<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 June 30, 1999
-------------
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 August 9, 1999 common
shares outstanding were 5,629,277.
<PAGE>
ASTREX, INC.
INDEX
Page
No.
PART I: Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets
June 30, 1999 (unaudited) and March 31, 1999 . . . . . . . . . . 1
Consolidated Statements of Income (unaudited)
Three months ended June 30, 1999 and 1998 . . . . . . . . . . . 2
Consolidated Statements of Cash Flows (unaudited)
Three months ended June 30, 1999 and 1998 . . . . . . . . . . . 3
Notes to Consolidated Financial Statements (unaudited) . . . . . 4
Item 2. Management's Discussion and Analysis or Plan of Operations . . . 5-7
PART II: Other Information
Other Information and Signatures . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
PART I - Financial Information
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1999 March 31, 1999
(Unaudited)
------------- --------------
(000) Omitted
<S> <C> <C>
Current Assets:
Cash $ 2 $ 2
Accounts receivable (net of allowance
for doubtful accounts of $79 at June 30, 1999
and March 31, 1999) 1,742 1,893
Inventory 4,160 4,440
Prepaid expenses and other
current assets 147 65
------ ------
Total current assets 6,051 6,400
Property, plant and equipment at cost (net of
accumulated depreciation of $463 at June 30,
1999 and $441 at March 31, 1999) 691 706
Other long-term assets 170 140
------ ------
Total Assets $6,912 $7,246
====== ======
Current Liabilities:
Accounts payable 671 979
Accrued liabilities 342 579
Current portion of capital lease obligations 45 46
------ ------
Total current liabilities 1,058 1,604
------ ------
Capital lease obligations 21 32
Long-term debt 2,565 2,413
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, 6,542,863 at June 30,
1999 and March 31, 1999 65 65
Additional paid-in capital 3,902 3,902
Accumulated deficit (434) (505)
Treasury stock, at cost (913,586 shares) (265) (265)
------ ------
Total shareholders' equity 3,268 3,197
------ ------
Total liabilities and shareholders' equity $6,912 $7,246
====== ======
</TABLE>
See accompanying notes to unaudited consolidated financial statements
1
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
1999 1998
-----------------------
(000) Omitted
<S> <C> <C>
Net sales $ 3,853 $ 3,416
Cost of sales 2,972 2,593
---------- ----------
Gross profit 881 823
Selling, general and
administrative expenses 759 733
---------- ----------
Income from operations 122 90
Interest expense 42 27
---------- ----------
Income before provision
for income taxes 80 63
Provision for income taxes 9 5
---------- ----------
Net income $ 71 $ 58
========== ==========
Per share data for the three months ended June 30, 1999 and 1998 are as follows:
Weighted average common shares and common
equivalent shares outstanding:
Basic 5,526,777 4,326,777
========== ==========
Diluted 5,629,277 4,459,277
========== ==========
Net income per share:
Basic $ 0.01 $ 0.01
========== ==========
Diluted $ 0.01 $ 0.01
========== ==========
</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 THREE MONTHS ENDED JUNE 30,
1999 1998
------ ------
(000) Omitted
Cash Flows From Operating Activities:
<S> <C> <C>
Net income $ 71 $ 58
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 22 23
Amortization of deferred stock compensation 1 2
Changes in assets and liabilities:
Decrease in accounts receivable, net 150 47
Increase in prepaid expenses and other
current assets (82) (60)
Decrease (increase)in inventory 281 (55)
(Decrease) in accounts payable (308) (173)
(Decrease) increase in accrued liabilities (237) 73
----- -----
Net cash used in operating activities (102) (85)
----- -----
Cash flows used in investing activities:
Capital expenditures (7) (3)
----- -----
Net cash used in investing activities (7) (3)
----- -----
Cash flows from financing activities:
Principal payments under capital lease obligations (12) (12)
Proceeds from loans payable, net 121 100
----- -----
Net cash provided by financing activities 109 88
----- -----
Net change in cash 0 0
Cash - beginning of period 2 2
----- -----
Cash - end of period $ 2 $ 2
===== =====
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - UNAUDITED FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1999 and the consolidated
statements of operations and cash flows for the three months ended June 30, 1999
and 1998, have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normally recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at June 30, 1999 (and for all periods presented) have been made.
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements and
notes thereto included in the Annual Report on Form 10-KSB for the year ended
March 31, 1999 filed by the Company. The results of operations for the periods
ended June 30, 1999 and 1998 are not necessarily indicative of the operating
results for the respective full years.
NOTE B - EARNINGS PER COMMON SHARE
Basic earnings per share are based on the weighted average number of common
shares outstanding without consideration of potential common stock. Diluted
earnings per share are based on the weighted average number of common and
potential common shares outstanding. The calculation takes into account the
shares that may be issued upon exercise of stock options, reduced by the shares
that may be repurchased with the funds received from the exercise, based on the
average price during the period.
The following table sets forth the reconciliation of the weighted average number
of common shares:
Three months ended
June 30,
1999 1998
(Unaudited) (Unaudited)
----------- -----------
Basic 5,526,777 4,326,777
Effect of dilutive securities (non-vested
restricted stock) 102,500 132,500
--------- ---------
Diluted 5,629,277 4,459,277
========= =========
4
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
Net income for the three months ended June 30, 1999 was approximately
$71,000, an increase of 22% from the same quarter last fiscal year. This
increase is principally the result of high sales volume.
Sales increased by approximately $437,000, or 12.8%, for the three
months ended June 30, 1999, from the comparable three month period in 1998. This
increase is primarily the result of an increase in international sales due to
the Company's increased focus in this area since October 1998.
The Company's gross margin of 23% for the three month period ended June
30, 1999, fell slightly from 24% for the quarter ended June 30, 1998 and
remained constant when compared to the other quarters in 1998.
Selling, general and administrative expenses increased slightly by
approximately $26,000, or 3.6%, for the three months ended June 30, 1999 from
the comparable previous three month period in 1998.
Interest expense increased approximately $15,000 for three months ended
June 30, 1999, from the previous comparable three month period in 1998 due to an
increase in borrowings to purchase inventory.
5
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company used approximately $121,000 in cash from its increased line of
credit to pay down accounts payable. At June 30, 1999, the Company had working
capital of approximately $4,993,000 and its stockholders' equity was
approximately $3,268,000. The Company believes that its present working capital,
cash used in 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") first entered into on
July 9, 1997. The Line is secured by substantially all of the Company's assets,
and since May 14, 1999, a term loan collateralized by a mortgage on the 205
Express Street property. Borrowings under the Line, other than with respect to
the mortgage, is based on the Company's inventory and receivables. Presently the
term of the Line runs to April 30, 2002. On June 30, 1999, the Company owed
approximately $2,565,000 on the Line. The Company's relationship with its
secured lender is satisfactory and the Company believes that the lending
arrangement will be adequate for the foreseeable future.
YEAR 2000 DISCLOSURE
The Company has completed its assessment of its informational technology systems
("IT Systems) and equipment and has made the necessary changes to make such
systems and equipment year 2000 ("Y2K") compliant. Preliminary testing of its
informational technology systems has been completed with minimal cost to the
Company. The Company believes there is no significant internal risk with regards
to Y2K.
Management is currently monitoring and evaluating vendors and suppliers to
determine their compliance and any material impact there might be on the
Company. Currently, major suppliers are either Y2K compliant or have established
plans to be so by December 1999.
An inventory and assessment of all non-IT systems (items containing embedded
chips, such as electronic door locks, telephones, security systems etc.) is
being undertaken. The majority of these systems are not believed to be potential
sources of significant disruption.
The Company is in the process of developing a "worst-case scenario" with respect
to the Y2K non-compliance and to develop contingency plans designed to minimize
the effects of such a scenario. Although management believes that it is very
unlikely that the worst-case scenario will occur, contingency plans will be
developed and will address both the IT system and equipment and the non-IT
system failure.
6
<PAGE>
There is still uncertainty as to the broader scope of the Y2K issue as it may
affect the Company and third parties that are critical to the Company's
operations. As an example, lack of readiness by electrical and water utilities,
financial institutions, governmental agencies or other general infrastructure
providers could pose significant impediments to our ability to carry on our
normal operations. The Company intends to request assurances of Y2K readiness
from its telephone and utilities suppliers. However, management has been
informed that some suppliers have either declined to provide the requested
assurances, or have limited the scope of assurances to which they are willing to
permit. If suppliers of services that are critical to the Company's operations
were to experience business disruptions as a result of their lack of Y2K
readiness, their problems could have a material adverse affect on the financial
position and results of operations of the Company. The impact of a failure of
readiness by critical suppliers cannot be estimated with confidence, and the
effectiveness cannot provide an assurance that there will be no material adverse
effects to the financial condition or results of operations of the Company as a
result of Y2K issues.
