<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1997
--------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 1-4530
------
ASTREX, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 13-1930803
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
205 EXPRESS STREET, PLAINVIEW, NEW YORK 11803
(Address of principal executive offices)
(516) 433-1700
(Issuer's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. As of November 3, 1997 common
shares outstanding were 5,375,363.
<PAGE>
ASTREX, INC."
INDEX
Page
No.
PART I:
Financial Statements:
Consolidated Balance Sheets
September 30, 1997 (unaudited) and March 31, 1997 . . . . . . . .1
Consolidated Statements of Income (unaudited)
Six months and three months ended September 30, 1997 and 1996 . 2
Consolidated Statements of Cash Flows (unaudited)
Six months ended September 30, 1997 and 1996 . . . . . . . . . . 3
Notes to Consolidated Financial Statements (unaudited) . . . . . .4
Management's Discussion and Analysis or Plan of Operations . . 5-6
PART II:
Other Information and Signatures . . . . . . . . . . . . . . . . 7-8
<PAGE>
PART I - Financial Information
ASTREX, INC. AND SUBSIDIARIES"
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1997 March 31, 1997
(Unaudited)
----------- -----------------
(000) Omitted
<S> <C> <C>
Current Assets:
Cash $37 $2
Accounts receivable (net of allowance
for doubtful accounts of $86 at
September 30, 1997"
and $87 at March 31, 1997) 1,636 1,584
Inventory 2,876 3,313
Prepaid expenses and other
current assets 93 67
----- -----
Total current assets 4,642 4,966
Property, plant and equipment at cost (net of
accumulated depreciation of $302 at September 30,
1997 and $249 at March 31, 1997) 805 841
----- -----
TOTAL ASSETS $5,447 $5,807
====== ======
Current Liabilities:
Accounts payable 647 868
Accrued liabilities 350 483
Current portion of capital lease obligation 46 43
Total current liabilities 1,043 1,394
Capital lease obligation 102 125
Loans payable 1,000 1,226
----- -----
2,145 2,745
Shareholders' Equity:
Preferred Stock, Series A - issued, none -- --
Preferred Stock, Series B - issued, none -- --
Common Stock - par value $.01 per share; authorized, 15,000,000 shares;
issued, 5,375,363 at September 30, 1997 and at
March 31, 1997 54 54
Additional paid-in capital 3,621 3,621
Accumulated deficit (355) (591)
----- ------
3,320 3,084
Less: deferred compensation (18) (22)
----- ------
Total shareholders' equity 3,302 3,062
----- ------
Total liabilities and shareholders' equity $5,447 $5,807
====== ======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
-1-
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
--------------------------------------------------------------------------------
(000) Omitted (000) Omitted
<S> <C> <C> <C> <C>
Net sales $7,787 $7,494 $3,824 $3,735
Cost of sales 5,987 5,676 2,954 2,821
----- ----- ----- -----
Gross profit 1,800 1,818 870 914
Selling, general and
administrative
expenses 1,487 1,536 721 764
----- ----- ----- -----
Income from
operations 313 282 149 150
Interest expense 65 94 27 45
----- ----- ----- -----
Income before
provision for
income taxes 248 188 122 105
Provision for
income taxes 11 17 4 9
----- ----- ----- -----
Net income $237 $171 $118 $96
===== ===== ===== =====
Per share data for the six months and three months ended September 30, 1997 and
1996 are as follows:
Weighted average
number of
common shares
outstanding 5,375,363 5,314,379 5,375,363 5,375,363
========= ========= ========= =========
Net income
per share $0.04 $0.03 $0.02 $0.02
========= ========= ========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
-2-
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
1997 1996
----------------------------------------------
(000) Omitted
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $237 $171
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 51 30
Stock compensation 4 2
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net (52) 126
Increase in prepaid expenses and other
current assets (26) (43)
Decrease in inventory 437 509
Decrease in accounts payable (221) (442)
Decrease in accrued liabilities (131) (7)
---- ----
NET CASH PROVIDED BY OPERATING ACTIVITIES 299 346
---- ----
Cash flows used in investing activities:
Capital expenditures (17) (19)
---- ----
Net cash used in investing activities (17) (19)
---- ----
Cash flows from financing activities:
Proceeds from issuance of common stock -- 47
Principal payments under capital lease obligations (21) --
Repayments of loans payable, net (226) (374)
---- ----
NET CASH USED IN FINANCING ACTIVITIES (247) (327)
---- ----
Net increase in cash for the six months
ended September 30 35 0
Cash - beginning of period 2 2
---- ----
Cash - end of period $37 $2
==== ====
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
-3-
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED FINANCIAL STATEMENTS
- ------------------------------
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly its financial position as of September 30,
1997. The results of operations and cash flows for the six month period ended
September 30, 1997 are not necessarily indicative of the results to be expected
for the full year. In the opinion of management, the information in this interim
report for the six months ended September 30, 1997 and 1996 presents fairly the
Company's financial position consistent with the Company's accounting practices
and principles used in interim reports. Accordingly, certain items included in
these statements are based upon best estimates, particularly cost of goods sold.
For the six month and three month periods ended September 30, 1997 and 1996
these costs have principally been determined by utilizing perpetual inventory
records. The calculation of the actual cost of goods sold amount is predicated
upon a physical inventory taken only at the end of each fiscal year.
-4-
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
NET INCOME FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 WAS APPROXIMATELY
$237,000, AN INCREASE OF 39% OVER THE SAME PERIOD LAST FISCAL YEAR. THIS
INCREASE IS PRINCIPALLY THE RESULT OF HIGHER SALES AND REDUCTIONS IN selling,
general and administrative expenses AND INTEREST EXPENSE.
Sales increased by approximately $293,000, or 3.9%, for the six months and
approximately $89,000, or 2.4%, for the three months ended September 30, 1997,
from the comparable six and three month periods in 1996, respectively.
Gross profit percentages decreased to 23.1% from 24.3% for the six months,
and to 22.8% from 24.5% for the three months ended September 30, 1997 and 1996,
respectively. These decreases are a result of continued price pressures in a
somewhat soft overall market.
Selling, general and administrative expenses decreased approximately
$49,000, or 3.2%, for the six months and approximately $43,000, or 5.6%, for the
three months ended September 30, 1997 from the comparable previous six and three
month periods in 1996, in spite of higher sales and commission expense. These
decreases are a result of the Company's ongoing efforts to operate more
efficiently.
Interest expense decreased approximately $29,000, or 30.9% for six months,
and approximately $18,000, or 40.0% for the three months ended September 30,
1997, from the previous comparable six and three month periods in 1996. This
decrease is due to both a lower loan balance and a substantially reduced
interest rate, as a result of the Company entering into a new lending agreement
on July 9, 1997.
-5-
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company generated $299,000 in cash from its operating activities which was
used to primarily paydown the outstanding loan payable balance. At September 30,
1997, the Company had working capital of $3,599,000 and its stockholders' equity
was $3,302,000. The Company believes that its present working capital, cash
generated from operations and amounts available under the new loan agreement
will be sufficient to meet its cash needs during the next year (the new loan
agreement is described in the Company's June 30, 1997 Form 10-QSB). The
Company's principal credit facility is a line of credit ("Line") measured by its
inventory and receivables and secured by substantially all of the Company's
assets including a negative pledge of (i.e. that the Company will not otherwise
mortgage to any other person) its Plainview office/warehouse facility. On
September 30, 1997 the Company owed $1,000,000 on the Line.
-6-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits
---------
Previously Filed and Incorporated
Exhibit Description by reference or Filed Herewith
- -------------------------------------------------------------------------------
3 (a) Certificate of Incorporation Filed herewith
of Astrex, Inc., as amended
(a Delaware corporation)
3 (b) By-Laws of Astrex, Inc., as amended Filed as Exhibit 3 (b) to the Form
10-QSB of the Company for the
quarter ended September 30, 1996
10(a) Credit and Security Agreement Filed herewith
(Revolver) between Astrex,
Inc. and Fleet National Bank
dated July 9, 1997
10(b) Appendix A to Credit and Security Filed herewith
Agreement (Revolver)
between Astrex, Inc. and Fleet
National Bank dated July 9, 1997
10(c) Pledge Agreement between Astrex, Filed herewith
Inc. and Fleet National
Bank dated July 9, 1997
10(d) Revolving Credit Promissory Note Filed herewith
between Astrex, Inc. and
Fleet National Bank dated July 9, 1997
10(e) Guaranty Agreement between Filed herewith
AVest, Inc. and Fleet National
Bank dated July 9, 1997
10(f) Guaranty Agreement between Filed herewith
T.F. Cushing, Inc. and Fleet
National Bank dated July 9, 1997
27 Financial Data Schedule Filed herewith
(B) Reports on Form 8-K:
None
-7-
<PAGE>
SIGNATURES
In accordance with the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASTREX, INC.
Date: November 11, 1997 By: /s/ Michael McGuire
------------------ -------------------
Michael McGuire
Director, President and
Chief Executive Officer
By: /s/ Irene S. Lyons
------------------
Irene S. Lyons
Chief Financial Officer,
Vice President,
Treasurer and Secretary
-8-
<PAGE>
EXHIBIT 3(a)
CERTIFICATE OF INCORPORATION
OF
ASTREX, INC.
The undersigned, a natural person, for the purpose of organizing a corporation
for conducting the business and promoting the purposes hereinafter stated, under
the provisions and subject to the requirements of the laws of the State of
Delaware (particularly Chapter 1, Title 8 of the Delaware Code, as amended and
supplemented, which is hereinafter referred to as the "General Corporation Law
of Delaware"), hereby certifies that:
FIRST: The name of the corporation (the "Corporation") is Astrex, Inc.
SECOND: The address, including street, number, city, and county of the
registered office of the Corporation in the State of Delaware is 32 Loockerman
Square, Suite L-100, City of Dover, 19901, County of Kent; and the name of the
registered agent of the Corporation in the State of Delaware at such address is
The Prentice - Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The Corporation shall be authorized to issue the following shares:
<TABLE>
<CAPTION>
Class Number of Shares Par Value
- ----- ---------------- ---------
<S> <C> <C>
Common Stock 5,200,000 $.01
Preferred Stock 200,000 $5.00
</TABLE>
FIFTH: The name and the mailing address of the incorporator are as follows:
<PAGE>
Name Mailing Address
- ---- ---------------
Michael Harvey 342 Madison Avenue
New York, NY 10173
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The number of directors of the Corporation shall consist of not
less than five
(5) and not more than nine (9) members.
EIGHTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
NINTH: No director shall be liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
Corporation or its stockholders, (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware
<PAGE>
General Corporation Law, or (4) a transaction from which the director derived an
improper personal benefit, it being the intention of the foregoing provision to
eliminate the liability of the Corporation's directors to the Corporation or its
stockholders to the fullest extent permitted by Section 102(b)(7) of the
Delaware General Corporation Law.
TENTH: The Corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the State of
Delaware, indemnify any and all persons whom it shall have power to indemnify
under said section from and against any and all of the expenses, liabilities, or
other matters referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office, and
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under the penalties of
perjury this 23 day of November, 1992.
/s/ Michael Harvey
---------------------------
Michael Harvey
Sole Incorporator
<PAGE>
Certificate of Amendment of Certificate of Incorporation
of
ASTREX, INC.
It is hereby certified that:
1. The name of the Corporation (hereinafter called the
"corporation") is Astrex, Inc.
2. The certificate of incorporation of the corporation is hereby
amended by striking out Articles Fourth and Seventh thereof and
by substituting in lieu of said Articles the following new
Articles:
" FOURTH: THE CORPORATION SHALL BE AUTHORIZED TO ISSUE THE FOLLOWING
SHARES:
<TABLE>
<CAPTION>
CLASS OF SHARES NUMBER OF SHARES PAR VALUE OF SHARES
<S> <C> <C>
COMMON STOCK 15,000,000 $0.01
PREFERRED STOCK, SERIES A 200,000 $5.00
PREFERRED STOCK, SERIES B 10,000,000 $0.01
</TABLE>
THE SPECIFIC POWERS, RIGHTS, PREFERENCES, DESIGNATIONS, QUALIFICATIONS,
RESTRICTIONS AND OTHER CHARACTERISTICS OF EACH SERIES OF PREFERRED SHARES SHALL
BE AS DETERMINED BY DUE RESOLUTION OF THE BOARD OF DIRECTORS."
And
"SEVENTH: THE NUMBER OF DIRECTORS OF THE CORPORATION SHALL CONSIST OF NOT
LESS THAN FOUR (4) AND NO MORE THAN NINE (9) MEMBERS."
3. The amendments of the certificate of incorporation herein certified have
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
Signed and attested to on August 8, 1997.
/s/ Michael McGuire
-------------------------------
Michael McGuire, President
Attest:
/s/ Irene S. Marcic
- -------------------
Irene S. Marcic, Secretary
- --------------------------
<PAGE>
<PAGE>
EXHIBIT 10(A)
CREDIT AND SECURITY AGREEMENT
(REVOLVER)
CREDIT AND SECURITY AGREEMENT, dated as of July 9, 1997 (the "Agreement"),
between Astrex, Inc., a Delaware corporation, having offices at 205 Express
Street, Plainview, New York 11803 (the "Borrower"), T.F. Cushing, Inc., a
Massachusetts corporation having offices at 126 Myron Street, West Springfield,
Massachusetts 01089 ("TFCI") and Fleet National Bank, a national banking
association, having offices at One Landmark Square, Stamford, Connecticut 06901
(the "Lender" or "Bank").
The Borrower, TFCI and the Lender, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, hereby agree as
follows:
ARTICLE 1. THE LOANS
1.1 CERTAIN DEFINITIONS. Certain capitalized terms used herein are defined
in Appendix A attached hereto.
1.2 REVOLVING CREDIT LOANS AND RESERVES. Subject to the terms and
conditions of this Agreement and in reliance on the representations and
warranties of the Borrower contained herein, the Lender agrees to make available
to the Borrower from time to time, prior to the Revolving Credit Loan
Termination Date, upon the request of the Borrower, revolving credit loans (each
a "Loan" or "Revolving Credit Loan" and collectively the "Loans" or "Revolving
Credit Loans") in an aggregate principal amount not to exceed, at any one time
outstanding, the Revolving Credit Maximum Amount. In addition to any of its
other rights hereunder, the Borrower, pursuant to said terms and subject to said
conditions, may borrow, repay and reborrow the Revolving Credit Loans up to, at
any one time outstanding, the Revolving Credit Maximum Amount. Lender shall have
the right to establish reserves in such amounts, and with respect to such
matters, as Lender shall deem necessary or appropriate in its reasonable credit
judgment, against the amount of Revolving Credit Loans which Borrower may
otherwise request hereunder. Such reserves shall be calculated (as deductions)
in determining the Borrowing Base.
1.3 THE NOTE. The Loans, and the obligation of the Borrower to repay the
Loans with interest, shall be evidenced by a revolving credit promissory note
(such promissory note is hereinafter referred to as the "Note" which defined
term shall also include such promissory note as it may be extended or otherwise
amended, supplemented, or modified from time to time and also any notes (if any)
given in extension, renewal, or substitution of such promissory note) in
substantially the form of Exhibit A attached hereto.
1.4 INTEREST. The aggregate unpaid principal balance of the Prime Rate
Revolving
<PAGE>
-2-
Credit Portion outstanding from time to time shall bear interest at a rate per
annum equal to the Prime Rate in effect from time to time. If Borrower properly
exercises its LIBOR Option in accordance with Section 1.6(b) below, the
aggregate unpaid principal balance of the Libor Revolving Credit Portions
outstanding from time to time shall bear interest at a rate per annum equal to
the sum of (i) the Libor Rate applicable to each Libor Revolving Credit Portion
for the corresponding Interest Period plus (ii) two percent (2%) (i.e., 200
basis points). Anything contained in this Agreement to the contrary
notwithstanding, during any period in which an Event of Default is continuing,
the interest rate hereunder and under the Note shall, at the option of the
Lender, be increased to a rate per annum equal to the Revolving Credit Default
Rate and any interest accruing at such Revolving Credit Default Rate shall be
payable on demand.
All computations of interest shall be made on the basis of a three hundred
sixty (360) day year and the actual number of days elapsed.
Anything contained in this Agreement or the Note to the contrary
notwithstanding, the Lender does not intend to charge and the Borrower shall not
be required to pay interest or other charges in excess of the maximum rate
permitted by Applicable Law. Any payments in excess of such maximum shall be
refunded to Borrower or credited against principal.
1.5 PAYMENT OF PRINCIPAL AND INTEREST AND OTHER AMOUNTS. The Borrower shall
pay the unpaid principal of all Revolving Credit Loans on the Revolving Credit
Maturity Date. Interest on the Revolving Credit Loans shall be due and payable,
in arrears, on each Revolving Credit Interest Payment Date and also on the
Revolving Credit Maturity Date. (The Lender in its sole and absolute discretion
may make a Loan to cover an interest payment due on a Revolving Credit Interest
Payment Date; provided, that it is understood and agreed that the Lender shall
have no obligation to do so). All payments of principal, interest, and other
amounts due hereunder or under the Note shall be made without any deductions
whatsoever, including, but not limited to, any deduction for any set-off,
recoupment, or counterclaim. All payments shall be made in United States Dollars
and immediately available funds. Unless the Lender otherwise agrees (and subject
to Section 1.8 below), all payments shall first be applied to fees, costs and
expenses which the Borrower is obligated to pay under the Financing Documents,
then to accrued and unpaid interest and then to unpaid principal (nothing
contained herein shall limit the rights of the Lender under Section 7.4). If any
payment hereunder or under the Note or other Financing Document shall be
specified to be made upon a day which is not a Business Day, it shall (subject
to the provisions regarding Business Days in the definition of Interest Period)
be made on the next succeeding day which is a Business Day and such extension of
time shall in such case, to the extent applicable, be included in computing any
interest in connection with such payment. The records of the Lender shall be
prima facie evidence of the making of any Revolving Credit Loans, any accrued
interest thereon, the amount of Loans bearing interest at the Prime Rate or with
reference to the Libor Rate, and all principal and interest payments made in
respect thereof; provided, that no failure of the Lender to timely record any
transaction, or any error in any such recordation, shall in any way affect or
impair any liability or other obligation of the Borrower to the Lender.
<PAGE>
-3-
1.6 NOTICE OF BORROWING; AUTHORITY FOR BORROWING; LIBOR REQUESTS. (a) The
Borrower shall give the Lender written (or, if acceptable to the Lender,
telephonic) notice of the amount and date of each Revolving Credit Loan
requested under the Revolving Credit Facility received no later than 12:00 p.m.
on the date on which the requested Revolving Credit Loan is to be made,
provided, that if all or any portion of such Loan is to be included (as of the
making of such Loan) as part (or all) of a Libor Revolving Credit Portion,
Borrower shall give the Lender at least two (2) Business Days prior notice of
such requested Revolving Credit Loan and give to Lender a LIBOR Request pursuant
to Section 1.6(b) below. Such notice shall be accompanied by a true and correct
and current Borrowing Base Certificate (if acceptable to the Lender, the
Borrowing Base Certificate can also serve as notice of the request of the Loan).
Such Notice shall specify the proposed effective date and amount of such
Revolving Credit Loan. (If requested by Lender (at its option) telephonic notice
shall be followed by written confirmation.) No failure to give any such notice
(or confirmation) or supply any such certificate shall impair the obligation of
the Borrower to repay any Loan made by the Lender.
The Lender may assume that any person whom the Lender in good faith
believes is an employee or officer of the Borrower and who requests any
Revolving Credit Loan is authorized to do so on behalf of the Borrower unless
the Lender has received prior specific written notice from the Borrower to the
contrary. Lender shall have no responsibility to verify the origin of any oral,
electronic or other communication.
(b) (i) Upon the conditions that: (1) Lender shall have received a LIBOR
Request from Borrower at least two (2) Business Days prior to the first day of
the Interest Period requested, (2) there shall have occurred no change in
Applicable Law which would make it unlawful for Lender to obtain deposits of
U.S. Dollars in the London interbank foreign currency deposits market, (3) as of
the date of the LIBOR Request and the first day of the Interest Period, there
shall exist no Default or Event of Default, (4) Lender is able to determine the
Libor Rate in respect of the requested Interest Period and (5) as of the first
date of the Interest Period, there is no more than two (2) outstanding LIBOR
Revolving Credit Portions including the LIBOR Revolving Credit Portion being
requested, then interest on the LIBOR Revolving Credit Portion requested during
the Interest Period requested will be based on the applicable LIBOR Rate. No
LIBOR Revolving Credit Portion shall be less than $500,000.00.
(ii) Each LIBOR Request shall be irrevocable and binding on Borrower.
Borrower shall indemnify Lender for any loss, penalty or reasonable expense
incurred by Lender due to failure on the part of Borrower to fulfill, on or
before the date specified in any LIBOR Request, the applicable conditions set
forth in this Agreement, or due to any other failure to make a borrowing
requested in a LIBOR Request or due to the prepayment or payment (including
without limitation any payment after acceleration) of the applicable LIBOR
Revolving Credit Portion prior to the last day of the applicable Interest
Period, including, without limitation, any loss (including loss of anticipated
profits) or expense incurred by reason of the liquidation or redeployment of
deposits or other funds acquired by Lender to fund or maintain the applicable
LIBOR Revolving Credit Portion (or requested LIBOR Revolving Credit Portion).
<PAGE>
-4-
(iii) If any change in any Legal Requirement shall (1) make it unlawful for
Lender to fund through the purchase of U.S. Dollar deposits any LIBOR Revolving
Credit Portion or otherwise give effect to its obligations as contemplated under
this Section 1.6(b) (or other applicable provision hereof) or (2) shall impose
on Lender any additional restrictions on the amount of such a category of
liabilities or assets which Lender may hold, then, in each such case, Lender
may, by notice thereof to Borrower, terminate the LIBOR Option. If any change in
any Legal Requirement shall impose of Lender any additional costs (not already
taken into account under Eurocurrency Reserve Requirements) based on or measured
by the excess above a specified level of the amount of a category of deposits or
other liabilities of Lender which includes deposits by reference to which the
LIBOR Rate is determined as provided herein or a category of extensions of
credit or other assets of Lender which includes any LIBOR Revolving Credit
Portion or there shall be imposed on Lender or the London interbank market any
other condition (with respect to a Legal Requirement or otherwise) with respect
to this Agreement or the Loans and the result of such condition is to impose any
additional costs on the Lender (including any reduction in Lender's return),
then Borrower shall, upon demand of Lender, pay to Lender the amount of any and
all such additional costs. Also, at the Lender's option, any LIBOR Revolving
Credit Portion subject thereto shall immediately bear interest thereafter at the
rate and in the manner provided for Prime Rate Revolving Credit Portions
pursuant to Section 1.4 above. Borrower shall indemnify Lender against any loss,
penalty or expense incurred by Lender due to liquidation or redeployment of
deposits or other funds acquired by Lender to fund or maintain any LIBOR
Revolving Credit Portion that is terminated under this paragraph.
(iv) Lender shall receive payments of amounts of principal of and interest
with respect to the LIBOR Revolving Credit Portions free and clear of, and
without deduction for, any Taxes. If (1) Lender shall be subject to any Tax in
respect of any LIBOR Revolving Credit Portion or any part thereof or (2)
Borrower shall be required to withhold or deduct any Tax from any such amount,
the LIBOR Rate applicable to such LIBOR Revolving Credit Portion shall be
adjusted by Lender to reflect all additional costs incurred by Lender in
connection with the payment by Lender or the withholding by Borrower of such Tax
and Borrower shall provide Lender with a statement detailing the amount of any
such Tax actually paid by Borrower. Determination by Lender of the amount of
such costs shall, in the absence of manifest error, be conclusive. If after any
such adjustment any part of any Tax paid by Lender is subsequently recovered by
Lender, Lender shall reimburse Borrower to the extent of the amount so
recovered. A certificate of an officer of Lender setting forth the amount of
such recovery and the basis therefor shall, in the absence of manifest error, be
conclusive.
(v) Any amounts owed by Borrower under this Section 1.6(b) shall be due and
payable upon demand. The Lender shall supply a certificate(s) or statement(s) to
the Borrower setting forth any amount(s) so owed under this Section 1.6(b) and
such certificate or statement shall be conclusive and binding upon the Borrower
absent manifest error. Any amount(s) showing as owed in such certificate(s) or
statement(s) shall be due and payable by the Borrower within fifteen (15) days
after the applicable certificate or statement is sent.
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(c) Lender may, in Lender's discretion, permit electronic transmittal of
instructions, authorization, agreements or reports to Lender. Unless Borrower
specifically directs Lender in writing not to accept or act upon telephonic or
electronic communications from Borrower, Lender shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of Lender's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by Borrower and Lender
shall have no duty to verify the origin of any such communication or the
authority of the person sending it.
1.7 OPTIONAL AND MANDATORY PREPAYMENTS. (a) The Borrower may optionally
prepay the principal of Loans, in whole or in part, at any time, (i) in the case
of the Prime Rate Loans, without penalty or premium and (ii) in the case of
Libor Loans, accompanied by any payment(s) required by Section 1.6 above. All
such prepayments shall first be applied to the Prime Rate Revolving Credit
Portion and then to the LIBOR Revolving Credit Portion.
(b) Borrower shall make any payments or prepayments required by Section 4.3
below or by any provision of any other applicable Financing Document.
(c) Pursuant to Section 1.8 below, all payments with respect to Receivables
or other Collateral shall be applied to the mandatory prepayment of the Loans.
All such prepayments shall first be applied to the Prime Rate Revolving Credit
Portion and then to the LIBOR Revolving Credit Portion.
(d) To the extent that at any time the aggregate unpaid principal amount of
the Loans shall exceed the Borrowing Base or otherwise shall exceed the
Revolving Credit Maximum Amount, the Borrower shall immediately prepay the Loans
(with such prepayment to be in the amount of such excess). The Borrower shall
specify in writing that a prepayment is being made pursuant to this Section
1.7(d).
(e) Amounts prepaid prior to the Revolving Credit Loan Termination Date on
account of the Loans may, upon the terms and subject to the conditions of this
Agreement, be reborrowed prior to such Date.
1.8 PAYMENTS ON COLLATERAL. Upon the Borrower or TFCI (or any other
Affiliate of Borrower or of TFCI or any Person acting for or in concert with the
Borrower or TFCI) receiving any checks, notes, drafts, other instruments, cash,
other monies or any other items of payment, representing payments on or
otherwise with respect to or relating to any and all Receivables or any other
Collateral, Borrower or TFCI, as the case may be, shall receive same in trust
for the Lender and immediately upon receipt thereof shall (i) deliver same duly
endorsed by Borrower or TFCI, as the case may be, for deposit, to Lender for
immediate deposit in a cash collateral account established by the Lender (and
same shall be deposited in such account), and (ii) if requested by the
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Lender, forward to the Lender, on a daily basis, copies of all such items and
deposit slips related thereto, together with a collection report in form and
substance satisfactory to the Lender. All such checks, notes, drafts, other
instruments, cash, other monies or other items of payment shall be the sole and
exclusive property of the Lender immediately upon receipt of such items by the
Borrower or TFCI and shall (at all times), until actually applied to the payment
of the Secured Obligations as hereinafter set forth, be part of the Collateral
securing the payment and performance of the Secured Obligations. After allowing
two (2) days for collection of checks and other instruments, the Lender will
credit (conditional upon final collection) all such payments to such collateral
account. Such collateral account shall be a blocked account to which the Lender
shall have sole access and sole dominion and control. The amounts in such
account shall (unless otherwise determined by the Lender) be drawn upon by the
Lender (at any time and from time to time and without the need for notice) and
applied to the (i) prepayment or payment of the Revolving Credit Loans, (ii) the
payment of interest on the Revolving Credit Loans (and any other amounts then
due hereunder), and (iii), if a Default or Event of Default is then continuing,
to the payment (or prepayment) of any other Secured Obligations; provided, that,
after such application by the Lender (and provided further, no Event of Default
then exists hereunder) the Borrower or TFCI, as the case may be, shall be
entitled to any remaining amounts in such account (provided, it is understood
that any balances in such account shall not accrue interest in favor of the
Borrower or TFCI). (Nothing contained herein shall, or shall be interpreted or
construed to, limit the unconditional obligation of the Borrower (or of any
Guarantor) to pay all Secured Obligations in full when due, and if the amount in
the collateral account is insufficient to pay all Secured Obligations then due
Borrower shall immediately pay any deficiency; and, provided, further, that the
Lender shall not be required to look to such account as its first source of
repayment.) Nothing contained in this Section 1.8 shall be construed or
interpreted to limit any right or remedy of the Lender under Section 8.15 hereof
or under any other term or provision of any of the Financing Documents. Borrower
shall pay all standard charges of the Lender for operating such account and
other related charges.
TFCI hereby agrees, notwithstanding the fact that it is a Guarantor and not
the borrower of the Loans, that all payments on account of its Receivables (and
its other applicable Collateral) shall be applied as set forth above.
At the request of the Lender, which request may be made at any time
(whether or not an Event of Default has occurred), the Borrower and TFCI shall
enter into a lockbox arrangement with the Lender and, if such lockbox
arrangements are so requested, the Borrower and TFCI shall cause each of their
account debtors and other obligers to at all times send all of their payments
directly to the lockbox. Such lockbox arrangements shall be pursuant to a
lockbox agreement, in form and substance satisfactory to the Bank, to be entered
into by the Lender, the Borrower and TFCI.
1.9 LATE CHARGES. [Intentionally Omitted]
1.10 FURTHER ASSURANCES. Each of the Borrower and TFCI hereby agrees to do
and perform any and all acts and to execute any and all further instruments from
time to time reasonably requested by the Lender to more fully effect the
purposes of this Agreement.
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1.11 FEES. (a) The Borrower shall pay to the Lender a non-refundable
one-time facility fee equal to Three Thousand Dollars ($3,000) payable on or
before the Closing Date.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Revolving
Credit Loans, the Borrower hereby represents and warrants to the Lender that,
except as set forth in Schedule A attached hereto:
2.1 CORPORATE EXISTENCE AND POWER. The Borrower and each of its
Subsidiaries is, and will continue to be, a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business and in good standing, and
authorized to do business, in all other jurisdictions (the "Foreign
Jurisdictions"), if any, in which the property or assets owned, leased or
operated by it or the nature of the business conducted by the Borrower requires
such qualification or authorization, except for qualifications and
authorizations the lack of which, singly or in the aggregate, has not had and
will not have a Material Adverse Effect upon the Borrower or such Subsidiary, as
the case may be. Borrower and each of its Subsidiaries has the corporate power
and authority, the legal right, and all the requisite permits, authorizations,
licenses and other general intangibles (as defined in the Connecticut UCC),
without unusual restrictions or limitations, to own, operate and lease all of
its material properties and assets, to conduct the business in which it is
presently engaged or presently proposes to be engaged, and to execute, deliver
and perform its obligations under all Financing Documents to which the Borrower
or such Subsidiary is a party, and all such permits, authorizations, licenses
and other general intangibles are in full force and effect.
