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, 1998
-------------------------------------------------
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 9, 1998 common
shares outstanding were 5,659,277.
<PAGE>
INDEX
Page
No.
PART I:
- -------
Financial Statements:
Consolidated Balance Sheets
September 30, 1998 (unaudited) and March 31, 1998 ............... 1
Consolidated Statements of Income (unaudited)
Six months and three months ended September 30, 1998 and 1997 ... 2
Consolidated Statements of Cash Flows (unaudited)
Six months ended September 30, 1998 and 1997 .................... 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
<PAGE>
PART I - Financial Information
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1998 March 31, 1998
(Unaudited)
------------------ --------------
(000) Omitted
<S> <C> <C>
Current Assets:
Cash $2 $2
Accounts receivable (net of allowance
for doubtful accounts of $79 at June 30, 1998
and at March 31, 1998) 1,547 1,502
Inventory 3,514 3,383
Prepaid expenses and other
current assets 110 62
-------- --------
Total current assets 5,173 4,949
Property, plant and equipment at cost (net of
accumulated depreciation of $394 at September 30,
1998 and $349 at March 31, 1998) 732 772
Investments 350 50
-------- --------
Total Assets $6,255 $5,771
======== ========
Current Liabilities:
Accounts payable 759 985
Accrued liabilities 399 334
Current portion of capital lease obligation 48 48
-------- --------
Total current liabilities 1,206 1,367
-------- --------
Capital lease obligation 54 78
Loans payable 1,524 1,200
-------- --------
2,784 2,645
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 6,572,863 shares at
September 30, 1998 and issued 5,372,863
shares at March 31, 1998 66 54
Additional paid-in capital 3,908 3,620
Accumulated deficit (227) (269)
-------- --------
3,747 3,405
Less: treasury stock, at cost (913,586 shares) (265) (265)
Less: deferred compensation (11) (14)
-------- --------
Total shareholders' equity 3,471 3,126
-------- --------
Total liabilities and shareholders' equity $6,255 $5,771
======== ========
</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,
1998 1997 1998 1997
-------------------------------------------- --------------------------------------------
(000) Omitted (000) Omitted
<S> <C> <C> <C> <C>
Net sales $6,783 $7,787 $3,367 $3,824
Cost of sales 5,193 5,987 2,600 2,954
-------- -------- -------- --------
Gross profit 1,590 1,800 767 870
Selling, general and
administrative expenses 1,481 1,487 748 721
-------- -------- -------- --------
Income from operations 109 313 19 149
Interest expense 57 65 30 27
-------- -------- -------- --------
Income before provision
for income taxes 52 248 (11) 122
Provision for income taxes 11 11 6 4
-------- -------- -------- --------
Net income $41 $237 ($17) $118
======== ======== ======== ========
Per share data for the three months ended September 30, 1998 and 1997 are as
follows:
Weighted average number of
common shares outstanding:
Basic 4,838,252 5,240,363 5,344,168 5,240,363
========= ========= ========= =========
Diluted 4,970,752 5,375,363 5,476,668 5,375,363
========= ========= ========= =========
Net income per share:
Basic $0.01 $0.04 $0.00 $0.02
========= ========= ========= =========
Diluted $0.01 $0.04 $0.00 $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,
1998 1997
--------------------------------------
(000) Omitted
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $41 $237
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 45 51
Stock compensation 4 4
Changes in assets and liabilities:
Increase in accounts receivable, net (45) (52)
Increase in prepaid expenses and other
current assets (49) (26)
(Increase) decrease in inventory (132) 437
Decrease in accounts payable (226) (221)
Increase (decrease) in accrued liabilities 67 (131)
-------- ---------
Net cash (used in) provided by operating activities (295) 299
-------- ---------
Cash flows used in investing activities:
L/T Investment (Enigma) (300) 0
Capital expenditures (5) (17)
-------- ---------
Net cash used in investing activities (305) (17)
-------- ---------
Cash flows from financing activities:
Proceeds from Common Stock issuance 300 0
Principal payments under capital lease obligations (24) (21)
Proceeds from (repayments of) loans payable, net 324 (226)
-------- ---------
Net cash provided by (used in) financing activities 600 (247)
-------- ---------
Net increase in cash for the three months
ended September 30 0 35
Cash - beginning of period 2 2
-------- ---------
Cash - end of period $2 $37
======== ========
</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,
1998. The results of operations and cash flows for the six month period ended
September 30, 1998 and 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, 1998 and 1997
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, 1998 and 1997 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.