CAUTIONARY LANGUAGE REGUARDING FORWARD LOOKING STATEMENTS
When used herein, the words "believe," "anticipate," "think," "intend," "will
be," "expect" and similar expressions identify forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are not guarantees of future performance and involve certain risks
and uncertainties discussed herein, which could cause actual results to differ
materially from those in the forward-looking statements. Readers are cautioned
not to place undue reliance on the forward-looking statements, which speak only
as of the date hereof. Readers are also urged carefully to review and consider
the various disclosures made by the Company which attempt to advise interested
parties of the factors which affect the Company's business, including, without
limitation, the disclosures made under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operation."
7
<PAGE>
PART II - OTHER INFORMATION
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) Amendment No. 3 To Credit and Security Agreement dated May
14, 1999. Filed herewith
10(b) Second Amended and Restated Revolving Credit Promissory
Note dated May 14, 1999 Filed herewith
10(c) Term Loan Promissory Note, dated May 14, 1999 Filed herewith
10(d) Guaranty Confirmation Agreement (With Modifications), dated
May 14, 1999 Filed herewith
10(e) Mortgage from Avest, Inc. To Fleet National Bank, dated May
14, 1999 Filed herewith
27 Financial Data Schedule Filed herewith
</TABLE>
(B) Reports on Form 8-K:
A current Report on Form 8-K was filed on April 5, 1999 with
respect to Item 4 and Item 7 regarding Changes in Registrant's Certifying
Accountant.
<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: August 9, 1999 By: /s/ Michael McGuire
--------------------------------
Michael McGuire
Director, President and
Chief Executive Officer
CHIEF FINANCIAL OFFICER
OF ASTREX, INC.
Date: August 9, 1999 By: /s/ Lori A. Sarnataro
--------------------------------
Lori A. Sarnataro
Chief Financial Officer, Executive Vice
President, Treasurer, and Secretary
<PAGE>
Exhibit 10(a)
AMENDMENT NO. 3
TO
CREDIT AND SECURITY AGREEMENT
AMENDMENT NO. 3 to CREDIT AND SECURITY AGREEMENT (this "Amendment"),
dated as of May 14, 1999, by and between ASTREX, INC. ("Borrower"), T.F.
CUSHING, INC ("TFCI") and FLEET NATIONAL BANK (the "Lender" or "Bank"). All
capitalized terms unless defined herein shall have the meanings assigned to them
in the Credit Agreement (as defined below).
WITNESSETH:
WHEREAS, the Borrower, TFCI and the Bank executed and delivered a
certain Credit and Security Agreement, dated as of July 9, 1997, which was
amended by an Amendment No. 1, dated as of August 31, 1998 and by an Amendment
No. 2, dated as of December 18, 1998 (as so amended, the "Credit Agreement");
and
WHEREAS, the Credit Agreement provides for, among other things, a
$3,500,000 revolving credit facility; and
WHEREAS, the Borrower and TFCI have requested that the Lender (i)
reduce the amount of such revolving credit facility to $3,150,000, (ii) make a
$850,000 term loan to the Borrower, and (iii) extend the maturity date and
termination date of such revolving credit facility from July 7, 2000 to April
30, 2002 and provide that the maturity date for such term loan be April 30,
2002; and
WHEREAS, the Lender has agreed to such requests provided that, among
other conditions precedent, (a) the Borrower and TFCI execute and deliver this
Amendment No. 3, (b) the Borrower executes and delivers a $3,150,000 Second
Amended and Restated Revolving Credit Promissory Note in the form of Exhibit A-1
attached hereto and hereby made a part hereof (the "Revolving Credit Note"), and
an $850,000 Term Loan Promissory Note in the form of Exhibit A-2 attached hereto
and hereby made a part hereof (the "Term Loan Note", together with the Revolving
Credit Note, the "Notes"), (c) Avest (as defined in the Credit Agreement)
executes and delivers a first mortgage against the Plainview Real Estate (as
defined in the Credit Agreement) in the form of Exhibit B attached hereto and
hereby made a part hereof (the "Mortgage") to secure payment of Avest's
obligations under the Guaranty Agreement, dated as of July 1997, between Avest
and the Bank, as amended, supplemented or otherwise modified from time to time,
to the extent such obligations relate to the indebtedness evidenced by the
<PAGE>
Term Loan Note, and (d) TFCI and Avest execute and deliver a Guaranty
Confirmation Agreement (with Modifications) (the "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:
PART I. WAIVER
Section 1. The Lender hereby waives the Event of Default (as defined in
the Credit Agreement) under the Credit Agreement resulting from the breach by
the Borrower of the covenant set forth in Section 5.12 of the Credit Agreement
for the Elapsed Fiscal Period ending as of December 31, 1998. This waiver is
limited to the express terms set forth above, and does not apply to any Elapsed
Fiscal Period other than December 31, 1998, nor to any covenant other than as
specifically identified above, and the Lender's giving of this waiver does not
obligate the Lender to grant any other waiver on any other occasion.
PART II. AMENDMENTS TO THE CREDIT AGREEMENT
Section 1. (a) Any and all references to the parenthetical "(Revolver)"
in the title of the Credit Agreement (whether referenced in the Credit Agreement
or any other Financing Document) are hereby amended by deleting such
parenthetical.
(b) Sections 2.12, 3.3, 7.2 (in seven places), 8.5(b) and the
opening paragraphs to Articles 2, 4 and 5 of the Credit Agreement are hereby
amended by deleting the phrase "Revolving Credit Loans" and inserting in lieu
thereof the word "Loans". The opening paragraphs to Articles 4 and 5 of the
Credit Agreement and Section 7.2 (in two places) of the Credit Agreement are
hereby amended by deleting the phrase "Revolving Credit Facility" and inserting
in lieu thereof the phrase "Revolving Credit Facility and Term Loan Facility."
Section 6.4 of the Credit Agreement is hereby amended by deleting the phrase
"Revolving Credit Facility" and inserting in lieu thereof the phrase "Revolving
Credit Facility or Term Loan Facility." Section 6.8(d) of the Credit Agreement
is hereby amended by deleting the phrase "revolving credit facility" and
inserting in lieu thereof the phrase "revolving credit facility and the term
loan facility."
(c) The definition of "Revolving Credit Default Rate" in
Appendix A of the Credit Agreement is hereby deleted. The following new
definition is hereby inserted in Appendix A of the Credit Agreement after the
definition of "Default" and before the definition of "Elapsed Fiscal Period":
"Default Rate": a rate per annum equal to the Prime Rate plus
two (2%) percent (i.e., 200 basis points).
-2-
<PAGE>
Any and all references to "Revolving Credit Default Rate" in the Credit
Agreement (including in Appendix A thereto and including in the definition
itself) or any other Financing Document are hereby amended to read "Default
Rate".
(d) All references to the term "Note" in Sections 1.4, 2.2,
7.2, 8.5, 8.6, 8.12, 8.14, 8.19, and 8.20, and in the definition of "Financing
Documents" in Appendix A, of the Credit Agreement are hereby deleted and in lieu
thereof shall be substituted the term "Notes". All references to the term "the
Note" contained in Sections 7.1(b), 8.7, 8.15 and 8.18 of the Credit Agreement
are hereby deleted and in lieu thereof shall be inserted the phrase "any Note".
References in Sections 3.1(a)(v) and (vi) to the "Note" are hereby deleted and
in lieu thereof shall be substituted the phrase "Revolving Credit Note".
Section 2. Section 1.2 of the Credit Agreement is hereby amended by
deleting the phrase "(each a "Loan" or "Revolving Credit Loan" and collectively
the "Loans" or "Revolving Credit Loans")" and inserting in lieu thereof the
phrase "(each a "Revolving Credit Loan" and collectively the "Revolving Credit
Loans")".
Section 3. The following new Section 1.2A to the Credit Agreement is
hereby added in its entirety after Section 1.2 and before Section 1.3:
1.2A Term Loan. 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 loan to the Borrower,
and the Borrower agrees to borrow from the Lender, a term loan (the
"Term Loan"; collectively with the Revolving Credit Loans, each a
"Loan" and collectively the "Loans") in the aggregate principal amount
of Eight Hundred Fifty Thousand Dollars ($850,000).