2.2 CORPORATE AUTHORITY; NO CONFLICTS; BINDING AGREEMENTS. The execution,
delivery and performance by the Borrower and each Guarantor of this Agreement,
the Note and any other Financing Document to which Borrower and/or any such
Guarantor is a party, and any borrowings hereunder, have been duly authorized by
all necessary corporate and, if required, stockholder action. The execution, and
delivery and performance of this Agreement, the Note, and any other Financing
Document to which Borrower and/or any Guarantor is a party, and any borrowings
hereunder, are and will be within the Borrower's or any such Guarantor's, as the
case may be, powers, corporate and otherwise, and do not and will not (i)
violate any Applicable Law or Borrower's or such Guarantor's certificate of
incorporation, by-laws or other organizational document or (ii) result in the
breach of, conflict with, constitute a default under, or give rise to the right
of acceleration or mandatory prepayment under, any material Contract or any
judgment, decree or order which is binding upon the Borrower or any such
Guarantor or to which the Borrower or any Guarantor or any of their respective
properties may be subject, or result in the creation of any Lien (other than in
favor of the Lender) upon any property or assets of the Borrower or any
Guarantor pursuant to any Contract or any such judgment, decree or order. This
Agreement has been, and the Note and each other Financing Document to which the
Borrower and/or any
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Guarantor is a party will be, duly executed and delivered on behalf of the
Borrower or such Guarantor, as the case may be. This Agreement constitutes, and
the Note and each other Financing Document to which the Borrower and/or any
Guarantor is a party when executed and delivered, will constitute, a legal,
valid and binding obligation of the Borrower or such Guarantor, as the case may
be, enforceable against the Borrower in accordance with its terms. No
Governmental Approval is or will be required in connection with the execution,
delivery and performance of this Agreement or any other Financing Document or
any borrowing hereunder.
2.3 FINANCIAL CONDITION. The Financial Statements, copies of which have
been furnished to the Lender, are true and correct in all material respects and
fairly present the financial condition of the Borrower and its Subsidiaries as
of the respective dates thereof and the results of the operations and cash flows
of the Borrower and its Subsidiaries for the periods covered thereby, all in
accordance with GAAP consistently applied (subject to normal year-end
adjustments in the case of any interim financial statements). None of the
Borrower or any Subsidiary has any material direct or contingent Liabilities not
disclosed in the Financial Statements (including any notes thereto) or in
Schedule A attached hereto other than Trade Debt arising in the ordinary course
of business since March 31, 1997.
2.4 NO ADVERSE CHANGE. Since March 31, 1997, no material, adverse change in
the business, assets or other properties, Liabilities, financial condition,
results of operations or business prospects of the Borrower or any of its
Subsidiary has occurred, no dividends, redemptions or other distributions have
been declared or made to or with respect to any stockholders of the Borrower and
no other event has occurred or failed to occur, which has had or could
reasonably be expected to have in the future, either alone or in conjunction
with all other such events and failures, a Material Adverse Effect upon the
Borrower or any of its Subsidiaries or on any Financing Document.
2.5 INFORMATION COMPLETE. Subject to any limitations stated therein or in
connection therewith, all information (whether past financial statements, the
financial statements delivered pursuant to Section 4.2 below or other
information) furnished or to be furnished by the Borrower or any of its
Subsidiaries in connection with, or pursuant to the terms hereof or any other
Financing Document is, or will be at the time the same is furnished, as the case
may be true, accurate and complete in all material respects necessary in order
to make the information furnished, in the light of the circumstances under which
such information is furnished, not misleading.
2.6 COMPLIANCE WITH APPLICABLE LAWS. The Borrower and each of its
Subsidiaries is in compliance, in all material respects, with all Applicable
Laws.
2.7 LITIGATION. There are not any actions, suits or legal, equitable,
arbitration, or administrative proceedings, pending or, to the knowledge of the
Borrower, threatened (nor, to the knowledge of the Borrower, is there any basis
therefor) against or in any other way relating to or affecting the Borrower or
any of its Subsidiaries or their respective businesses or any assets or other
properties of the Borrower or any of its Subsidiaries or any Financing Document.
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2.8 BURDENSOME PROVISIONS; NO DEFAULT. None of the Borrower or any of its
Subsidiaries is a party to or bound by any Contract or Applicable Law, that,
either alone or in conjunction with any other such Contract or Applicable Law,
has had or could reasonably be expected to have in the future a Material Adverse
Effect upon the Borrower or such Subsidiary. None of Borrower or such Subsidiary
is in default or breach of any material Contract where such breach or default,
either alone or in conjunction with any other default or breach, has had or
could reasonably be expected to have in the future a Material Adverse Effect
upon the Borrower or such Subsidiary.
2.9 NO ADVERSE FACT. Except as may be set forth in the Financial Statements
(or in Schedule A), no fact or circumstance is known to the Borrower which,
either alone or in conjunction with all other such facts and circumstances, has
had or could reasonably be expected to have in the future a Material Adverse
Effect upon the Borrower or any of its Subsidiaries or on any Financing
Document.
2.10 SUBSIDIARIES; OWNERSHIP. Schedule B sets forth any and all
Subsidiaries of the Borrower. The capital stock of each such Subsidiary is owned
entirely by the Borrower. Except for such Subsidiaries, the Borrower has not
invested in the stock, common or preferred, of any other corporation, and there
are no fixed, contingent or other obligations on the part of the Borrower or any
of its Subsidiaries to issue any additional shares of its capital stock to any
Person.
2.11 EVENTS OF DEFAULT. No Event of Default or Default has occurred and/or
is continuing.
2.12 USE OF PROCEEDS. The Borrower shall use the proceeds of the Revolving
Credit Loans only for the Permitted Uses, and no part of such proceeds will be
used, in whole or in part, for the purpose of purchasing or carrying any "margin
security" as such term is defined in Regulation U of the Board of Governors of
the Federal Reserve System, or otherwise in a manner which would violate any
Regulations of such Board, including without limitation Regulations G, U, T and
X.
2.13 TITLE TO PROPERTY. The Borrower and each of its Subsidiaries has good
and marketable title to all properties and assets they respectively purport to
own, and a valid leasehold interest in, all of its assets and other properties
it purports to have a leasehold interest in. Such assets and other properties
are subject to no Liens other than Permitted Liens.
2.14 TAXES. Except for the specified Pennsylvania and Connecticut Tax
Returns, the Borrower has filed or caused to be filed all Federal, state and
local and foreign tax returns and reports required to have been filed by it or
any of its Subsidiaries and has paid or caused to be paid all taxes,
assessments, fees and other governmental charges payable by it or any of its
Subsidiaries which have become due, other than those not yet delinquent and
those due that are being contested in good faith by appropriate proceedings and
for which the Borrower or such Subsidiary shall have set aside on its books
adequate reserves in accordance with GAAP. The Borrower has paid or has
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provided adequate reserves for the payment of all Federal, State, local and
foreign income taxes applicable to the Borrower or any of its Subsidiaries for
all prior fiscal years and for the current fiscal year to the date hereof. There
is no proposed tax assessment against the Borrower or any of its Subsidiaries
which would, if the assessment were made, have a Material Adverse Effect upon
the Borrower.
2.15 BUSINESS NAME; OFFICES AND LOCATIONS. The Borrower and each of its
Subsidiaries conducts its business solely in its own corporate name without the
use of a trade name or style, except for any trade name or style set forth in
Schedule C attached hereto. The chief executive offices and principal place of
business of (i) the Borrower is at the address set forth in the opening
paragraph of this Agreement, (ii) of TFCI, is at 126 Myron Street, West
Springfield, Massachusetts 01089, and (iii) of Avest, at 205 Express Street,
Plainview, New York 11803.
2.16 BORROWER'S QUESTIONNAIRE AND TFCI'S QUESTIONNAIRE. All statements in
each of the Borrower's Questionnaire and Company's Questionnaire are true and
correct as of the date of this Agreement and, except to the extent the Borrower
gives to the Bank prior written notice of any change, shall remain true and
correct. Nothing contained in this Section 2.16 shall be interpreted to limit
the Borrower's obligations, or the Lender's rights, under Section 6.5 below.
2.17 EMPLOYEE BENEFIT PLANS. Each employee benefit plan, (as such term is
defined in Section 3(3) of ERISA), if any, established, maintained or
contributed to by the Borrower, any Subsidiary or any other ERISA Affiliate
(each a "Plan") is in compliance in all material respects with the applicable
provisions of ERISA and the Code. No Plan has an Accumulated Funding Deficiency,
as such term is defined in Section 412 of the Code. No Reportable Event, as such
term is defined in ERISA, has occurred with respect to any Plan. No Plan is a
Multiemployer Plan, as such term is defined in ERISA.
2.18 ENVIRONMENTAL MATTERS. To the best of the Borrower's knowledge and
belief (i) Borrower, and each of its Subsidiaries and each of their respective
properties, operations and other activities are in compliance, in all material
respects, with all Environmental Laws, (ii) no Hazardous Material (other than
Hazardous Materials used in the ordinary business of office maintenance in
compliance with Environmental Laws) is located at, on or in, or about, to the
Borrower's or such Subsidiary's properties and none of Borrower's or such
Subsidiary's operations or other activities involve Hazardous Materials or have
resulted in the Release of any Hazardous Materials which may have damaged any
Natural Resources, and (iii) the Borrower and each of its Subsidiaries has no
liability or class of liability under any Environmental Law or with respect to
any Hazardous Material. The term "property(ies)" as used in this Section shall
mean any property(ies) owned, occupied and/or operated by the Borrower or any of
its Subsidiaries.
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ARTICLE 3. CONDITIONS PRECEDENT
3.1 INITIAL REVOLVING CREDIT LOAN. The initial Revolving Credit Loan shall
be subject (in addition to the conditions precedent set forth in Section 3.2
below) to the Borrower fulfilling the following conditions precedent:
(a) DELIVERY OF VARIOUS DOCUMENTS. The Lender shall have received each
of the following, all of which shall be in form and substance satisfactory
to the Lender:
(i) originals of each of the applicable Financing Documents, all
of which shall have been duly and properly authorized, executed and
delivered by the respective party or parties thereto and in full force
and effect.
(ii) the Obligor Legal Opinion.
(iii) certificates of insurance and loss payable clauses, meeting
the requirements of Section 4.3 below and all other applicable
requirements of any other Financing Document.
(iv) current copies of the articles of incorporation and by-laws
of each of the Borrower and its Subsidiaries, as restated or amended
to the date of the making of such initial Revolving Credit Loan,
certified, with respect to the articles of incorporation, by the
appropriate Secretary of State, and, with respect to the by-laws, by
an appropriate officer of each of the Borrower and its Subsidiaries.
(v) certified copies of all corporate (including stockholder, if
required) action taken by each of the Borrower and its Subsidiaries to
authorize the execution, delivery and performance in accordance with
their respective terms of this Agreement, the Note, and any other
Financing Document to which Borrower and/or such Subsidiary is a
party, such resolutions to be certified by the secretary or assistant
secretary of the Borrower or such Subsidiary as of the date of
disbursement of such initial Revolving Credit Loan.
(vi) a certificate of incumbency with respect to the officers of,
as applicable, each of the Borrower and its Subsidiaries authorized to
execute and deliver this Agreement, the Note, or any other Financing
Document to which the Borrower or such Subsidiaries is a party.
(vii) current certificates of good standing for each of the
Borrower and its Subsidiaries from the applicable state of
incorporation, and, if applicable, in each of the Foreign
Jurisdictions.
(viii) a certificate, dated the date of the Loan, signed by a
Responsible
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Officer of the Borrower, confirming compliance with Section 3.2(a)
hereof.
(ix) current UCC search reports with respect to the Borrower and
its Subsidiaries.
(x) acknowledgement copies of the filing of all UCC financing
statements filed in connection with the perfection of any Lien granted
in favor of the Lender pursuant to any Financing Document.
(xi) pay proceeds letter, executed by Borrower, directing and
authorizing the Lender to apply the proceeds of the initial Revolving
Credit Loan for the purposes, and in accordance with the instructions,
set forth therein and in accordance with Section 2.12 hereof.
(xii) a current title report with respect to the Plainview Real
Estate.
(xiii) postal change of address cards, letter to postmaster and
letters in blank to account debtors of Borrower and TFCI.
(xiv) the Specified Additional Closing Documents.
(b) OTHER DOCUMENTS. The Lender shall have received all such other
certificates, reports, statements, opinions of counsel, instruments,
assurances, agreements, or other documents as the Lender may reasonably
request.
(c) LEGAL MATTERS. All legal matters incident to the transactions
contemplated by this Agreement and the other Financing Documents shall be
satisfactory to the Lender and Messrs. Finn Dixon & Herling, special
counsel for the Lender.
(d) PAYMENT OF LEGAL FEES. Borrower shall pay the legal fees and
disbursements, of Messrs. Finn Dixon & Herling LLP ("FDH"), special counsel
to the Lender to be limited to a maximum of $4,000 plus $1,000 for
disbursements as set forth in the Commitment Letter (provided, that
Borrower shall also reimburse FDH for the costs of all UCC searches, filing
fees and corporate searches and certificates).
(e) PAYMENT OF CERTAIN EXISTING DEBT. Payment in full by the Borrower
of all Indebtedness to the Existing Lender.
(f) PAYMENT OF THE FACILITY FEE. Borrower shall pay $3,000 facility
fee referred to in Section 1.12.
3.2 ALL REVOLVING CREDIT LOANS. The making of each Revolving Credit Loan
(whether the initial Revolving Credit Loan or any subsequent Revolving Credit
Loan) shall be subject to the following additional conditions precedent:
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(a) REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT; NO EVENT OF
DEFAULT. (i) All of the representations and warranties made or deemed to be
made under this Agreement or any other Financing Document shall be true and
correct at the time of the disbursement of the Revolving Credit Loan
(except for the representation or warranty contained in Section 2.4 with
respect to distributions to the extent it is no longer true by reason of a
distribution made in accordance with, and permitted by, Section 5.7 below.,
with and without giving effect to the making of the Revolving Credit Loan
and the application of the proceeds thereof, and (ii) no Event of Default
or Default, shall have occurred and be continuing at such time, with and
without giving effect to the making of the such Loan and the application of
the proceeds thereof. The Lender may, without waiving this condition,
consider it fulfilled, and a representation and warranty by the Borrower to
such effect made to the Lender, if no written notice to the contrary is
received by the Lender from the Borrower prior to the making of the such
Loan.
(b) DOCUMENTS IN FULL FORCE AND EFFECT. All Financing Documents shall
remain in full force and effect and not be terminated. The Lender may,
without waiving this condition, consider it fulfilled, and a representation
and warranty by the Borrower to the Lender to such effect made, if no
written notice to the contrary is received from the Borrower prior to the
making of the applicable Loan.
(c) CORPORATE ACTIONS IN FULL FORCE AND EFFECT. The corporate actions
of the Borrower referred to in Section 3.1(a) shall remain in full force
and effect and the incumbency of officers shall be as stated in the
certificates of incumbency delivered pursuant to Section 3.1(a) or as
subsequently modified and reflected in a certificate of incumbency
delivered to the Lender. The Lender may, without waiving this condition,
consider it fulfilled, and a representation and warranty by the Borrower to
the Lender to such effect made, if no written notice to the contrary is
received from the Borrower prior to the making of the applicable Loan.
(d) NO MATERIAL ADVERSE CHANGE. There has been no material adverse
change in the business, assets, liabilities, financial condition, results
of operations or business prospects of the Borrower or any Guarantor since
the date of any financial statements delivered to the Lender prior to or
after the date of this Agreement. The Lender may, without waiving this
condition, consider it fulfilled, and a representation and warranty by the
Borrower to the Lender to such effect made, if no written notice to the
contrary is received from the Borrower prior to the making of the
applicable Loan.
(e) REQUEST AND BORROWING BASE CERTIFICATE. The Borrower shall have
requested such Revolving Credit Loan and Borrower shall have also supplied
and/or executed any other applicable documentation, including a Borrowing
Base Certificate, in accordance with the applicable terms and provisions
hereof.
(f) NOT EXCEED REVOLVING CREDIT MAXIMUM AMOUNT. Immediately prior to
and after the applicable Revolving Credit Loan is made, the sum of
outstanding Revolving Credit Loans
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shall not exceed the Revolving Credit Maximum Amount. The Lender may,
without waiving this condition, consider it fulfilled, and a representation
and warranty by the Borrower to the Lender to such effect made, if no
written notice to the contrary is received from the Borrower prior to the
making of the applicable Loan.
9 3.3 WAIVER. The Lender, in its sole and absolute discretion, may waive a
condition(s) precedent with respect to a Revolving Credit Loan. The giving of a
waiver on one occasion shall not obligate the Lender to grant a waiver on any
other occasion.
ARTICLE 4. AFFIRMATIVE COVENANTS
The Borrower (and to the fullest extent applicable, TFCI) covenants and
agrees with the Lender that, until payment in full of the Revolving Credit
Loans, payment and performance by the Borrower and Guarantors of all of their
other obligations under the Financing Documents and the termination of the
Revolving Credit Facility, unless the Lender otherwise consents in writing, the
Borrower shall and shall cause its Subsidiaries to:
4.1 PRESERVATION OF EXISTENCE AND PROPERTIES; SCOPE OF BUSINESS. (a)
Preserve and maintain its corporate existence and all of its other franchises,
licenses, rights and privileges, and remain qualified to do business, and
authorized to do business, as a foreign corporation in all jurisdictions in
which the property or assets owned, leased, or operated by the Borrower or such
Subsidiary, as the case may be, or the nature of the business conducted by
Borrower or such Subsidiary, as the case may be, requires such qualification or
authorization, except for qualifications and authorizations the lack of which,
singly or in the aggregate, has not had and will not have a Material Adverse
Effect upon the Borrower or such Subsidiary, as the case may be, (b) preserve,
protect and obtain all material general intangibles, (c) preserve and maintain
in good repair, working order and condition, reasonable wear and tear excepted,
all of the Borrower's or such Subsidiary's, as the case may be, material assets
and other material properties and (d) engage only in businesses in substantially
the same fields as the businesses conducted by the Borrower or such Subsidiary,
as the case may be, on the date hereof. Avest shall conduct no business other
than the ownership, maintenance, and operation of the Plainview Real Estate.
4.2 FINANCIAL STATEMENTS.
A. Deliver to the Lender:
(i) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Borrower, a copy of the consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as at the end of such year
and the related statements of operations, stockholders' equity and cash flows of
the Borrower and its Subsidiaries for such year, showing the financial condition
of the Borrower and its Subsidiaries as of the close of such fiscal year and the
results of their operations during such year, all audited by independent public
accountants selected
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by Borrower and reasonably satisfactory to the Lender and accompanied by an
opinion of such accountants (which shall not be qualified in any material
respect) to the effect that such financial statements fairly present the
financial condition and results of operations of the Borrower and its
Subsidiaries in accordance with GAAP. Concurrently with the delivery of such
financial statements, Borrower shall cause such independent public accountants
to deliver a certificate stating that in making the examination necessary
therefor no actual knowledge was obtained of any Default or Event of Default,
except as may be specified in such certificate.
(ii) as soon as practicable, but in any event within thirty (30) days after
the end of each calendar month, a copy of a Borrower-prepared consolidated, and,
if requested by Lender, consolidating, financial statements including a balance
sheet, income statement, source and use of funds statement, and such other
supporting schedules as Lender may require, of the Borrower and its Subsidiaries
as at the end of such month.
(iii) as soon as practicable, but in any event within thirty (30) days
after the end of each calendar month, (aa) an accounts receivable aging (on a
form acceptable to the Lender) of the Borrower and its Subsidiaries as of the
end of such month,
(iv) within 5 days after the end of each month, a Borrowing Base
Certificate as of the end of such month, in form and substance acceptable to the
Lender.
(v) copies of all federal income tax returns filed by the Borrower or any
of its Subsidiaries, such statements to be delivered to the Lender within thirty
(30) days of the filing thereof.
(vi) copies of all filings (10-Q) made with the Securities and Exchange
Commission as soon as practicable, but in any event within ten (10) Business
Days after the applicable deadline thereof (as adjusted for taking any valid
extension thereof).
(vii) within thirty (30) days after the end of each fiscal year, management
prepared financial projections for the next fiscal year which projections shall
include consolidated balance sheets, income statements and sources and uses of
funds of the Borrower and its Subsidiaries, and other necessary supporting
schedules. Such projections shall be the good faith projections of the
Borrower's management.
The Borrower agrees and covenants with the Lender that all financial
statements referred to in subparagraph (i) and (ii) of this Section 4.2.A. will
present fairly the financial condition of the Borrower and its Subsidiaries as
of the respective dates thereof and the results of operations (and, in the case
of the annual statements, cash flows) of the Borrower and its Subsidiaries for
the periods covered by such statements in accordance with GAAP applied
consistently throughout the periods reflected therein (except as approved by
such accountants and disclosed therein).
B. Deliver to the Lender:
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(a) concurrently with the delivery of the financial statements referred to
in subsection 4.2.A.(ii) above for any month ending any fiscal quarter, a
certificate of the President or Chief Financial Officer of the Borrower (i)
stating that, to the best of his or her knowledge, the Borrower during such
period has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and in each of the other
Financing Documents to be observed, performed or satisfied by it, and that he or
she has obtained no knowledge of any Default or Event of Default, except as may
be specified in such certificate, (ii) certifying that all such financial
statements are true and correct in all material respects and fairly present the
consolidated financial condition and results of operations of the Borrower and
its Subsidiaries (subject, in the case of interim statements, to normal year-end
audit adjustments) and have been prepared in accordance with GAAP applied
consistently throughout the periods reflected therein (except as approved by the
Borrower's independent certified public accountants and disclosed therein) and
(iii) showing in reasonable detail the calculations required to establish
whether or not Borrower was in compliance with any applicable Specified Covenant
Tests.
(b) promptly, such additional financial and other information and
certificates as the Lender may from time to time reasonably request.
4.3 GENERAL INSURANCE REQUIREMENTS. (a) Keep all of the Borrower's and each
of its Subsidiary's insurable properties (including all physical Collateral)
insured against fire and other hazards (so called "All Risk" coverage), with
financially responsible companies and in amounts reasonably satisfactory to the
Lender and, in any event, in at least such amounts and against at least such
risks as are usually insured against in the same general area(s) by companies
engaged in the same or similar business, (b) maintain public liability coverage
against claims for personal injuries, death or property damage, in amounts
reasonably satisfactory to the Lender, (c) maintain product liability insurance
in amounts reasonably satisfactory to the Lender, (d) maintain all worker's
compensation, employment or similar insurance as may be required by Applicable
Law, and (e) maintain such other insurance as may be required by Applicable Law
or reasonably required by the Lender. Such All Risk, property insurance, public
and product liability coverage shall provide for a minimum of thirty (30) days'
prior written notice from the insurer to Lender of any expiration or termination
of, or material amendment to, such insurance coverage. Such All Risk property
insurance shall name the Lender as loss payee or mortgagee, as the case may be,
and shall contain a clause specifying that the interests of Lender shall not be
impaired or invalidated by any act or neglect of Borrower (or other owner of the
property) or by the occupation of the premises for purposes more hazardous than
are permitted by said policy. The Lender shall be named as additional insured on
all such public liability and product liability policies. Borrower agrees to
deliver copies of all of the aforesaid insurance policies to the Lender. In the
event of any loss or damage to the assets or other properties of the Borrower or
its Subsidiaries, Borrower shall give immediate written notice to the Lender and
to its insurers of such loss or damage and shall promptly file its proofs of
loss with said insurers. All obligations of the Borrower, and all rights of the
Lender, with respect to insurance contained in this Section 4.3 shall be in
addition to, and not in limitation of, any other obligations and rights with
respect to insurance set forth in any other
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Financing Document. Nothing contained in this Agreement or any other Financing
Document shall be interpreted or construed to impose on the Lender any
obligation or liability with respect to the insurance of the Borrower or its
Subsidiaries or the maintenance or adequacy thereof. If Borrower fails to pay
any premiums of any insurance, Lender may (but shall have no obligation to) pay
same and any payments made by Lender shall be reimbursed by the Borrower upon
demand of the Lender, and shall bear interest at the Revolving Credit Default
Rate.
Pursuant to Section 6.1 and the definition of "Collateral", the Lender has
been assigned and granted a security interest in any and all proceeds of all
insurance policies covering or otherwise relating to any Collateral. Each of the
Borrower and TFCI authorizes and empowers the Lender (i) after the occurrence
and during the continuance of any Event of Default to adjust or compromise any
loss under such policies and (ii) prior to or after the occurrence of any Event
of Default, to collect and receive all such proceeds. If an Event of Default is
not continuing, the Borrower or TFCI, as the case may be, shall have the right
to adjust or compromise any loss under such policies, provided, that the
Borrower shall not agree to any such adjustment or compromise without the prior
written consent of the Lender if the loss is involved in excess of $75,000,
which consent shall not be unreasonably withheld. Each of the Borrower and TFCI
hereby authorizes and directs each insurance company to pay all such proceeds
directly and solely to the Lender and not to Borrower or TFCI, as the case may
be, and the Lender jointly. Borrower and TFCI authorize and empower the Lender
to execute and endorse in Borrower's or TFCI's name (at all times) all proofs of
loss, drafts, checks and any other documents or instruments necessary to
accomplish such collection, and any Persons making payments to the Lender under
the terms of this paragraph are hereby relieved absolutely from any obligation
or responsibility to see to the application of any sums so paid. After deduction
from any such proceeds of all costs and expenses (including reasonable
attorney's fees) incurred by the Lender in the collection and handling of such
proceeds, the net proceeds shall be applied as follows. If no Event of Default
shall have occurred and then be continuing, such net proceeds may be applied, at
Borrower's or TFCI's option, either toward replacing or restoring the applicable
Collateral (provided such replacement or restoration is practicable), in a
manner and on terms reasonably satisfactory to the Lender, or as a credit
against the Secured Obligations, whether matured or unmatured. In the event that
Borrower or TFCI may and does elect to replace or restore as aforesaid, then
such net proceeds shall be deposited in a segregated account at the Lender
subject to the sole order of the Lender and shall be disbursed therefrom by the
Lender in such manner and at such times as the Lender reasonably deems
appropriate to complete such replacement or restoration; provided, however, that
if any Event of Default shall occur and be continuing at any time before or
after replacement or restoration has commenced, then thereupon the Lender shall
have the option, at its sole discretion, to apply all remaining net proceeds
either toward replacing or restoring the applicable Collateral, in a manner and
on terms satisfactory to the Lender, or as a credit against such of the Secured
Obligations, whether matured or unmatured, as the Lender shall determine in its
sole discretion. If an Event of Default shall have occurred and be continuing
(including an Event of Default occurring prior to such deposit of the net
proceeds), the Lender may, in its sole discretion, apply such net proceeds
either toward replacing or restoring the Collateral, in a manner and on terms
satisfactory to the Lender, or as a credit against the Secured Obligations,
whether matured or unmatured. Notwithstanding the foregoing provisions of this
paragraph but
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without otherwise limiting the rights of the Lender under this paragraph, at all
times that no Event of Default is continuing, if the loss involved is $75,000 or
less, the Lender shall, at the request of the Borrower rather than deposit the
net proceeds for such loss in such a segregated account, promptly pay over such
proceeds to the Borrower or TFCI, as the case may be, provided that the Borrower
or TFCI, as the case may be, shall promptly apply such proceeds to the
replacement or restoration of the applicable Collateral, if practicable.
If there shall have occurred a Default, but not at such time an Event of
Default, the Lender shall have the right to hold all insurance proceeds in an
account at the Lender (subject to the sole order of the Lender) until such time
as the event or condition constituting such Default is either timely cured or
waived in accordance the terms and provisions hereof or becomes an Event of
Default, so as to be able to determine which of the procedures with respect to
the application of insurance proceeds set forth in the immediately preceding
paragraph should be used.
4.4 COMPLIANCE WITH LAWS; PAYMENT OF TAXES. (a) Comply with all Applicable
Laws and all obligations under all Contracts except to the extent that failure
to comply therewith could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Borrower or any of its
Subsidiaries; and (b) pay all (i) taxes, assessments, governmental charges or
levies, and (ii) claims for labor, supplies, rent and other obligations made
against it or its property which, if unpaid, might become a lien or charge
against the Borrower or such Subsidiary or its respective properties, except, in
the case of (b)(i) or (b)(ii), liabilities being contested by the Borrower or
such Subsidiary in good faith by appropriate proceedings and against which the
Borrower shall set up adequate reserves on its books in conformity with GAAP.
4.5 INSPECTION. Permit representatives (whether or not officers or
employees) of the Lender, from time to time, as often as may be reasonably
requested, but only during normal business hours and upon reasonable prior
notice (provided, however, that prior notice need not be given for the audits
referred to in the immediately succeeding sentence or, if an Event of Default
has occurred and is continuing), to (a) visit and inspect any offices, assets or
other properties of the Borrower or any of its Subsidiaries, (b) inspect, audit
and make extracts from the Borrower's or such Subsidiary's books and records,
and (c) discuss with Borrower's or such Subsidiary's principal officers, and its
independent accountants, the Borrower's or such Subsidiary's businesses, assets
and other properties, liabilities, financial condition, results of operations
and business prospects. As part of the Lender's rights under the immediately
preceding sentence, the Lender shall, at any time and from time to time, have
the right to perform audits with respect to the Borrower and its books, records
and assets and other properties (including assets in any warehouse). The
Borrower shall pay for the costs of such audits which fees will be $500 for each
man day plus out-of-pocket expenses; provided, that, as long as no Event of
Default shall have occurred, the aggregate amount the Borrower shall be
obligated to pay for such audits in any calendar year, commencing with the
calendar year 1997, shall not exceed $4,000 (per year).
4.6 NOTICE OF DEFAULT; LITIGATION, ETC. Furnish to the Lender prompt
written notice of any of the following: (i) the occurrence of any Event of
Default or Default; (ii) the commencement
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of any actions, suits or proceedings or investigations in any court or before
any arbitrator of any kind or by or before any governmental or non-governmental
body against or in any other way relating adversely to, or affecting, the
Borrower or any of its Subsidiaries or their respective businesses or
properties, which, singly or in the aggregate, have an amount involved in excess
of $50,000; (iii) any material amendment of the certificate of incorporation,
by-laws, or other organizational document of the Borrower or any of its
Subsidiaries; (iv) any change with respect to the business, assets or other
properties, liabilities, financial condition, results of operations or business
prospects of the Borrower or any of its Subsidiaries other than changes in the
ordinary course of business which, singly or in the aggregate, have not had a
Material Adverse Effect on the Borrower or any of its Subsidiaries.
4.7 EMPLOYEE BENEFIT PLAN. Cause each Plan to comply in all material
respects with the applicable provisions of ERISA and the Code. The Borrower
shall promptly give written notice to the Lender of the details of (i) any
Reportable Event (as such term is defined in ERISA) with respect to a Plan, (ii)
any Accumulated Funding Deficiency (as such term is defined in Section 412 of
the Code) with respect to a Plan, (iii) the material modification or termination
(or proposed termination) of any Plan or (iv) the establishment or agreement to
maintain or make contributions to any new Plan. Neither the Borrower nor any
ERISA Affiliate will establish, maintain or make contributions to any
Multiemployer Plan (as such term is defined in ERISA).