As discussed in greater detail in Item 5 of Part II hereof, on July 20, 1998 the
Company entered into an agreement to purchase an 8% equity interest in Enigma
Energy Company, L.L.C. together with an option to purchase the remaining equity
in that entity in late 1998 or early 1999. The Company funded the $300,000
purchase price through the private placement of 1,200,000 unregistered shares of
it's Common Stock with its Chairman of the Board and members of his family at
twenty-five cents per share.
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, 1998 was
approximately $41,000, a decrease of $196,000 from the same period last fiscal
year. This decrease is principally the result of lower sales.
Sales decreased by approximately $1,000,000, or 12.8%, for the six
months and approximately $ 457,000 for the three months ended September 30,
1998, from the comparable six and three month period in 1997, respectively. This
decrease is the result of generally weak market conditions along with the
Company's decision not to continue accepting certain large low margin orders, as
it had through its T.F. Cushing subsidiary, in the six month period ending
September 30, 1997.
Gross profit percentages remained constant at approximately 23% for the
six months and three months ended September 30, 1998 from the comparable period
in 1997.
Selling, general and administrative expenses decreased slightly by
approximately $6,000, or .4%, for the six months and increased by approximately
$27,000 or 4% for the three months ended September 30, 1998 from the comparable
previous six month and three month period in 1997, in spite of the decrease in
sales and commission expense. This increase is primarily the result of
additional expenses associated with the implementation and certification of ISO
9002 and marginal increases in selling and administrative salaries in the
quarter ended September 30, 1998. ISO 9002 is a globally recognized certifiable
series of standards for implementing and managing a quality system in order to
ensure a quality product. The Company has made this investment to increase its
marketability in both the United States and internationally.
Interest expense decreased approximately $8,000 for the six months
ended September 30, 1998 and increased $3,000 for the three months ended
September 30, 1998, from the previous comparable six month and three month
period in 1997. This decrease is due primarily to lower interest rates for the
three months ended June 30, 1998, as a result of the new lending agreement dated
July 9, 1997, as discussed further under "Liquidity and Capital Resources". The
increase in the three month period from July 1 through September 30, 1998 from
the prior comparible three month period in 1997 was primarily the result of an
increase in borrowings due to the reduction in sales.
5
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company used $324,000 in cash from its increased line of credit to purchase
inventory and pay down accounts payable. At September 30, 1998, the Company had
working capital of $3,967,000 and its stockholders' equity was $3,471,000. 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 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, 1998 the
Company owed approximately $1,524,000 on the Line. On July 9, 1997, the Company
changed its secured lender. The terms of the new secured lending arrangement
(expiring in July 1999) were substantially the same as the previous arrangement
except that (i) the lender is a commercial bank, and (ii) the interest rate is
appreciably lower. The Company's relationship with its new and previous secured
lenders is and was satisfactory. The change in secured lenders was voluntarily
made by the Company in order to obtain a lower interest rate. On August 31, 1998
the Company amended its agreement dated July 9, 1997 to increase its maximum
availability under its credit line, subject to sufficient supporting inventory
and receivables, from $2,500,000 to $3,500,000. In addition, the Company lowered
its interest rate by .5% and extended the agreement until July 7, 2000. The
Company believes that the new secured lending arrangement will be adequate for
the foreseeable future.
As discussed in greater detail in Item 5 of Part II hereof, on July 20, 1998 the
Company entered into an agreement with Enigma Energy Company, L.L.C. the funds
for which were secured through a private placement of the Company's Common
stock. Under the agreement the Company purchased an 8% equity interest in Enigma
together with an option to purchase the remaining equity in that entity in late
1998 or early 1999. In order to have funds available to exercise that option,
should it so elect, the Company is presently contemplating, among other
considerations, a future, substantially non transferable, rights offering to be
made solely to shareholders.