Section 4. Section 1.3 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
1.3 The Notes. The Revolving Credit Loans, and the obligation
of the Borrower to repay the Revolving Credit Loans with interest,
shall be evidenced by a second amended and restated revolving credit
promissory note (such promissory note is hereinafter referred to as the
"Revolving Credit 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-1 attached hereto. The Term
Loan, and the obligation of the Borrower to repay the Term Loan with
interest, shall be evidenced by a term loan promissory note (such
promissory note is hereinafter referred to as the "Term Loan 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
-3-
<PAGE>
extension, renewal, or substitution of such promissory note) in
substantially the form of Exhibit A-2 attached hereto. The term "Notes"
shall collectively mean the Revolving Credit Note and the Term Loan
Note.
Section 5. The first paragraph of Section 1.4 of the Credit Agreement
is hereby amended and restated to read in its entirety as follows:
The aggregate unpaid principal balance of the Prime Rate Revolving
Credit Portion and the Prime Rate Term Loan 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
applicable LIBOR Option in accordance with Section 1.6(b) below, the
aggregate unpaid principal balance of the Libor Revolving Credit
Portions and the Libor Term Loan Portion 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 or Libor
Term Loan Portion, as the case may be, for the corresponding Interest
Period plus (ii) one and one-half percent (1.5%) (i.e., 150 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 Notes shall, at
the option of the Lender, be increased to a rate per annum equal to the
Default Rate and any interest accruing at such Default Rate shall be
payable on demand.
Section 6. Section 1.5 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
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 and of the Term Loan on the Term
Loan 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. Interest on the Term
Loan shall be due and payable, in arrears, on each Term Loan Interest
Payment Date and also on the Term Loan Maturity Date. (The Lender in
its sole and absolute discretion may make a Revolving Credit Loan to
cover an interest payment due on a Revolving Credit Interest Payment
Date and/or on a Term Loan 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 any of the Notes 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
-4-
<PAGE>
any of the Notes or other Financing Documents 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 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.
Section 7. Subsections 1.6 (a) and (b) of the Credit Agreement are
hereby amended and restated to read in their entirety as follows:
(a) The Borrower shall give the Lender written (or, if
acceptable to the Lender, telephonic) notice (i) of the amount and date
of each Revolving Credit Loan requested under the Revolving Credit
Facility and (ii) its intention to borrow the Term Loan, received no
later than 12:00 p.m. on the date on which the requested Loan is to be
made, provided, that if all or any portion of any such Loan is to be
included (as of the making of such Loan) as part (or all) of a Libor
Revolving Credit Portion or Libor Term Loan Portion, respectively,
Borrower shall give the Lender at least two (2) Business Days prior
notice of such requested Loan and give to Lender a LIBOR Request
pursuant to Section 1.6(b) below. Such notice (in the case of a
Revolving Credit Loan) 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,
in the case of a Revolving Credit Loan, the amount of such 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 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
-5-
<PAGE>
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 three (3) outstanding
LIBOR Revolving Credit Portions and LIBOR Term Loan Portions, including
the LIBOR Revolving Credit Portion or LIBOR Term Loan Portion being
requested, then interest on the LIBOR Revolving Credit Portion or LIBOR
Term Loan Portion requested during the Interest Period requested will
be based on the applicable LIBOR Rate. No LIBOR Revolving Credit
Portion or LIBOR Term Loan 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 or LIBOR Term Loan 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) or LIBOR
Term Loan Portion (or requested LIBOR Term Loan Portion).
(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 LIBOR Term Loan
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
on Lender (or Lender's holding company) 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 LIBOR
Term Loan Portion or there shall be imposed on Lender (or Lender's
holding company) or the London interbank market any other condition
(with respect to a Legal Requirement or otherwise and including without
limitation any conditions relating to capital adequacy) with respect to
or affecting this Agreement or the Loans and the result of such
condition is to impose any additional costs on the Lender (including,
without limitation, 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, the
-6-
<PAGE>
LIBOR Revolving Credit Portion or LIBOR Term Loan Portion subject
thereto shall immediately bear interest thereafter at the rate and in
the manner provided for Prime Rate Revolving Credit Portions or the
Prime Rate Term Loan Portion, as the case may be, 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 or LIBOR Term Loan 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 and LIBOR Term Loan Portion 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 Portions or LIBOR Term Loan
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 or LIBOR Term Loan
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.
Section 8. Section 1.7 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
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 any prepayment of the Prime Rate Revolving
Credit Portion or the Prime Rate Term Loan Portion, without penalty or
premium and (ii) in the case of any prepayment of any Libor Revolving
Credit Portion or Libor Term Loan Portion, accompanied by any
payment(s) required by Section 1.6 above. The Borrower shall specify
whether it is prepaying the Revolving Credit Loans or the Term Loan.
All prepayments of the
-7-
<PAGE>
Revolving Credit Loans shall first be applied to the Prime Rate
Revolving Credit Portion and then to the Libor Revolving Credit
Portion. All prepayments of the Term Loan shall first be applied to the
Prime Rate Term Loan Portion and then to the Libor Term Loan Portion.
No prepayments of the Term Loan may be reborrowed. Amounts prepaid
prior to the Revolving Credit Loan Termination Date on account of the
Revolving Credit Loans may, upon the terms and subject to the
conditions of this Agreement, be reborrowed prior to such Revolving
Credit Termination Date.
(b) Borrower shall make any payments or prepayments required
by Section 4.3 below or by any provision of any other applicable
Financing Document. Without limiting the generality of the foregoing,
the Borrower acknowledges and agrees to any provisions of the Mortgage
with respect to the payment or prepayment of the Term Loan.
(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 Revolving Credit Loans (and, if there is an Event of
Default, the Term Loan). All such prepayments shall first be applied to
the Prime Rate Revolving Credit Portion and then to the LIBOR Revolving
Credit Portion (and, in the case of a prepayment of the Term Loan,
first to the Prime Rate Term Loan Portion and then to the Libor Term
Loan Portion).
(d) To the extent that at any time the aggregate unpaid
principal amount of the Revolving Credit Loans shall exceed the
Borrowing Base or otherwise shall exceed the Revolving Credit Maximum
Amount, the Borrower shall immediately prepay the Revolving Credit
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).
Section 9. The following new Section 2.19 to the Credit Agreement is
hereby added in its entirety after Section 2.18 and before Article 3:
2.19 Year 2000 Matters. Borrower has reviewed the "Year 2000
Risk" (that is the risk that computer applications used by Borrower
and/or its suppliers, vendors and customers may be unable to recognize
and perform without error date-sensitive functions involving certain
dates prior to and any date after December 31, 1999) and represents
that it is taking such action as may be necessary to ensure that the
Year 2000 risk will not adversely affect its business operations and/or
financial condition.
Section 10. The following new Section 3.1A to the Credit Agreement is
hereby added in its entirety after Section 3.1 and before Section 3.2 (and the
Lender's agreement to enter into the amendments set forth in this Amendment is
contingent upon the conditions listed therein having been satisfied by the
Borrower):
-8-
<PAGE>
3.1A Term Loan. The making of the Term Loan shall be subject
to the Borrower fulfilling the following conditions precedent:
(a) The Borrower and TFCI shall execute and deliver an
Amendment No. 3 to Credit and Security Agreement ("Amendment No. 3"),
the Borrower shall execute and deliver the Notes, Avest shall executed
and deliver the Mortgage and any related financing statements required
by the Lender, and the Borrower, TFCI and Avest 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, TFCI and Avest 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 Amendment No. 3, the Mortgage (in the case of Avest), the Notes (in
the case of the Borrower), the Guaranty Confirmation Agreement (in the
case of TFCI and Avest) and all related documentation, (ii) certifying
that no amendments have been made to the Borrower's or TFCI's or
Avest's, as the case may be, certificate of incorporation or by-laws
since July 9, 1997 (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
or Avest, as the case may be, which executes and delivers Amendment No.
3, the Notes, the Mortgage or the Guaranty Confirmation Agreement, each
as the case may be; and a certificate from the Secretary of State of
its state of incorporation, and, if applicable, each of the Foreign
Jurisdictions, with respect to its good standing.
(d) UCC search reports are delivered to the Bank with respect
to filings made against the Borrower or TFCI or Avest; and a title
search report (including related tax, municipal and flood zone
searches) is delivered to the Bank with respect to the Plainview Real
Estate.