4.8 ENVIRONMENTAL COMPLIANCE. (i) Comply with, and cause all of the
Borrower's and each of its Subsidiary's properties, operations and other
activities to comply with all Environmental Laws except for non-compliance which
could not reasonably be expected to have a Material Adverse Effect on Borrower
or any of its Subsidiaries; (ii) not Release any Hazardous Materials which
Release damages or threatens to damage any Natural Resources in any material
manner; (iii) not engage in the handling, use, storage or transportation of
Hazardous Materials (except for the storage and use of Hazardous Materials used
in normal office maintenance and except for the use of any such materials
normally used in the assembly and distribution of connectors for original
equipment manufacturers, in compliance in all material respects with
Environmental Laws); and (iv) promptly notify the Lender of any material notice
received by the Borrower or any of its Subsidiaries with respect to (aa) any
alleged material violation by the Borrower of any Environmental Law, (bb) any
liability or class of liability under any Environmental Law, or (cc) any Lien
imposed or threatened to be imposed on any of the Borrower's or such
Subsidiary's properties pursuant to any Environmental Law.
4.9 OPERATING ACCOUNTS. To the fullest extent permitted under Applicable
Law, maintain all of Borrower's and TFCI's operating accounts with Lender.
ARTICLE 5. NEGATIVE COVENANTS
The Borrower (and, to the fullest extent applicable, TFCI) covenants and
agrees with the Lender that, until payment in full of all Revolving Credit
Loans, payment and performance by the Borrower and Guarantors of all of their
other obligations under the Financing Documents and the
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termination of the Revolving Credit Facility, unless the Lender otherwise
consents in writing, the Borrower shall not, and shall cause its Subsidiaries
not to, (directly or indirectly):
5.1 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien against
any of the Borrower's or such Subsidiary's assets or other properties, whether
now existing or hereafter acquired, except: (a) Liens in favor of the Lender or
(b) Permitted Liens.
5.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume, suffer to exist any
Indebtedness except for Permitted Indebtedness.
5.3 CONTINGENT LIABILITIES. Assume, guarantee, endorse or otherwise become
liable upon or otherwise become obligated with respect to, any liability or
other obligation of any other Person, except for endorsements of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
5.4 CONSOLIDATION OR MERGER; ACQUISITION OR SALE OF ASSETS. (a) Dissolve or
liquidate or discontinue its normal operations with intent to liquidate; (b)
merge or consolidate with any other Person; (c) acquire by purchase, lease or
otherwise all or a material portion of the properties or assets of any other
Person; or (d) sell, transfer, lease or otherwise dispose of any of its assets
or other properties (whether tangible or intangible) except that the Borrower or
TFCI (or, in the case of clause (ii) below, Avest), so long as no Event of
Default shall have occurred and be continuing or would result therefrom, may (i)
sell inventory (as defined in the Connecticut UCC) in the ordinary course of
business for value received and (ii) replace, in the ordinary course of
business, equipment (as defined in the Connecticut UCC) which has become worn
out or obsolete, with equipment of at least comparable value.
5.5 TRANSACTIONS WITH AFFILIATES. Enter into, or be a party to, any
transaction with any Affiliate of the Borrower or any of its Subsidiaries
(including, without limitation, transactions involving the purchase, sale or
exchange of assets or properties or the rendering of services), except in the
ordinary course of business pursuant to the reasonable requirements of the
Borrower or such Subsidiary and upon fair and reasonable terms no less favorable
to the Borrower of such Subsidiary than Borrower or such Subsidiary would obtain
in a comparable arm's-length transaction with a Person other than an Affiliate.
Without limiting the generality of the immediately preceding sentence, such
sentence shall apply to transactions between the Borrower and its Subsidiaries,
PROVIDED, however, that intercompany charges between the Borrower and its
Subsidiaries may be made in accordance with the prior practices of such parties.
5.6 LOANS, ADVANCES, INVESTMENTS. Purchase or otherwise acquire any shares
of stock or obligations of, make any loans or advances to, make a capital
contribution to, or make any other investments in, any Person other than
investments in direct obligations of the United States of America, or commercial
paper rated the highest grade by two or more national credit rating agencies, or
deposit or time accounts of Lender or, subject to Section 4.9 hereof, any other
United States bank and which account is insured by the Federal Deposit Insurance
Corporation.
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5.7 ACQUISITION OF STOCK OF BORROWER; DIVIDENDS. (i) Purchase, acquire,
redeem or retire, or make any commitment to purchase, acquire, redeem or retire,
any of the capital stock of the Borrower, whether now or hereafter outstanding,
provided, however, that the Borrower and/or TFCI shall be permitted to purchase,
acquire, redeem or retire the capital stock of the Borrower so long as (x) the
aggregate amount of the capital stock thus purchased, acquired redeemed or
retired does not exceed $100,000 and (y) neither at the time of such purchase,
acquisition, redemption or retirement nor as a result thereof no Default or
Event of Default exists or occurs or (ii) pay any dividends on, or otherwise
make any distributions with respect to, any capital stock of the Borrower if at
the time of such dividend or other distribution an Event of Default or Default
exists or if an Event of Default or Default shall result from such payment.
5.8 [INTENTIONALLY OMITTED.]
5.9 SUBSIDIARIES. Acquire (other than, in the case of the Borrower, TFCI
and Avest), form or dispose of any Subsidiary.
5.10 CURRENT RATIO. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities, as of the end of any fiscal quarter
(commencing with the fiscal quarter ending September 30, 1997), (i) for any such
fiscal quarter ending prior to June 30, 1998, to be less than 1.00 to 1.00 and
(ii) for any such fiscal quarter ending on or after June 30, 1998, to be less
than 1.25 to 1.00.
5.11 DEBT SERVICE COVERAGE. Permit the ratio of (a) Consolidated EBITDA
less Cash Capital Expenditures to (b) Interest Expense plus CMTLD, for any
Elapsed Fiscal Year (commencing with the Elapsed Fiscal Period ending September,
1997), to be less than 1.25 to 1.00.
5.12. MINIMUM INTEREST COVERAGE. Permit the Interest Coverage Ratio for any
Elapsed Fiscal Year (commencing with the Elapsed Fiscal Period ending September,
1997), to be less than 1.50 to 1.00.
5.13. LIABILITIES TO TANGIBLE NET WORTH RATIO. Permit the ratio of
Consolidated Liabilities to Consolidated Tangible Net Worth, as of the end of
any fiscal quarter (commencing with the fiscal quarter ending September 30,
1997), to exceed 1.50 to 1.00.
5.14 LEASE OBLIGATIONS. Incur, create, or assume any commitment to make any
Lease Payments (as defined below) if the aggregate amount payable thereunder in
any one fiscal year (commencing with the fiscal year ending March 31, 1997)
would exceed $175,000. "Lease Payments" means any direct or indirect payment or
payments, whether as rent or otherwise, exclusive of, however, any rent payments
to Avest made pursuant to that certain lease of the property at the Plainview
Site between Avest, as lessor, and Astrex, as lessee, dated June 30, 1989,
including fees or service or finance charges, under any lease, rental or other
agreement for the use of the property of any Person other than the Borrower
whether or not such agreement contains an
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option to purchase.
5.15 FISCAL YEAR. Cause its fiscal year to end on any date other than March
31.
5.16 DOUBLE NEGATIVE PLEDGE. Enter into or suffer to exist, or permit any
of Borrower's Subsidiaries to enter into or suffer to exist, other than in favor
of the Lender, any agreement prohibiting (or restricting) the creation or
assumption of any Lien upon any property(ies) or assets of the Borrower or any
of its Subsidiaries.
ARTICLE 6. COLLATERAL.
6.1. SECURITY INTEREST. To secure the due and punctual payment and
performance of all of the Secured Obligations, each of the Borrower and TFCI do
hereby each pledge and assign all of the Collateral to the Lender, and grant to
the Lender a present and continuing security interest in and lien upon all of
its respective Collateral.
6.2. CONTINUED PRIORITY OF SECURITY INTEREST. Borrower and TFCI represent,
warrant and covenant that (i) the Security Interest is and shall at all times be
a valid and perfected security interest enforceable against the Borrower, TFCI
and all third parties and securing, in accordance with the terms of this
Agreement, the Secured Obligations, and (ii) the Collateral shall not at any
time be subject to any Liens that are prior to, on a parity with or junior to
the Security Interest other than Permitted Liens.
6.3. FILING; VERIFICATION.
(a) The Borrower and TFCI shall, at their sole cost and expense, take or
cause to be taken all action which may be necessary or desirable, or that the
Lender may reasonably request, in order to assure that the Security Interest
will at all times comply with the provisions of Section 6.2 and the other
provisions of the Financing Documents and to enable the Lender to exercise or
enforce its rights hereunder and under the other Financing Documents, including,
but not limited to, (i) executing, delivering and, where applicable, filing
financing statements, continuation statements, pledges, designations, mortgages,
hypothecation, notices and assignments, in each case in form and substance
satisfactory to the Lender, (ii) causing to be executed and delivered (a)
landlord's waivers and (b) postal change of address cards, letters to
postmasters and pre-signed letters to account debtors under Accounts of the
Borrower and/or TFCI, all in form and substance satisfactory to the Lender,
(iii) delivering to the Lender, endorsed or accompanied by such instruments of
assignment as the Lender may specify, any and all chattel paper, securities,
instruments, letters of credit and advices thereof and documents evidencing or
forming a part of the Collateral. The Borrower and TFCI shall mark their books
and records as may be necessary or appropriate to evidence, protect and perfect
the Security Interest.
(b) A carbon, photographic or other reproduction of this Agreement or of
any financing
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statement shall be sufficient as a financing statement.
(c) The Lender shall have the right at any time and by any reasonable means
(including by mail, telephone, telecopy or otherwise), in the name of the Lender
or the Borrower or its Subsidiaries (or other name), to verify (or require the
Borrower or TFCI to verify) the validity, ownership, amount or any other matter
relating to any Collateral. Borrower and its Subsidiaries shall cooperate in
connection with same.
6.4. CERTAIN COVENANTS AS TO COLLATERAL. So long as any of the Secured
Obligations are outstanding and unpaid or the Revolving Credit Facility exists
and unless the Lender shall otherwise consent in writing:
(a) The Borrower and TFCI will:
(i) at all times be the sole owner of each and every item of
Collateral respectively owned by it;
(ii) discharge all Liens other than Permitted Liens and otherwise
defend the Security Interest and its title to the Collateral at its own
expense;
(iii) endeavor to make collection of the Receivables of Borrower and
TFCI, provided, that nothing contained in this sentence shall, or shall be
interpreted to, limit any right of the Lender to collect any Receivable
upon the occurrence or continuance of any Event of Default (or any other
right or remedy of the Lender).
(iv) at all times keep, in all material respects, accurate and
complete records of the Collateral;
(v) (A) for purposes of computing the Borrowing Base, and not in
limitation of any of the provisions of Section 4.2 above, furnish to the
Lender information and documentation adequate to identify Receivables at
times and in form and substance as may be required by the Lender and from
time to time, as determined by the Lender, provide the Lender with aging
schedules describing all Receivables created or acquired by Borrower or
TFCI, (B) together with each such schedule, upon the request of the Lender,
provide the Lender with copies of customers' invoices or the equivalent,
original shipping and delivery receipts and such other documents as the
Lender shall specify, (C) upon the request of the Lender from time to time,
execute and deliver confirmatory written assignments of any Receivables or
other Collateral to the Lender, but any failure by the Borrower or TFCI to
execute and deliver such schedules and other materials or assignments shall
not limit or otherwise affect the Security Interest or the Lender's other
rights in and to the Collateral, (D) upon the request of the Lender, from
time to time, (i) a current listing of inventory of the Borrower and (ii) a
listing of the inventory of TFCI based upon (x) the current annual physical
inventory count or (y) at any time other than when the annual physical
inventory
<PAGE>
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count is taken, estimates derived from a gross profit roll forward method
of inventory calculation, and (E) upon request of the Lender, from time to
time, provide such information with respect to any collateral or the
operations of the Borrower or TFCI as shall in good faith be requested by
the Lender;
(vi) maintain all physical property that constitutes Collateral in
good condition and repair, reasonable wear and tear excepted, make all
necessary repairs thereto and all replacement of parts thereof so that the
value and operating efficiency thereof shall at all times be maintained and
preserved, reasonable wear and tear excepted, and exercise proper custody
over all such property;
(vii) upon Borrower or TFCI becoming aware of such matter or event,
give prompt notice to the Lender of (A) any matter or event which has
resulted in, or may result in, the actual or reasonably foreseeable
potential diminution in the value of, or reasonably foreseeable potential
offsets to, any of the Collateral in excess of $50,000 in the aggregate,
(B) any fact which would render any Receivables in the aggregate in excess
of $50,000 invalid or uncollectible, (C) any dispute with respect to any
Receivable, provided, however, that notice need only be given if the
aggregate amount of Receivables in dispute is in excess of $50,000, (D) all
returns, repossessions and recoveries in excess of $50,000 per month or
which are otherwise material, (E) Borrower's or TFCI's failure or inability
to perform on accounts over $50,000 in the aggregate, and (F) any
information relating to the material adverse change in the financial
condition of any account debtor or other obligor owing, at the applicable
time, an aggregate of $50,000 or more to the Borrower or TFCI; and
(viii) (A) upon the Lender's request, verify the amount, quantity,
ownership, value or any other documentation or matter relating to any of
the Collateral and (B) furnish to the Lender, upon the Lender's request,
such other information and documentation with respect to the Collateral as
the Lender may in good faith request from time to time, including, without
limitation, a master address list with respect to the Receivables of
Borrower or TFCI, a price list (setting forth both cost and proposed retail
price) of and physical listings and schedules of Inventory, a schedule of
Equipment setting forth each of the items of Equipment and any details with
respect thereto as the Lender may in good faith request, and schedules of
General Intangibles, all in form and substance reasonably satisfactory to
the Lender; and
(b) Borrower and TFCI represent, warrant and covenant that (i) all
Receivables that are Eligible Receivables or otherwise material Accounts shall
at all times represent bona fide transactions, and at all times shall be
complete and require no further act under any circumstances on the Borrower's or
TFCI's part to make such Receivables payable by the account debtors thereunder,
(ii) no Receivable or Receivables that is or are Eligible Receivables shall at
any time be subject to any defense or dispute or to any present, future or
contingent offset or counterclaim or any contract prohibiting assignment thereof
or requiring notice of or consent to assignment, or
<PAGE>
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represent a bill-and-hold sale, consignment sale, guaranteed sale,
sale-or-return or other similar understanding, and (iii) none of the
transactions underlying or giving rise to any Receivable shall at any time
violate any Applicable Law in a manner affecting the validity or enforceability
of the Receivable (including, without limitation, access to the courts of any
State to enforce such Receivable) and all such Receivables shall be legal, valid
and binding on the applicable obligor and fully enforceable by the Borrower or
TFCI, as the case may be; provided, that the failure of any Receivable or other
Collateral to comply with the terms of any of the provisions of any Financial
Document shall in no way impair the Lender's Security Interest therein.
(c) Neither the Borrower nor TFCI shall:
(i) rescind or cancel any obligation evidenced by any Receivable or
modify any term thereof or make any adjustment with respect thereto, or
extend or renew the same, or compromise or settle any dispute, claim, suit
or legal proceeding relating thereto, without the prior written consent of
the Lender, except that, if no Event of Default shall then exist (or result
therefrom), and subject to the rights of the Lender under Section 6.6, the
Borrower or TFCI, as the case may be, may, with respect to any Receivable,
but only in the ordinary course of its business and in accordance with
commercially reasonable business judgment and its customary collection
practices (aa) extend the time of payment thereof, (bb) in the case of an
Account that represents the right to payment for goods sold or leased,
grant a refund or credit with respect thereto for returned, damaged or
non-complying merchandise and (cc) settle the same for an amount less than
the then unpaid balance thereof; or
(ii) sell, assign, transfer or otherwise dispose of any Collateral to
anyone other than the Lender, provided, however, that, notwithstanding the
foregoing, so long as no Event of Default exists or would exist after
giving effect to such sale or disposition, (A) Inventory may be sold by the
Borrower or TFCI in the ordinary course of business and (B) Equipment which
is, in the reasonable commercial business judgment of the Borrower or TFCI,
obsolete or no longer useful in the conduct of the Borrower's or TFCI's
business may be sold or disposed of by the Borrower or TFCI provided that
the Lender is given prompt notice thereof. The sale proceeds of any such
sale or other disposition shall, subject to the other rights of the Lender
hereunder (including Section 6.6) be applied as set forth in Section 1.8
hereof. The inclusion of "proceeds" of the Collateral under the Security
Interest shall not be deemed a consent by the Lender to any sale or other
disposition of any part or all of the Collateral.
(d) Borrower shall duly fulfill any obligations on its part to be fulfilled
under or in connection with the Receivables and other Collateral and shall do
nothing to impair the rights of the Lender therein.
(e) Neither the Borrower nor TFCI shall attach or affix any material
Collateral to any real estate without the prior written consent of the Lender.
(f) If any Inventory (or other property of the Borrower or TFCI) is in the
possession or
<PAGE>
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control of any of the Borrower's or TFCI's agents or processors, the Borrower or
TFCI, as the case may be, shall, after the occurrence and during the continuance
of any Event of Default, if requested by the Lender, instruct such Person to
hold all such Inventory (and other property) for the account of the Lender and
subject to the instructions of the Lender and in all events the Borrower shall
cooperate with the Lender in taking possession of any such Inventory. Nothing
contained herein shall be interpreted to limit the provisions of Section 6.5
below.
6.5 LOCATION OF COLLATERAL; CHANGE OF NAME, ETC. Each of the Borrower and
TFCI represents, warrants and covenants that:
(a) The Borrower's Questionnaire was and is true, complete and correct in
all respects when originally given and as of the date hereof.
(b) The Company's Questionnaire was and is true, complete and correct in
all respects when originally given and as of the date hereof.
(c) Neither the Borrower nor TFCI, without giving the Lender thirty days'
prior notice thereof, and subject to any other additional restrictions set forth
in this Agreement or any other Financing Document, will (i) move its chief
executive office and, if different from its chief executive office, any office
where the books and records relating to any Receivables or General Intangibles
are kept, (ii) change the location of any other place of business or open any
new place of business, (iii) change its name, identity or corporate structure or
(iv) do any business under any name, trade name or trade style not listed on the
Borrower's Questionnaire or the Company's Questionnaire, as the case may be. In
addition, (i) the Borrower will not move its chief executive office outside of
Nassau County, New York without the written consent of the Lender and (ii) TFCI
will not move its chief executive office outside of West Springfield,
Massachusetts (unless such office is moved to Nassau County, New York with
proper notice given to Lender under clause (i) above) without the written
consent of Lender.
(d) (i) Borrower shall not move the location of any Inventory, Equipment or
other tangible Collateral without the prior written consent of the Lender and
(ii) TFCI shall not move the location of any Inventory, Equipment or other
tangible collateral to any location other than the Plainview Site without the
prior written consent of the Bank; provided, that the Borrower and TFCI may each
sell Inventory, and replace equipment, in the ordinary course as permitted by
Section 5.4 above.
6.6. NOTICE TO ACCOUNT DEBTORS OR OTHER OBLIGORS; POSSESSION OF COLLATERAL.
Upon the occurrence and any time during the continuance of any Event of Default,
the Lender may do any or all of the following:
(i) The Lender may notify (in the Lender's name and/or in the
Borrower's or TFCI's name), and/or require the Borrower or TFCI to notify,
in writing any account debtor or other obligor with respect to any one or
more of the Receivables or other Collateral to
<PAGE>
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make payment to the Lender, or any agent or designee of the Lender, at such
address as may be specified by the Lender or its agent or designee, as the
case may be, and the Lender or such agent or designee shall have the right
to receive all such payments; thereupon, the Borrower and/or TFCI, as the
case may be, shall no longer have any right to collect the affected
Receivables or other Collateral. If, notwithstanding the giving of any
notice, any account debtor or other obligor shall make payment to the
Borrower or TFCI's, the Borrower or TFCI, as the case may be, shall hold
all such payments it receives in trust for the Lender and shall deliver the
same to the Bank, or any such agent or designee, immediately upon receipt
by the Borrower or TFCI, as the case may be, in the identical form
received, together with any necessary endorsements. Anything contained in
this Agreement to the contrary notwithstanding, the Lender may, upon the
occurrence and at any time during the continuance of any Event of Default,
in its or the Borrower's or TFCI's name, (i) demand, sue for, collect or
receive any payment with respect to, (ii) settle or adjust any disputes or
claims with respect to, (iii) file any proof of claim or similar document
with respect to, or (iv) extend, compromise, renew, discharge, release or
otherwise modify any of the terms of, the Receivables and other Collateral,
and otherwise exercise any of Borrower's or TFCI's rights, as the case may
be in, to or under or otherwise related to the Receivables or other
Collateral.
Anything herein contained to the contrary notwithstanding,
neither the Lender, nor any such agent or designee shall be required
or obligated, to (A) make any demand, or to make an inquiry as to the
nature or sufficiency of any payment received by it, or to present or
file any claim or notice or take any action with respect to any
Receivable or other Collateral or the monies due or to become due
thereunder, (B) to take any steps necessary to preserve any rights
against prior parties, or (C) notify the Borrower or TFCI of any
decline in the value of any of the Collateral or, except as required
by Applicable Law, take any steps to protect the value of any
collateral. Neither the Lender nor its agents or designees shall have
any liability to the Borrower or TFCI, as the case may be, for actions
or omissions or any error of judgment or mistake of fact or law made
in connection with this Agreement or any other Financing Document,
other than those occasioned by its or their gross negligence or
willful misconduct.
(ii) All amounts received or deposited with the Lender pursuant
to paragraph (i) of this Section 6.6 representing the proceeds of
Receivables and other Collateral shall be applied to the payment of
the Secured Obligations (whether or not matured) in such order as the
Lender shall in its sole discretion determine.
6.7. APPOINTMENT AS ATTORNEY AND AGENT FOR THE BORROWER WITH RESPECT TO
SECURITY INTEREST. To the fullest extent permitted by Applicable Law, each of
the Borrower and TFCI hereby irrevocably appoints the Lender as its true and
lawful attorney and agent, with full power of substitution, to execute and
deliver, on behalf of and in the name of the Borrower and TFCI, such financing
statements, assignments, notices, pledges and other documents and agreements,
and to take such other action as the Lender may reasonably deem necessary for
the purpose of the creation,
<PAGE>
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perfection, maintenance or continuation of the Security Interest, under any
Applicable Law, and the Lender is hereby authorized to file on behalf of and in
the name of the Borrower and TFCI, at the Borrower's expense, such financing
statements, assignments, notices, pledges and other documents and agreements in
any appropriate governmental office. The right is expressly granted to the
Lender in its discretion, in those jurisdictions where the same is permitted, to
file one or more financing statements (including amendments thereof) under the
Uniform Commercial Code signed only by the Bank, naming the Borrower or TFCI as
debtor and naming the Lender as secured party and indicating therein the types,
or describing the items, of the Collateral.
6.8. APPOINTMENT TO ACT FOR THE BORROWER. Each of the Borrower and TFCI
hereby:
(a) irrevocably authorizes the Lender to perform any and all of the acts
that the Lender is permitted to perform under any provision of this Agreement;
(b) constitutes and appoints the Lender as each of the Borrower's and
TFCI's true and lawful attorney and agent, with full power of substitution, in
the place and stead of the Borrower and TFCI and either in its own name or in
the name of the Borrower or of TFCI, to take the actions described below, (x)
with respect to any action described in clauses (i) and (ii) below, at any time,
and (y) with respect to any action described in clauses (iii)-(vi) below, if any
Event of Default shall occur and be continuing:
(i) to endorse the Borrower's or TFCI's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security
that may come into the Lender's possession;
(ii) to sign and endorse the Borrower's or TFCI's name on any invoice,
storage or warehouse receipt, express bill or bill of lading relating to
any Receivables, on drafts against customers, on schedules and assignments
of Receivables, on notices of assignment, financing and continuation
statements and other public records, on verifications of accounts, on
notices to or from customers and on any and all documents necessary to
effectuate drawings under letters of credit and all other instruments or
documents relating to any of the foregoing items referred to in this
subparagraph (ii);
(iii) to notify the post office authorities to change the address for
delivery of the Borrower's and TFCI's mail to an address designated by the
Bank;
(iv) to receive, open and dispose of all mail addressed to the
Borrower or TFCI;
(v) to exercise any right, remedy or power of the Lender hereunder or
any other Financing Document (including without limitation Sections 6.6 or
7.3 hereof); and
(vi) to do all things necessary or in the Lender's judgment desirable
to carry out this Agreement or other Financing Document to which Borrower
or TFCI is a party;
<PAGE>
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(c) agrees to execute from time to time, upon request of the Lender,
letters of authorization in the form of Exhibit D attached hereto for use by the
Lender and related postal change of address cards, and letters to the account
debtors of the Borrower and TFCI (the actual use by the Lender of a letter of
authorization, change of address cards and letters to account debtors to be upon
the occurrence or anytime during the continuance of any Event of Default); and
(d) agrees that neither the Lender nor any other Person or Persons
designated by the Lender to exercise any of the foregoing powers of attorney
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law other than those occasioned by its or their gross negligence or
willful misconduct. Any power of attorney granted hereunder shall be deemed
coupled with an interest and shall be irrevocable until the Secured Obligations
have been fully satisfied and this Agreement is terminated (including the
revolving credit facility hereunder). The Lender may appoint such persons, firms
or corporations as, in its sole discretion, it may determine, for the purpose of
exercising any powers and taking any action permitted to be exercised or taken
by the Lender under or pursuant to any of the provisions of this Agreement.
6.9 DAMAGE TO OR LOSS OF COLLATERAL. Reference is made to Section 4.3 above
with respect to damage or loss of any Collateral.
ARTICLE 7. EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. Any of the following shall constitute an Event of
Default, whatever the reason for such event or circumstance and whether
voluntary or involuntary and whether an event or circumstance is mentioned once
or more than once:
(a) Borrower shall fail to make any payment of any interest or
principal, when any of same shall become due under this Agreement
or any other Financing Document (whether due at maturity or by
reason of acceleration or demand or as part of any prepayment or
otherwise); PROVIDED, HOWEVER, that with respect to payments of
interest only, Borrower shall have two (2) Business Days after
such payment has become due in which to make such payment to
Lender in full before such overdue payment shall constitute an
Event of Default hereunder.
(b) Borrower or any other Person shall fail to make any payment of
any other monetary liability or other monetary obligation under
the Note, this Agreement or any other Financing Document and such
failure shall continue for a period of seven (7) calendar days
after written notice of such failure shall have been given to the
Borrower or such other person by the Lender.
(c) Borrower or TFCI shall default in the due performance or
observance of:
<PAGE>
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(i) any agreement or covenant contained in Sections 1.8,
4.1(a) (insofar as such Section requires the preservation of the
corporate existence of the Borrower and its Subsidiaries),
4.1(d), or 4.6 hereof or Articles 5 or 6 hereof ; or
(ii) any other agreement or covenant contained in this
Agreement (other than a covenant or agreement a default in the
performance or observance of which is elsewhere in this Section
7.1 specifically dealt with) and such default (in the case of
this subparagraph (ii)) shall have continued unremedied for a
period of, in the case of Section 4.5, two (2) Business Days
after, and, in the case of any such other agreement or covenant,
thirty (30) calendar days after written notice of such default
shall have been given to Borrower or TFCI by Lender.
(d) Any other "Event of Default" (after any other applicable cure
period) or "event of default" (after any other applicable cure
period) shall occur under any other Financing Document or, if the
term "Event of Default" or "event of default" is not defined
therein, any material breach of any such Financing Document by a
Person other than the Lender shall occur or any Financing
Document is terminated (except by reason of the Secured
Obligations being paid in full and this Agreement being
terminated).
(e) Any financial report or statement, certificate, statement,
representation or warranty at any time furnished or made by or on
behalf of Borrower, its Subsidiaries or any other Guarantor to
Lender, including, without limitation, any representation or
warranty made or deemed to be made in any Financing Document,
proves to have been incorrect, untrue or misleading in any
material respect when made.
(f) There shall occur any loss, theft, destruction, or damage of or
to all or a material portion of the assets or other properties of
the Borrower or its Subsidiaries except that such loss, theft,
destruction, or damage shall not be an Event of Default if same
is covered, in all material respects, by insurance issued by a
financially responsible insurance company which has not denied
coverage.
(g) Borrower or any Guarantor shall (i) fail to pay, when due, any
liability or other obligation, whether present or future,
absolute or contingent, to the Lender under any instrument or
agreement not constituting a Financing Document beyond the period
of grace, if any, provided in such instrument or agreement, or
(ii) default in the due observance or performance of any other
covenant or agreement relating to any such liability or
obligation or contained in any instrument or agreement
evidencing, governing, securing or otherwise relating thereto, or
any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or permit
the Lender to cause, with the giving of notice if required, such
liability or obligation to become due prior to its stated
maturity or, in the case of an
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obligation under a guaranty, endorsement or the like, to become
payable.
(h) Borrower or any Guarantor shall (i) fail to make, when due, any
payment with respect to any Indebtedness owed to any Person other
than the Lender or with respect to any guarantee, endorsement, or
other obligation relating to any Liability of any other Person
(other than a Liability owed to the Lender), which Indebtedness
and/or such Liability(ies), individually or in the aggregate,
exceed $50,000, beyond the period of grace, if any, applicable
thereto, (ii) default in the due observance or performance of any
other covenant or agreement relating to any such Indebtedness or
such guarantee, endorsement or other obligation, or contained in
any instrument or agreement evidencing, governing, securing or
otherwise relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or permit the holder(s) thereof to cause,
with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or, in the case of any
such guaranty, endorsement or such other obligation, to become
payable, or (iii) fail to pay, within 90 days of the due date
thereof, any Trade Debt which individually or in the aggregate
exceeds the Trade Debt Default Amount.
(i) Borrower or any Guarantor shall cease doing business as a going
concern, make an assignment for the benefit of creditors,
generally not pay its debts as they become due or admit in
writing its inability to pay its debts as they become due, file a
petition commencing a voluntary case under any chapter of the
Bankruptcy Code, 11 U.S.C.ss.101 ET SEQ. (the "Bankruptcy Code"),
be adjudicated an insolvent, file a petition seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar arrangement under the
Bankruptcy Code or any other present or future statute, law, rule
or regulation, or file an answer admitting the material
allegations of a petition filed against Borrower or such
Guarantor, as the case may be, in any such case or proceeding,
consent to the filing of such a petition or apply for or
acquiesce in the appointment of a trustee, receiver, custodian or
other similar official for Borrower or such Guarantor, as the
case may be, or of all or any substantial part of Borrower's or
such Guarantor's, as the case may be, assets or other properties,
or take any action looking to Borrower's or such Guarantor's, as
the case may be, dissolution or liquidation.