OTHER MATTERS
The Company has completed its assessment of its internal systems and has
determined them to be year 2000 compliant. Currently, the Company's major
suppliers are either year 2000 compliant or expect to be by April 1999.
Management believes that the consequences of the change to the year 2000 should
not have a material impact on the Company's ability to do business, results of
operations, or financial condition. See "Cautionary Language Regarding Future
Looking Statements" in Part II, Item 5 "Other Information".
6
<PAGE>
PART II - OTHER INFORMATION
Item 2 (c). Changes in Securities
On July 15, 1998 the Company sold 1,200,000 unregistered shares of Common Stock
through a private placement (pursuant to Section 4(2) of the Securities and
Exchange Act of 1933) to its Chairman of the Board and members of his family at
twenty-five cents per share or $300,000. If the Company does not make a rights
offering of registered shares to substancially all shareholders on similar terms
in 1998 then the Company will have the option of repurchasing those privately
placed shares. ( This information was disclosed in Item 5 of the Company's June
30, 1998 Form 10-QSB.)
Item 5. Other Information
On July 20, 1998 the Company entered into an agreement with Enigma Energy
Company, L.L.C. ("Enigma") and its members to purchase an 8% equity interest in
Enigma with an option ("Option") to purchase the remaining equity interest in
late 1998 or early 1999. While the Company has no prior experience in the oil
and gas industry it believes that the industry at this time offers the Company a
sound business opportunity and that Enigma may be a good entry vehicle.
Enigma Energy Company L.L.C. is a closely held Dallas, Texas producer of natural
gas and oil. It owns the working interests in several leases located in Panola
County Texas, which include six producing wells, two `shut in' wells, and
several potential well sites. In addition, it owns interests in two other
producing wells. The purchase price for the 8% equity interest in Enigma and the
Option was $300,000. These funds were secured by the Company through the sale of
shares of its common stock in a private placement.
The Option: The Option grants the Company the right to purchase the remaining
92% of Enigma during late 1998 or early 1999 after the Company has had an
opportunity to further evaluate Enigma's properties. There can be no assurance
at this time that the Company will in fact elect to exercise the Option and it
is quite possible that it will not.
If the Company elects to exercise the Option the exercise price will be
$1,200,000 plus a "back-end" payment of the Company's Common Stock to be
measured, valued and paid in the summer of 1999. Subject to adjustment the
amount of shares to be paid in the summer of 1999 will equal $2,800,000
`adjusted book value'. However, depending upon an optional valuation of the
Enigma properties in the summer of 1999 that amount could be reduced to as
little as zero (i.e. no stock to be issued) or increase by as much as 15%. The
net effect of this "back-end" payment could be to give Enigma equity holders
(other then the Company) approximately 40% of the Company's then outstanding
Common Stock. In order to have funds available to exercise the Option, should it
so elect, the Company is presently contemplating, among other considerations, a
future, substantially non transferable, rights offering to be made solely to
shareholders.
7
<PAGE>
If the Company elects to exercise the Option then to a significant extent it
would also be in the business of finding and producing oil and natural gas. In
that event it presently anticipates that this business and the Company's present
business would be independently managed under the Board of Directors. Enigma's
financial and corporate records would be maintained at the Company's Plainview
headquarters but otherwise it would be anticipated that Enigma would continue
under it's present management and contract well operator. In addition it would
be anticipated that two or three present Enigma equity holders would join the
Company's Board of Directors.
If the Company elects not to exercise the Option, as may quite possibly be the
case, it will continue to own the just purchased 8% equity interest in Enigma
and to the extent any funds have been raised pursuant to a rights offering or
otherwise, those funds will be retained for working capital purposes, including
future possible acquisitions.
The Private Placement: The Company funded the $300,000 purchase price through
the private placement of 1,200,000 unregistered shares of it's Common Stock with
it's Chairman of the Board and members of his family at twenty-five cents per
share. If the Company does not make a rights offering of registered shares to
substantially all shareholders on similar terms in November 1998 then the
Company will have the option of repurchasing those privately placed shares.