(e) The Borrower shall pay the fees and disbursements of
Messrs. Finn Dixon & Herling LLP, special counsel to the Lender,
incurred in connection with Amendment No. 3 and any related documents
and matters.
(f) The Borrower shall deliver to the Lender an as built ALTA
survey of the Plainview Real Estate certified to the Lender and the
Title Company (as defined below) by a surveyor satisfactory to the
Lender, satisfactory to the Lender in its sole discretion.
(g) The Borrower shall deliver to the Lender at closing the
following items satisfactory to the Lender in its sole discretion:
-9-
<PAGE>
(i) an ALTA form mortgagee's title insurance
policy or unqualified binder issued to the
Lender by First American Title Insurance
Company (the "Title Company") in the amount
of $850,000 insuring the first priority of
Lender's lien on the Plainview Real Estate
free and clear of all defects and
encumbrances except Permitted Encumbrances
(as defined in the Mortgage), and including
any and all endorsements requested by the
Lender, together with evidence that all
premiums, charges and mortgage taxes
relating thereto have been paid in full.
(ii) any and all affidavits required by the title
company or title agent in connection with
the issuance of the title insurance,
executed by Borrower, and any and all
Mortgage tax affidavits or other documents
required in connection with the recording of
the Mortgage, executed by Borrower.
(h) The Borrower and Avest shall deliver to the Lender at
closing certificates of insurance and loss payable clauses, meeting the
requirements of Section 4.3 of the Credit Agreement, Section 5 of the
Mortgage and all other applicable requirements of any other Financing
Document.
(i) The Borrower shall deliver to the Lender at closing an
appropriate written notice of its intent to borrow the Term Loan.
(j) The Borrower, TFCI and Avest shall deliver to the Lender
at closing all such other certificates, reports, statements, opinions
of counsel, instruments, assurances, agreements, or other documents as
the Lender may reasonably request.
(k) All legal matters incident to the transactions
contemplated by Amendment No. 3 and the other Financing Documents to be
executed hereunder shall be satisfactory to the Lender and Messrs. Finn
Dixon & Herling, special counsel for the Lender.
(l) Borrower shall pay a fee of $2,500 to the Lender.
Section 11. Section 3.2 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
3.2 All Loans. The making of each Revolving Credit Loan
(whether the initial Revolving Credit Loan or any subsequent Revolving
Credit Loan) and the making of the Term Loan shall be subject to the
following additional conditions precedent:
-10-
<PAGE>
(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
such Revolving Credit Loan or the Term Loan, as the case may be (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 such
Revolving Credit Loan or the Term Loan, as the case may be, 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 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 the applicable Loan and Borrower shall
have also supplied and/or executed any other applicable documentation,
including, in the case of a Revolving Credit Loan, a
-11-
<PAGE>
Borrowing Base Certificate, in accordance with the applicable terms and
provisions hereof.
(f) Not Exceed Revolving Credit Maximum Amount. In
the case of any Revolving Credit Loan, immediately prior to and after
the applicable Revolving Credit Loan is made, the sum of outstanding
Revolving Credit Loans 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
Revolving Credit Loan.
Section 12. Each of Sections 5.11 and 5.12 of the Credit Agreement is
hereby clarified by deleting the phrase "Elapsed Fiscal Year (commencing" and
inserting in lieu thereof the phrase "Elapsed Fiscal Period (commencing". In
addition, Section 5.12 of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
5.12 Minimum Interest Coverage. Permit the Interest Coverage
Ratio for any Elapsed Fiscal Period (commencing with the Elapsed Fiscal
Period ending September, 1997), except for the Elapsed Fiscal Period
ending March 31, 1999, to be less than 1.50 to 1.00, or permit the
Interest Coverage Ratio for the Elapsed Fiscal Period ending March 31,
1999, to be less than 1.15 to 1.00.
Section 13. A new Section 7.1(n) is hereby added to read in its
entirety as follows:
(n) The obligation of the Lender to make the Revolving Credit
Loans is terminated for any reason.
Section 14. Section 7.3(v) is hereby amended and restated to read in
its entirety as follows:
(v) The Lender may require the Borrower to cause Avest to grant a
mortgage, in addition to the Mortgage, to the Lender (in form and
substance satisfactory to Lender) with respect to the Plainview Real
Property to secure the Secured Obligations other than the Term Loan,
and Borrower or Avest shall pay all mortgage, recording an other taxes,
fees or charges in connection with such mortgage.
Section 15. Section 8.17 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
8.17 Loss, Theft, Etc. of Note. Upon receipt by the Borrower
of reasonably satisfactory evidence of the loss, theft, mutilation or
destruction of any of the Notes, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in
-12-
<PAGE>
such form and amount as shall be reasonably satisfactory to the
Borrower, or in the event of such mutilation upon surrender and
cancellation of the applicable 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.
Section 16. The following new Sections 8.21, 8.22, 8.23 and 8.24 to the
Credit Agreement are hereby added in their entirety after Section 8.20 and
before the "IN WITNESS WHEREOF" paragraph:
8.21 Pledge to Federal Reserve Bank. Without limiting the
generality of the Bank's rights under Section 8.5, it is hereby agreed
that the Bank may at any time pledge all or any portion of its rights
under the Financing Documents, including all or any portion of any or
all of the Notes, to any of the twelve (12) Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or enforcement thereof shall release the Bank from
its obligations under any of the Financing Documents.
8.22 Appraisals. From time to time, at the Bank's option, the
Bank may obtain an appraisal of the Plainview Real Estate or an
appraisal of any other property, whether real or personal, of Borrower
and any Guarantor that secures the Secured Obligations, which the Bank
in its sole, unfettered discretion deems necessary, and Borrower and
each Guarantor shall, jointly and severally, pay to the Bank
immediately upon demand all costs of such appraisals, but not more than
one every two (2) years provided, however, that if the Bank, in its
sole and unfettered discretion determines that there has been a
material adverse change in the Plainview Real Estate, the Borrower, the
Guarantor, or market conditions, the Borrower and each Guarantor shall,
jointly and severally, pay to the Bank immediately upon demand all
costs of such appraisals, but not more than one annually. Borrower and
each Guarantor shall permit the Bank and its agents, employees,
representatives and appraisers such access to the Plainview Real Estate
and to such other property and to the books and records of Borrower and
each Guarantor other than natural persons relating thereto as may be
necessary or convenient to perform such appraisals.
8.23 Reports. The Bank may require at any time, at Borrower's
expense, a written report of a site assessment and environmental audit
with respect to the Plainview Real Estate in scope, form and substance
satisfactory to the Bank, prepared by an independent, competent and
qualified engineer selected by the Bank, in the Bank's sole and
unfettered discretion, showing that the engineer made all appropriate
inquiry
-13-
<PAGE>
consistent with good commercial and customary practice, that no
evidence or indication came to light which would suggest there was a
release of Hazardous Materials on the Plainview Real Estate which would
necessitate an environmental response action and that the Plainview
Real Estate complies with and does not deviate from, Applicable Law,
including any licenses, permits or certificates required thereunder.
8.24 Indemnification. The Borrower and TFCI, jointly and
severally, agree, to the extent (if at all) the Bank is not indemnified
under Section 8.7 above, to defend, indemnify and hold harmless the
Bank and any participants, successors or assigns of the Bank and the
officers, directors, employees and agents of each of them (each a "Bank
Party") from and against any and all losses, claims, liabilities,
asserted liabilities, costs and expenses, including, without
limitation, costs of litigation and reasonable attorneys' fees (whether
in-house or outside counsel), incurred in connection with any and all
claims or proceedings against any Bank Party (whether brought by
private party or related to an action, proceeding or investigation
instituted by any federal, state or local governmental agency related
to any suspected or actual violation of Applicable Law with respect to
any real property, including the Plainview Real Estate, owned or
operated by the Borrower or any Guarantor and/or business conducted
thereon) for bodily injury, property damage, abatement or remediation,
environmental damage or impairment or any other injury of damage
(including all foreseeable and unforeseeable consequential damage) or
any diminution in value of any real property, including the Plainview
Real Estate, resulting from or relating, directly or indirectly, to (a)
the Release, threatened Release, existence or removal of any Hazardous
Materials on, into, from, through or under any real property, including
the Plainview Real Estate, owned or operated by the Borrower or any
Guarantor (whether or not such Release was caused by Borrower, any
Guarantor, a tenant, subtenant, prior owner or tenant or any other
person and whether or not the alleged liability is attributable to the
handling, storage, generation, transportation or disposal of Hazardous
Materials or the mere presence of such Hazardous Materials) or (b) the
breach or alleged breach of Applicable Law by Borrower or any
Guarantor. THE AGREEMENT OF THE BORROWER AND EACH GUARANTOR UNDER THIS
PARAGRAPH SHALL SURVIVE THE PAYMENT IN FULL OF THE NOTE, THE
TERMINATION OF THE MORTGAGE, THE TERMINATION OF ANY OTHER FINANCING
DOCUMENT (INCLUDING, WITHOUT LIMITATION, FOR THE AVOIDANCE OF DOUBT, BY
REASON OF THE FORECLOSURE OF THE MORTGAGE OR CONVEYANCE IN LIEU OF
FORECLOSURE) OR THE RELEASE OF ANY COLLATERAL.