(j) A case, proceeding or other action shall be instituted against
Borrower or any Guarantor seeking the entry of an order for
relief against Borrower or any Guarantor as a debtor, to
adjudicate Borrower or any Guarantor as a bankrupt or insolvent,
or seeking reorganization, arrangement, readjustment,
liquidation, dissolution or similar relief against Borrower or
any Guarantor under the Bankruptcy Code or other present or
future statute, law, rule or regulation, which case, proceeding
or other action either (i) results in such entry, or
adjudication, or relief or issuance or entry of any other order
or judgment having a similar effect or (ii) remains undismissed
for sixty (60) calendar days, or within sixty (60) calendar days
after the
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appointment without Borrower's or any Guarantor's consent or
acquiescence of any trustee, receiver, custodian or other similar
official for Borrower or such Guarantor or of all or any
substantial part of Borrower's or such Guarantor's assets and
other properties, and such appointment shall not be vacated.
(k) (i) A writ of execution, attachment, foreign attachment,
garnishment, replevin or any similar process shall be issued or
levied with respect to (aa) any deposits of the Borrower with the
Lender or any other property of the Borrower in which the Lender
has a lien or right of set-off or (bb) any other property which
individually or in the aggregate exceeds $100,000 or (ii) any
final order, judgment or decree shall be entered against Borrower
or any Guarantor by a court of competent jurisdiction which,
together with other outstanding orders, judgments, and decrees
against Borrower or such Guarantor, as the case may be, exceed
$100,000 (exclusive of amounts actually insured against by
adequate liability insurance policies issued by financially
responsible companies who have not denied coverage), and any such
execution, attachment, foreign judgment, garnishment, replevin,
similar process, or judgment(s) shall continue in effect for any
period of ten (10) consecutive calendar days or more without
being released or a stay of execution.
(l) There shall occur any material adverse change with respect to the
Borrower's or any of its Subsidiary's business, assets,
liabilities, financial condition, results of operations, or
business prospects (a "Material Adverse Change"), and the Lender
shall reasonably believe that as a result of such Material
Adverse Change the prospects for the Borrower's or any
Guarantor's payment of the Secured Obligations or performance of
any material covenant or agreement hereunder or under any other
Financing Document shall be impaired. A Material Adverse Change
shall be determined with reference to the business, assets,
liabilities, financial condition, results of operations or
business prospects, as the case may be, of the Borrower or such
Subsidiary as of March 31, 1997 (i.e., a Material Adverse Change
will be a material adverse change in the Borrower's or any of its
Subsidiary's business, assets, liabilities, financial condition,
results of operations or business prospects, as the case may be,
as compared to the Borrower's or any of its Subsidiary's
business, assets, liabilities, financial condition, results of
operations or business prospects, as the case may be, as of March
31, 1997).
(m) There shall occur, for any reason (voluntary or involuntary), any
change in senior management of the Borrower and (i) a period of
60 (calendar) days shall expire after the date of any such change
and (ii) the Lender shall not consent in writing, within such
sixty day period, to any proposed replacement of the person who
formerly held the applicable senior management position, it being
understood that the Lender may withhold its consent in its
absolute (but good faith) discretion.
7.2 ACCELERATION. Upon the occurrence and at any time during the
continuance of any
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Event of Default, the Lender, by written notice to the Borrower, may (i)
terminate the right of the Borrower to borrow any further Revolving Credit Loans
under the Revolving Credit Facility, and/or (ii) declare the entire unpaid
principal balance of the Note and all Revolving Credit Loans and any or all
other Secured Obligations, and all accrued and unpaid interest under the Note
and on all Revolving Credit Loans, to be due and payable immediately, and upon
any such declaration the entire unpaid principal balance of the Note and all
Revolving Credit Loans and all accrued and unpaid interest under the Note and on
all Revolving Credit Loans (and any other Secured Obligations so declared by the
Lender) shall become and be immediately due and payable, without the need for
presentment, demand for payment, protest, notice of dishonor or protest or other
notice of any kind all of which are expressly waived by the Borrower; provided,
however, that upon the occurrence of any of the events specified in
subparagraphs (i) and (j) above, (i) the right of the Borrower to borrow under
the Revolving Credit Facility shall automatically be terminated and (ii) the
entire unpaid principal balance of the Revolving Credit Loans and the Note, and
all unpaid and accrued interest under the Note and all Revolving Credit Loans
and all other Secured Obligations, shall be immediately due and payable without
any notice whatsoever, and all without the need for presentment, demand for
payment, protest, notice of dishonor or protest or other notice of any kind all
of which are hereby expressly waived by the Borrower. Lender shall have, upon
the occurrence and during the continuance of any Event of Default, all other
rights, remedies, and powers provided to the Lender under the Financing
Documents, any other agreement, instrument or other document or Applicable Law.
7.3 OTHER REMEDIES. If an Event of Default shall have occurred and be
continuing, the Lender may, without presentment, demand, protest or other notice
of any kind (except as may be specifically required by this Agreement), all of
which are hereby expressly waived, exercise all of the rights and remedies of a
secured party under the Uniform Commercial Code upon a default (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where such rights
and remedies are exercised) or other Applicable Law. In addition, the Borrower
agrees that the Lender may exercise any or all of the following rights and
remedies:
(i) The Lender may exercise any and all of its rights and remedies
hereunder or under any other Financing Document or other applicable
agreement, instrument or other document or Applicable Law;
(ii) The Lender may at any time and from time to time do any of the
following: (aa) with or without judicial process or the aid or assistance
of others, enter upon any premises (including without limitation any
premises of the Borrower or TFCI) in which any Collateral may be located
and take physical possession of any items of Collateral and maintain such
possession on such premises and/or move the same or any part thereof to
such other places as the Lender shall choose (the Lender shall not be
liable to the Borrower or TFCI on account of any losses, damage or
depreciation that may occur as a result thereof so long as the Lender shall
act in good faith), (bb) dispose of all or any part of the Collateral on
any premises of the Borrower or TFCI (or on or at any other location), (cc)
require the
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Borrower or TFCI (at their expense) to assemble the Collateral and maintain
or deliver the Collateral into the possession of the Lender or any other
Person designated by the Lender at such place or places as the Lender (or
such other Person) may designate and as are reasonably convenient to both
the Lender and the Borrower, (dd) cause any or all of the Collateral to be
placed in or removed from any public, private or field warehouse, (ee)
remove all or any part of the Collateral from any premises (including
without limitation any premises of the Borrower or TFCI or any warehouse)
in which any such Collateral may be located for the purpose of effecting
sale or other disposition thereof and (ff) take delivery of any Collateral.
The Lender may exercise any or all of its rights and remedies under this
paragraph (ii) or any of its other rights and remedies under any of the
Financing Documents or Applicable Law (1) without payment of any rent,
license fee or compensation of any kind to Borrower or TFCI and (2) for the
account and at the expense of the Borrower and TFCI. Borrower and TFCI will
not resist or interfere with any such exercise. The Borrower and TFCI
hereby agree to cooperate with the Lender in the Lender's exercise of any
of the foregoing rights and remedies (and the other rights and remedies of
the Lender).
Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the
Lender will give the Borrower or TFCI, as the case may be, at least ten
(10) Business Days prior written notice of the time and place of any public
sale thereof or of the time after which any private sale or any other
intended disposition is to be made. The Borrower and TFCI agree that such
ten (10) Business Day period is a reasonable time for such notice. Any sale
or other disposition by the Bank of any Collateral may be for cash or
credit or any combination thereof (and the Bank shall not assume any credit
risk). (To the fullest extent permitted by Applicable Law, the Bank may, at
its discretion, adjourn any such sale (or other dispositions).) The Bank
may sell or dispose of the Collateral in whole or in part or parts at any
time and from time to time as it, in its sole discretion, may deem
advisable. If the Bank purchases any Collateral at any sale, it may, in
lieu of actual payment of the purchase price, set-off the amount of such
price against the Secured Obligations (or portion thereof). The Bank, if it
is in possession of the Collateral, shall be deemed to have exercised
reasonable care in the custody, preservation and management of the
Collateral if it takes such action for those purposes as the Borrower or
TFCI, as the case may be, shall request in writing, provided, however, that
the Lender shall not be required to take any such action. No omission on
the part of the Lender to take any action, whether or not requested, shall
of itself be deemed a failure to exercise reasonable care; and
(iii) without the same having the effect of releasing any or all of
the Collateral or otherwise prejudicing any rights of the Lender hereunder,
the Lender may (A) sell or cause to be sold or otherwise dispose of such of
the Collateral as it may in its sole discretion deem desirable without
being required simultaneously or later similarly to sell or dispose of the
balance of the Collateral or any other property or other security at the
time available to it and without being required to resort to any other
security or sources of reimbursement which may at the time be available to
it; and (B) apply to the Secured Obligations the
<PAGE>
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proceeds of the Collateral or any portion thereof, or any other amount
received on account of the Collateral or any portion thereof, by the
exercise of any right or remedy permitted hereunder, without resorting to
and without regard to other security or sources of reimbursement which may
at the time be available to it.
(iv) Lender is hereby granted a license or other right to use, without
charge, Borrower's and TFCI's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or
any property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and Borrower's and TFCI's
rights under all licenses and all franchise agreements (and other rights)
shall inure to Lender's benefit.
(v) The Lender may require the Borrower to cause Avest to grant a
mortgage to the Lender (in form and substance satisfactory to Lender) with
respect to the Plainview Real Property to secure the Secured Obligations
and Borrower or Avest shall pay all mortgage, recording an other taxes,
fees or charges in connection with such mortgage.
7.4. APPLICATION OF PROCEEDS. All proceeds from each sale of, or other
realization upon, all or any part of the Collateral following an Event of
Default and all other payments during the continuance of an Event of Default
shall be applied or paid over as follows:
First: To the payment of all costs and expenses incurred in connection
with such sale or other realization (including all costs and expenses of
collecting, retaking, completing, protecting, removing, storing,
advertising for sale, selling and/or delivering, any Collateral), including
reasonable attorneys' fees and disbursements (all such costs and expenses
shall constitute Secured Obligations);
Second: To the payment of the other Secured Obligations (with the
Borrower and all applicable Guarantors remaining jointly and severally
liable for any deficiency) in any order which the Lender may elect; and
Third: The balance (if any) of such proceeds to the Borrower or TFCI,
as the case may be, subject to applicable law and to any duty to pay such
balance to the holder of any subordinate Lien in the Collateral.
ARTICLE 8. MISCELLANEOUS
8.1 CERTAIN WAIVERS. Each of Borrower and TFCI waives presentment,
diligence, protest, demand, notice of demand, notice of acceptance of or
reliance, notice of all non-payment, notice of dishonor, notice of protest, and
all other notices (except for those expressly provided for herein) to parties in
connection with the delivery, acceptance, performance, default or enforcement
<PAGE>
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of any Financing Document or any collateral or security. Lender shall have no
obligation to preserve rights against prior parties.
8.2. SEVERABILITY. Any provision of this Agreement or other Financing
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or thereof
in such jurisdiction, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.3. PARAGRAPH HEADINGS. The paragraph headings used in this Agreement are
for purposes of convenience of reference only and shall not affect the
construction hereof or be taken into consideration in the interpretation hereof.
8.4. NO WAIVER; CUMULATIVE REMEDIES. (a) The Lender shall not by any act
(except by a written instrument executed and delivered in accordance with
subparagraph (b) of this Section), delay, indulgence, omission or otherwise be
deemed to have waived any right, remedy or other power hereunder or under any
other Financing Document or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Lender, any right, remedy or other power shall preclude any other or further
exercise thereof or the exercise of any other right, remedy or other power. No
single or partial exercise of any right, remedy, or power hereunder or under any
other Financing Document shall preclude any other or further exercise thereof or
the exercise of any other right, remedy or power. A waiver by the Lender of any
right, remedy or power hereunder or under any other Financing Document on any
one occasion shall not be construed as, or constitute a bar to, any right,
remedy or other power which the Lender would otherwise have on any future
occasion. The rights, remedies and powers provided to the Lender herein or in
any other Financing Document are cumulative, may be exercised singly or
concurrently and are not exclusive of and shall be in addition to all other
rights, remedies, or powers provided by Applicable Law or any other agreement,
instrument or other document. Lender may exercise any or all such rights,
remedies and powers at any time(s) in any order which Lender chooses in its
discretion.
(b) No waiver, amendment, supplement or other modification of any of the
terms or provisions of this Agreement shall be effective unless set forth in a
writing executed and delivered by the party sought to be charged (except that a
waiver, amendment, supplement or other modification executed and delivered by
Borrower or TFCI, as the case may be, shall be binding upon the other) .
8.5. SUCCESSORS AND ASSIGNS; SALE, ASSIGNMENT OR PARTICIPATION. (a) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, heirs, and representatives, except
that neither the Borrower nor TFCI may not, without the prior written consent of
the Lender, assign or transfer any of its rights or obligations under this
Agreement, the Note or other Financing Document, and no such assignment or
transfer of any obligation shall relieve either the Borrower or TFCI thereof
unless the Lender shall have consented
<PAGE>
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to such release in a writing specifically referring to the obligation from which
the Borrower or TFCI is to be released.
(b) The Lender may from time to time sell or assign, in whole or in part,
or grant participation in some or all of the Financing Documents and/or the
Revolving Credit Loans and other Liabilities of Borrower or TFCI evidenced
thereby. The holder/transferee of any such sale, assignment or participation, if
and to the extent the applicable agreement between the Lender and such holder so
provides, (i) shall be entitled to all of the rights, obligations and benefits
of the Lender (provided, that, in the case of a participation, it is understood
and agreed that, except to the extent such agreement otherwise provides,
vis-a-vis the Borrower and TFCI the Lender shall (aa) remain the holder of the
Note and all rights, obligations and benefits of the Lender hereunder and under
the other Financing Documents, and (bb) the Borrower and TFCI shall continue to
deal solely and directly with the Lender with respect to such rights,
obligations and benefits, and (ii) shall be deemed to hold and may exercise the
rights of setoff or banker's lien with respect to any and all obligations of
such holder/transferee to the Borrower, in each case as fully as though the
Borrower were directly indebted to such holder/transferee (whether or not
Borrower is, in fact, so directly indebted). The Lender may in its discretion,
give notice to the Borrower of such sale, assignment or participation; however,
the failure to give such notice shall not affect any of the Lender's or such
holder/transferee's rights hereunder. In the event of any assignment by the
Lender of any obligations of the Lender under any of the Financing Documents,
the Lender shall not be liable to the Borrower for the performance of any such
obligations so assigned, to the extent same are to be performed after the
effective date of the sale or assignment and it shall be solely the obligation
of the assignee to perform same. Each of the Borrower and TFCI authorizes the
Lender to provide information concerning the Borrower and/or TFCI or other
Subsidiary of the Borrower to any prospective purchaser, assignee or
participant, provided, that the recipient, with respect to any information that
consists of Proprietary Information (as defined below), shall agree to keep such
Proprietary Information confidential and not make any use thereof other than for
purposes of evaluating Borrower's or such Subsidiary's credit (and/or to
exercise any rights or remedies under any of the Financing Documents or
otherwise in connection with same) except for disclosure (a) as required by
Applicable Law, (b) to its attorneys and accountants and (c) to bank regulatory
authorities or other governmental authorities if required (in the case of such
other governmental authorities) by lawful order, summons or subpoena. For
purposes of this Agreement, the term "Proprietary Information" shall mean all
written information about the Borrower and/or TFCI or other Subsidiary of the
Borrower which has been furnished to the Lender before or after the date hereof,
provided, however that proprietary information does not include information
which (x) is or becomes publicly available (other than as a result of a breach
of this Agreement), (y) was possessed by or available to the Lender on a
nonconfidential basis prior to its disclosure to the Lender or such recipient by
the Borrower and/or TFCI or any of its Subsidiaries or (z) becomes available to
the Lender or such recipient on a nonconfidential basis from a Person which, to
the knowledge of the Lender, is not bound by a confidentiality agreement with
the Borrower or TFCI and is not otherwise prohibited from transmitting such
information. The information provided may include, but is not limited to,
amounts, terms, balances, payment history, return item history and any financial
or other information about the Borrower or any of its Subsidiaries. Each of the
Borrower
<PAGE>
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and TFCI agrees to indemnify, defend, release the Lender, and hold the Lender
harmless, at the Borrower's cost and expense, from and against any and all
lawsuits, claims, actions, proceedings, or suits against the Lender or against
the Borrower and/or TFCI and the Lender, arising out of or relating to the
Lender's reporting or disclosure of such information.
8.6. NOTICES. Except as may otherwise be expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto shall be
in writing (including by telecopy), and shall be deemed to have been duly given
or made when delivered by hand, or one Business Day after being sent by
overnight mail by Federal Express or other nationally recognized overnight
courier service, or four Business Days after being deposited in the mail, first
class postage prepaid, or, in the case of telecopy notice, when sent,
confirmation of receipt received (which may include electronic confirmation),
addressed as follows, or to such other address as may be hereafter notified by
the respective parties hereto and any future holder(s) of the Note:
The Borrower or TFCI: Astrex, Inc.
205 Express Street
Plainview, New York 11803
Attention: Irene Marcic
Telecopy No.: 516 433-5709
With a copy to: John C. Loring, Esq.
700 W. Irving Park Road
Suite A1
Chicago, Illinois 60613
Telecopy No.: 773-871-8374
The Lender: Fleet National Bank
Commercial Banking Group
One Landmark Square
Stamford, Connecticut 06901
Attention: Mr. Anthony M. McKiernan
Telecopy No.: (203) 358-2039
With a copy to: Finn Dixon & Herling LLP
One Landmark Square
Stamford, Connecticut 06901
Attention: Edward A. Weiss, Esq.
Telecopy No: (203) 348-5777
<PAGE>
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8.7 COSTS AND EXPENSES; INDEMNIFICATION. The Borrower and TFCI jointly and
severally agree (a) to pay or reimburse the Lender for all its out-of-pocket
costs and expenses incurred in connection with the preparation and execution of,
and any amendment, supplement or other modification to, this Agreement, the Note
or any other Financing Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, professional fees and disbursements and all costs of any
appraisals, environmental studies and of any audits of Borrower's or its
Subsidiaries' books and records or properties, including without limitation the
fees and disbursements of legal counsel to the Lender (limited to, with respect
to the preparation of the initial Financing Documents, $4,000 plus all
disbursements associated herewith up to a maximum of $1,000 (plus reimbursement
of UCC searches and filings and other costs); (b) to pay or reimburse the Lender
for all its costs and expenses (including without limitation all reasonable fees
and disbursements of legal counsel (whether outside counsel or in-house counsel)
and all other professional fees and disbursements and all costs of any
appraisals, environmental studies and of any audits of Borrower's or any of its
Subsidiaries books and records or properties) incurred by the Lender in
connection with the preservation, defense, protection, exercise or enforcement
(including without limitation collection and/or realization on any collateral or
other security), or attempted preservation, defense, protection, exercise or
enforcement (including without limitation collection and/or realization on any
collateral or other security) of this Agreement, the Note or any other Financing
Document or any of the Lender's rights, remedies or powers hereunder or
thereunder, and (c) to pay, indemnify, and hold the Lender and Lender's
employees, officers, directors and agents harmless from and against any and all
liabilities, obligations, losses, damages, penalties, fines, claims, actions,
judgments, suits, cost recovery actions, response costs, compliance costs,
costs, expenses or disbursements of any kind or nature whatsoever (including
without limitation attorneys' fees and disbursements) arising out of or
otherwise related to or connected with (i) this Agreement, the Note or any of
the other Financing Documents; (ii) the exercise by the Lender of any of its
rights, remedies or powers hereunder, the Note or any of the other Financing
Documents; (iii) any misrepresentation, inaccuracy, or breach of any
representation, warranty, covenant, or agreement contained or referred to herein
or any other Financing Document; or (iv) any Hazardous Material at, on, in,
under, or about all or any portion any property owned, occupied and/or operated
by the Borrower and/or its Subsidiaries or any Release of any Hazardous
Materials by the Borrower and/or its Subsidiaries or any violation by the
Borrower and/or its Subsidiaries of, or liability of the Borrower under, any
Environmental Laws (all the foregoing under this subparagraph (c), collectively,
the "indemnified liabilities"), and, in addition, at Lender's discretion,
Borrower and TFCI shall defend (with counsel satisfactory to the Lender) Lender
against those indemnified liabilities which the Lender shall choose Borrower and
TFCI to defend Lender against (provided, that, it is understood and agreed that
all reasonable costs and expenses of counsel incurred by Lender in defending
itself any indemnified liability shall be indemnified liabilities for which
Borrower or TFCI is responsible for payment under this subparagraph (c));
PROVIDED that neither the Borrower nor TFCI shall have any obligation hereunder
to the Lender with respect to indemnified liabilities to the extent that such
liabilities are determined by a final and non-appealable decision of
<PAGE>
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a court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Lender. The agreements in this Section shall survive
any payment of the Note or any other amounts payable hereunder or under any
other Financing Document and/or any termination of any Financing Document or the
release of any collateral. All amounts payable under this Section shall be
payable by the Borrower and TFCI on demand by the Lender. The Borrower and its
Subsidiaries, for themselves and their successors and assigns, hereby, to the
fullest extent permitted by applicable law, forever waive, release and covenant
not to bring any demand, claim, cost recovery action or lawsuit they may now or
hereafter have or accrue against the Lender or its officers, directors,
employees or agents arising from the same facts or circumstances as any
indemnified liability.
8.8. INTEGRATION. This Agreement and the other Financing Documents
represent the agreement of the Borrower and TFCI and the Lender with respect to
the subject matter hereof and thereof and supersede all negotiations and prior
writings with respect to the subject matter hereof and thereof (including the
Commitment Letter), AND THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR
WARRANTIES BY THE LENDER RELATIVE TO SUBJECT MATTER HEREOF OR THEREOF THAT ARE
NOT EXPRESSLY SET FORTH OR REFERRED TO HEREIN OR IN THE OTHER FINANCING
DOCUMENTS.
8.9. GENDER AND NUMBER; "INCLUDING" NO RULE OF STRICT CONSTRUCTION.
Whenever the context herein so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and
vice-versa. The word "including", whenever used in any Financing Document, shall
mean "including, but not limited to," whether or not the phrase ", but not
limited to," or similar phrase, accompanies such word.
(b) Borrower and TFCI acknowledge that Borrower and TFCI and their counsel
have had an opportunity to review and negotiate the terms and provisions of this
Agreement and the other Financing Documents and no rule of strict construction
shall be used against the Lender with respect to any of the Financing Documents.
8.10. PAYMENTS SURRENDERED. If, after receipt of any payment of all or any
part of any Loan, or with respect to any other obligation under any of the
Financing Documents, the Lender is compelled or required or agrees, for
settlement purposes, to surrender such payment to any Person for any reason
(including, without limitation, a determination that such payment is void or
voidable as a preference or fraudulent conveyance, an impermissible setoff, or a
diversion of trust funds), then this Agreement and the other Financing Documents
shall continue in full force and effect, and the Borrower and Guarantors shall
be fully liable for, and shall indemnify, defend and hold harmless the Lender
with respect to the full amount so surrendered.
8.11 COMPLIANCE. The determination of the Borrower's (or TFCI's) compliance
with the Specified Covenant Tests, all other applicable covenants in Article 5
hereof and any other applicable provisions hereof shall be based upon GAAP
applied on a basis consistent with that used in preparing the Financial
Statements unless otherwise subsequently and specifically agreed to in writing
by the Lender.
<PAGE>
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8.12 STAMP TAX. The Borrower will pay any stamp or other tax which becomes
payable in respect of the Note or this Agreement or other Financing Document.
8.13 SCHEDULES, EXHIBITS, APPENDICES AND ANNEXES. Any and all schedules,
exhibits, appendices and annexes to this Agreement shall constitute a part of
this Agreement for all purposes.
8.14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made herein, in the other Financing Documents and in any document,
certificate or statement delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive the execution and delivery of this Agreement
and the Note or any other Financing Document and any investigation by the
Lender.
8.15 SET-OFF; LIEN. (a) In addition to any other rights, remedies and
powers of the Lender provided by Applicable Law or any agreement, instrument or
other document (including this Agreement), the Lender, upon the occurrence and
during the continuance of any Event of Default or any Default (or if any order
(or the like) for any garnishment, attachment, levy or lien on any deposit
account of the Borrower or TFCI with the Lender is issued) shall have the right
(and is hereby authorized) at any time or from time to time, without the need
for prior notice to the Borrower or TFCI, any such notice being expressly waived
by the Borrower and TFCI to the fullest extent permitted by Applicable Law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final, and including, without limitation, any and all bank
accounts and certificates of deposit) and any other monies, cash, credits,
indebtedness or claims, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender to or
for the credit of the account of the Borrower or TFCI against any and all of the
Liabilities of the Borrower or TFCI to the Lender, whether now or hereafter
existing and whether or not arising under any Financing Document, irrespective
of whether or not the Lender shall have made any demand under this Agreement or
the Note and whether or not any or all such Liabilities are matured, even if
affecting such set-off or application results in a loss or reduction of interest
or the imposition of a penalty applicable to the early withdrawal of time
deposits. Lender agrees promptly to notify the Borrower or TFCI, as the case may
be, after any such set-off and application made by Lender; PROVIDED that the
failure to give such notice shall not affect the validity of such set-off and
application.
8.16 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, each of which
shall be considered an original but all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
8.17 LOSS, THEFT, ETC. OF NOTE. Upon receipt by the Borrower of reasonably
satisfactory evidence of the loss, theft, mutilation or destruction of the Note,
and in the case of any such loss, theft or destruction upon delivery of a bond
of indemnity in such form and amount as shall be reasonably satisfactory to the
Borrower, or in the event of such mutilation upon surrender and
<PAGE>
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cancellation of the Note, the Borrower will execute and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note; provided, however that if any Institutional Holder
is the then owner of any such lost, stolen or destroyed Note, then the affidavit
of an authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of such Note at the time of such loss, theft or
destruction shall be accepted as reasonably satisfactory evidence thereof and no
further indemnity shall be required as a condition to the execution and delivery
of a new Note other than the written agreement of such owner to indemnify the
Borrower.
8.18 SUBMISSION TO JURISDICTION; WAIVER OF PUNITIVE OR CONSEQUENTIAL
DAMAGES. Each of the Borrower and TFCI hereby irrevocably and unconditionally:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR OTHERWISE RELATED TO OR CONNECTED WITH THIS
AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF
CONNECTICUT;
(b) consents that any such action or proceeding may be brought in such
courts, and waives any objection that Borrower or TFCI may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower or TFCI, as the case may be, at its address set forth in Section
8.6 or at such other address of which the Lender shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right of the Lender (or its successors or assigns) to bring any legal
action or proceeding in any other jurisdiction;
(e) agrees that, notwithstanding the foregoing, any action brought by
the Borrower and/or its Subsidiaries against the Lender shall be commenced
and maintained only in a state or federal court located in Connecticut; and
(f) waives, to the fullest extent permitted under Applicable Law, any
right Borrower and/or TFCI may have to claim or recover in any legal action
or proceeding arising out of or otherwise related to or connected with this
Agreement, the Note or any other Financing Document any special, exemplary,
punitive or consequential damages, except to the extent such damages are
caused by the willful misconduct of the Lender.
<PAGE>
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8.19 CERTAIN ACKNOWLEDGEMENTS. Each of the Borrower and TFCI hereby
acknowledges that:
(a) Each of them has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Note and the other
Financing Documents;
(b) the Lender does not have any fiduciary relationship to the
Borrower and/or its Subsidiaries and the relationship between Lender on the
one hand, and the Borrower and its Subsidiaries on the other hand, is
solely that of creditor and debtor;
(c) no joint venture exists among the Borrower, its Subsidiaries and
the Lender; and
(d) each of the Borrower and TFCI has made its own independent
determination and decision (i) to borrow hereunder and to enter into this
Agreement and any other Financing Document to which it is a party and (ii)
that it can comply with the terms and provisions hereof and thereof.
8.20. GOVERNING LAW; JURY TRIAL AND CHAPTER 903A WAIVERS. (a) THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE BORROWER AND TFCI
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT, REGARDLESS OF ANY
PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER.
(B) THE BORROWER AND TFCI HEREBY KNOWINGLY AND VOLUNTARILY WAIVE TRIAL
BY JURY AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING
UNDER OR OUT OF, OR OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH THIS
AGREEMENT OR ANY OTHER FINANCING DOCUMENT.
(C) EACH OF THE BORROWER AND TFCI ACKNOWLEDGES THAT THE TRANSACTION OF
WHICH THIS AGREEMENT IS A PART IS A "COMMERCIAL TRANSACTION" WITHIN THE MEANING
OF CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, AND THAT ANY
MONIES, PROPERTY OR SERVICES WHICH ARE THE SUBJECT OF SUCH TRANSACTION ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE BORROWER AND TFCI HEREBY
VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT WHICH THE BORROWER OR TFCI MIGHT HAVE
TO A NOTICE AND HEARING UNDER SECTIONS 52-278A TO 52-278G, INCLUSIVE, OF THE
CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER APPLICABLE FEDERAL OR STATE
LAW, IN THE EVENT THAT THE LENDER (OR ITS SUCCESSORS OR ASSIGNS) SEEKS ANY
PREJUDGMENT REMEDY IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OTHER
FINANCING
<PAGE>
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DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed and delivered as of the day
<PAGE>
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and year first above written.
WITNESS: ASTREX, INC.
/s/ Edward A. Weiss By: /s/ Irene Marcic
- --------------------------------------------------------------------------------
Name: Edward A. Weiss Name: Irene Marcic
Title: Vice President
T.F. CUSHING, INC.
/s/ Edward A. Weiss By: /s/ Irene Marcic
- --------------------------------------------------------------------------------
Name: Edward A. Weiss Name: Irene Marcic
Title: Vice President
FLEET NATIONAL BANK
/s/ Edward A. Weiss By /s/ Anthony McKiernan
- --------------------------------------------------------------------------------
Name: Edward A. Weiss Name: Anthony McKiernan
Title: Assistant Vice-President
<PAGE>
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STATE OF CONNECTICUT)
) ss: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 9th day of July,
1997 by Irene Marcic, the Vice President of ASTREX, INC., a Delaware
corporation, on behalf of the corporation.
/s/ Judith P. Pepler
--------------------------------
Name: Judith P. Pepler
Notary Public
My Commission Expires 2/28/2000
<PAGE>
-47-
STATE OF CONNECTICUT)
) ss: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 9th day of July,
1997 by Michael McGuire, the President of T.F. CUSHING, Inc., a Massachusetts
corporation, on behalf of the corporation.
/s/ Judith P. Pepler
--------------------------------
Name: Judith P. Pepler
Notary Public
My Commission Expires 2/28/2000
[SEAL]
STATE OF CONNECTICUT)
) ss: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 9th day of July,
1997 by Anthony McKiernan, an Assistant Vice-President of Fleet National Bank, a
national banking association, on behalf of the corporation.