Cautionary Language Regarding Future Looking Statements.
This Item 5 and 'Management's Discussion and Analysis or Plan of Operations'
earlier herein contains forward looking statements that involve risks and
uncertainties, including those relating to a future Company decision or ability
to (or not to) exercise the Option, to commence or complete a rights offering,
or to repurchase the stock sold in the private placement and those relating to
the value of Enigma's oil and gas properties or future drilling of and
production from the same or to be year 2000 compliant. Other potential risks and
uncertainties include, among others, the competitive nature of the Company's
current business, the risks of, the sometime speculative nature of, and the
competetive nature of the oil and gas business and the facts that if the Company
elects not to exercise the Option it will hold only a minority interest in
Enigma, a closely-held, non-publicly traded limited liability company and if the
Company elects to exercise the Option it will be entering a business in which it
has no prior experience. More information about some of the many potential
factors which could affect the Company's business and financial results is
included in the Company's Annual Report on Form 10-KSB for the year ended March
31, 1998, including (without limitation) under the captions "Description of
Business", "Description of Property" and "Management's Discussion and Analysis
or Plan of Operation," which is on file with the Securities and Exchange
Commission (http://www.sec.gov).
8
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits
--------
<TABLE>
<CAPTION>
Previously Filed and Incorporated
Exhibit Description by reference or Filed Herewith
- ------- ----------- ------------------------------
<S> <C> <C>
3 (a) Certificate of Incorporation of Astrex, Inc., as amended Filed as Exhibit 3(a) to the Form
(a Delaware corporation) 10-QSB of the Company for the quarter
ended September 30, 1997
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) Purchase and Option Agreement between Astrex, Inc., Enigma Filed as Exhibit 10(a) to the Form
Energy Company and Members dated June 6, 1998 10-QSB of the Company for the quarter
ended June 30, 1998
10(b) Subscription and Stock Purchase Agreement between Astrex, Filed as Exhibit 10(b) to the Form
Inc. and John C. and Elizabeth S. Loring dated July 15, 1998 10-QSB of the Company for the quarter
ended June 30, 1998
10(c) Amended and Restated Revolving Credit Promissory Note Filed herewith
between Astrex,Inc. and Fleet National Bank dated August
31, 1998
10(d) Amendment No. 1 to Credit and Security Agreement between Filed herewith
Astrex, Inc. and Fleet National Bank dated August 31, 1998
10(e) Guaranty Confirmation Agreement between T.F. Cushing, Inc. Filed herewith
and Avest, Inc. and Fleet National Bank dated August 31,
1998
27 Financial Data Schedule Filed herewith
</TABLE>
(B) Reports on Form 8-K:
None
9
<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, thereunto
duly authorized.
ASTREX, INC.
Date: November 10, 1998 By: s/ Michael McGuire
------------------ ------------------
Michael McGuire
Director, President and
Chief Executive Officer
CHIEF FINANCIAL OFFICER
OF ASTREX, INC.
Date: November 10, 1998 s/ Lori A. Sarnataro
------------------ -------------------------
Lori A. Sarnataro
Chief Financial Officer
10
<PAGE>
EXHIBIT 10(c)
-------------
AMENDED AND RESTATED REVOLVING CREDIT PROMISSORY NOTE
$3,500,000.00 Stamford, Connecticut
August 13, 1998
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 Three Million Five Hundred Thousand
Dollars ($3,500,000.00) 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 July 9, 1997 between the Borrower, T.F. Cushing, Inc.
and the Lender, as 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, 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.
<PAGE>
-2-
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 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.
<PAGE>
-3-
(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.
10. Amended and Restated Note. This Note (i) amends and restates the Revolving
Credit Promissory Note, dated July 9, 1997, from the Borrower to the Lender (the
"Existing Note"), (ii) evidences, in addition to any Revolving Credit Loans made
by the Lender on or after the date hereof, any Revolving Credit Loans
outstanding as of the date hereof and previously evidenced by the Existing Note
and (iii) and is a modification with respect to, and does not constitute a
novation of, any such outstanding Revolving Credit Loans.