Section 17. The definitions of "Consolidated Current Liabilities",
"Financing Documents", "Interest Expense", "LIBOR Option" or "Libor Option", and
"Permitted Indebtedness" in Appendix A of the Credit Agreement are hereby
amended by deleting the phrase "Revolving Credit Loans" and inserting in lieu
thereof the word "Loans". The definitions of "Eurocurrency Reserve Requirement",
"Interest Period", "LIBOR Request" or "Libor
-14-
<PAGE>
Request" (in two places), and "Tax" in Appendix A of the Credit Agreement are
hereby amended by deleting the phrase "Libor Revolving Credit Portion" and
inserting in lieu thereof the phrase "Libor Revolving Credit Portion or Libor
Term Loan Portion". Clause (3) of the definition of "Interest Period" in
Appendix A of the Credit Agreement is hereby amended by deleting the phrase
"Revolving Credit Maturity Date" (in two places) and inserting in lieu thereof
the phrase "Revolving Credit Maturity Date or Term Loan Maturity Date, as the
case may be".
Section 18. (a) The definition of the term "Borrowing Base" in Appendix
A of the Credit Agreement is hereby amended and restated to read in its entirety
as follows:
"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, less (iii)
until the Prior Judgement (as defined in Section 43 of the Mortgage)
and the Prior Judgement Lien (as defined in Section 43 of the Mortgage)
no longer have any legal effect and the exception for same in the title
insurance policy issued to the Bank insuring the lien of the Mortgage
is removed by the title insurance company, $120,000.00; 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.
(b) The definition of the term "Borrowing Base Certificate" in
Appendix A of the Credit Agreement is hereby amended by deleting the phrase
"Exhibit C" and inserting in lieu thereof the phrase "Exhibit B".
Section 19. Section (vii)(c) of the definition of the term "Eligible
Receivables" in Appendix A of the Credit Agreement is hereby amended by adding
to the end thereof, just before the semicolon, the following: "or such Account
is insured by credit insurance satisfactory to the Lender."
Section 20. The definition of the term "Financing Documents" in
Appendix A of the Credit Agreement is hereby amended by adding after the phrase
"landlord waiver(s)," the phrase "the Mortgage, any and all swap or hedging
agreements between the Borrower and the Lender and any related documents,".
Section 21. The following new definition is hereby added in its
entirety to Appendix A of the Credit Agreement after the definition of "LIBOR
Revolving Credit Portion" or "Libor Revolving Credit Portion" and before the
definition of "Lien":
-15-
<PAGE>
"LIBOR Term Loan Portion" or "Libor Term Loan Portion": that
portion of the Term Loan specified in a LIBOR Request (including any
applicable portion of the Term Loan 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 the Term Loan not already subject to a LIBOR
Option and, which, as of the date of the LIBOR Request specifying such
LIBOR Term Loan Portion, 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.
Section 22. The definition of the term "Loan" and "Loans" in Appendix A
of the Credit Agreement is hereby amended by deleting the reference to "Section
1.2" and inserting in lieu thereof a reference to "Section 1.2A".
Section 23. The following new definition is hereby added in its
entirety to Appendix A of the Credit Agreement after the definition of "Material
Adverse Effect" and before the definition of "Natural Resources":
"Mortgage":" the mortgage by Avest, Inc. to Lender against the
Plainview Real Estate in the form of Exhibit B attached hereto and made
a part hereof, as such mortgage may be amended, supplemented or
otherwise modified from time to time.
Section 24. The following new definition is hereby added in its
entirety to Appendix A of the Credit Agreement after the definition of "Natural
Resources" and before the definition of "Obligor Legal Opinion":
"Notes": as that terms is defined in Section 1.3 of the Credit
Agreement.
Section 25. The definition of the term "Permitted Uses" in Appendix A
of the Credit Agreement is hereby amended and restated to read in its entirety
as follows:
"Permitted Uses": (a) as to the proceeds of the Term Loan,
pay-down of the Revolving Credit Loans, and (b) as to the proceeds of
the Revolving Credit Loans, 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.
-16-
<PAGE>
Section 26. The following new definition is hereby added in its
entirety to Appendix A of the Credit Agreement after the definition of "Prime
Rate Revolving Credit Portion" and before the definition of "Receivables":
"Prime Rate Term Loan Portion": that portion of the Term Loan
that is not subject to a LIBOR Option or is not otherwise bearing
interest with reference to the LIBOR Rate.
Section 27. The definition of the term "Revolving Credit Loan" or
"Revolving Credit Loans" in Appendix A of the Credit Agreement is hereby amended
and restated to read as follows:
"Revolving Credit Loan" and "Revolving Credit Loans": as those
terms are respectively defined in Section 1.2 of the Credit Agreement
including any Prime Rate Revolving Credit Portion and any LIBOR
Revolving Credit Portion(s).
Section 28. The definition of the term "Revolving Credit Loan
Termination Date" in Appendix A of the Credit Agreement is hereby amended by
deleting the date "July 7, 2000" and inserting in lieu thereof the date "April
30, 2002".
Section 29. The definition of the term "Revolving Credit Maturity Date"
in Appendix A of the Credit Agreement is hereby amended by deleting the date
"July 7, 2000" and inserting in lieu thereof the date "April 30, 2002".
Section 30. The definition of the term "Revolving Credit Maximum
Amount" in Appendix A of the Credit Agreement is hereby amended by deleting the
phrase "(i) Three Million Five Hundred Thousand Dollars ($3,500,000) or" and
inserting in lieu thereof the phrase "(i) Three Million One Hundred Fifty
Thousand Dollars ($3,150,000) or".
Section 31. The first paragraph of the definition of "Secured
Obligations" in Appendix A of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
(a) all indebtedness, obligations and liabilities of the Borrower to
the Lender under this Agreement or the Notes (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,
-17-
<PAGE>
agreement, or book account, including, but not limited to, all loans
(including any loan by renewal or extension), all other indebtedness,
all guarantees, all reimbursement obligations or other obligations
relating to letters of credit and the like, and all obligations under
swap and hedging agreements and other swap and hedging arrangements 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
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,
all reimbursement obligations or other obligations relating to letters
of credit and the like, and all obligations under swap and hedging
agreements and other swap and hedging arrangements and the like,
including without limitation any guaranty of TFCI under any of the
Financing Documents.
Section 32. The following new definitions are hereby added in their
entirety to Appendix A of the Credit Agreement after the definition of "Telerate
Page 3750" and before the definition of "Trade Debt":
"Term Loan": as that term is defined in Section 1.2A of the
Credit Agreement including any Prime Rate Term Loan Portion and any
LIBOR Term Loan Portion.
"Term Loan Facility": the term loan borrowing facility
established pursuant to the Credit Agreement.
"Term Loan Interest Payment Date": (i) with respect to the
Prime Rate Term Loan Portion, the first day of each and every month,
commencing on the date hereof; and (ii) with respect to any Libor Term
Loan 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.
"Term Loan Maturity Date": April 30, 2002.
"Term Loan Note": as defined in Section 1.3 of the Credit
Agreement.
Section 33. Exhibit A to the Credit Agreement is hereby deleted.
Exhibits A-1 and A-2 attached hereto shall be and become, for all purposes,
Exhibits A-1 and A-2 to the Credit Agreement.
-18-
<PAGE>
PART III. REPRESENTATIONS AND WARRANTIES
Section 1. To induce the Lender to enter into this Agreement and to
make the Term Loan, 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 Notes (in the case of the Borrower), the Guaranty
Confirmation Agreement (in the case of TFCI) 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 Notes (in the case of the Borrower) 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.
(vi) All interests of the Borrower, as lessee, in the Plainview Real
Estate are subordinate to the Mortgage.