/s/ Judith P. Pepler
---------------------------------
Name: Judith P. Pepler
Notary Public
My Commission Expires 2/28/2000
[SEAL]
<PAGE>
-48-
EXHIBITS
--------
A - Form of Promissory Note
B - Borrowing Base Certificate
C - Letter of Authorization to Postmaster
SCHEDULES
---------
A - Exceptions
B - Subsidiaries
C - Trade Names
APPENDIX
--------
A - Definitions
<PAGE>
Schedule A
None.
<PAGE>
EXHIBIT 10(B)
APPENDIX A TO CREDIT AND SECURITY AGREEMENT (REVOLVER)
This Appendix A which is attached to and a part of the Credit and Security
Agreement (Revolver), dated as of July 9, 1997, between Astrex Inc., a Delaware
corporation, (the "Borrower"), T.F. Cushing, Inc., a Massachusetts corporation
("TFCI"), and Fleet National Bank, a national banking association, having
offices at One Landmark Square, Stamford, Connecticut 06901, (the "Lender" or
"Bank"), as same may be amended, supplemented or otherwise modified from time to
time (the "Credit Agreement"), is a glossary of certain defined terms which may
be used in the Credit Agreement and/or other Financing Documents and is part of
the substantive agreement of the Borrower and the Lender.
"ACCOUNT": as defined in the UCC as in effect in Connecticut on the date
hereof.
"AFFILIATE": of any Person shall mean (a) any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or (b) any other Person who is a director or executive officer
of or is in the same family as (i) such Person, (ii) any Subsidiary of such
Person or (iii) any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, to (i)
vote 5% or more of the securities having ordinary voting power for the election
of directors of such Person or (ii) direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"APPLICABLE LAW": all applicable provisions of all (a) constitutions,
statutes, laws, rules, regulations, guideline ordinances and orders of
governmental bodies, (b) Governmental Approvals and (c) orders, decisions,
rulings, judgments and decrees of all courts and arbitrators.
"AVEST" or "Avest": AVest, Inc., a Delaware corporation.
"BANKRUPTCY CODE": as defined in Section 7.1(i) of the Credit Agreement.
"BORROWER'S QUESTIONNAIRE": the Borrower's Questionnaire of even date
herewith.
"BORROWING BASE": as of any particular time, the sum of (i) eighty-five
percent (85%) of the amount of the then Eligible Receivables and (ii) the lesser
of (a) twenty-five percent (25%) of the amount of the then Eligible Inventory or
(b) $1,000,000.00; provided that it is further understood and agreed that for
purposes of calculating the Borrowing Base, (1) Eligible Inventory of TFCI shall
not exceed $500,000, (2) Eligible Receivables of TFCI shall not exceed $500,000
and (3) Eligible Inventory at the Massachusetts Site shall not exceed $500,000.
The Lender shall have the right to decrease any such percentages provided that
the Lender acts in good faith in doing so.
"BORROWING BASE CERTIFICATE": a borrowing base certificate in the form of
Exhibit C to the Credit Agreement or in such other form as the Lender may
reasonably request, signed by the President of the Borrower and TFCI or other
officer or employee of the Borrower or TFCI who is designated or authorized by
the Borrower or TFCI or its respective President to sign the Borrowing Base
Certificate (the Lender can conclusively presume that any officer or employee
who executes
<PAGE>
-2-
any such Certificate is so designated or authorized unless the Borrower or TFCI,
as the case may be, informs the Lender to the contrary prior to the applicable
Certificate being delivered). Any differences in terms used in this Agreement
and such Certificate shall not be interpreted against the Lender. At Lender's
election, the Borrowing Base Certificate may be signed by Borrower and TFCI
together or each of Borrower and TFCI may sign separate Borrowing Base
Certificates.
"BUSINESS DAY": any day other than Saturday, Sunday or other day in which
banks are authorized to be closed in the State of Connecticut, provided, that,
at the Lender's election, with respect to any Loans bearing (or to bear)
interest with reference to the LIBOR Rate, Business Day shall mean a Eurodollar
Business Day.
"CASH CAPITAL EXPENDITURES": with respect to any fiscal period, all capital
expenditures made by the Borrower or its Subsidiaries in such period except that
portion (if any) of such capital expenditures which are financed to the extent
such financing is permitted under the Credit Agreement.
"CLOSING DATE": July 9, 1997.
"CMLTD": with respect to any fiscal period, the aggregate of all principal
and other payments (excluding interest payments) made or payable during such
fiscal period on account of any and all Indebtedness (but excluding from such
Indebtedness for purposes of this definition any Indebtedness which, pursuant to
its original terms, was due within one year of the date such Indebtedness was
created) of the Borrower and/or its Subsidiaries, all on a consolidated basis in
accordance with GAAP.
"CODE": the Internal Revenue Code of 1986, as the same may be amended from
time to time.
"COLLATERAL": as it applies to the Borrower or TFCI, as the case may be,
all personal property and fixtures of the Borrower or TFCI, as the case may be
(the term "Debtor" as used below in this definition shall refer to each of the
Borrower and TFCI), of every kind, nature and description, including, without
limitation, all of the following, in each case whether now or hereafter existing
or now owned or hereafter acquired by any Debtor, or in which any Debtor
otherwise at any time has any right, title or interest, and wherever located and
whether or not the same is subject to Article 8 or 9 of the Uniform Commercial
Code or constitutes Collateral by reason of one or more than one of the
following clauses (or is mentioned once or more than once within a clause):
(a) all Receivables of any Debtor;
(b) all Equipment of any Debtor;
(c) all Inventory of any Debtor;
<PAGE>
-3-
(d) all General Intangibles of any Debtor;
(e) all of any Debtor's right, title and interest in and to all goods and
other property, whether or not delivered, (i) the sale or lease of which gives
or purports to give rise to any Receivable, including but not limited to all
merchandise returned or rejected by or repossessed from customers, or (ii)
securing any Receivable, including all of any Debtor's rights as an unpaid
vendor or lienor, including stoppage in transit, replevin and reclamation with
respect to such goods and other properties;
(f) all guaranties, letters of credit, mortgages and other Liens on real or
personal property, leases and other agreements or property securing or relating
to any Receivable or other Collateral, or acquired for the purpose of securing
and enforcing any item thereof;
(g) all documents of title (as defined in the UCC as adopted in Connecticut
as of the date hereof), policies and certificates of insurance, securities,
chattel paper, contracts or other documents or instruments either (i)
evidencing, pertaining to or in any other way relating to any and all goods (as
defined in the UCC as adopted in Connecticut as of the date hereof) of any
Debtor and/or (ii) in which any Debtor, at any time, otherwise has any right,
title or interest;
(h) to the extent not otherwise constituting Collateral, (i) all cash
collateral accounts and (ii) all other deposit and other bank accounts,
certificates of deposit, money, securities, instruments and other property of
any Debtor with, in the possession of, or in transit to or from, or under the
control of the Bank, and any and all other claims of any Debtor against the
Lender at any time existing;
(i) all claims (i) to any items of the Collateral, (ii) under warranties
relating to any of the Collateral, and (iii) against third parties for (A) (l)
loss, destruction, damage, requisition, confiscation, condemnation, seizure,
forfeiture or infringement of, or damage to, and (2) payments due or to become
due under leases, rentals or hires of, any and all of the Collateral and (B)
proceeds payable under, and unearned premiums with respect to, any and all
policies of insurance;
(j) any and all other rights to, and payments under (or other proceeds of),
any and all insurance policies and all rights to make claims thereunder;
(k) all ledger sheets, books, records, files, customer lists,
correspondence, computer hardware, printouts, computer programs, tapes, discs
and related data processing software (owned by any Debtor or in which it has an
interest), or any other documentation, which contain information identifying or
pertaining to any of the Collateral or any account debtor or other obligor, or
showing the amounts thereof or payments thereon or otherwise necessary or
helpful in the realization thereon or the collection thereof; and
(l) any and all accessions to or substitutions for, and any and all
products and proceeds
<PAGE>
-4-
(whether cash or non-cash) of, any of the above Collateral, in whatever form.
It is the intent of the parties that the Security Interest and Collateral
cover all personal property and fixtures of each of the Borrower and TFCI of
every kind, nature and description.
"COMMITMENT LETTER": that certain letter dated June 9, 1997, from Lender to
Borrower and accepted by the Borrower setting forth certain of the terms of the
terms hereof.
"COMPANY'S QUESTIONNAIRE": the Company's Questionnaire of even date
herewith.
"CONSOLIDATED CURRENT ASSETS": at any particular date, the aggregate amount
of assets of the Borrower and its Subsidiaries, on a consolidated basis, as of
such date which, in accordance with GAAP, may properly be classified as current
assets.
"CONSOLIDATED CURRENT LIABILITIES": at any particular date, the aggregate
amount of all liabilities of the Borrower and its Subsidiaries, on a
consolidated basis, as of such date which, in accordance with GAAP, may properly
be classified as current liabilities and also including, notwithstanding GAAP,
all Revolving Credit Loans outstanding as of such date.
"CONSOLIDATED EBIT": for the applicable period, consolidated net earnings
(or loss) of the Borrower and its Subsidiaries from continuing operations for
such period before interest expense and income taxes, and excluding any
extraordinary items, all determined in accordance with GAAP.
"CONSOLIDATED EBITDA": for the applicable period, the consolidated net
earnings (or loss) of the Borrower and its Subsidiaries from continuing
operations for such period before interest expense, income taxes, depreciation
and amortization, and excluding any extraordinary items, all determined in
accordance with GAAP.
"CONSOLIDATED LIABILITIES": at any particular date, the aggregate amount of
all Liabilities of the Borrower and its Subsidiaries, on a consolidated basis.
"CONSOLIDATED TANGIBLE NET WORTH": at any particular date, the consolidated
Tangible Net Worth of the Borrower and its Subsidiaries.
"CONTRACT": an indenture, agreement (other than the Credit Agreement),
other contractual restriction, lease, or instrument.
"DEFAULT": any event or circumstance which, with the giving of notice or
passage of time or both, would become an Event of Default.
"ELAPSED FISCAL PERIOD": shall mean the elapsed portion of any fiscal year
of the Borrower ending as of the last day of any fiscal quarter of such year.
For example the four Elapsed Fiscal
<PAGE>
-5-
Periods for the Borrower's fiscal year ending March 31, 1998 would be (i) April
1, 1997 to June 30, 1997, (ii) April 1, 1997 to September 30, 1997, (iii) April
1, 1997 to December 31, 1997 and (iv) April 1, 1997 to March 31, 1998.
"ELIGIBLE INVENTORY": Inventory of the Borrower or TFCI (valued at lesser
of cost to Borrower or TFCI (as the case may be) or market value, determined on
a first-in-first-out basis) which consists of finished goods and continually
meets the following additional criteria:
(i) It is in first class condition and not damaged in any way, not
obsolete, not in-transit goods or goods intended to be sold by consignment
sale and is saleable through normal trade channels in the Borrower's or
TFCI's normal course of business and meets all applicable legal
requirements;
(ii) (a) It is new and unused, (b) it is located at either (x) the
Plainview Site or (y) the Massachusetts Site and, if located at the
Massachusetts Site, a maximum of $500,000 of such inventory may be included
in the calculation of Eligible Inventory for purposes of determining the
Borrowing Base and (c) the Lender has a first priority attached and
perfected security interest in such Inventory;
(iii) It is owned by the Borrower or TFCI and is not subject to (a) any
Lien or (b) any dispute, and the Borrower or TFCI had and has the absolute,
lawful, undisputed and unquestioned right to own and sell same (and to
collect any Receivable which results from any potential sale thereof);
(iv) No event has occurred and no condition exists which could impede in
any material manner the Borrower's or TFCI's ability to continue to sell
such Inventory in the normal course (including for normal prices);
(v) Eligible Inventory may include only finished goods and shall
specifically exclude any raw materials or work-in-progress; and
(vi) It is not determined by the Lender to be ineligible for any other
reason generally accepted in the commercial finance business as a reason
for ineligibility.
"ELIGIBLE RECEIVABLES": the net amount of those Accounts of the Borrower or
TFCI (net of any applicable reserves) which arise in the ordinary course of
business and which continually meet the following requirements:
(i) The Account shall not be unpaid more than 90 days from the date of
original invoice and shall not be more than 60 days past due;
(ii) The account debtor with respect to the Account shall not
have more than 50% of its then total outstanding Accounts with
the Borrower or TFCI remaining
<PAGE>
-6-
unpaid more than 90 days from the applicable dates of original
invoice or more than 60 days past due;
(iii) The Account arose from the performance of services by the
Borrower or TFCI which have been fully and satisfactorily
performed or from the absolute sale of goods by the Borrower or
TFCI in which Borrower or TFI had the sole and complete ownership
and which have been shipped or delivered to the account debtor
evidencing which delivery the Borrower, TFCI or the Lender has
the possession of shipping and delivery receipts;
(iv) The Account is not subject to any prior or subsequent
assignment, claim, lien, security interest or other Lien except
that of the Lender and is not subordinated in any manner and the
Account does not arise from a Contract prohibiting the assignment
thereof or requiring the consent of any Person to such assignment
(unless such consent is obtained and Lender has given its prior
written approval of the form and substance of such consent);
(v) (a) The Account is not subject to (aa) any set-off,
counterclaim, claim, defense, allowance or adjustment other than
discounts (given in the Borrower's or TFCI's ordinary course of
business) for prompt payment shown on the invoice, or (bb)
dispute, objection or complaint (whether by the Account debtor
concerning its liability on the Account or otherwise), (b) the
goods, the sale of which gave rise to the Account, have not been
returned, rejected, lost or damaged and are not subject to any
right of return sales or guaranty or any consignment, and (c) the
Account is otherwise fully enforceable and the Borrower or TFCI
does not need to be qualified to do business in the State where
the Account Debtor is located in order to enforce the Account;
(vi) The Account arose in the ordinary course of business from a
bona-fide transaction and all transactions relating thereto are
in full compliance with Applicable Law;
(vii) The Account is not due from (a) the United States or any
agency, department or subdivision thereof unless the rights to
such Account have been validly assigned to the Lender in
accordance with all applicable requirements of Applicable Law; or
(b) any state or municipality or any agency, department or
subdivision thereof, or (c) any account debtor located outside
the United States unless such Account is secured by a letter of
credit from a bank acceptable to the Lender and which letter of
credit is in form and substance acceptable to the Lender;
(viii) No petition in bankruptcy or other application for relief
under the Bankruptcy Code or other insolvency law has been filed
with respect to the account debtor; and the account debtor has
not made an assignment for the benefit of
<PAGE>
-7-
creditors, become insolvent, or suspended or terminated business;
and the account debtor is generally paying its debts as they
become due;
(ix) The account debtor is not an Affiliate of the Borrower or
its shareholders;
(x) The Lender has a first priority attached and perfected
security interest in the Account;
(xi) The Account complies with Section 6.4(b) hereof and with any
other covenant, agreement, representation, warranty, or other
applicable term or provision of any Financing Document; and
(xii) The Account is not determined by the Lender to be
ineligible for any other reason generally accepted in the
commercial finance business as a reason for ineligibility.
In addition, in the event that the Lender in its reasonable discretion
determines that the Accounts owed by a particular account debtor constitute too
high a percentage of the then aggregate amount of Accounts, the Lender shall
have the right to lower the amount of Accounts of such account debtor which
shall be considered Eligible Receivables.
"ENVIRONMENTAL LAWS": all laws, rules, codes, ordinances, and regulations,
and all consent decrees, administrative orders or judgments relating to public
health or safety and/or the environment, including without limitation those
laws, rules, codes, ordinances and regulations identified in the definition of
the term "Hazardous Materials," all as amended, supplemented or otherwise
modified from time to time.
"EQUIPMENT": (a) all machinery, equipment, spare parts, tools, furniture,
and furnishings and instruments of conveyance, including motor vehicles, (b) all
other goods except goods that constitute Inventory, and (c) all replacements and
substitutions for, and all accessions to, the foregoing, in each case whether
now or hereafter existing or now owned or hereafter acquired by the Borrower or
TFCI, as the case may be, and wherever located and whether or not the same is
subject to Article 9 of the Uniform Commercial Code or constitutes a "fixture"
or constitutes Equipment by reason of any one or more than one of the preceding
clauses.
"ERISA AFFILIATE": any trade or business (whether or not incorporated) that
is member of a group of which the Borrower or any of its Subsidiaries is a
member and which is treated as a single employer under Section 414 of the Code.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day, the aggregate (without
duplication) of the maximum reserve percentages, expressed as a decimal,
including, without limitation, basic, supplemental, marginal and emergency
reserves, in effect on such day, established by the Board of Governors of the
Federal Reserve System (or any successor) or any other banking authority,
<PAGE>
-8-
domestic or foreign, to which the Lender is subject, for "Eurocurrency
Liabilities" as defined in Regulation D. Such reserve percentages shall include,
without limitation, those imposed under Regulation D. Loans that are part of any
Libor Revolving Credit Portion shall be considered to constitute Eurocurrency
Liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to Lender under Regulation D. The Eurocurrency Reserve Requirements shall
be adjusted automatically on and as of the effective date of any change in the
Eurocurrency Reserve Requirements.
"EURODOLLAR BASE RATE": with respect to each day during each Interest
Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/32
of one percent) for deposits in United States dollars for one month, three
month, or six month maturities (as applicable to such Interest Period), as the
case may be, which appears on the Telerate Page 3750 as of 11:00 a.m., London
time, on the day that is two Eurodollar Business Days prior to the commencement
of such Interest Period. If such rate does not appear on the Telerate Page 3750,
the rate to be utilized shall be the offered rate (rounded upwards, if
necessary, to the nearest 1/32 of one percent) which appears, or if two or more
such rates appear, the average (rounded upwards, if necessary, to the nearest
1/32 of one percent) of the offered rates which appear on the Reuters Screen
LIBO Page as of 11:00 a.m., London time, on the day that is two Eurodollar
Business Days prior to the commencement of such Interest Period.
If both the Telerate and Reuters systems are unavailable, then the rate
will be determined on the basis of the offered rates for which deposits in U.S.
dollars for a period equal to or approximately equal to the applicable Interest
Period are offered by four major banks (selected by the Lender) in the London
interbank market, at approximately 11:00 a.m., London time, on the day that is
two Eurodollar Business Days preceding the first day of the proposed Interest
Period. The principal London office of each of the four major banks will be
requested to provide a quotation of its U.S. dollar deposit offered rate. If at
least two such quotations are provided, the rate will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
will be the arithmetic mean of the rates quoted by major banks in New York City,
selected by the Lender, at approximately 11:00 a.m., New York City time, on the
date that is two Eurodollar Business Days prior to the first day of the
applicable Interest Period, for loans in U.S. dollars to leading European banks
for a period equal to or approximately equal to the applicable Interest Period.
In the event that the Bank is unable to obtain any such quotation as provided
above, interest shall accrue at a rate per annum equal to the Prime Rate.
"EURODOLLAR BUSINESS DAY": any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Lender in its sole
discretion acting in good faith.
"EVENT OF DEFAULT": any of the events specified in Section 7.1 of the
Credit Agreement.
"EXISTING LENDER": Congress Financial Corporation, 1133 Avenue of the
Americas, New
<PAGE>
-9-
York, NY 10036.
"FINANCIAL STATEMENTS": the consolidated balance sheet of the Borrower and
its Subsidiaries as at March 31, 1997 and the related statements of operations,
stockholder's equity and cash flows of the Borrower and such Subsidiaries for
the fiscal year then ended, and the accompanying footnotes together with the
report thereon, dated the date hereof, by KPMG Peat Marwick LLP, independent
public accountants, and the interim balance sheet of the Borrower and such
Subsidiaries as at June 30, 1997 and the related statements of operations and
source and use of funds for the three (3) month period then ended.
"FINANCING DOCUMENTS": (a) this Agreement, the Note, the Guaranty
Agreement, of even date herewith, between TFCI and the Lender, and the Guaranty
Agreement, of even date herewith, between AVest, and the Lender, the Pledge
Agreement, of even date herewith, from the Borrower to the Lender, the
Borrower's Questionnaire, and the Company's Questionnaire, any landlord's
waiver(s), and (b) any other written agreement, instrument, certificate,
financing statement or other document, whether now or hereafter existing,
executed or delivered in connection with or otherwise related to any of the
agreements, instruments or other documents referred to in clause (a) or
otherwise relating in any way to any of the Revolving Credit Loans or any
collateral, as any of the foregoing referred to in clause (a) or (b) may be
amended, supplemented or otherwise modified from time to time.
"FOREIGN JURISDICTIONS": as defined in Section 2.1 of the Credit Agreement.
"GAAP": generally accepted accounting principles as in effect in the United
States of America.
"GENERAL INTANGIBLES": (a) any and all intangible, personal property of the
Borrower or TFCI, as the case may be, of every kind, nature and description
including, without limitation, (i) rights to the payment or receipt of money or
other forms of consideration of any kind at any time now or hereafter owing or
to be owed to the Borrower or TFCI, as the case may be, (ii) claims for tax
refunds, (iii) causes of action, whether sounding in tort, contract, patent
infringement or otherwise and whether or not currently in litigation (provided,
that, it is understood and agreed that nothing contained in any Finance Document
shall, or shall be interpreted to, obligate the Lender to prosecute any such
cause of action), (iv) judgments, (v) patents, patent rights, trademarks,
trademark rights, copyrights, trade names, trade name rights, all rights under
applications for any of the foregoing, all rights under licenses relating to any
of the foregoing, and all other rights with respect to the foregoing, (vi)
inventions, (vii) trade secrets, (viii) designs, (ix) goodwill, (x) franchises,
(xi) customer lists, (xii) licenses, and (xiii) corporate and other business
records, and (b) any and all tangible, personal property, in the nature of
documents, records and the like, constituting, evidencing or otherwise relating
to any such intangible personal property, in each case whether now or hereafter
existing or now owned or hereafter acquired by the Borrower or TFCI and whether
the same is subject to Article 8 or 9 of the Uniform Commercial Code or
constitutes a General Intangible by reason of any one or more than one of the
preceding clauses.
<PAGE>
-10-
"GOVERNMENT APPROVAL": any authorization, consent, approval, license or
exemption of, registration or filing with, or report or notice to, any
governmental unit.
"GUARANTORS": T.F. Cushing, Inc., a Massachusetts corporation, AVest, Inc.,
a Delaware corporation, and any other Person (if any) who is a guarantor,
endorser, or surety with respect to any of Secured Obligations.
"HAZARDOUS MATERIAL": (aa) "hazardous substances" or "toxic substances" as
those terms are defined by the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601, ET SEQ., or the
Hazardous Materials Transportation Act, 49 U.S.C. ss.1801, all as amended and
amended after this date; (bb) "hazardous wastes," as that term is defined by the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901, ET SEQ., as
amended and amended after this date; (cc) any pollutant, contaminant or
hazardous, dangerous, or toxic chemicals, materials, or substances within the
meaning of any other applicable federal, state or local law, regulation,
ordinance, or requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste substance or material, all as amended or
amended after this date; (dd) any other substance the presence of which requires
investigation or remediation under any law, regulation, ordinance or
requirement; (ee) crude oil or any fraction thereof which is liquid at standard
conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds
per square inch absolute); (ff) any radioactive material; (gg) asbestos in any
form or condition; and (hh) polychlorinated biphenyls (PCBs) or substances or
compounds containing PCBs.
"INDEBTEDNESS": of any Person at any particular date, without duplication,
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than Trade Debt) or which is
evidenced by a note, bond, debenture or similar instrument, (b) all obligations
of such Person upon which interest charges are customarily paid, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (d) all
obligations of such Person under capitalized leases, (e) all obligations of such
Person in respect of acceptances or letters of credit issued or created for the
account of such Person, (f) all liabilities secured by any Lien on any property
owned by such Person, whether or not such Person has assumed or otherwise become
liable for the payment thereof, and (g) all obligations of such Person in
respect of interest rate protection agreements, interest rate future agreements,
foreign currency exchange agreements and any other hedging arrangements.
"INSTITUTIONAL HOLDER": any bank, insurance company, savings and loan
association, trust company, investment company, charitable foundation, employee
benefit plan (as defined in ERISA) or other financial institution or
institutional investor.
"INTANGIBLE ASSETS" with respect to any Person, (i) those assets of such
Person which, in accordance with GAAP, are properly classified as intangible
assets on a balance sheet of such
<PAGE>
-11-
Person including without limitation goodwill, franchises, licenses, patents,
trademarks, tradenames, and copyrights, plus (ii) any advance or other loan from
such Person to any officer, shareholder, director or employee of such Person or
of any Affiliate of such Person.
"INTEREST EXPENSE": for the applicable period, all interest paid or payable
by the Borrower or any of its Subsidiaries in such period, including, but not
limited to, interest paid or payable on the Revolving Credit Loans and on all
other Indebtedness (including without limitation imputed interest on capitalized
lease obligations), determined in accordance with GAAP on a consolidated basis.
"INTEREST COVERAGE RATIO": for the applicable period, the ratio of
Consolidated EBIT for such period to Interest Expense for such period.
"INTEREST PERIOD": with respect to any Libor Revolving Credit Portion, any
period of 1, 3 or 6 months, commencing on a Eurodollar Business Day, selected as
provided for in Section 1.6(b) of the Credit Agreement and the definition of
LIBOR Request,
provided, however, that:
(1) any Interest Period (other than an Interest Period determined pursuant
to clause (3) below) that would otherwise end on a day that is not a
Eurodollar Business Day shall be extended to the next succeeding
Business Day unless such Eurodollar Business Day falls in the next
calendar month, in which case such Interest Period shall end on the
immediately preceding Eurodollar Business Day;
(2) any Interest Period that begins on the last Eurodollar Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (3) below, end on the last Eurodollar
Business Day of a calendar month;
(3) any Interest Period that would otherwise end after the Revolving
Credit Maturity Date shall end on the Revolving Credit Maturity Date;
and
(4) notwithstanding clause (2) above, no Interest Period shall (unless
otherwise agreed to by the Lender) have a duration of less than one
month and if any Interest Period would be for a period shorter than
one month, such Interest Period shall (unless the Lender otherwise
agrees) not be available hereunder.
"INVENTORY": (a) all inventory (as defined in the UCC, as adopted in the
State of Connecticut on the date hereof), including, but not limited to, (i) all
goods held by Borrower or TFCI, as the case may be, for sale or lease or to be
furnished under contracts of service or furnished under such contracts; (ii) all
work in process; (iii) all raw materials and other materials and supplies of
every nature and description used or which might be used in connection with the
manufacture,
<PAGE>
-12-
packing, shipping, advertising, selling, leasing or furnishing of such inventory
or otherwise used or consumed in Borrower's or TFCI's business; and (b) all
documents evidencing and general intangibles relating to any of the foregoing,
in each case whether now or hereafter existing or now owned or hereafter
acquired by Borrower or TFCI and wherever located and whether or not the same is
subject to Article 9 of the Uniform Commercial Code or constitutes Inventory by
reason of any one or more than one of the preceding clauses.
"LEGAL REQUIREMENT": any requirement imposed upon Lender by any law of the
United States of America or the United Kingdom or by any regulation, order,
interpretation, ruling or official directive (whether or not having the force of
law) of the Federal Reserve Board, the Bank of England or any other board,
central bank or governmental or administrative agency, institution or authority
of the United States of America, the United Kingdom or any political subdivision
of either thereof.
"LIABILITIES": as of any date, shall mean, without duplication, (i) all
indebtedness, obligations and liabilities of the Borrower and/or its
Subsidiaries which would be reflected as liabilities on a balance sheet, as of
such date, of the Borrower prepared in accordance with GAAP, (ii) all
obligations, indebtedness and other liabilities of the Borrower secured by any
Lien on any assets or other properties of such Person.
"LIBOR OPTION" or "LIBOR OPTION": the option granted pursuant to Section
1.6(b) of the Credit Agreement to have the interest on a portion of the
principal amount of the Revolving Credit Loans based on a LIBOR Rate.
"LIBOR RATE" or "LIBOR RATE": means, with respect to each day during each
Interest Period, the rate determined in accordance with the following formula:
EURODOLLAR BASE RATE
------------------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"LIBOR REQUEST" or "LIBOR REQUEST": a notice in writing (or if permitted by
Lender, by telephone) from Borrower to Lender requesting that interest on a
LIBOR Revolving Credit Portion be based on the LIBOR Rate, specifying: (i) the
first day of the Interest Period; (ii) the length of the Interest Period
consistent with the definition of that term; and (iii) the dollar amount of the
LIBOR Revolving Credit Portion consistent with the definition of such term.
"LIBOR REVOLVING CREDIT PORTION" or "LIBOR REVOLVING CREDIT PORTION": that
portion of the Revolving Credit Loans specified in a LIBOR Request (including
any applicable portion of any Revolving Credit Loans which is being borrowed by
Borrower concurrently with such LIBOR Request) which is not less than $500,000
and is an integral multiple of $100,000 which does not exceed the outstanding
balance of Revolving Credit Loans not already subject to a LIBOR Option and,
which, as of the date of the LIBOR Request specifying such LIBOR Revolving
Credit Portion,
<PAGE>
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has met the conditions for basing interest on the LIBOR Rate in Section 1.6(b)
of the Credit Agreement and the Interest Period of which has commenced and not
terminated.
"LIEN": any mortgage, security interest, pledge, title retention agreement,
hypothecation, assignment, lien, attachment, garnishment, levy, charge, or other
encumbrance of any kind.
"LOAN" and "LOANS": as those terms are respectively defined in Section 1.2
of the Credit Agreement.
"MASSACHUSETTS SITE": the facility operated by TFCI at 126 Myron Street,
West Springfield, Massachusetts 01089 or such other location in Massachusetts as
may be approved in writing by the Lender.
"MATERIAL ADVERSE EFFECT": (a) with respect to any Person, a material
adverse effect upon such Person's business, assets, liabilities, financial
condition, results of operations or business prospects, (b) with respect to a
group of Persons "taken as a whole", a material adverse effect upon such
Persons' business, assets, liabilities, financial conditions, results of
operations or business prospects taken as a whole on, where appropriate, a
consolidated basis and (c) with respect to this Agreement, any Contract or any
other obligation, a material adverse effect, as to any party thereto, upon the
binding nature, validity or enforceability thereof or the ability of any party
thereto to perform thereunder.
"NATURAL RESOURCES": each and all of the atmosphere, air, waters, earth,
land, minerals, flora, fauna, fish, shellfish, wildlife, biota and/or other
natural resources.
"OBLIGOR LEGAL OPINION": an opinion of John C. Loring, Esq., counsel for
the Borrower and the Guarantors, dated the date of the making of the initial
Revolving Credit Loan.
"PATENTS": patents, patent rights or licenses, trademarks, trademark
rights, trade names, trade name rights, copyrights, and any other rights with
respect to the foregoing.
"PBGC": the Pension Benefit Guaranty Corporation referred to and defined in
ERISA.