Anything contained herein to the contrary notwithstanding, and in
addition to, and not in limitation of, any other obligations of the Borrower
hereunder, the Borrower shall pay to the Lender in accordance with the Credit
and Security Agreement any unpaid interest which has accrued under the Existing
Note, as of the date hereof, on any outstanding Revolving Credit Loans.
<PAGE>
-4-
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note
as of the day and year first written above.
WITNESS: ASTREX, INC.
/s/ Lori A. Sarnataro By: /s/ Michael McGuire
- ------------------------ ----------------------------
Name: Lori A. Sarnataro Name: Michael McGuire
Title: President
<PAGE>
EXHIBIT 10(d)
AMENDMENT NO. 1
TO
CREDIT AND SECURITY AGREEMENT
AMENDMENT NO. 1 to CREDIT AND SECURITY AGREEMENT, dated as of August
31, 1998, by and between ASTREX, INC. ("Borrower") T.F. CUSHING, INC ("TFCI")
and FLEET NATIONAL BANK (the "Lender" or "Bank").
WITNESSETH:
WHEREAS, the Borrower, TFCI and the Bank executed and delivered a
certain Credit and Security Agreement, dated as of July 9, 1997 (the "Credit
Agreement"); and
WHEREAS, the Credit Agreement provides for, among other things, a
$2,500,000 revolving credit facility; and
WHEREAS, the Borrower and if TFCI have requested that the Lender
increase the amount of such revolving credit facility from $2.5 million to $3.5
million; and
WHEREAS, the Borrower has also requested that (i) the pricing on the
LIBOR Revolving Credit Portions under the Credit Agreement be decreased from the
LIBOR Rate plus two percent per annum to the LIBOR Rate plus one and one-half
percent per annum and (ii) the Revolving Credit Maturity Date and Revolving
Credit Loan Termination Date be extended from July 9, 1999 to July 7, 2000; and
WHEREAS, the Lender has agreed to such request provided that, among
other conditions precedent, (a) (i) the Borrower and TFCI execute and deliver
(i) this Amendment No. 1, and (ii) the Borrower executes and delivers a
$3,500,000 Amended and Restated Revolving Credit Promissory Note in the form of
Exhibit A attached hereto and hereby made a part hereof (the "1998 Note") and
(b) TFCI and Avest (as defined in the Credit Agreement) execute and deliver a
Guaranty Confirmation Agreement.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Lender hereby agree as follows:
<PAGE>
-2-
PART I. AMENDMENTS TO THE CREDIT AGREEMENT
Section 1. Section 1.3 of the Credit Agreement is hereby amended by
deleting the phrase "revolving credit promissory note" and inserting in lieu
thereof the phrase "amended and restated revolving credit promissory note".
Section 2. Section 1.4 of the Credit Agreement is hereby amended by
deleting the phrase "(ii) two percent (2%) (i.e., 200 basis points)" and
inserting in lieu thereof the phrase "(ii) one and one-half percent (1 1/2%)
(i.e., 150 basis points)".
Section 3. Sections 2.3 and 2.4 of the Credit Agreement are hereby
amended by deleting the date "March 31, 1997" and inserting in lieu thereof the
date "March 31, 1998".
Section 4. (a) Section 3.2(a) of the Credit Agreement is hereby
clarified by adding a closed parenthesis at the end of the first sentence
thereof.
(b) Section 8.5(a) of the Credit Agreement is hereby clarified by
deleting the word "not" in the fourth line thereof.
Section 5. Section 8.6 of the Credit Agreement is hereby amended by
deleting the phrase "Attention: Irene Marcic" and inserting in lieu thereof the
phrase "Attention: Michael McGuire".
Section 6. The definition of the term Borrowing Base contained in
Appendix A to the Credit Agreement is hereby amended by deleting the phrase
"Exhibit C" and inserting in lieu thereof the phrase "Exhibit B".
Section 7. The definition of the term "Financial Statements" in such
Appendix A is hereby amended and restated to read in its entirety as follows:
"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
thereof, by KPMG Peat Marwick LLP, independent public accountants, and
the consolidated balance sheet of the Borrower and its Subsidiaries as
at March 31, 1998 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 thereof, by
KPMG Peat Marwick LLP, independent public accountants.