-19-
<PAGE>
PART IV. CONDITIONS PRECEDENT
Section 1. The making of the Term Loan shall be subject to the Borrower
fulfilling the conditions precedent relating thereto as set forth in the Credit
Agreement, as amended hereby.
PART V. MORTGAGE AND LEASE MATTERS
Section 1. The Borrower hereby acknowledges, consents to, and agrees to
comply with all of the applicable provisions of, the Mortgage, including
specifically, but without limitation, the provisions of Section 12 thereof.
PART VI. MISCELLANEOUS
Section 1. 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.
Section 2. Except as amended hereby, the Credit Agreement shall remain
in full force and effect.
Section 3. 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.
Section 4. This Amendment shall be construed in accordance with and
governed by the laws of the State of Connecticut.
-20-
<PAGE>
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.
WITNESSES: ASTREX, INC.
/s/ Keri Jones By: /s/ Michael McGuire
- ---------------------------- -----------------------------
Name: Keri Jones Michael McGuire
President
/s/ Lori Sarnataro
- ----------------------------
Name: Lori Sarnataro
WITNESSES: T.F. CUSHING, INC.
/s/ Keri Jones By: /s/ Michael McGuire
- ---------------------------- -----------------------------
Name: Keri Jones Michael McGuire
President
/s/ Lori Sarnataro
- ----------------------------
Name: Lori Sarnataro
WITNESSES: FLEET NATIONAL BANK
/s/ Nancy Lamoso By: /s/ Richard Bochicchio
- ---------------------------- ------------------------------
Name: Nancy Lomazo Name: Richard Bochiccio
Title: Vice President
/s/ Carolyn Kaye
- ----------------------------
Name: Carolyn Kaye
-21-
<PAGE>
EXHIBIT A-1
The Revolving Credit Note
-22-
<PAGE>
EXHIBIT A-2
The Term Loan Note
-23-
<PAGE>
EXHIBIT B
The Mortgage
-24-
<PAGE>
Exhibit 10(b)
SECOND AMENDED AND RESTATED REVOLVING CREDIT PROMISSORY NOTE
$3,150,000.00 Stamford, Connecticut
May _14_, 1999
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 One Hundred Fifty Thousand
Dollars ($3,150,000.00) 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 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>
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.
(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.
<PAGE>
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 Amended and
Restated Revolving Credit Promissory Note, dated August 31, 1998, 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.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note
as of the day and year first written above.
WITNESSES: ASTREX, INC.
/s/ Keri Jones By: /s/ Michael McGuire
- ------------------------ ----------------------
Name: Keri Jones Michael McGuire
President
/s/ Lori Sarnataro
- -----------------------
Name: Lori Sarnataro
<PAGE>
Exhibit 10(c)
TERM LOAN PROMISSORY NOTE
$850,000.00 Stamford, Connecticut May 14, 1999
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 Eight Hundred Fifty Thousand Dollars
($850,000.00), 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
the Term Loan in full on the Term Loan Maturity Date.
2. Interest Rate; Payment of Interest. Borrower shall pay interest on the
aggregate unpaid principal balance of the Term Loan 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 Term
Loan Interest Payment Date and shall also be payable on the Term Loan 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 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
Term Loan 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>
5. Credit and Security Agreement; Lender's Records. This Note evidences the Term
Loan 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 Term Loan 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 Term
Loan, 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>
(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.
WITNESSES: ASTREX, INC.
/s/ Keri Jones By: /s/ Michael Mcguire
- ---------------------- --------------------
Name: Keri Jones Michael McGuire
President
/s/ Lori Sarnataro
- ---------------------
Name: Lori Sarnataro
<PAGE>
Exhibit 10(d)
GUARANTY CONFIRMATION AGREEMENT (WITH MODIFICATIONS)
AGREEMENT, dated as of May 14_, 1999, 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. On or
about August 31, 1998, the Bank, T. F. Cushing, Inc. and the Borrower entered
into a certain Amendment No. 1 to Credit and Security Agreement, dated as of
August 31, 1998 ("Amendment No. 1"), and each Guarantor executed and delivered a
Guaranty Confirmation Agreement dated as of August 31, 1998 in connection
therewith. On or about December 18, 1998, the Bank, T. F. Cushing, Inc. and the
Borrower entered into a certain Amendment No. 2 to Credit and Security
Agreement, dated as of December 18, 1998 ("Amendment No. 2"), and each Guarantor
executed and delivered a Guaranty Confirmation Agreement dated as of December
18, 1998 in connection therewith. The Bank, T. F. Cushing, Inc. and the Borrower
now desire to enter into a certain Amendment No. 3 to Credit and Security
Agreement dated of even or substantially even date herewith ("Amendment No. 3").
Each Guarantor shall derive substantial benefits, financial and
otherwise, from the execution and delivery of such Amendment No. 3 and any
agreement or instrument executed in connection therewith (including without
limitation any and all amended and restated revolving credit notes and any and
all term loan notes).
The Bank is only willing to enter into such Amendment No. 3 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 the 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)
<PAGE>
under the Notes (as defined in Amendment No. 3) and any and all obligations
under any swap or hedging agreements. Pursuant to the applicable terms and
provisions of each Guaranty, neither the modifications set forth or to be set
forth in said Amendment No. 1, Amendment No. 2 or Amendment No. 3 (or in any
other agreement or instrument) shall impair the obligations of each Guarantor
under its Guaranty.
2. Each of the Guarantors and the Bank hereby agree that each
occurrence in the Guaranty of the phrase "the Note" is hereby deleted and
replaced with the phrase "the Notes".
3. AVEST, INC. hereby confirms that its obligations under its Guaranty,
to the extent same relate to the Term Loan Note (as defined in Amendment No. 3
and the certain Credit Agreement amended thereby), are secured by a mortgage of
even or substantially even date herewith (and related financing statements) from
AVEST, INC. to the Bank. AVEST, INC. and the Bank hereby agree that, so long as
said mortgage remains in effect, AVEST, INC.'s Guaranty shall be amended as
follows: (a) Section 20 shall be dormant (with said mortgage governing the
matters covered by Section 20), and (b) Subsection 3(e) shall include, just
before its final period, the phrase ", except for any Liens created by AVEST,
INC. in favor of the Bank under any mortgage (and related financing
statements)".
4. Anything contained in any Guaranty to the contrary notwithstanding,
in the event that the obligations of a Guarantor under its Guaranty would, if
not for this sentence, be deemed to constitute a fraudulent conveyance under any
applicable state or federal fraudulent conveyance law, the obligations of such
Guarantor under such Guaranty shall be limited to an aggregate amount equal to
the largest amount that would not render its obligations subject to avoidance
under such law. In the event the immediately preceding sentence becomes
operative with respect to AVEST, INC., AVEST INC. hereby agrees that its
obligations under its Guaranty not relating to the such Term Loan Note shall be
reduced first before its obligations under its Guaranty relating to such Term
Loan Note shall be reduced.
5. 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.
6. 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.
7. 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.
2
<PAGE>
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/ Richard Bochiccio
----------------------------
Its: Senior Vice President
<PAGE>
EXHIBIT (e)
MORTGAGE
--------
THIS MORTGAGE, dated as of May _14_, 1999 is made by AVEST,
INC., a Delaware corporation ("Mortgagor"), whose address is c/o ASTREX, INC.,
205 Express Street, Plainview, New York 11803, Attention: Michael McGuire, and
FLEET NATIONAL BANK, a national banking association ("Mortgagee"), whose address
is One Landmark Square, Stamford, Connecticut 06901, Attention: Carolyn Kaye,
Commercial Banking Group. References to this "Mortgage" shall mean this
instrument and any and all renewals, modifications, amendments, supplements,
extensions, consolidations, substitutions, spreaders and replacements of this
instrument. All capitalized terms unless defined herein shall have the meanings
assigned to them in the Credit and Security Agreement dated as of July 9, 1997,
between Borrower (as defined below) and Mortgagee, as amended, supplemented,
extended, renewed, restated, replaced or otherwise modified from time to time
(the "Credit Agreement").