"PERMITTED INDEBTEDNESS":
-------------------------
(a) any Revolving Credit Loans and any other Indebtedness owed to the
Lender;
(b) annual real property rental expenses of Borrower permitted under
Section 5.14 of the Credit Agreement;
(c) Indebtedness in respect of taxes, assessments, governmental
charges, levies and claims which at the time are not required to
be paid under Section 4.4 of the Credit Agreement;
<PAGE>
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(d) Indebtedness secured by Permitted Liens; and
(e) operating leases for personal property entered into in the
ordinary course of business consistent with the Borrower's past
practices and permitted under Section 5.14 of the Credit
Agreement.
"PERMITTED LIEN":
-----------------
(a) Liens for taxes not yet due or which are being contested as
permitted by and in accordance with Section 4.4 of the Credit
Agreement;
(b) carriers', warehousemen's, mechanics' materialmen's, landlord's,
repairmen's or other like Liens arising in the ordinary course of
business and not overdue for a period of more than 30 days or (in
the case of mechanics' Liens only) the full amount of which has
been bonded;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business; and
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount and which do not
in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct
of the business of the Borrower.
(f) purchase money security interests in equipment or capitalized
leases of equipment which (i) cover only the property purchased
or leased by Borrower, (ii) only secure the related purchase
money debt and (iii) which purchase money debt and capitalized
lease obligations do not exceed, in the aggregate, $50,000 at any
one time outstanding.
"PERMITTED USES": general working capital purposes of the Borrower,
provided that (i) the proceeds of the initial Revolving Credit Loan shall first
be used to pay off any Indebtedness to the Existing Lender and (ii) the Borrower
may, in the ordinary course of its business, loan a portion of the proceeds of
Revolving Credit Loans to TFCI provided that such loans to TFCI shall be no
greater than the approximate amount of the proceeds of Revolving Credit Loans
attributable to Eligible Receivables and Eligible Inventory of TFCI.
"PERSON": any individual, corporation, partnership, trust or unincorporated
organization, a government or any agency or political subdivision thereof, or
any other entity.
"PLAN": as defined in Section 2.17 of the Credit Agreement.
<PAGE>
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"PLAINVIEW REAL ESTATE": the real estate (including all buildings and
improvements) located at 205 Express Street, Plainview, New York 11803.
"PLAINVIEW SITE": the Borrower's offices and other facilities at the
Plainview Real Estate.
"PRIME RATE": Lender's annual rate of interest designated by Lender from
time to time as a standard for setting loan rates on certain types of loans, and
is not necessarily the lowest or best rate the Lender charges its customers.
Each change in such Prime Rate shall affect an adjustment in the applicable
interest rate of the day of such change. In the event the Lender no longer has a
prime rate, a reasonably comparable substitute rate (selected by the Lender)
shall be used in its place.
"PRIME RATE REVOLVING CREDIT PORTION": that portion of the Revolving Credit
Loans that is not subject to a LIBOR Option or is not otherwise bearing interest
with reference to the LIBOR Rate.
"RECEIVABLES": any and all rights and claims to the payment or receipt of
money or other forms of consideration or compensation of any kind at any time
now or hereafter owing or to be owing or claimed or which could be claimed to be
owing to Borrower (whether, if subject to the Uniform Commercial Code,
classified thereunder as accounts, contract rights, chattel paper, general
intangibles, instruments, securities or otherwise) including, but not limited
to, any and all such rights and claims in, to and under: (a) (i) all accounts,
(ii) contracts, including guaranties and contracts of insurance of all kinds,
including credit and key-man life insurance and property insurance, (iii)
letters of credit, (iv) chattel paper, (v) notes, (vi) drafts, (vii) instruments
and securities, (viii) documents, (ix) acceptances, (x) tax refunds, (xi)
judgments and (xii) all other debts, obligations and liabilities in whatever
form now or hereafter owing to Borrower, and (b) all causes of action, whether
in sounding in tort, contract or otherwise and whether or not currently in
litigation, in each case whether now or hereafter existing or now owned or
hereafter acquired by Borrower and whether or not the same is subject to Article
8 or 9 of the Uniform Commercial Code or constitutes a Receivable by reason of
one or more than one of the preceding clauses.
"REGULATION D": Regulation D of the Board of Governors of the Federal
Reserve System (or any successor) as from time to time in effect and all
official rulings and interpretations thereunder or thereof.
"RELEASE": any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, disposing or other
discharging into the environment.
"RESPONSIBLE OFFICER": with respect to any corporation of the chief
executive officer or the president of such corporation and, with respect to any
partnership, any general partner of such partnership.
"REUTERS SCREEN LIBO PAGE": the display designated as page "LIBO" on the
Reuters
<PAGE>
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Monitor Money Rates Service (or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates of
major banks).
"REVOLVING CREDIT DEFAULT RATE": a rate per annum equal to the Prime Rate
plus two (2%) percent (i.e., 200 basis points).
"REVOLVING CREDIT LOAN" and "REVOLVING CREDIT LOANS": as those terms are
respectively defined in Section 1.2 of the Credit Agreement including any and
all Libor Loans and Prime Rate Loans made pursuant to the Credit Agreement.
"REVOLVING CREDIT FACILITY": the revolving credit borrowing facility
established pursuant to the Credit Agreement.
"REVOLVING CREDIT INTEREST PAYMENT DATE": (i) with respect to the Prime
Rate Revolving Credit Portion, the first day of each and every month, commencing
on August 1, 1997; and (ii) with respect to any Libor Revolving Credit Portion,
the last day of the applicable Interest Period and also, in the case of an
Interest Period of 6 months, that date which is three months after the first day
of such Interest Period.
"REVOLVING CREDIT LOAN TERMINATION DATE": July 9, 1999.
"REVOLVING CREDIT MATURITY DATE": July 9, 1999.
"REVOLVING CREDIT MAXIMUM AMOUNT": at any time, the lesser of (i) Two
Million Five Hundred Thousand Dollars ($2,500,000) or (ii) the Borrowing Base at
such time.
"SECURED OBLIGATIONS": (a) all indebtedness, obligations and liabilities of
the Borrower to the Lender under this Agreement or the Note (including, but not
limited to, any and all principal, interest, and all amounts under Section 8.7
of the Credit Agreement) or any other Financing Documents, whether now existing
or hereafter arising and whether for payment or performance; and (b) all other
indebtedness, obligations, and liabilities of Borrower to the Lender of every
kind, nature and description, direct or indirect, secured or unsecured, joint or
several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising (including, but not limited to,
any and all future advances), regardless of how the same arise or by what
instrument, agreement, or book account they may be evidenced, or whether
evidenced by any instrument, agreement, or book account, including, but not
limited to, all loans (including any loan by renewal or extension), all other
indebtedness, all guarantees, and all reimbursement obligations or other
obligations relating to letters of credit and the like; provided that, with
respect to TFCI and the Security Interest it grants hereunder in its Collateral,
Secured Obligations shall also mean, in addition to the above, all indebtedness,
obligations, and liabilities of TFCI to the Lender of every kind, nature and
description, direct or indirect, secured or unsecured, joint or several,
absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising (including, but not limited to,
any and all future advances), regardless of how the
<PAGE>
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same arise or by what instrument, agreement, or book account they may be
evidenced, or whether evidenced by any instrument, agreement, or book account,
including, but not limited to, all loans (including any loan by renewal or
extension), all other indebtedness, all guarantees, and all reimbursement
obligations or other obligations relating to letters of credit and the like,
including without limitation any guaranty of TFCI under any of the Financing
Documents.
IT IS THE INTENT AND AGREEMENT OF THE PARTIES HERETO THAT ALL INDEBTEDNESS,
OBLIGATIONS AND LIABILITIES OF THE BORROWER (AND, IN THE CASE OF TFCI, OF TFCI)
TO THE LENDER (WHETHER NOW EXISTING OR HEREAFTER ARISING) BE SECURED BY THE
COLLATERAL, REGARDLESS OF WHETHER OR NOT SUCH INDEBTEDNESS, OBLIGATIONS OR
LIABILITIES ARE NOW CONTEMPLATED BY SUCH PARTIES. SUCH INDEBTEDNESS,
OBLIGATIONS, AND LIABILITIES MAY BE REDUCED TO ZERO OR OTHERWISE SATISFIED AND
THEREAFTER NEW INDEBTEDNESS, OBLIGATIONS AND LIABILITIES INCURRED AND ALL SUCH
INDEBTEDNESS, OBLIGATIONS AND LIABILITIES SHALL BE SECURED OBLIGATIONS
HEREUNDER.
"SECURITY INTEREST": shall mean the assignments, security interests, other
Liens and rights of setoff in, or with respect to, the Collateral provided for
or effected by this Agreement.
"SPECIFIED ADDITIONAL CLOSING DOCUMENTS":
(i) a true and complete copy of any such additional financial
statements of the Borrower as Lender shall reasonably request.
(ii) landlord's waivers.
(iii)Pay proceeds letter, termination agreement, mortgage releases
and UCC-3 termination statements executed by the Existing Lender.
(iv) Finance indemnity letter of Existing Lender.
(v) (a) current Borrowing Base Certificate;
(b) inventory listings;
(c) accounts receivable agings; and
(d) accounts receivable reconciliations.
(vi) title report.
(vii)stock certificates and stock powers, in blank with respect to
pledged stock of TFCI
<PAGE>
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and AVest.
"SPECIFIED COVENANT TESTS": the covenants set forth in Sections 5.10 to
5.13 of the Credit Agreement.
"SPECIFIED PENNSYLVANIA AND CONNECTICUT TAX RETURNS: certain tax returns
for the States of Pennsylvania and Connecticut for prior years; provided,
however, that the total amount owing with respect to all such years does not
exceed $15,000 in the aggregate.
"SUBSIDIARY": as to any Person, shall mean a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"TANGIBLE NET WORTH": at any particular date, for any Person, the total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) which would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
LESS the aggregate book value of the Intangible Assets of such Person shown on
such balance sheet.
"TAX": in relation to any LIBOR Revolving Credit Portion and the applicable
LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or charges of
whatever nature required by any Legal Requirement (i) to be paid by Lender
and/or (ii) to be withheld or deducted from any payment otherwise required
hereby to be made by Borrower to Lender; PROVIDED, that the term "Tax" shall not
include any taxes imposed upon the net income of Lender.
"TELERATE PAGE 3750": the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying London interbank offered rates of major
banks).
"TRADE DEBT": Liabilities which consists of trade liabilities incurred in
the ordinary course of business and payable in accordance with customary trade
practices.
"TRADE DEBT DEFAULT AMOUNT": $50,000.
"UCC": the Uniform Commercial Code.
<PAGE>
EXHIBIT 10(C)
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 9, 1997, made by Astrex, Inc., a
Delaware corporation, having offices at 205 Express Street, Plainview, New York
11803 (the "Pledgor"), in favor of Fleet National Bank, a national banking
association, having offices at One Landmark Square, Stamford, Connecticut 06901
(the "Secured Party").
W I T N E S S E T H :
---------------------
WHEREAS, T.F. Cushing, Inc., a Massachusetts corporation having offices at
126 Myron Street, West Springfield, Massachusetts 01089 ("TFCI"), is a
wholly-owned subsidiary of Pledgor and Pledgor is the record and beneficial
owner of 99 shares of the common stock, no par value, of TFCI (the "TFCI Common
Stock"); and
WHEREAS, AVest, Inc., a Delaware corporation having offices at 205 Express
Street, Plainview, New York ("AVest"), is a wholly-owned subsidiary of Pledgor
and Pledgor is the record and beneficial owner of 11,725,907 shares of the
common stock, par value $0.001 per share of AVest (the "AVest Common Stock");
and
WHEREAS, the TFCI Common Stock and the AVest Common Stock (collectively,
the "Common Stock") constitute 100% of the issued and outstanding capital stock
of each of TFCI and AVest, respectively; and
WHEREAS, simultaneously with the execution and delivery of this Pledge
Agreement, the Pledgor and the Secured Party are executing and delivering a
Credit and Security Agreement (as same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), of even date herewith; and
WHEREAS, the execution and delivery of this Pledge Agreement by Pledgor is
a condition precedent to the Secured Party extending any credit or other
financial accommodations to the Pledgor under the Credit Agreement; and
WHEREAS, the Pledgor shall derive substantial and material benefits,
financial and otherwise, from any extension of credit or any other financial
accommodation to such Pledgor under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the Secured
Party to extend any credit or any other financial accommodation to the Pledgor
under the Credit Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby
agrees with the Secured Party as follows:
<PAGE>
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1. DEFINED TERMS. The following terms shall have the following meanings as
used herein:
"BUSINESS DAY": any day other than Saturday or Sunday or other day in which
banks are authorized to be closed in the State of Connecticut.
"CODE": the Uniform Commercial Code from time to time in effect in the
State of Connecticut.
"COLLATERAL": any and all of the following (whether any item is mentioned
once or more than once and whether now existing or arising at any time(s)
in the future): (i) the shares of Common Stock listed on Schedule I
attached hereto and made a part hereof, (ii) all other Pledged Stock, (iii)
any and all other property (tangible or intangible) identified herein as
additional collateral, and (iv) any and all Proceeds of any and all of the
foregoing.
"EVENT OF DEFAULT": the occurrence of any of the following (whether or not
an event or circumstance is mentioned once or more than once): (i) any
failure of the Pledgor to pay when due (whether due at maturity or by
reason of demand or acceleration or otherwise) any other Obligation beyond
any period of grace (if any) applicable thereto; (ii) any "Event of
Default" as defined in the Credit Agreement or the occurrence or existence
of any other event or condition the effect of which event or condition is
to cause, or permit the Secured Party to cause, with the giving of notice
if required, any of the liabilities or other obligations of the Borrower or
any of the Obligations to become due prior to its stated maturity or, in
the case of any such liabilities or other obligations or any Obligations
consisting of a guaranty or the like, to become payable; (iii) any
representation or warranty made by the Pledgor hereunder proves to have
been incorrect or misleading in any material respect; (iv) any default by
the Pledgor in the observance or performance of Section 5(b) hereof; or (v)
any default by the Pledgor in the observance or performance of any other
covenant or agreement set forth herein and such default shall continue
unremedied for a period of thirty (30) calendar days after written notice
of such default shall have been given to the Pledgor by the Secured Party.
"LIEN": any security interest, mortgage, lien, pledge, charge, title
retention agreement, hypothecation, levy, execution, seizure, attachment,
garnishment, voting agreement, assignment or other encumbrance.
"OBLIGATIONS": any and all Secured Obligations as such term is defined in
the Credit Agreement. The Obligations shall include, but shall not be
limited to, all
<PAGE>
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indebtedness, liabilities, covenants and duties of, all terms and
conditions to be observed by, and all other obligations of the Pledgor
under this Pledge Agreement, whether now existing or hereafter arising.
"PERSON": any individual, corporation, partnership, trust or unincorporated
organization, a government or any agency or political subdivision thereof,
or other entity.
"PLEDGE AGREEMENT": this Pledge Agreement, as same may be amended,
supplemented or otherwise modified from time to time.
"PLEDGED STOCK": any and all of the following: (i) the shares of Common
Stock listed on Schedule I attached hereto and made a part hereof, (ii) all
capital stock, rights, options, or other securities identified herein as
additional collateral and (iii) any and all stock certificates or other
instruments or other writings evidencing any stock, rights, options or
other securities referred to in clauses (i) or (ii) above.
"PROCEEDS": proceeds of every kind, nature and description and in whatever
form (whether cash or non-cash) including, but not limited to, any and all
dividends or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
2. GRANT OF SECURITY INTEREST. The Pledgor hereby delivers to the Secured
Party all the Pledged Stock listed on Schedule I and hereby grants to the
Secured Party a first priority security interest in the Collateral, as
collateral security for the full and prompt payment, performance and observance
when due (whether due at the stated maturity, by demand, acceleration or
otherwise) of the Obligations.
This Pledge Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until all the Obligations, now existing
or hereafter arises, shall have been paid in full and the Credit Agreement, the
Note and the Security Documents shall no longer be in effect.
3. STOCK POWERS. Concurrently with the delivery to the Secured Party of
each certificate or other instrument or other writing representing one or more
shares of Pledged Stock, the Pledgor shall deliver an undated stock power
covering such certificate, instrument or other writing duly executed in blank by
the Pledgor with, if the Secured Party so requests, signature guaranteed.
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
that:
<PAGE>
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(a) the shares of Pledged Stock listed on Schedule I constitute 100% of all
the issued and outstanding shares of all classes of the capital stock of each of
TFCI and AVest;
(b) all the shares of the Pledged Stock listed on Schedule I have been duly
and validly issued and are fully paid and nonassessable and there are no pending
or contingent restrictions on transferability;
(c) the Pledgor is the record, legal and beneficial owner of, and has good
and marketable title to, the Pledged Stock listed on Schedule I, free of any and
all Liens or options in favor of, or claims of, any other Person, except the
Lien created by this Pledge Agreement;
(d) upon delivery to the Secured Party of the stock certificates evidencing
the Pledged Stock listed in Schedule I, the security interest granted pursuant
to this Pledge Agreement will constitute a valid, perfected first priority
security interest in the Collateral, enforceable as such against the Pledgor and
all those parties; and
(e) this Pledge Agreement is the legal, valid and binding obligation of the
Pledgor, enforceable in accordance with its terms, and the execution, delivery
and performance of this Agreement by the Pledgor does not and will not violate
any applicable law, or any agreement or instrument applicable to the Pledgor or
any of Pledgor's property.
5. COVENANTS. The Pledgor covenants and agrees with the Secured Party that,
from and after the date of this Pledge Agreement until the Obligations are paid
in full, any and all credit facilities between Pledgor and the Secured Party are
terminated and the security interest granted pursuant to this Pledge Agreement
is released:
(a) If the Pledgor (i) shall, as a result of Pledgor's ownership of any of
the Pledged Stock, become entitled to receive or shall receive any shares of
capital stock (including, without limitation, any shares of capital stock
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option(s), rights, or other securities or
other property whether in addition to, in substitution of, as a conversion of,
or in exchange for any shares of any Pledged Stock, or otherwise in respect
thereof or (ii) shall at any time otherwise for any reason receive any capital
stock, options, warrants or other equity securities of each of TFCI and AVest or
any securities convertible into or granting the right to purchase or exchange
for any stock or other equity securities of each of TFCI and AVest (whether or
not any of the securities referred to in this clause (ii) are related to the
Pledged Stock identified on Schedule I or any other Pledged Stock), the Pledgor
shall accept any and all of the same as the agent of the Secured Party, hold the
same in trust for the Secured Party and deliver (to the extent same are
certificated or otherwise evidenced by an instrument or other writing) any and
all certificates, other instruments or other writings evidencing same forthwith
to the Secured Party
<PAGE>
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in the exact form received, duly endorsed by the Pledgor to the Secured Party,
if required, together with, to the fullest extent applicable, an undated stock
power(s) covering same duly executed in blank by the Pledgor and with, if the
Secured Party so requests, signature guaranteed, any and all of the foregoing to
be held by the Secured Party, subject to the terms hereof, as additional
collateral security for the Obligations. Any sums paid upon or in respect of the
Pledged Stock (or any other Collateral) upon the liquidation or dissolution of
the TFCI and/or AVest, as the case may be, shall be paid over to the Secured
Party to be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or in
respect of the Pledged Stock (or any other Collateral) or any property (cash or
non-cash) shall be distributed upon or with respect to the Pledged Stock (or any
other Collateral) pursuant to the recapitalization or reclassification of the
capital of the Borrower or pursuant to the reorganization thereof, the property
so distributed shall be delivered to the Secured Party to be held by the Secured
Party hereunder as additional collateral security for the Obligations. If any
sums of money or property so paid or distributed in respect of the Pledged Stock
(or any other Collateral) shall be received by the Pledgor, the Pledgor shall,
until such money or property is paid or delivered to the Secured Party, hold
such money or property in trust for the Secured Party, segregated from other
funds of the Pledgor, as additional collateral security for the Obligations and
so immediately deliver it to the Secured Party.
(b) Without the prior written consent of the Secured Party, the Pledgor
will not directly or indirectly (i) vote to enable, or take any other action to
permit, TFCI and/or AVest, as the case may be, to hereafter issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of TFCI and/or AVest, as the case may be,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Collateral, or permit any action to be taken in
furtherance of any of the foregoing, or (iii) create, incur or permit to exist
any Lien or option in favor of, or any claim of any Person with respect to, any
of the Collateral or any interest therein, except for the Lien provided for by
this Pledge Agreement and any other Liens in favor of the Secured Party. The
Pledgor will defend the right, title and interest of the Secured Party in and to
the Collateral against the claims and demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written request of the
Secured Party, and at the sole expense of the Pledgor, the Pledgor will promptly
and duly execute and/or deliver such further instruments and other documents and
take such further actions as the Secured Party may request to perfect its
security interest in any and all Collateral, or may otherwise reasonably request
for the purposes of obtaining or preserving the full benefits of this Pledge
Agreement and of any and all of the rights, remedies and powers herein granted.
If any amount payable under or in connection with any of the Collateral shall be
or become evidenced by any promissory note, other instrument or chattel
<PAGE>
-6-
paper, such note, instrument or chattel paper shall be immediately delivered to
the Secured Party, duly endorsed in a manner satisfactory to the Secured Party,
to be held as additional collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Secured Party harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Pledge Agreement or the
exercise by the Secured Party of any of its rights, remedies or powers
hereunder.
6. VOTING RIGHTS; DIVIDENDS. Unless an Event of Default shall have occurred
and be continuing, the Pledgor shall be permitted to exercise all voting and
corporate rights with respect to the Pledged Stock, PROVIDED, HOWEVER, that
Pledgor covenants to the Secured Party that no vote shall be cast or corporate
right exercised or other action taken by Pledgor which, in the Secured Party's
reasonable judgment, would impair the Collateral or which would be inconsistent
with or result in any violation of any provision of any agreement or instrument
relating to any Obligation or any agreement or instrument between Secured Party
and Borrower or from Borrower to Secured Party, including without limitation the
Credit Agreement, this Agreement, or any other Financing Document (as defined in
the Credit Agreement). The Secured Party, if an Event of Default shall have
occurred or be continuing, shall have the right to receive and hold as
additional collateral any dividends or other distributions on the Pledged Stock
or other Collateral and, in the event that the Pledgor shall be delivered or
otherwise have received (or be entitled to receive) any such dividends or other
distributions, Pledgor shall hold same in trust and immediately turn over same
to the Secured Party who may hold same as additional collateral.
7. RIGHTS OF THE SECURED PARTY. (a) If any Event of Default shall occur and
be continuing, (A) any and all shares of the Pledged Stock (and any other
applicable Collateral) may, at the Secured Party's option, be registered in the
name of the Secured Party or its nominee, and/or (B) the Secured Party or its
nominee may exercise (i) all voting, corporate and any other rights pertaining
to the Pledged Stock (and any other applicable Collateral), whether at any
meeting of shareholders of TFCI and/or AVest, as the case may be, or otherwise
and/or (ii) any and all rights of conversion, exchange, subscription and any
other rights, privileges or options pertaining to the Pledged Stock (and any
other applicable Collateral) as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Stock (and any other applicable Collateral) upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of TFCI and/or AVest, as the case may be, or upon the
exercise by the Pledgor or the Secured Party of any right, privilege or option
pertaining to such shares of the Pledged Stock (and any other applicable
Collateral), and in connection therewith, the right to deposit and
<PAGE>
-7-
deliver any and all of the Pledged Stock (and any other applicable Collateral)
with any committee, depository, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine), all without
liability to the Pledgor, but the Secured Party shall have no duty to the
Pledgor to exercise any of the foregoing rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
(b) The rights of the Secured Party under this Agreement shall not be
conditioned or contingent upon the pursuit by the Secured Party of any right or
remedy against the Pledgor or against any other Person or against any security
or collateral. The Secured Party shall have no obligation or duty (and shall not
be liable for any failure) to demand, collect, apply or realize upon all or any
part of the Collateral or for any delay in doing so, to collect or to sell or
otherwise dispose of any Collateral (whether upon the request of the Pledgor or
any other Person or otherwise and whether or not an Event of Default has
occurred or the value of the Collateral has (or may) increase or decrease), to
advise the Pledgor of any actual or anticipated changes in the value of the
Collateral, to act as an investment advisor or insurer of any of the Collateral,
to preserve rights against prior parties, to protect Collateral (except, with
respect to Collateral in its possession, as specifically set forth in Section 12
below), to take any other action whatsoever with regard to the Collateral or any
part thereof, or to seek payment from any particular source, and any such
obligation or duty is hereby waived to the fullest extent permitted by
applicable law.
8. REMEDIES. If an Event of Default shall occur and be continuing, the
Secured Party may exercise, in addition to all other rights, remedies and powers
granted in this Pledge Agreement or in any other instrument or agreement, all
rights, remedies, and powers whether as a secured party or otherwise, under the
Code or other applicable law. Without limiting the generality of the foregoing,
the Secured Party, without the need for demand of payment or other performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the Pledgor,
TFCI, AVest or any other Person (all of which demands, defenses, advertisements
and notices are hereby waived), may at any and all times demand, sue for,
collect, receive, appropriate and/or realize upon any or all of the Collateral,
and/or make any settlement or compromise which the Secured Party reasonably
deems desirable with respect to any or all Collateral, and/or sell, assign, give
option or options to purchase or otherwise dispose of and deliver any and all
the Collateral (or contract to do any of the foregoing), in one or more parcels
at public or private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Secured Party or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Secured Party shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is, to the fullest
extent permitted under applicable law, hereby waived. The Secured
<PAGE>
-8-
Party shall have the right to apply any Proceeds from time to time held by it
and the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred in respect thereof or incidental to the care or safekeeping by the
Secured Party (or any agent or representative of the Secured Party) of any of
the Collateral or in any way relating to the Collateral or the rights, remedies
or powers of the Secured Party hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel to the Secured Party, to
the payment of any and all of the Obligations (whether matured or unmatured), in
such order and manner as the Secured Party may elect, and only after such
application and after the payment by the Secured Party of any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Secured Party account for the surplus, if any,
to the Pledgor. To the extent permitted by applicable law, the Pledgor waives
all claims, damages and demands it may acquire against the Secured Party arising
out of the exercise by the Secured Party of any rights, remedies or powers
hereunder. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, ten (10) calendar days prior written notice of the
time and place of any public sale or of the time after which any private sale or
other intended disposition is to be made shall be deemed reasonable. The Pledgor
further waives and agrees not to assert any rights or privileges which it may
acquire under Section 9-112 of the Code. The Pledgor shall remain fully liable
for any deficiency if the proceeds of any sale or other disposition or any
application of the Collateral are insufficient to pay the Obligations and the
costs and expenses of the Secured Party. Nothing contained in this Agreement
shall be interpreted or construed so as to require the Secured Party to realize
upon the Collateral prior to attempting to collect any of the Obligations, and
the Secured Party may exercise all of its various rights, remedies and powers in
such order and manner as Secured Party, in its discretion, shall deem advisable.
9. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the Secured Party shall
determine to exercise its right to sell any or all of the Pledged Stock (or
other applicable Collateral) pursuant to Section 8 hereof, and if in the
reasonable judgment of the Secured Party it is necessary or advisable to have
the Pledged Stock (or other applicable Collateral), or any portion thereof, to
be sold in a transaction which is required to be registered under the provisions
of the Securities Act of 1933, as amended (the "Securities Act"), the Pledgor
will cause TFCI and/or AVest, as the case may be, to (i) execute and deliver,
and cause the directors and officers of the to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Secured Party, necessary or advisable to register the
Pledged Stock (and, if requested by the Secured Party, such other Collateral),
or that portion thereof to be sold, under the provisions of the Securities Act,
(ii) use Pledgor's best efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of one year
from the date of the first public offering of the Pledged Stock (and if
requested by the Secured Party, such other Collateral) or that portion thereof
to be sold, and (iii) make all amendments thereto and/or to the related
prospectus which, in the opinion of the
<PAGE>
-9-
Secured Party, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Pledgor agrees to
cause TFCI and/or AVest, as the case may be, to comply with the provisions of
the securities or "Blue Sky" laws of any and all jurisdictions which the Secured
Party shall designate and to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of Section
11(a) of the Securities Act.
(b) The Pledgor recognizes that the Secured Party may be unable to effect a
public sale of any or all the Pledged Stock (or other applicable Collateral), by
reasons of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise (including without limitation the
impracticability of such a public sale due to the value of the Pledged Stock or
otherwise), and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Secured Party shall be under no
obligation to delay a sale of any of the Pledged Stock (or other Collateral) for
the period of time necessary to permit the Borrower to register such securities
for public sale under the Securities Act, or under applicable state securities
laws, even if the Borrower would agree to do so.
(c) The Pledgor further agrees to use Pledgor's best efforts to do or cause
to be done all such other acts as may be necessary to make any sale or sales of
all or any portion of the Pledged Stock (or other Collateral) pursuant to this
Pledge Agreement valid and binding and in compliance with any and all other
applicable requirements of law. The Pledgor further agrees that a breach of any
of the covenants contained in this Section 9 will cause irreparable injury to
the Secured Party, that the Secured Party has no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 9 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred.
10. RIGHTS OF SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY. The
Pledgor shall not enforce any rights that the Pledgor may at any time have
against TFCI and/or AVest, as the case may be, any other guarantor or any
applicable collateral, including, but not limited to, rights of subrogation,
exoneration, indemnity, reimbursement and contribution and whether arising by
operation of law or otherwise, until all of the Obligations have been paid,
observed
<PAGE>
-10-
and performed in full, except that this Section shall not apply to routine acts,
such as the giving of notices and the filing of continuation statements,
necessary to preserve any such rights.
11. CERTAIN WAIVERS. The Pledgor waives (i) diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon TFCI
and/or AVest, as the case may be, or the Pledgor with respect to the Obligations
or any obligations or liabilities of the Borrower to the Secured Party and (ii)
the benefit of any marshalling doctrine with respect to the Secured Party's
exercise of its rights, remedies or powers hereunder or otherwise.
12. LIMITATION ON DUTIES REGARDING COLLATERAL. The Secured Party's sole
duty with respect to the custody, safekeeping and physical preservation and
protection of the Collateral in its possession, under Section 9-207 of the Code
or otherwise, shall be to deal with it in the same manner as the Secured Party
deals with similar securities and property for its own account. Neither the
Secured Party nor any of its officers, employees or agents shall be (i) liable
or responsible for any failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or for any change in the value of any
Collateral (whether before or after an Event of Default) or (ii) under any
obligation to sell or otherwise dispose of any Collateral, whether upon the
request of the Pledgor or otherwise.
13. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies herein
contained with respect to the Collateral are irrevocable and powers coupled with
an interest.
14. SEVERABILITY. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in such jurisdiction, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
15. PARAGRAPH HEADINGS. The paragraph headings used in this Pledge
Agreement are for convenience of reference only and shall not affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. NO WAIVER; CUMULATIVE REMEDIES; WAIVERS AND AMENDMENTS.