<PAGE>
-3-
Section 8. The definition of the term "Liabilities" contained in such
Appendix A is hereby and restated to read in its entirety as follows:
"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 and/or
any of its Subsidiaries and prepared in accordance with GAAP, or would
be noted or presented in any footnote thereto, and including without
limitation any Indebtedness of the Borrower or any of its Subsidiaries
and (ii) all obligations, indebtedness and other liabilities of any
other Person secured by any Lien on any assets or other properties of
the Borrower and/or any of its Subsidiaries.
Section 9. The definition of the term "Receivables" in such Appendix A
is hereby clarified by deleting the word "Borrower" each time it appears and
inserting in lieu thereof (in each such instance) the phrase "Borrower or TFCI,
as the case may be"
Section 10. The definition of the term "Revolving Credit Loan" and
"Revolving Credit Loans" in such Appendix A is hereby clarified by deleting the
phrase "Libor Loans and Prime Rate Loans made pursuant to the Credit Agreement"
and inserting in lieu thereof "any and all Loans consisting of part of the Prime
Rate Revolving Credit Portion or part of the LIBOR Revolving Credit Portion".
Section 11. The definition of the term "Revolving Credit Loan
Termination Date" is hereby amended by deleting the date "July 9, 1999" and
inserting in lieu thereof the date "July 7, 2000".
Section 12. The definition of the term "Revolving Credit Maturity Date"
is hereby amended by deleting the date "July 9, 1999" and inserting in lieu
thereof the date "July 7, 2000".
Section 13. The definition of the term Revolving Credit Maximum Amount
in such Appendix A is hereby amended by deleting the phrase "(i) Two Million
Five Hundred Thousand Dollars ($2,500,000) or" and inserting in lieu thereof the
phrase "(i) Three Million Five Hundred Thousand Dollars ($3,500,000) or".
Section 14. Exhibit A to the Credit Agreement is hereby amended and
restated to read in its entirety as set forth in Exhibit A attached hereto and
made a part hereof and Exhibit A attached hereto shall be and become, for all
purposes, Exhibit A to the Credit Agreement.
<PAGE>
-4-
PART II. CONDITIONS PRECEDENT
-----------------------------
Section 15. The Lender's agreement to enter into the amendments set
forth in this Amendment is contingent upon the following conditions precedent
being satisfied by the Borrower:
(a) The Borrower and TFCI shall execute and deliver this
Amendment the Borrower shall execute and deliver the 1998 Note
and the Borrower and TFCI shall execute and deliver such other
documents as the Bank may reasonably require.
(b) TFCI and Avest shall execute and deliver a Guaranty
Confirmation Agreement in form and substance reasonably
satisfactory to the Lender.
(c) Each of the Borrower and TFCI shall cause the delivery of
a certificate of its corporate secretary or assistant
secretary (i) certifying (and attaching) resolutions adopted
by its Board of Directors authorizing the execution, delivery
and performance of this Amendment, the 1998 Note (in the case
of the Borrower) and all related documentation, (ii)
certifying that no amendments have been made to the Borrower's
or TFCI, as the case may be, certificate of incorporation or
by-laws (or, if such changes have been made, attaching copies
of the relevant amendment documents), and (iii) certifying as
to the incumbency (and signature) of any officer of the
Borrower or TFCI's, as the case may be, which executes and
delivers this Amendment or (in the case of the Borrower) the
1998 Note.
(e) UCC search reports are delivered to the Bank with respect
to filings made against the Borrower or TFCI and good standing
certificates with respect to the Borrower and TFCI are
delivered to the Bank.
(f) The Borrower shall pay the fees and disbursements of the
Lender's legal counsel incurred in connection with this
Amendment and any related documents and matters.
PART III. MISCELLANEOUS
-----------------------
Section 16. Pursuant to Section 1.3 of the Credit Agreement and the
amendments set forth above, any reference to the term "Note" in the Credit
Agreement shall mean the 1998 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 the 1998 Note.