Background
----------
Mortgagor is the owner of the parcel(s) of real property
described on Schedule A attached (such real property, together with all of the
buildings, improvements, structures and fixtures now or subsequently located
thereon (the "Improvements"), being collectively referred to as the "Real
Estate"). Under a Guaranty Agreement dated as of July 9, 1997 (as same may be
confirmed, amended, supplemented, extended, renewed, restated, replaced or
otherwise modified from time to time, the "Guaranty"), Mortgagor has
unconditionally guaranteed, among other things, the payment of a certain term
loan promissory note (as the same may be amended, supplemented, modified,
extended, restated or replaced from time to time, the "Note") of Astex, Inc., a
Delaware corporation ("Borrower"), dated the same date as this Mortgage, made
payable to Mortgagee in the original principal amount of $850,000. The Note
bears interest at the rate or rates stated in the Note. References in this
Mortgage to the "Default Rate" shall mean the Default Rate as defined in the
Credit Agreement. The Note has been issued by Borrower pursuant to the Credit
Agreement.
Granting Clauses
----------------
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor agrees that to secure:
(a) (i) the payment and other performance of all obligations
of the Mortgager under the Guaranty with respect to or otherwise
relating to the Note, including the guaranty under the Guaranty of all
principal, interest, costs and expenses (including reasonable
attorneys' fees and disbursements) at any time owed under the Note and
any obligations under any hedging or swap arrangements with Mortgagee
relating to the Note (such obligations of Mortgagor under the Guaranty
are referred to herein as the "Indebtedness" and such principal,
interest, costs and expenses and swap or hedging obligations are
referred to as the "Note Indebtedness"); and
<PAGE>
(b) the performance of all covenants, agreements, obligations
and liabilities of Mortgagor (the "Obligations") under or pursuant to
the provisions of this Mortgage and any other document securing payment
of the Indebtedness (collectively the "Security Documents") and any
amendments, supplements, extensions, renewals, restatements,
replacements or modifications of any of the foregoing (the Note, the
Credit Agreement, the Guaranty, this Mortgage, the other Security
Documents and all other documents and instruments from time to time
evidencing, securing or guaranteeing the payment of the Indebtedness or
the Note Indebtedness or the performance of the Obligations, as any of
the same may be amended, supplemented, extended, renewed, restated,
replaced or modified from time to time, are collectively referred to as
the "Financing Documents");
MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND
HEREBY MORTGAGES, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER TO MORTGAGEE:
(A) the Real Estate;
(B) all the estate, right, title, claim or demand whatsoever
of Mortgagor, in possession or expectancy, in and to the Real Estate or
any part thereof;
(C) all right, title and interest of Mortgagor in, to and
under all easements, rights of way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water and
riparian rights, development rights, air rights, mineral rights and all
estates, rights, titles, interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging, relating or appertaining to
the Real Estate, and any reversions, remainders, rents, issues, profits
and revenue thereof and all land lying in the bed of any street, road
or avenue, in front of or adjoining the Real Estate to the center line
thereof;
(D) all of the fixtures, chattels, business machines,
machinery, apparatus, equipment, furnishings, fittings and articles of
personal property of every kind and nature whatsoever, and all
appurtenances and additions thereto and substitutions or replacements
thereof (together with, in each case, attachments, components, parts
and accessories) currently owned or subsequently acquired by Mortgagor
and now or subsequently attached to, or contained in or used or usable
in any way in connection with any operation or letting of the Real
Estate, including but without limiting the generality of the foregoing,
all screens, awnings, shades, blinds, curtains, draperies, artwork,
carpets, rugs, storm doors and windows, furniture and furnishings,
heating, electrical, and mechanical equipment, lighting, switchboards,
plumbing, ventilating, air conditioning and air-cooling apparatus,
refrigerating, and incinerating equipment, escalators, elevators,
loading and unloading equipment and systems, stoves, ranges, laundry
equipment, cleaning systems (including window cleaning apparatus),
telephones, communication systems (including satellite dishes and
antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems,
motors, engines, machinery, pipes, pumps, tanks, conduits, appliances,
fittings and fixtures of every kind
2
<PAGE>
and description (all of the foregoing in this paragraph (D) being
referred to as the "Equipment");
(E) all right, title and interest of Mortgagor in and to all
substitutes and replacements of, and all additions and improvements to,
the Real Estate and the Equipment, subsequently acquired by or released
to Mortgagor or constructed, assembled or placed by Mortgagor on the
Real Estate, immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any and all
building materials whether stored at the Real Estate or offsite, and,
in each such case, without any further mortgage, conveyance, assignment
or other act by Mortgagor;
(F) all right, title and interest of Mortgagor in, to and
under all leases, subleases, underlettings, concession agreements,
management agreements, licenses and other agreements relating to the
use or occupancy of the Real Estate or the Equipment or any part
thereof, now existing or subsequently entered into by Mortgagor and
whether written or oral and all guarantees of any of the foregoing
(collectively, as any of the foregoing may be amended, restated,
extended, renewed or modified from time to time, the "Leases"), and all
rights of Mortgagor in respect of cash and securities deposited
thereunder and the right to receive and collect the revenues, income,
rents, issues and profits thereof, together with all other rents,
royalties, issues, profits, revenue, income and other benefits arising
from the use and enjoyment of the Mortgaged Property (as defined below)
(collectively, the "Rents");
(G) all trade names, trade marks, logos, copyrights, good will
and books and records relating to or used in connection with the
operation of the Real Estate or the Equipment or any part thereof; all
general intangibles related to the operation of the Improvements now
existing or hereafter arising;
(H) all unearned premiums under insurance policies now or
subsequently obtained by Mortgagor relating to the Real Estate or
Equipment and Mortgagor's interest in and to all proceeds of any such
insurance policies (including title insurance policies) including the
right to collect and receive such proceeds, subject to the provisions
relating to insurance generally set forth below; and all awards and
other compensation, including the interest payable thereon and the
right to collect and receive the same, made to the present or any
subsequent owner of the Real Estate or Equipment for the taking by
eminent domain, condemnation or otherwise, of all or any part of the
Real Estate or any easement or other right therein;
(I) all right, title and interest of Mortgagor in and to (i)
all contracts from time to time executed by Mortgagor or any manager or
agent on its behalf relating to the ownership, construction,
maintenance, repair, operation, occupancy, sale or financing of the
Real Estate or Equipment or any part thereof and all agreements
relating to the purchase or lease of any portion of the Real Estate or
any property which is adjacent or peripheral to the Real Estate,
together with the right to exercise such options and all
3
<PAGE>
leases of Equipment (collectively, the "Contracts"), (ii) all consents,
licenses, building permits, certificates of occupancy and other
governmental approvals relating to construction, completion, occupancy,
use or operation of the Real Estate or any part thereof (collectively,
the "Permits") and (iii) all drawings, plans, specifications and
similar or related items relating to the Real Estate (collectively, the
"Plans");
(J) any and all monies now or subsequently on deposit for the
payment of real estate taxes or special assessments against the Real
Estate or for the payment of premiums on insurance policies covering
the foregoing property or otherwise on deposit with or held by
Mortgagee as provided in this Mortgage; all capital, operating, reserve
or similar accounts held by or on behalf of Mortgagor and related to
the operation of the Mortgaged Property, whether now existing or
hereafter arising and all monies held in any of the foregoing accounts
and any certificates or instruments related to or evidencing such
accounts;
(K) all accounts and revenues arising from the operation of
the Improvements including, without limitation, (i) any right to
payment now existing or hereafter arising for rental of hotel rooms or
other space or for goods sold or leased or for services rendered,
whether or not yet earned by performance, arising from the operation of
the Improvements or any other facility on the Mortgaged Property and
(ii) all rights to payment from any consumer credit-charge card
organization or entity including, without limitation, payments arising
from the use of the American Express Card, the Visa Card, the Carte
Blanche Card, the Mastercard or any other credit card, including those
now existing or hereafter created, substitutions therefor, proceeds
thereof (whether cash or non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange, transfer, collection or
other disposition or substitution thereof and any and all of the
foregoing and proceeds therefrom; and
(L) all proceeds, both cash and noncash, of the foregoing;
(All of the foregoing property and rights and interests now
owned or held or subsequently acquired by Mortgagor and described in the
foregoing clauses (A) through (E) are collectively referred to as the
"Premises", and those described in the foregoing clauses (A) through (L) are
collectively referred to as the "Mortgaged Property").
TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby mortgaged unto Mortgagee, its successors and assigns for the
uses and purposes set forth, until the Indebtedness is fully paid and the
Guaranty and the Obligations fully performed.
Terms and Conditions
--------------------
Mortgagor further represents, warrants, covenants and agrees
with Mortgagee as follows:
4
<PAGE>
1. Warranty of Title. Mortgagor warrants that it has good and
marketable title to the Premises, subject only to the Permitted Liens and the
matters that are set forth in Schedule B of the title insurance policy or
policies being issued to Mortgagee to insure the lien of this Mortgage
(collectively, the "Permitted Exceptions").