(a) The Secured Party shall not by any act (except by a written
instrument executed and delivered by the Secured Party in accordance with
subparagraph (b) below), delay, indulgence, omission or otherwise be deemed
to have waived any right, remedy or power hereunder or to have acquiesced
in any Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Secured Party, any right, remedy or power
shall operate as a waiver thereof. No single or partial exercise of any
right, remedy or power hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, remedy or power. A
waiver by the Secured Party of any right, remedy or power hereunder on
<PAGE>
-11-
any one occasion shall not be construed as a bar to any right, remedy or
power which the Secured Party would otherwise have on any future occasion.
The rights, remedies and powers of the Secured Party herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any other rights, remedies or powers provided by applicable law or any
other agreement, instrument or other document. Secured Party may exercise
any or all such rights, remedies and powers at any time(s) in any order
which Secured Party chooses.
(b) None of the terms or provisions of this Pledge Agreement may be
amended, waived, supplemented or otherwise modified except by a written
instrument executed and delivered by the party sought to be charged.
17. SUCCESSORS AND ASSIGNS. This Pledge Agreement shall be binding upon the
successors, assigns, heirs and representatives of the Pledgor and shall inure to
the benefit of the Secured Party and its successors and assigns.
18. NOTICES. Notices by one party to the other shall be in writing and may
be given by mail, by overnight mail sent by Federal Express or other nationally
recognized overnight courier, or delivery by hand, addressed to such party at
the address set forth in the first paragraph hereof and shall be deemed given
(a) in the case of mail, four (4) Business Days after being deposited in the
mail, first class postage pre-paid, (b) in the case of overnight mail, one (1)
Business Day after being sent by overnight mail, and (c) in the case of delivery
by hand, when delivered. Either party may change its address for delivery of
notices by written notice to the other in the manner set forth in this Section
18.
19. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO BORROWER. The Pledgor
hereby irrevocably authorizes and instructs each of TFCI and AVest to comply
with any instruction received by it from the Secured Party, on demand, in
writing that (a) states that an Event of Default has occurred and (b) is
otherwise in accordance with the terms of this Pledge Agreement, without any
other or further instructions from the Pledgor, and the Pledgor agrees that TFCI
and AVest shall be fully protected in so complying.
20. COSTS AND EXPENSES. The Pledgor hereby agrees to pay or reimburse the
Secured Party, on demand, for all costs and expenses (including without
limitation all reasonable attorneys' fees and disbursements and the reasonable
fees and disbursements of all other experts including without limitation all
accountants and appraisers) incurred by the Secured Party in connection with
administrating, preserving, defending, protecting, exercising or enforcing this
Pledge Agreement or any of its rights, remedies and powers hereunder, or
attempting to do any of the foregoing, including without limitation all costs
and expenses incurred in connection with the exercise of any right, remedy or
power with respect to the Collateral.
<PAGE>
-12-
21. INTEGRATION. This Pledge Agreement represents the agreement of the
Pledgor to the Secured Party with respect to the subject matter hereof, and
there are no promises, undertakings, representations or warranties by the
Secured Party relative to the subject matter hereof not expressly set forth or
referred to herein or in the Guaranty.
22. GENDER. Whenever the context herein so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice-versa.
23. COUNTERPARTS. This Pledge Agreement may be executed in counterparts,
each of which shall be considered an original but all of which together shall be
deemed one instrument.
24. GOVERNING LAW; JURY TRIAL WAIVER. (a) THIS PLEDGE AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PLEDGOR UNDER THIS PLEDGE AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CONNECTICUT WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS
THEREUNDER.
(b) THE PLEDGOR HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY AND
THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR OUT
OF, OR OTHERWISE RELATED TO OR CONNECTED WITH, THIS PLEDGE AGREEMENT.
<PAGE>
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IN WITNESS WHEREOF, the undersigned has executed and delivered this Pledge
Agreement as of the day and year first above written.
WITNESS: ASTREX, INC.
/S/ EDWARD A. WEISS /S/ IRENE MARCIC
- ------------------------ -------------------------
Name: Edward A. Weiss Name: Irene Marcic
Title: Vice President
<PAGE>
-14-
ACKNOWLEDGMENT AND CONSENT
Each of TFCI and AVest as referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof and agrees to be bound thereby, to
comply with the terms thereof insofar as such terms are in any way applicable to
each of them, and to not take any action inconsistent with such terms. TFCI and
AVest agree to notify the Secured Party promptly in writing of the occurrence of
any of the events described in Section 5(a) of the Pledge Agreement.
T.F. CUSHING, INC.
By: /S/ IRENE MARCIC
-------------------------
Name: Irene Marcic
Title: Vice President
AVEST, INC.
By: /S/ IRENE MARCIC
-------------------------
Name: Irene Marcic
Title: Vice President
<PAGE>
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SCHEDULE I
To Pledge
AGREEMENT
---------
DESCRIPTION OF PLEDGED STOCK
================================================================================
GUARANTOR OWNED BY CLASS STOCK NO. OF
OF STOCK CERTIFICATE NO. SHARES
================================================================================
T.F. Cushing, Inc. Astrex, Inc. Common 8 99
================================================================================
AVest, Inc. Astrex, Inc. Common 1 11,725,907
================================================================================
<PAGE>
EXHIBIT 10(D)
REVOLVING CREDIT PROMISSORY NOTE
$2,500,000.00 Stamford, Connecticut
July 9, 1997
FOR VALUE RECEIVED, ASTREX INC., a Delaware corporation (the "Borrower"),
hereby unconditionally promises to pay to the order of Fleet National Bank (the
"Lender" or "Bank"), at the office of the Lender located at One Landmark Square,
Stamford, Connecticut, or such other office as the holder hereof may designate,
in lawful money of the United States and in immediately available funds, the
principal sum of Two Million Five Hundred Thousand Dollars ($2,500,000.00) or,
if less, the aggregate unpaid amount of all Revolving Credit Loans (as defined
in the Credit and Security Agreement referred to below) made by the Lender to
the Borrower pursuant to the Credit and Security Agreement, together with
interest thereon as provided for below. All capitalized terms unless defined
herein shall have the meanings assigned to them in the Credit and Security
Agreement.
1. PAYMENT OF PRINCIPAL. Borrower shall pay the outstanding principal
balance of each Revolving Credit Loan in full on the Revolving Credit Maturity
Date.
2. INTEREST RATE; PAYMENT OF INTEREST. Borrower shall pay interest on the
aggregate unpaid principal balance of the Revolving Credit Loans outstanding
from time to time at the applicable rate or rates set forth in Credit and
Security Agreement, dated of even date herewith between the Borrower, T.F.
Cushing, Inc. and the Lender, as same may be amended, supplemented or otherwise
modified from time to time (the "Credit and Security Agreement"). Interest shall
be payable, in arrears, and on each Revolving Credit Interest Payment Date and
shall also be payable on the Revolving Credit Maturity Date. Anything contained
in this Note to the contrary notwithstanding, during any period in which an
Event of Default is continuing, the interest rate hereunder shall, at the option
of the Lender, be increased to the Revolving Credit Default Rate, and all
interest accruing at such rate shall be payable upon demand by the Lender.
Interest shall commence to accrue on the date hereof and shall continue to
accrue until all principal hereof is paid in full (whether before or after
maturity or judgment). Interest under this Note shall be computed on the basis
of a year of three hundred sixty (360) days and the actual number of days
elapsed.
3. OPTIONAL AND MANDATORY PREPAYMENTS. Optional and mandatory prepayments
of the Revolving Credit Loans shall be made in accordance with Section 1.7 of
the Credit and Security Agreement.
4. EXPENSES. Borrower shall pay or reimburse the Lender, on demand, for all
costs and expenses, including, but not limited to, the reasonable fees and
disbursements of legal counsel, appraisers, accountants and other experts
employed by the Lender, incurred in the administration,
<PAGE>
-2-
preservation, defense, protection, or collection or other enforcement of this
Note or in foreclosing or otherwise enforcing any security interest securing the
payment of this Note or in sustaining or protecting the lien or priority of any
such security interest, or in attempting to do any of the foregoing.
5. CREDIT AND SECURITY AGREEMENT; LENDER'S RECORDS. This Note evidences
Revolving Credit Loans under, and has been executed and delivered by the
Borrower in accordance with, the terms and conditions of the Credit and Security
Agreement, which Credit and Security Agreement, among other things, contains
provisions with respect to prepayment (optional and mandatory), and the
acceleration of the unpaid principal of, and accrued and unpaid interest on the
Revolving Credit Loans upon the occurrence and at any time during the
continuance of any Event of Default. The Lender is entitled to the benefits of
the Credit and Security Agreement and the other Financing Documents and may
enforce the covenants and other agreements of the Borrower contained therein,
and the Lender may exercise the respective rights, remedies and powers provided
for thereby or otherwise available in respect thereof, all in accordance with
the respective terms thereof.
The records of the Lender shall be prima facie evidence of the Revolving
Credit Loans, any accrued interest thereon and all principal and interest
payments made in respect thereof; provided, that no failure of the Lender to
timely record any transaction, or any error therein, shall in any way affect or
impair any liability or other obligation of the Borrower to the Lender.
6. CERTAIN WAIVERS. Borrower and any indorser hereof or any other party
hereto or any guarantor hereof (collectively, the "Obligors") and each of them
(i) waive(s) presentment, diligence, protest, demand, notice of demand, notice
of acceptance or reliance, notice of non-payment, notice of dishonor, notice of
protest and all other notices to parties in connection with the delivery,
acceptance, performance, default or enforcement of this Note, any indorsement or
guaranty of this Note, or any collateral or other security; (ii) consent(s) to
any and all delays, extensions, renewals or other modifications of this Note,
any other Financing Document or the debt(s) or collateral evidenced hereby or
thereby or any waivers of any term hereof or thereof, any release, surrender,
taking of additional, substitution, exchange, failure to perfect or record any
interest in, failure to preserve or realize upon, failure to lawfully dispose
of, or any other impairment of, any collateral or other security, or any other
failure to act by the Lender or any other forbearance or indulgence shown by the
Lender, from time to time and in one or more instances (without notice to or
assent from any of the Obligors) and agree(s) that none of the foregoing shall
release, discharge or otherwise impair any of their liabilities; (iii) agree(s)
that the full or partial release or discharge of any Obligor(s) shall not
release, discharge or otherwise impair the liabilities of any other Obligor(s);
and (iv) waive(s) any defenses based on suretyship or impairment of collateral.
7 COMMERCIAL TRANSACTION; JURY WAIVER. (a) THE BORROWER ACKNOWLEDGES THAT
THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A "COMMERCIAL TRANSACTION"
WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS
AMENDED, AND THAT ANY MONIES, PROPERTY OR SERVICES WHICH ARE THE SUBJECT OF SUCH
TRANSACTION ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE BORROWER
HEREBY
<PAGE>
-3-
WAIVES ANY RIGHT WHICH BORROWER MIGHT HAVE TO A NOTICE AND A HEARING, UNDER
SECTIONS 52-278a-52-278g, INCLUSIVE, OF THE CONNECTICUT GENERAL STATUTES, AS
AMENDED, OR OTHER APPLICABLE FEDERAL OR STATE LAW, IN THE EVENT THE LENDER (OR
ITS SUCCESSORS OR ASSIGNS) SEEKS ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS
NOTE, THE CREDIT AND SECURITY AGREEMENT OR ANY OTHER FINANCING DOCUMENT.
(b) THE BORROWER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY AND
THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR OUT
OF, OR OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH THIS NOTE OR ANY OTHER
FINANCING DOCUMENT.
8. BINDING NATURE. This Note shall bind the Borrower and Borrower's
successors and assigns and shall inure to the benefit of the Lender and its
successors and assigns. The term "Lender" as used herein shall include, in
addition to the Lender, any successors, indorsees, or other assignees of Lender
and shall also include any other holder of this Note. Any transferee of this
Note shall have the rights of a holder in due course under Article 3 of the
Connecticut Uniform Commercial Code if the transferee took rights under this
Note in good faith for value and without notice of a claim or defense.
9. GOVERNING LAW. This Note shall be governed by, and construed and
interpreted in accordance with the laws the State of Connecticut, without regard
to its rules pertaining to conflicts of laws thereunder.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note as of
the day and year first written above.
WITNESS: ASTREX, INC.
BY: /S/ EDWARD A. WEISS BY: /S/ IRENE S. MARCIC
- --------------------------------------------------------------------------------
Name: Edward A. Weiss Name: Irene S. Marcic
Title: Vice President
<PAGE>
EXHIBIT 10(E)
GUARANTY AGREEMENT
Guaranty Agreement, dated as of July 9, 1997, between AVEST, INC., a
Delaware corporation, (the "Guarantor"), having an address at 205 Express
Street, Plainview, New York, and FLEET NATIONAL BANK, a national banking
association (the "Guaranteed Party" or "Lender"), having offices at One Landmark
Square, Stamford, Connecticut 06901.
W I T N E S S E T H
-------------------
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Astrex, Inc. (the "Borrower"), T.F. Cushing, Inc., a Massachusetts corporation,
and the Guaranteed Party are executing and delivering a Credit and Security
Agreement (as same may be amended, supplemented or otherwise modified from time
to time, the "Credit Agreement") of even date herewith; and
WHEREAS, it is a condition precedent to the Guaranteed Party extending any
credit (or other financial accommodations) to the Borrower under the Credit
Agreement that the Guarantor execute and deliver this Agreement; and
WHEREAS, the Guarantor shall derive substantial and material benefits,
financial and otherwise, from any extension of credit or other financial
accommodation to the Borrower under the Credit Agreement, including, without
limitation, the fact that loans under the Credit Agreement will enable the
Borrower to make payments to the Guarantor under that certain Lease Agreement
dated June 30, 1994 by and between Borrower and the Guarantor; and
WHEREAS, the Borrower owns 100% of the capital stock of the Guarantor; and
WHEREAS, the Guarantor benefits, financially and otherwise, from its
relationship with the Borrower; and
NOW THEREFORE, in consideration of the premises, and to induce the
Guaranteed Party to make any extension of credit or other financial
accommodation to the Borrower under the Credit Agreement, and in consideration
of any other accommodations, financial or otherwise, given or to be given or
continued by the Guaranteed Party to the Borrower, and for other good and
valuable consideration, the receipt and sufficiency of which the parties hereto
hereby acknowledge, the Guarantor and Guaranteed Party hereby agree as follows:
<PAGE>
-2-
GUARANTY
A. GUARANTY. (a) The Guarantor unconditionally and absolutely guarantees to
the Guaranteed Party the full and prompt payment and performance when due
(whether at maturity or by reason of acceleration, demand, mandatory prepayment,
the provisions of Section 1(b) below, or otherwise) of any and all of the
Guaranteed Obligations (as hereinafter defined). "Guaranteed Obligations" shall
mean all indebtedness, liabilities, and other obligations of the Borrower due or
owing to, or in favor or for the benefit of, the Guaranteed Party, of every
kind, nature and description, direct or indirect, absolute or contingent,
independent, joint or several, due or not due, contractual or tortious,
liquidated or unliquidated, arising by reason of any agreement, instrument or
other document or by operation of law or otherwise, and whether now existing or
hereafter arising, and whether or not incurred after other Guaranteed
Obligations have been paid (whether in full or in part), and whether or not now
contemplated, including without limitation all principal, interest,
reimbursement obligations and costs and fees (including, without limitation, all
attorneys' fees and disbursements), and all amounts owed pursuant to any
indemnification provisions. The Guaranteed Obligations shall include, but shall
not be limited to, (i) all present and future indebtedness, liabilities and
other obligations under, arising out of or otherwise relating to the Credit
Agreement, the Note (as defined in the Credit Agreement), or any other Financing
Document (as defined in the Credit Agreement), including without limitation all
principal, interest and costs and fees (including, without limitation, all
attorneys' fees and disbursements) and also any and all overadvances or
overdrafts.
(b) In addition to, and not in any way in limitation of, any other event(s)
or circumstance(s) pursuant to which any or all of the Guaranteed Obligations
shall or may become due, all Guaranteed Obligations shall, for purposes of this
Guaranty Agreement, be deemed and considered due upon any Act of Insolvency (as
defined below). "Act of Insolvency" shall mean the commencement of any case,
proceeding or other action, whether voluntary or involuntary, under any
bankruptcy, insolvency, receivership, reorganization, liquidation, arrangement,
composition, readjustment or similar law, whether state or federal, with respect
to the Borrower, the Guarantor or any other Person (as defined in the Credit
Agreement) liable for any or all of the Guaranteed Obligations, or the Borrower,
Guarantor or any such Person shall make an assignment for the benefit of
creditors, generally not be paying its debts when they become due or admit in
writing such Person's inability to pay such Person's debts as they become due.
2. DUE ON DEMAND; NO DEDUCTION IN CONNECTION WITH PAYMENT. All obligations
of the Guarantor under Section 1 above are payable on demand by the Guaranteed
Party, without the need to first take action against the Borrower or any other
Person (as defined in the Credit Agreement) or any collateral. All payments due
the Guaranteed Party hereunder (whether under Section 1 or otherwise), shall be
made by the Guarantor without any deduction whatsoever, including, but not
limited to, any deduction for any set-off, recoupment, or counterclaim.
3. UNCONDITIONAL NATURE OF GUARANTOR'S OBLIGATIONS; NO RELEASE OF
GUARANTOR; JOINT AND SEVERAL. (a) The Guarantor's obligations hereunder (i) are
absolute and unconditional, and (ii) constitute a guaranty of payment and not
merely a guaranty of collection. THE OBLIGATIONS OF THE GUARANTOR HEREUNDER
SHALL NOT BE REDUCED, LIMITED OR TERMINATED, NOR SHALL THE GUARANTOR BE
DISCHARGED FROM ANY
<PAGE>
-3-
THEREOF, FOR ANY REASON WHATSOEVER (other than, subject to Section 5, the full
payment and performance of the Guaranteed Obligations and termination of all
credit facilities between the Lender and the Borrower), including, but not
limited to, any or all of the following (and whether or not any or all of the
following shall have occurred or failed to occur once or more than once or in
whole or in part, and whether or not the Guarantor shall have received notice
thereof or assented thereto):
(i) any increase or decrease in principal or any interest rate, any
extension, indulgence, postponement, renewal, waiver, amendment or other
modification with respect to any of the Guaranteed Obligations or any
agreement or instrument related thereto, or the taking or the omission of
any of the actions referred to in any such agreement or instrument or
otherwise;
(ii) any addition, substitution, exchange, sale, surrender, or release
of any collateral or other property;
(iii) any failure, omission or delay (whether any of the foregoing is
intentional or unintentional) to attach, grant, perfect or record any
security interest, mortgage, assignment or other Lien (as defined in the
Credit Agreement) in or on any collateral, or any failure to record any
document;
(iv) any failure, omission or delay (whether any of the foregoing is
intentional or unintentional) in enforcing, assenting to or exercising any
right, remedy or power;
(v) any realization upon or other dealings with any collateral or
other property;
(vi) the addition, release (whether by contract, operation of law or
otherwise), discharge, death, bankruptcy or insolvency of any Person
primarily, secondarily or otherwise liable for any of the Guaranteed
Obligations, or any settlement or compromise of any of the Guaranteed
Obligations or with respect to any such Person;
(vii) any direction of application of payment with respect to, or any
subordination of the right to payment of or of any collateral for, any
Guaranteed Obligations or for any guaranty of same; or
(viii) ANY OTHER ACT OR FAILURE TO ACT WHICH (A) VARIES THE RISK OF
THE GUARANTOR HEREUNDER OR (B), BUT FOR THE PROVISIONS HEREOF, WOULD, AS A
MATTER OF STATUTE OR RULE OF LAW OR EQUITY, OPERATE TO REDUCE, LIMIT OR
TERMINATE THE OBLIGATIONS OF THE GUARANTOR HEREUNDER OR DISCHARGE THE
GUARANTOR FROM ANY THEREOF.
Guaranteed Party shall have no obligation to take, to collect or to protect
any collateral (or other property) or any income thereon, nor to preserve any
rights against prior or other parties, and the Guaranteed Party may proceed
under this Guaranty immediately upon Borrower's default without resorting to or
regard to any action against or with respect to the Borrower, any collateral or
any other guaranty or source of payment.
<PAGE>
-4-
(b) Settlement of any claim by the Guaranteed Party against the
Borrower, whether or not in any proceeding, and whether voluntary or
involuntary, shall not reduce the amount due under this Agreement except to
the extent (subject to Section 5 hereof) of the amount actually paid by
Borrower and legally retained by the Guaranteed Party in connection with
the settlement.
(c) The invalidity, irregularity, or unenforceability of all or any
part of the Guaranteed Obligations or any agreement or instrument relating
thereto, or the lack of validity, enforceability, perfection, impairment or
loss of any Liens granted in connection therewith, whether caused by any
action or inaction of the Guaranteed Party, or otherwise, shall not affect,
impair, or be a defense to the Guarantor's obligations under this
Agreement.
(d) The obligations of the Guarantor hereunder are joint and several
with any other guarantor (if any) of any of the Guaranteed Obligations, and
the obligations of the Guarantor hereunder shall not be affected by any
event or circumstance with respect to any such other guarantor.
(e) In addition to, and in no way in limitation or impairment of, the
Guarantor's other obligations under this Agreement, the Guarantor hereby
covenants to take all actions (or non-action, if applicable) necessary so
that the Borrower (and, to the extent applicable, TFCI) performs all
obligations under the Credit Agreement relating to the Guarantor or its
assets or other properties. As part of this, Guarantor covenants to not
permit any Lien (as defined in the Credit Agreement) on the Plainview Real
Estate (as defined in the Credit Agreement) and to not sell or otherwise
transfer the Plainview Real Estate (or any part thereof).
4. CERTAIN WAIVERS. The Guarantor waives (to the fullest extent permitted
by applicable law): (i) presentment, diligence, protest, demand, notice of
demand, notice of acceptance or reliance, notice of the creation of any
Guaranteed Obligation in reliance hereon, notice of non-payment, notice of
dishonor, notice of protest, and all other notices (except notices, if any,
expressly provided for herein), (ii) any requirement that any right, remedy or
power first be exercised or any action first be taken against the Borrower, any
other guarantor or any collateral for any of the Guaranteed Obligations or for
any guaranty prior to the Guaranteed Party exercising its rights, remedies or
powers, or taking any other action, with respect to the Guarantor; (iii) any
right to defer or modify Guarantor's obligations hereunder by reason of any Act
of Insolvency; (iv) notice of disposition of any collateral; (v) any defense
based upon, arising out of or in any way related to (a) any claim that any sale
or other disposition of any collateral for any of the Guaranteed Obligations was
not conducted in a commercially reasonable manner, or that otherwise such sale
or disposition was not in compliance with Applicable Law (as defined in the
Credit Agreement), or (b) any claim that any election of remedies by the
Guaranteed Party, or any other action of Guaranteed Party, impaired, reduced,
released or extinguished any rights, including, but not limited to, any rights
of subrogation, exoneration, indemnity, reimbursement and contribution, that the
Guarantor might otherwise have had against the Borrower or any other guarantor
or against any collateral; and (vi) ANY AND ALL OTHER DEFENSES, WHETHER ARISING
UNDER ANY STATUTE OR AT LAW OR IN EQUITY, THAT WOULD, BUT FOR THIS CLAUSE (vi),
BE AVAILABLE TO THE GUARANTOR AS A DEFENSE AGAINST OR REDUCTION OF ANY
<PAGE>
-5-
OR ALL OF ITS LIABILITIES AND OTHER OBLIGATIONS HEREUNDER INCLUDING WITHOUT
LIMITATION ANY DEFENSES OF A SURETY OR IMPAIRMENT OF COLLATERAL.
5. CONTINUING LIABILITY OF GUARANTOR. If, after receipt of any payment of
all or any part of the Guaranteed Obligations, the Guaranteed Party is
compelled, required or ordered or agrees, whether for settlement purposes or
otherwise, to surrender such payment to any Person for any reason (including,
without limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion of
trust funds), then this Agreement shall continue in full force and effect, and
the Guarantor shall be fully liable for hereunder, and shall indemnify, defend
and hold harmless the Guaranteed Party with respect to, the full amount so
surrendered. The provisions of this paragraph shall survive the cancellation,
release or other termination of this Agreement or any other agreement or
instrument, the release of any collateral or other property and/or any other
action which the Guaranteed Party may have taken, whether in reliance upon
receipt of such payment or otherwise.
6. SUBORDINATION OF RIGHTS OF SUBROGATION, ETC. The Guarantor hereby
unconditionally subordinates, to the prior and indefeasible payment in full of
all Guaranteed Obligations, any rights, claims or remedies that the Guarantor
may at any time have against the Borrower (or any other guarantor or other
Person liable for any of the Guaranteed Obligations) or any collateral for any
of the Guaranteed Obligations, and which rights, claims or remedies arise under
or otherwise relate to this Agreement or any other Financing Document and/or
arise from or otherwise relate to the payment or other performance hereunder or
thereunder including, but not limited to, rights, claims or remedies of
subrogation, indemnity, exoneration, participation, reimbursement or
contribution and whether any such rights, claims or remedies arise in equity,
under contract, by statute, under common law or otherwise, and Guarantor hereby
agrees not to assert any such rights, claims or remedies unless and until the
Guaranteed Obligations are so paid in full and all credit arrangements between
the Borrower and the Guaranteed Party are terminated. In addition, if any such
rights, claims or remedies result in the Lender being an "insider" of the
Borrower for purposes of the Federal Bankruptcy Code (or other similar law),
such rights, claims or remedies are hereby waived.
7. CREDIT DECISION. The Guarantor has independently, and without reliance
on any information supplied by the Guaranteed Party, taken, and will continue to
take, whatever steps Guarantor deems necessary to evaluate the financial
condition and affairs of the Borrower, and the Guaranteed Party shall have no
duty to advise the Guarantor of information at any time known to Guaranteed
Party regarding such financial condition or affairs.
8. CONTINUANCE OF GUARANTY. This is a continuing guaranty and shall remain
in full force and effect, and shall be binding upon the Guarantor unless written
notice sent by registered or certified mail, addressed to Fleet National Bank,
One Landmark Square, Stamford, Connecticut 06901, Attention: Asset-Based
Lending, of its revocation as to future Guaranteed Obligations shall actually be
received by the Guaranteed Party at least five (5) days prior to the date set
for such revocation in such notice. No such revocation shall release the
Guarantor, or affect in any manner the Guaranteed Party's rights, remedies or
powers under this Agreement, with respect to any Guaranteed Obligation
(including without limitation any renewal, modification, substitution,
replacement, extension, refunding or other refinancing thereof) arising prior to
such date of
<PAGE>
-6-
revocation (and including without limitation, for the avoidance of doubt, any
and all reimbursement obligations relating to any letter of credit issued prior
to the date of revocation and all loans made prior to such date (both principal
and interest (whether such interest accrues before or after such date) and all
collection and other costs and expenses (whenever accrued) relating in any way
to any such Guaranteed Obligation). The revocation by any other guarantor of
his/her/its guaranty shall not revoke or otherwise affect any obligations of the
Guarantor hereunder. Guarantor has specifically considered the foregoing
termination provisions and agrees they are reasonable.
9. RIGHTS AND REMEDIES CUMULATIVE AND NOT EXCLUSIVE. All of the Guaranteed
Party's rights, remedies and powers hereunder shall be cumulative, and not
exclusive, and may be exercised singly or concurrently, and shall be in addition
to all other rights, remedies and powers of the Guaranteed Party under
Applicable Law (as defined in the Credit Agreement) or under any other
agreement, instrument or other document. Guaranteed Party may exercise any or
all such rights, remedies or powers at any time(s) in any order which the
Guaranteed Party chooses.
10. EXPENSES. The Guarantor shall pay, or reimburse the Guaranteed Party,
on demand, for all of the Guaranteed Party's costs and expenses (including
without limitation reasonable fees and disbursements of legal counsel,
appraisers, accountants, and other experts, employed or retained by the
Guaranteed Party) incurred in connection with protecting, preserving, defending,
exercising or enforcing this Agreement or any of the rights, powers or remedies
of the Guaranteed Party under this Agreement or in attempting to do any of the
foregoing.
11. NO WAIVERS OF RIGHTS; AMENDMENTS; WHEREAS CLAUSES. The Guaranteed Party
shall not by any act (except by a written instrument pursuant to the provisions
of this Section set forth below), delay, indulgence, omission or otherwise be
deemed to have waived any right, remedy or power hereunder or to have acquiesced
in any default or other breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the part of the Guaranteed
Party, any right, remedy or power shall operate as a waiver thereof. No single
or partial exercise of any right, remedy or power hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, remedy or
power. A waiver by the Guaranteed Party of any right, remedy or power hereunder
on any one occasion shall not be construed as, or constituted a bar to, any
right, remedy or power which the Guaranteed Party would otherwise have on any
future occasion. None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed and delivered by the party sought to be charged. The
"Whereas" clauses in this Agreement shall form a substantive part of the
agreement of the parties and the Lender in entering into the Credit Agreement is
relying on the truth and accuracy of same.
12. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
Connecticut without regard to rules pertaining to conflicts of laws thereunder.
THE GUARANTOR HEREBY SUBMITS TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED IN THE STATE OF CONNECTICUT IN CONNECTION WITH
ANY ACTION OR PROCEEDING ARISING OUT OF OR OTHERWISE RELATED TO OR OTHERWISE IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT AND WAIVES ANY
OBJECTION GUARANTOR MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
<PAGE>
-7-
INCONVENIENT COURT AND AGREES NOT TO PLEAD SAME. GUARANTOR AGREES THAT SERVICE
OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE GUARANTOR AT THE ADDRESS OF THE GUARANTOR SET
FORTH IN THE FIRST PARAGRAPH HEREOF OR SUCH OTHER ADDRESS OF WHICH THE
GUARANTEED PARTY SHALL HAVE BEEN NOTIFIED PURSUANT TO SECTION 18 BELOW.
GUARANTOR AGREES THAT NOTHING CONTAINED HEREIN SHALL EFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
OF THE GUARANTEED PARTY (OR ITS SUCCESSORS OR ASSIGNS) TO BRING ANY LEGAL ACTION
OR PROCEEDING IN ANY OTHER JURISDICTION.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
14. BINDING NATURE. This Agreement shall be binding upon the Guarantor and
Guarantor's successors, assigns, heirs and representatives and shall inure to
the benefit of and be enforceable by the Guaranteed Party, and Guaranteed
Party's successors, assigns and representatives. The Guaranteed Party may sell
or assign any or all of the Guaranteed Obligations, and any of its rights and
obligations under any agreement or instrument, evidencing, governing, securing
or otherwise relating thereto, and the transferee shall have the same rights
hereunder with respect to the assigned Guaranteed Obligations as had the
Guaranteed Party. Any successor to the Guaranteed Party (including without
limitation any successor by merger) shall succeed to the full rights of the
Guaranteed Party hereunder. The Guarantor may not assign the Guarantor's rights
or duties hereunder without the prior written consent of the Lender.
15. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in such jurisdiction, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
16. INTEGRATION. This Agreement represents the agreement of the Guarantor
with respect to the subject matter hereof and supersede all oral negotiations
and prior writings with respect to the subject matter hereof, AND THERE ARE NO
PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE GUARANTEED PARTY
RELATIVE TO THE SUBJECT MATTER HEREOF THAT ARE NOT EXPRESSLY SET FORTH OR
REFERRED TO HEREIN.
17. LIEN; RIGHT OF SET-OFF. Guarantor hereby grants to the Guaranteed Party
a lien and right of set-off for all of the Guarantor's liabilities or other
obligations to the Guaranteed Party, whether hereunder or otherwise, upon and
against all property of the Guarantor which may now be, or may in the future
come into, the possession, custody or control of the Guaranteed Party, or be in
transit to the Guaranteed Party, including but not limited to deposits (general
or special, time or demand, matured or unmatured), credits, securities,
instruments, or the proceeds thereof. The Guaranteed Party may at any time
(whether or not Guaranteed Party has made demand hereunder) set-off and apply
such property or any part thereof to any of the Guarantor's liabilities or other
obligations to the Guaranteed Party, whether under this Agreement or otherwise,
and whether or not any or all
<PAGE>
-8-
such liabilities or other obligations are matured at the time of such set-off or
application, even if effecting such set-off or application results in a loss or
reduction of interest or the imposition of a penalty applicable to the early
withdrawal of time deposits.
18. NOTICES. Notices by one party to the other hereunder shall be in
writing, and shall be deemed to have been duly given or made when delivered by
hand, or one Business Day (as defined in the Credit Agreement) after being sent
by overnight mail by Federal Express or other nationally recognized overnight
courier service, or four Business Days after being deposited in the mail, first
class postage prepaid, in each case addressed to such other party at the address
set forth in the first paragraph hereof. Either party may change its address for
purposes of this paragraph by written notice to the other party sent in the
manner set forth in this Section. Anything contained herein to the contrary, any
notices to the Guaranteed Party referred to in Section 8 above are to be sent in
accordance with the provisions thereof and shall only be deemed given when
actually received.
19. NO RULE OF STRICT CONSTRUCTION; NUMBER AND GENDER. Guarantor
acknowledges that Guarantor and Guarantor's counsel have had an opportunity to
review this Agreement and no rule of strict construction shall be used against
the Guaranteed Party. Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.
20. INSURANCE COLLATERAL. As security for its obligations hereunder, the
Guarantor hereby collaterally assigns to the Guaranteed Party all insurance
(including casualty) proceeds with respect to the Plainview Real Estate (or any
part thereof). In the event of any casualty or other loss with respect to the
Plainview Real Estate (or part thereof), the insurance proceeds shall be dealt
with and applied in the same manner as insurance proceeds with respect to
Collateral (as defined in the Credit Agreement) are dealt with and applied
pursuant to Section 4.3 of the Credit Agreement, the provisions of which Section
are hereby incorporated by reference as if fully stated herein (with such
conforming changes as shall be necessary, for such incorporation by reference
including (i) "Collateral" shall mean the Plainview Real Estate (or applicable
portion thereof) and (ii) applicable references to "Borrower" or "TFCI", as the
case may be, shall refer to the Guarantor).
21. CERTAIN REPRESENTATIONS AND COVENANTS. IN ORDER TO INDUCE THE
GUARANTEED PARTY TO MAKE EXTENSIONS OF CREDIT UNDER THE CREDIT AGREEMENT, THE
GUARANTOR HEREBY REPRESENTS AND WARRANTS TO THE GUARANTEED PARTY THAT (I) THIS
AGREEMENT IS THE LEGAL, VALID AND BINDING OBLIGATION OF THE GUARANTOR,
ENFORCEABLE AGAINST THE GUARANTOR IN ACCORDANCE WITH ITS TERMS, (II) THE
EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS AGREEMENT HAS BEEN
DULY AUTHORIZED BY ALL NECESSARY CORPORATE AND, IF REQUIRED, STOCKHOLDER ACTION,
(III) THE EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS AGREEMENT
IS AND WILL BE WITHIN THE GUARANTOR'S POWERS, CORPORATE AND OTHERWISE, AND DOES
NOT AND WILL NOT VIOLATE OR BREACH ANY STATUTE, REGULATION, OR OTHER APPLICABLE
LAW (AS DEFINED IN THE CREDIT AGREEMENT) OR THE GUARANTOR'S CERTIFICATE OF
INCORPORATION OR BY-LAWS.
22. WAIVER OF TRIAL BY JURY; CHAPTER 903(A) WAIVER; WAIVER OF CONSEQUENTIAL
DAMAGES.
<PAGE>
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(a) THE GUARANTEED PARTY AND THE GUARANTOR EACH VOLUNTARILY AND KNOWINGLY
WAIVE TRIAL BY JURY AND THEIR RESPECTIVE RIGHTS THERETO IN ANY ACTION OR
PROCEEDING OF ANY KIND TO WHICH THEY ARE BOTH PARTIES AND THAT IN ANY WAY ARISES
UNDER OR OUT OF OR IS OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH THIS
AGREEMENT OR ANY RELATED AGREEMENT OR INSTRUMENT (INCLUDING WITHOUT LIMITATION
ANY FINANCING DOCUMENT).
(b) THE GUARANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS AGREEMENT
IS A PART IS A "COMMERCIAL TRANSACTION" WITHIN THE MEANING OF CHAPTER 903A OF
THE CONNECTICUT GENERAL STATUTES, AS AMENDED, AND THAT ANY MONIES, PROPERTY OR
SERVICES WHICH ARE THE SUBJECT OF SUCH TRANSACTION ARE NOT FOR PERSONAL, FAMILY
OR HOUSEHOLD PURPOSES. THE GUARANTOR KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT
WHICH GUARANTOR MIGHT HAVE TO A NOTICE AND A HEARING UNDER SECTIONS 52-278A TO
52-278G, INCLUSIVE, OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER
APPLICABLE FEDERAL OR STATE LAW, IN THE EVENT THE GUARANTEED PARTY (OR ITS
SUCCESSORS OR ASSIGNS) SEEKS ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS
AGREEMENT.
(c) GUARANTOR HEREBY FURTHER WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT GUARANTOR MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL
PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR OTHERWISE RELATED TO THIS
AGREEMENT OR ANY OTHER FINANCING DOCUMENT ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.
WITNESSES: AVEST, INC.
/S/ EDWARD A. WEISS By: /S/ IRENE MARCIC
- ----------------------- --------------------------------------
Name: Edward A. Weiss Name: Irene Marcic
Title: Vice President
Fleet National Bank
/S/ EDWARD A. WEISS By: /S/ ANTHONY MCKIERNAN
- ----------------------- --------------------------------------
Name: Edward A. Weiss Name: Anthony M. McKiernan
Title: Assistant Vice-President
<PAGE>
EXHIBIT 10(F)
GUARANTY AGREEMENT
Guaranty Agreement, dated as of July 9, 1997, between T.F. Cushing, Inc., a
Massachusetts corporation, (the "Guarantor"), having an address at 126 Myron
Street, West Springfield, Massachusetts, and FLEET NATIONAL BANK, a national
banking association (the "Guaranteed Party" or "Lender"), having offices at One
Landmark Square, Stamford, Connecticut 06901.
W I T N E S S E T H
-------------------
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Astrex, Inc. (the "Borrower"), the Guarantor and the Guaranteed Party are
executing and delivering a Credit and Security Agreement (as same may be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") of even date herewith; and
WHEREAS, it is a condition precedent to the Guaranteed Party extending any
credit (or other financial accommodations) to the Borrower under the Credit
Agreement that the Guarantor execute and deliver this Agreement; and
WHEREAS, the Guarantor shall derive substantial and material benefits,
financial and otherwise, from any extension of credit or other financial
accommodation to the Borrower under the Credit Agreement.
NOW THEREFORE, in consideration of the premises, and to induce the
Guaranteed Party to make any extension of credit or other financial
accommodation to the Borrower under the Credit Agreement, and in consideration
of any other accommodations, financial or otherwise, given or to be given or
continued by the Guaranteed Party to the Borrower, and for other good and
valuable consideration, the receipt and sufficiency of which the parties hereto
hereby acknowledge, the Guarantor and Guaranteed Party hereby agree as follows:
GUARANTY
A. GUARANTY. (a) The Guarantor unconditionally and absolutely guarantees to
the Guaranteed Party the full and prompt payment and performance when due
(whether at maturity or by reason of acceleration, demand, mandatory prepayment,
the provisions of Section 1(b) below, or otherwise) of any and all of the
Guaranteed Obligations (as hereinafter defined). "Guaranteed Obligations" shall
mean all indebtedness, liabilities, and other obligations of the Borrower due or
owing to, or in favor or for the benefit of, the Guaranteed Party, of every
kind, nature and description, direct or indirect, absolute or contingent,
independent, joint or several, due or not due, contractual or tortious,
liquidated or unliquidated, arising by reason of any agreement, instrument or
<PAGE>
-2-
other document or by operation of law or otherwise, and whether now existing or
hereafter arising, and whether or not incurred after other Guaranteed
Obligations have been paid (whether in full or in part), and whether or not now
contemplated, including without limitation all principal, interest,
reimbursement obligations and costs and fees (including, without limitation, all
attorneys' fees and disbursements), and all amounts owed pursuant to any
indemnification provisions. The Guaranteed Obligations shall include, but shall
not be limited to, (i) all present and future indebtedness, liabilities and
other obligations under, arising out of or otherwise relating to the Credit
Agreement, the Note (as defined in the Credit Agreement), or any other Financing
Document (as defined in the Credit Agreement), including without limitation all
principal, interest and costs and fees (including, without limitation, all
attorneys' fees and disbursements) and also any and all overadvances or
overdrafts.
(b) In addition to, and not in any way in limitation of, any other event(s)
or circumstance(s) pursuant to which any or all of the Guaranteed Obligations
shall or may become due, all Guaranteed Obligations shall, for purposes of this
Guaranty Agreement, be deemed and considered due upon any Act of Insolvency (as
defined below). "Act of Insolvency" shall mean the commencement of any case,
proceeding or other action, whether voluntary or involuntary, under any
bankruptcy, insolvency, receivership, reorganization, liquidation, arrangement,
composition, readjustment or similar law, whether state or federal, with respect
to the Borrower, the Guarantor or any other Person (as defined in the Credit
Agreement) liable for any or all of the Guaranteed Obligations, or the Borrower,
Guarantor or any such Person shall make an assignment for the benefit of
creditors, generally not be paying its debts when they become due or admit in
writing such Person's inability to pay such Person's debts as they become due.
2. DUE ON DEMAND; NO DEDUCTION IN CONNECTION WITH PAYMENT. All obligations
of the Guarantor under Section 1 above are payable on demand by the Guaranteed
Party, without the need to first take action against the Borrower or any other
Person (as defined in the Credit Agreement) or any collateral. All payments due
the Guaranteed Party hereunder (whether under Section 1 or otherwise), shall be
made by the Guarantor without any deduction whatsoever, including, but not
limited to, any deduction for any set-off, recoupment, or counterclaim.
3. UNCONDITIONAL NATURE OF GUARANTOR'S OBLIGATIONS; NO RELEASE OF
GUARANTOR; JOINT AND SEVERAL. (a) The Guarantor's obligations hereunder (i) are
absolute and unconditional, and (ii) constitute a guaranty of payment and not
merely a guaranty of collection. THE OBLIGATIONS OF THE GUARANTOR HEREUNDER
SHALL NOT BE REDUCED, LIMITED OR TERMINATED, NOR SHALL THE GUARANTOR BE
DISCHARGED FROM ANY THEREOF, FOR ANY REASON WHATSOEVER (other than, subject to
Section 5, the full payment and performance of the Guaranteed Obligations and
termination of all credit facilities between the Lender and the Borrower),
including, but not limited to, any or all of the following (and whether or not
any or all of the following shall have occurred or failed to occur once or more
than once or in whole or in part, and whether or not the Guarantor shall have
received notice thereof or assented thereto):
(i) any increase or decrease in principal or any interest rate, any
extension, indulgence, postponement, renewal, waiver, amendment or other
modification with respect to any of the Guaranteed Obligations or any
agreement or instrument related thereto, or the taking or the
<PAGE>
-3-
omission of any of the actions referred to in any such agreement or
instrument or otherwise;
(ii) any addition, substitution, exchange, sale, surrender, or release
of any collateral or other property;
(iii) any failure, omission or delay (whether any of the foregoing is
intentional or unintentional) to attach, grant, perfect or record any
security interest, mortgage, assignment or other Lien (as defined in the
Credit Agreement) in or on any collateral, or any failure to record any
document;
(iv) any failure, omission or delay (whether any of the foregoing is
intentional or unintentional) in enforcing, assenting to or exercising any
right, remedy or power;
(v) any realization upon or other dealings with any collateral or
other property;
(vi) the addition, release (whether by contract, operation of law or
otherwise), discharge, death, bankruptcy or insolvency of any Person
primarily, secondarily or otherwise liable for any of the Guaranteed
Obligations, or any settlement or compromise of any of the Guaranteed
Obligations or with respect to any such Person;
(vii) any direction of application of payment with respect to, or any
subordination of the right to payment of or of any collateral for, any
Guaranteed Obligations or for any guaranty of same; or
(viii) ANY OTHER ACT OR FAILURE TO ACT WHICH (A) VARIES THE RISK OF
THE GUARANTOR HEREUNDER OR (B), BUT FOR THE PROVISIONS HEREOF, WOULD, AS A
MATTER OF STATUTE OR RULE OF LAW OR EQUITY, OPERATE TO REDUCE, LIMIT OR
TERMINATE THE OBLIGATIONS OF THE GUARANTOR HEREUNDER OR DISCHARGE THE
GUARANTOR FROM ANY THEREOF.
Guaranteed Party shall have no obligation to take, to collect or to protect
any collateral (or other property) or any income thereon, nor to preserve any
rights against prior or other parties, and the Guaranteed Party may proceed
under this Guaranty immediately upon Borrower's default without resorting to or
regard to any action against or with respect to the Borrower, any collateral or
any other guaranty or source of payment.
(b) Settlement of any claim by the Guaranteed Party against the Borrower,
whether or not in any proceeding, and whether voluntary or involuntary, shall
not reduce the amount due under this Agreement except to the extent (subject to
Section 5 hereof) of the amount actually paid by Borrower and legally retained
by the Guaranteed Party in connection with the settlement.
(c) The invalidity, irregularity, or unenforceability of all or any part of
the Guaranteed Obligations or any agreement or instrument relating thereto, or
the lack of validity, enforceability, perfection, impairment or loss of any
Liens granted in connection therewith, whether
<PAGE>
-4-
caused by any action or inaction of the Guaranteed Party, or otherwise, shall
not affect, impair, or be a defense to the Guarantor's obligations under this
Agreement.
(d) The obligations of the Guarantor hereunder are joint and several with
any other guarantor (if any) of any of the Guaranteed Obligations, and the
obligations of the Guarantor hereunder shall not be affected by any event or
circumstance with respect to any such other guarantor.
4. CERTAIN WAIVERS. The Guarantor waives (to the fullest extent permitted
by applicable law): (i) presentment, diligence, protest, demand, notice of
demand, notice of acceptance or reliance, notice of the creation of any
Guaranteed Obligation in reliance hereon, notice of non-payment, notice of
dishonor, notice of protest, and all other notices (except notices, if any,
expressly provided for herein), (ii) any requirement that any right, remedy or
power first be exercised or any action first be taken against the Borrower, any
other guarantor or any collateral for any of the Guaranteed Obligations or for
any guaranty prior to the Guaranteed Party exercising its rights, remedies or
powers, or taking any other action, with respect to the Guarantor; (iii) any
right to defer or modify Guarantor's obligations hereunder by reason of any Act
of Insolvency; (iv) notice of disposition of any collateral; (v) any defense
based upon, arising out of or in any way related to (a) any claim that any sale
or other disposition of any collateral for any of the Guaranteed Obligations was
not conducted in a commercially reasonable manner, or that otherwise such sale
or disposition was not in compliance with Applicable Law (as defined in the
Credit Agreement), or (b) any claim that any election of remedies by the
Guaranteed Party, or any other action of Guaranteed Party, impaired, reduced,
released or extinguished any rights, including, but not limited to, any rights
of subrogation, exoneration, indemnity, reimbursement and contribution, that the
Guarantor might otherwise have had against the Borrower or any other guarantor
or against any collateral; and (vi) ANY AND ALL OTHER DEFENSES, WHETHER ARISING
UNDER ANY STATUTE OR AT LAW OR IN EQUITY, THAT WOULD, BUT FOR THIS CLAUSE (vi),
BE AVAILABLE TO THE GUARANTOR AS A DEFENSE AGAINST OR REDUCTION OF ANY OR ALL OF
ITS LIABILITIES AND OTHER OBLIGATIONS HEREUNDER INCLUDING WITHOUT LIMITATION ANY
DEFENSES OF A SURETY OR IMPAIRMENT OF COLLATERAL.
5. CONTINUING LIABILITY OF GUARANTOR. If, after receipt of any payment of
all or any part of the Guaranteed Obligations, the Guaranteed Party is
compelled, required or ordered or agrees, whether for settlement purposes or
otherwise, to surrender such payment to any Person for any reason (including,
without limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion of
trust funds), then this Agreement shall continue in full force and effect, and
the Guarantor shall be fully liable for hereunder, and shall indemnify, defend
and hold harmless the Guaranteed Party with respect to, the full amount so
surrendered. The provisions of this paragraph shall survive the cancellation,
release or other termination of this Agreement or any other agreement or
instrument, the release of any collateral or other property and/or any other
action which the Guaranteed Party may have taken, whether in reliance upon
receipt of such payment or otherwise.
6. SUBORDINATION OF RIGHTS OF SUBROGATION, ETC. The Guarantor hereby
unconditionally subordinates, to the prior and indefeasible payment in full of
all Guaranteed Obligations, any rights,
<PAGE>
-5-
claims or remedies that the Guarantor may at any time have against the Borrower
(or any other guarantor or other Person liable for any of the Guaranteed
Obligations) or any collateral for any of the Guaranteed Obligations, and which
rights, claims or remedies arise under or otherwise relate to this Agreement or
any other Financing Document and/or arise from or otherwise relate to the
payment or other performance hereunder or thereunder including, but not limited
to, rights, claims or remedies of subrogation, indemnity, exoneration,
participation, reimbursement or contribution and whether any such rights, claims
or remedies arise in equity, under contract, by statute, under common law or
otherwise, and Guarantor hereby agrees not to assert any such rights, claims or
remedies unless and until the Guaranteed Obligations are so paid in full and all
credit arrangements between the Borrower and the Guaranteed Party are
terminated. In addition, if any such rights, claims or remedies result in the
Lender being an "insider" of the Borrower for purposes of the Federal Bankruptcy
Code (or other similar law), such rights, claims or remedies are hereby waived.
7. CREDIT DECISION. The Guarantor has independently, and without reliance
on any information supplied by the Guaranteed Party, taken, and will continue to
take, whatever steps Guarantor deems necessary to evaluate the financial
condition and affairs of the Borrower, and the Guaranteed Party shall have no
duty to advise the Guarantor of information at any time known to Guaranteed
Party regarding such financial condition or affairs.
8. CONTINUANCE OF GUARANTY. This is a continuing guaranty and shall remain
in full force and effect, and shall be binding upon the Guarantor unless written
notice sent by registered or certified mail, addressed to Fleet National Bank,
One Landmark Square, Stamford, Connecticut 06901, Attention: Asset-Based
Lending, of its revocation as to future Guaranteed Obligations shall actually be
received by the Guaranteed Party at least five (5) days prior to the date set
for such revocation in such notice. No such revocation shall release the
Guarantor, or affect in any manner the Guaranteed Party's rights, remedies or
powers under this Agreement, with respect to any Guaranteed Obligation
(including without limitation any renewal, modification, substitution,
replacement, extension, refunding or other refinancing thereof) arising prior to
such date of revocation (and including without limitation, for the avoidance of
doubt, any and all reimbursement obligations relating to any letter of credit
issued prior to the date of revocation and all loans made prior to such date
(both principal and interest (whether such interest accrues before or after such
date) and all collection and other costs and expenses (whenever accrued)
relating in any way to any such Guaranteed Obligation). The revocation by any
other guarantor of his/her/its guaranty shall not revoke or otherwise affect any
obligations of the Guarantor hereunder. Guarantor has specifically considered
the foregoing termination provisions and agrees they are reasonable.
9. RIGHTS AND REMEDIES CUMULATIVE AND NOT EXCLUSIVE. All of the Guaranteed
Party's rights, remedies and powers hereunder shall be cumulative, and not
exclusive, and may be exercised singly or concurrently, and shall be in addition
to all other rights, remedies and powers of the Guaranteed Party under
Applicable Law (as defined in the Credit Agreement) or under any other
agreement, instrument or other document. Guaranteed Party may exercise any or
all such rights, remedies or powers at any time(s) in any order which the
Guaranteed Party chooses.
10. EXPENSES. The Guarantor shall pay, or reimburse the Guaranteed Party,
on demand, for all of the Guaranteed Party's costs and expenses (including
without limitation reasonable fees and disbursements of legal counsel,
appraisers, accountants, and other experts, employed or
<PAGE>
-6-
retained by the Guaranteed Party) incurred in connection with protecting,
preserving, defending, exercising or enforcing this Agreement or any of the
rights, powers or remedies of the Guaranteed Party under this Agreement or in
attempting to do any of the foregoing.
11. NO WAIVERS OF RIGHTS; AMENDMENTS; WHEREAS CLAUSES. The Guaranteed Party
shall not by any act (except by a written instrument pursuant to the provisions
of this Section set forth below), delay, indulgence, omission or otherwise be
deemed to have waived any right, remedy or power hereunder or to have acquiesced
in any default or other breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the part of the Guaranteed
Party, any right, remedy or power shall operate as a waiver thereof. No single
or partial exercise of any right, remedy or power hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, remedy or
power. A waiver by the Guaranteed Party of any right, remedy or power hereunder
on any one occasion shall not be construed as, or constituted a bar to, any
right, remedy or power which the Guaranteed Party would otherwise have on any
future occasion. None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed and delivered by the party sought to be charged. The
"Whereas" clauses in this Agreement shall form a substantive part of the
agreement of the parties and the Lender in entering into the Credit Agreement is
relying on the truth and accuracy of same.
12. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
Connecticut without regard to rules pertaining to conflicts of laws thereunder.
THE GUARANTOR HEREBY SUBMITS TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED IN THE STATE OF CONNECTICUT IN CONNECTION WITH
ANY ACTION OR PROCEEDING ARISING OUT OF OR OTHERWISE RELATED TO OR OTHERWISE IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT AND WAIVES ANY
OBJECTION GUARANTOR MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD SAME. GUARANTOR AGREES THAT SERVICE
OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE GUARANTOR AT THE ADDRESS OF THE GUARANTOR SET
FORTH IN THE FIRST PARAGRAPH HEREOF OR SUCH OTHER ADDRESS OF WHICH THE
GUARANTEED PARTY SHALL HAVE BEEN NOTIFIED PURSUANT TO SECTION 18 BELOW.
GUARANTOR AGREES THAT NOTHING CONTAINED HEREIN SHALL EFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
OF THE GUARANTEED PARTY (OR ITS SUCCESSORS OR ASSIGNS) TO BRING ANY LEGAL ACTION
OR PROCEEDING IN ANY OTHER JURISDICTION.
<PAGE>
-7-
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
14. BINDING NATURE. This Agreement shall be binding upon the Guarantor and
Guarantor's successors, assigns, heirs and representatives and shall inure to
the benefit of and be enforceable by the Guaranteed Party, and Guaranteed
Party's successors, assigns and representatives. The Guaranteed Party may sell
or assign any or all of the Guaranteed Obligations, and any of its rights and
obligations under any agreement or instrument, evidencing, governing, securing
or otherwise relating thereto, and the transferee shall have the same rights
hereunder with respect to the assigned Guaranteed Obligations as had the
Guaranteed Party. Any successor to the Guaranteed Party (including without
limitation any successor by merger) shall succeed to the full rights of the
Guaranteed Party hereunder. The Guarantor may not assign the Guarantor's rights
or duties hereunder without the prior written consent of the Lender.
15. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in such jurisdiction, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
16. INTEGRATION. This Agreement represents the agreement of the Guarantor
with respect to the subject matter hereof and supersede all oral negotiations
and prior writings with respect to the subject matter hereof, AND THERE ARE NO
PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE GUARANTEED PARTY
RELATIVE TO THE SUBJECT MATTER HEREOF THAT ARE NOT EXPRESSLY SET FORTH OR
REFERRED TO HEREIN.
17. LIEN; RIGHT OF SET-OFF. Guarantor hereby grants to the Guaranteed Party
a lien and right of set-off for all of the Guarantor's liabilities or other
obligations to the Guaranteed Party, whether hereunder or otherwise, upon and
against all property of the Guarantor which may now be, or may in the future
come into, the possession, custody or control of the Guaranteed Party, or be in
transit to the Guaranteed Party, including but not limited to deposits (general
or special, time or demand, matured or unmatured), credits, securities,
instruments, or the proceeds thereof. The Guaranteed Party may at any time
(whether or not Guaranteed Party has made demand hereunder) set-off and apply
such property or any part thereof to any of the Guarantor's liabilities or other
obligations to the Guaranteed Party, whether under this Agreement or otherwise,
and whether or not any or all such liabilities or other obligations are matured
at the time of such set-off or application, even if effecting such set-off or
application results in a loss or reduction of interest or the imposition of a
penalty applicable to the early withdrawal of time deposits.
18. NOTICES. Notices by one party to the other hereunder shall be in
writing, and shall be deemed to have been duly given or made when delivered by
hand, or one Business Day (as defined in the Credit Agreement) after being sent
by overnight mail by Federal Express or other nationally recognized overnight
courier service, or four Business Days after being deposited in the mail, first
class postage prepaid, in each case addressed to such other party at the address
set forth
<PAGE>
-8-
in the first paragraph hereof. Either party may change its address for purposes
of this paragraph by written notice to the other party sent in the manner set
forth in this Section. Anything contained herein to the contrary, any notices to
the Guaranteed Party referred to in Section 8 above are to be sent in accordance
with the provisions thereof and shall only be deemed given when actually
received.
19. NO RULE OF STRICT CONSTRUCTION; NUMBER AND GENDER. Guarantor
acknowledges that Guarantor and Guarantor's counsel have had an opportunity to
review this Agreement and no rule of strict construction shall be used against
the Guaranteed Party. Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.
20. [INTENTIONALLY OMITTED.]
21. CERTAIN REPRESENTATIONS AND COVENANTS. IN ORDER TO INDUCE THE
GUARANTEED PARTY TO MAKE EXTENSIONS OF CREDIT UNDER THE CREDIT AGREEMENT, THE
GUARANTOR HEREBY REPRESENTS AND WARRANTS TO THE GUARANTEED PARTY THAT (I) THIS
AGREEMENT IS THE LEGAL, VALID AND BINDING OBLIGATION OF THE GUARANTOR,
ENFORCEABLE AGAINST THE GUARANTOR IN ACCORDANCE WITH ITS TERMS, (II) THE
EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS AGREEMENT HAS BEEN
DULY AUTHORIZED BY ALL NECESSARY CORPORATE AND, IF REQUIRED, STOCKHOLDER ACTION,
AND (III) THE EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS
AGREEMENT IS AND WILL BE WITHIN THE GUARANTOR'S POWERS, CORPORATE AND OTHERWISE,
AND DOES NOT AND WILL NOT VIOLATE OR BREACH ANY STATUTE, REGULATION, OR OTHER
APPLICABLE LAW (AS DEFINED IN THE CREDIT AGREEMENT) OR THE GUARANTOR'S
CERTIFICATE OF INCORPORATION OR BY-LAWS.
22. WAIVER OF TRIAL BY JURY; CHAPTER 903(A) WAIVER; WAIVER OF CONSEQUENTIAL
DAMAGES.
(a) THE GUARANTEED PARTY AND THE GUARANTOR EACH VOLUNTARILY AND
KNOWINGLY WAIVE TRIAL BY JURY AND THEIR RESPECTIVE RIGHTS THERETO IN ANY
ACTION OR PROCEEDING OF ANY KIND TO WHICH THEY ARE BOTH PARTIES AND THAT IN
ANY WAY ARISES UNDER OR OUT OF OR IS OTHERWISE RELATED TO OR OTHERWISE
CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT OR INSTRUMENT
(INCLUDING WITHOUT LIMITATION ANY FINANCING DOCUMENT).
(b) THE GUARANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS
AGREEMENT IS A PART IS A "COMMERCIAL TRANSACTION" WITHIN THE MEANING OF
CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, AND THAT ANY
MONIES, PROPERTY OR SERVICES WHICH ARE THE SUBJECT OF SUCH TRANSACTION ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE GUARANTOR KNOWINGLY AND
VOLUNTARILY WAIVES ANY RIGHT WHICH GUARANTOR MIGHT HAVE TO A NOTICE AND A
HEARING UNDER SECTIONS 52-278A TO 52-278G, INCLUSIVE, OF THE CONNECTICUT
GENERAL STATUTES, AS AMENDED, OR OTHER APPLICABLE FEDERAL OR STATE LAW, IN
THE EVENT THE GUARANTEED PARTY (OR ITS SUCCESSORS OR ASSIGNS) SEEKS ANY
PREJUDGMENT REMEDY IN CONNECTION WITH THIS AGREEMENT.
<PAGE>
-9-
(c) GUARANTOR HEREBY FURTHER WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT GUARANTOR MAY HAVE TO CLAIM OR RECOVER IN ANY
LEGAL PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR OTHERWISE RELATED TO
THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.
<PAGE>
-10-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.
WITNESSES: T.F. Cushing, Inc.
/S/ EDWARD A. WEISS By: /S/ IRENE MARCIC
- ----------------------- -----------------------------------
Name: Edward A. Weiss Name: Irene Marcic
Title: Vice President
Fleet National Bank
/S/ EDWARD A. WEISS By: /S/ ANTHONY M. MCKIERNAN
- ----------------------- -----------------------------------
Name: Edward A. Weiss Name: Anthony M. McKiernan
Title: Assistant Vice-President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements at September 30, 1997 (unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 37
<SECURITIES> 0
<RECEIVABLES> 1,722
<ALLOWANCES> (82)
<INVENTORY> 2,876
<CURRENT-ASSETS> 4,642
<PP&E> 1,107
<DEPRECIATION> (302)
<TOTAL-ASSETS> 5,447
<CURRENT-LIABILITIES> 1,043
<BONDS> 0
0
0
<COMMON> 54
<OTHER-SE> 3,248
<TOTAL-LIABILITY-AND-EQUITY> 5,447
<SALES> 7,787
<TOTAL-REVENUES> 7,787
<CGS> 5,987
<TOTAL-COSTS> 5,987
<OTHER-EXPENSES> 1,487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65
<INCOME-PRETAX> 248
<INCOME-TAX> 11
<INCOME-CONTINUING> 237
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 237
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