<PAGE>
-5-
Section 17. Except as amended hereby, the Credit Agreement as
originally constituted shall remain in full force and effect.
Section 18. Each of the Borrower and TFCI hereby represents and
warrants and covenants to the Lender that:
(i) The execution, delivery and performance by the Borrower and TFCI of
this Amendment, the 1998 Note (in the case of the Borrower) and any
related documents have been duly authorized by all necessary corporate
action on the part of the Borrower or TFCI, as the case may be, and do
not violate, conflict with, or result in a breach of the certificate of
incorporation or by-laws of Borrower or TFCI, as the case may be, or
any agreement or instrument or court order or judgment to which
Borrower or TFCI, as the case may be, is a party or which is binding
upon Borrower or TFCI, as the case may be, or any of their properties.
This Amendment, the 1998 Note and any related documents to which the
Borrower or TFCI is a party are the respective legal, valid and binding
obligations of the Borrower, or TFCI, as the case may be, enforceable
in accordance with their respective terms.
(ii) The Credit Agreement as amended hereby and all other Financing
Documents (as defined in the Credit Agreement) to which the Borrower or
TFCI, as the case may be, is a party are the respective legal, valid
and binding obligations of the Borrower or TFCI, as the case may be,
enforceable in accordance with their respective terms.
(iii) The security interests granted by the Borrower and TFCI, pursuant
to the Credit Agreement, in the Collateral (as defined in the Credit
Agreement) remain in full force and effect and secure the payment and
performance of all Secured Obligations (as defined in the Credit
Agreement).
(iv) Neither the Borrower nor TFCI, as of the date hereof, has any
claim, defense, counterclaim, or right of offset against the Lender,
whether relating to the Credit Agreement or otherwise.
(v) All representations and warranties of the Borrower or TFCI, as the
case may be, under the Credit Agreement and the other Financing
Documents to which it is a party are true and correct as of the date
hereof.
Section 19. This Amendment (i) may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall be considered one instrument and (ii) shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
<PAGE>
-6-
Section 20. This Amendment shall be construed in accordance with and
governed by the laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
ASTREX INC.
By: /s/ Michael McGuire
--------------------------------
Name: Michael McGuire
Title: President
T.F. CUSHING, INC.
By: /s/ Michael McGuire
--------------------------------
Name: Michael McGuire
Title: President
FLEET NATIONAL BANK
By: /s/Anthony McKiernan
--------------------------------
Name: Anthony McKiernan
Title: Vice-President
<PAGE>
Amendment no.1 to Credit And Security Agreement
EXHIBIT A
AMENDED AND RESTATED REVOLVING CREDIT PROMISSORY NOTE
$3,500,000.00 Stamford, Connecticut
August 13, 1998
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 Three Million Five Hundred Thousand
Dollars ($3,500,000.00) 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 July 9, 1997 between the Borrower, T.F. Cushing, Inc.
and the Lender, as 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.
<PAGE>
-2-
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, 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 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.
<PAGE>
-3-
(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.
10. Amended and Restated Note. This Note (i) amends and restates the Revolving
Credit Promissory Note, dated July 9, 1997, from the Borrower to the Lender (the
"Existing Note"), (ii) evidences, in addition to any Revolving Credit Loans made
by the Lender on or after the date hereof, any Revolving Credit Loans
outstanding as of the date hereof and previously evidenced by the Existing Note
and (iii) and is a modification with respect to, and does not constitute a
novation of, any such outstanding Revolving Credit Loans.
Anything contained herein to the contrary notwithstanding, and in
addition to, and not in limitation of, any other obligations of the Borrower
hereunder, the Borrower shall pay to the Lender in accordance with the Credit
and Security Agreement any unpaid interest which has accrued under the Existing
Note, as of the date hereof, on any outstanding Revolving Credit Loans.
<PAGE>
-4-
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note
as of the day and year first written above.
WITNESS: ASTREX, INC.
/s/ Lori A. Sarnataro By: /s/ Michael McGuire
- ------------------------------ -------------------------------
Name: Lori A. Sarnataro Name: Michael McGuire
Title: President
<PAGE>
EXHIBIT 10 (e)
GUARANTY CONFIRMATION AGREEMENT
AGREEMENT, dated as of August 31, 1998, by and between T.F. CUSHING, INC. and
AVEST, INC. (each a "Guarantor" and collectively the "Guarantors") and FLEET
NATIONAL BANK (the "Bank").
R E C I T A L S
Each Guarantor executed and delivered to the Bank a Guaranty Agreement, dated as
of July 9, 1997 (each, a "Guaranty") pursuant to which each Guarantor absolutely
and unconditionally guaranteed to the Bank the full and prompt payment and
performance when due of the "Guaranteed Obligations" of ASTREX INC. (the
"Borrower") to the Bank, all as set forth in more detail therein. The Bank, T.F.
Cushing, Inc. and the Borrower desire to enter into a certain Amendment No. 1
dated of even or substantially even date herewith.
Each Guarantor shall derive substantial benefits, financial and otherwise, from
the execution and delivery of such Amendment No. 1 and any agreement or
instrument executed in connection therewith (including without limitation any
and all amended and restated notes).
The Bank is only willing to enter into such Amendment No. 1 if, among other
things, each Guarantor executes and delivers this Agreement.
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency which are hereby
acknowledged, and to induce the granting of any further credit by the Bank to
the Borrower, the parties hereto hereby agree as follows:
1. Each Guarantor hereby represents, warrants, confirms and covenants
to the bank that (i) its Guaranty remains in full force and
effect, (ii) its Guaranty remains legal, valid and binding
obligation of such Guarantor, enforceable in accordance with its
terms, (iii) such Guarantor has no claims, counterclaims, defenses
or offsets against the Bank, whether relating to its Guaranty or
otherwise and (iv) pursuant to the provisions of the Guaranty of
such Guarantor, the obligations of the Borrower guaranteed by the
Guarantor pursuant to the Guaranty include without limitation, for
the avoidance of any doubt, all principal, interest, costs, and
expenses (including attorneys' fees) under the 1998 Note ( as
defined in the above-referenced Amendment No. 1). Pursuant to the
applicable terms and provisions set forth or to be set forth in
said Amendment No. 1 (or in any other agreement or instrument)
shall affect the obligations of each Guarantor under its Guaranty.
<PAGE>
2. The execution and delivery of this Agreement (or any other
confirmation (past, present, or future) shall not be construed or
interpreted to create a custom or course of dealing or performance
(or any duty or obligation) pursuant to which the Bank is required
to obtain a confirmation or consent from the Guarantor, or to
notify the Guarantor with respect to any modification or other
event or circumstance. No such consent or confirmation or notice
shall be necessary in connection with any such modification or
other event or circumstance in order to keep the obligations of
each Guarantor under its Guaranty in full force and effect, said
obligations being unconditional as set forth therein.
3. No amendment, waiver or other modification of this Agreement shall
be effective against a party hereto unless set forth in writing
signed by such party. This Agreement may be executed in
counterparts.
4. This Agreement shall (i) be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns
and (ii) shall be governed by and construed in accordance with the
internal laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.
T.F. CUSHING, INC.
By s/ Michael McGuire
----------------------------
Its: President
AVEST, INC.
By s/ Michael McGuire
----------------------------
Its: President
FLEET NATIONAL BANK
By: s/ Anthony McKiernan
----------------------------
Its: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements at September 30, 1998 (unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 1,626
<ALLOWANCES> (79)
<INVENTORY> 3,514
<CURRENT-ASSETS> 110
<PP&E> 1,126
<DEPRECIATION> (394)
<TOTAL-ASSETS> 6,255
<CURRENT-LIABILITIES> 1,206
<BONDS> 0
0
0
<COMMON> 66
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,255
<SALES> 6,783
<TOTAL-REVENUES> 6,783
<CGS> 5,193
<TOTAL-COSTS> 5,193
<OTHER-EXPENSES> 1,481
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57
<INCOME-PRETAX> 52
<INCOME-TAX> 11
<INCOME-CONTINUING> 41
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