2. Payment of Indebtedness. Mortgagor shall timely pay or
cause to be paid all of the Note Indebtedness and shall timely perform or cause
to be performed all of the Obligations.
3. Requirements.
(a) Mortgagor, in all material respects, is in compliance and
conforming to all present, and shall promptly comply with, or cause to be
complied with, and conform to all Applicable Laws and all Legal Requirements and
all covenants, restrictions and conditions now or later of record which may be
applicable to any of the Mortgaged Property, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Mortgaged Property.
(b) From and after the date of this Mortgage, Mortgagor shall
not by act or omission permit any building or other improvement on any premises
not subject to the lien of this Mortgage to rely on the Premises or any part
thereof or any interest therein to fulfill any Legal Requirement, and Mortgagor
hereby assigns to Mortgagee any and all rights to give consent for all or any
portion of the Premises or any interest therein to be so used. Mortgagor shall
not by act or omission impair the integrity of any of the Real Estate as a
single zoning lot separate and apart from all other premises. Mortgagor
represents that each parcel of the Real Estate constitutes a legally subdivided
lot, in compliance with all subdivision laws and similar Legal Requirements. Any
act or omission by Mortgagor which would result in a violation of any of the
provisions of this subsection shall be void.
4. Payment of Taxes and Other Impositions. (a) Promptly when
due, Mortgagor shall pay and discharge all taxes of every kind and nature
(including, without limitation, all real and personal property, income,
franchise, withholding, transfer, gains, profits and gross receipts taxes), all
charges for any easement or agreement maintained for the benefit of any of the
Mortgaged Property, all general and special assessments, levies, permits,
inspection and license fees, all water and sewer rents and charges, vault taxes,
and all other public charges even if unforeseen or extraordinary, imposed upon
or assessed against or which may become a lien on any of the Mortgaged Property,
or arising in respect of the occupancy, use or possession thereof, together with
any penalties or interest on any of the foregoing (all of the foregoing are
collectively referred to as the "Impositions"). Upon request by Mortgagee,
Mortgagor shall deliver to Mortgagee (i) original or copies of receipted bills
and canceled checks evidencing payment of such Imposition if it is a real estate
tax or other public charge and (ii) evidence acceptable to Mortgagee showing the
payment of any other such Imposition. If by law any Imposition, at Mortgagor's
option, may be paid in installments (whether or not interest shall
5
<PAGE>
accrue on the unpaid balance of such Imposition), Mortgagor may elect to pay
such Imposition in such installments and shall be responsible for the payment of
such installments with interest, if any. To the best knowledge of Mortgagee,
there is no proposed tax assessment against Mortgagor or the Real Estate which
would, if the assessment were made, would have a Material Adverse Effect upon
the value of the Real Estate or the Mortgaged Property.
(b) Nothing herein shall affect any right or remedy of
Mortgagee under this Mortgage or otherwise, without notice or demand to
Mortgagor, to pay any Imposition after the date such Imposition shall have
become due. Any sums paid by Mortgagee in discharge of any Impositions shall be
payable on demand by Mortgagor to Mortgagee together with interest at the
Default Rate.
(c) Mortgagor shall not claim, demand or be entitled to
receive any credit or credits toward the satisfaction of this Mortgage or on any
interest payable thereon for any taxes assessed against the Mortgaged Property
or any part thereof, and shall not claim any deduction from the taxable value of
the Mortgaged Property by reason of this Mortgage.
(d) Mortgagor shall have the right before any delinquency
occurs to contest or object in good faith to the amount or validity of any
Imposition by appropriate legal proceedings, but such right shall not be deemed
or construed in any way as relieving, modifying, or extending Mortgagor's
covenant to pay any such Imposition at the time and in the manner provided in
this Section unless (i) Mortgagor has given prior written notice to Mortgagee of
Mortgagor's intent so to contest or object to an Imposition, (ii) Mortgagor
shall demonstrate to Mortgagee's satisfaction that the legal proceedings shall
operate conclusively to prevent the sale of the Mortgaged Property, or any part
thereof, to satisfy such Imposition prior to final determination of such
proceedings and (iii) Mortgagor shall furnish a good and sufficient bond or
surety as requested by and reasonably satisfactory to Mortgagee in the amount of
the Impositions which are being contested plus any interest and penalty which
may be imposed thereon and which could become a lien against the Real Estate or
any part of the Mortgaged Property.
(e) Upon written notice to Mortgagor, Mortgagee after an Event
of Default (as defined below) shall be entitled to require Mortgagor to pay
monthly in advance to Mortgagee the equivalent of 1/12th of the estimated annual
Impositions. Mortgagee may commingle such funds with its own funds and Mortgagor
shall not be entitled to interest thereon.
5. Insurance. (a) Mortgagor shall maintain or cause to be
maintained on all of the Premises:
(i) property insurance against loss or damage by fire,
lightning, windstorm, tornado, water damage, flood, earthquake and by
such other further risks and hazards as now are or subsequently may be
covered by an "all risk" policy or a fire policy covering "special"
causes of loss, in such amounts as are reasonably satisfactory to
Mortgagee . The policy shall include building ordinance law
endorsements and the policy limits shall be automatically reinstated
after each loss;
6
<PAGE>
(ii) comprehensive general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language of such endorsement), covering all claims for personal injury,
bodily injury or death, or property damage occurring on, in or about
the Premises with a combined single limit reasonably satisfactory to
Mortgagee with respect to injury and property damage relating to any
one occurrence plus such excess limits as Mortgagee shall request from
time to time;
(iii) when and to the extent required by Mortgagee, insurance
against loss or damage by any other risk commonly insured against by
persons occupying or using like properties in the locality or
localities in which the Real Estate is situated;
(iv) insurance against rent loss, extra expense or business
interruption (and/or soft costs, in the case of new construction), if
applicable, in amounts satisfactory to Mortgagee, but not less than one
year's gross rent or gross income;
(v) during the course of any construction or repair of
Improvements, comprehensive general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language of such endorsement), (including coverage for elevators and
escalators, if any). The policy shall include coverage for independent
contractors and completed operations. The completed operations coverage
shall stay in effect for two years after construction of any
Improvements has been completed. The policy shall provide coverage on
an occurrence basis against claims for personal injury, including,
without limitation, bodily injury, death or property damage occurring
on, in or about the Premises and the adjoining streets, sidewalks and
passageways, such insurance to afford immediate minimum protection to a
limit of not less than that required by Mortgagee with respect to
personal injury, bodily injury or death to any one or more persons or
damage to property;
(vi) during the course of any construction or repair of the
Improvements, workers' compensation insurance (including employer's
liability insurance) for all employees of Mortgagor engaged on or with
respect to the Premises in such amounts as are reasonably satisfactory
to Mortgagee, but in no event less than the limits established by law;
(vii) during the course of any construction, addition,
alteration or repair of the Improvements, builder's risk completed
value form insurance against "all risks of physical loss," including
collapse, water damage, flood and earthquake and transit coverage,
during construction or repairs of the Improvements, with deductible
approved by Mortgagee, in nonreporting form, covering the total value
of work performed and equipment, supplies and materials furnished (with
an appropriate limit for soft costs in the case of construction);
7
<PAGE>
(viii) boiler and machinery property insurance covering
pressure vessels, air tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator equipment and escalator
equipment, provided the Improvements contain equipment of such nature,
and insurance against rent, extra expense, business interruption and
soft costs, if applicable, arising from any such breakdown, in such
amounts as are reasonably satisfactory to Mortgagee but not less than
the lesser of $1,000,000 or 10% of the value of the Improvements;
(ix) if any portion of the Premises are located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, flood insurance in an
amount satisfactory to Mortgagee, but in no event less than the maximum
limit of coverage available under the National Flood Insurance Act of
1968, as amended; and
(x) such other insurance in such amounts as Mortgagee may
reasonably request from time to time.
Each insurance policy (other than flood insurance written under the National
Flood Insurance Act of 1968, as amended, in which case to the extent available)
shall (i) provide that it shall not be canceled, non-renewed or materially
amended without 30-days' prior written notice to Mortgagee, and (ii) with
respect to all property insurance, provide for deductibles not to exceed
$25,000, contain a "Replacement Cost Endorsement" without any deduction made for
depreciation and with no co-insurance penalty (or attaching an agreed amount
endorsement satisfactory to Mortgagee), with loss payable solely to Mortgagee
(modified, if necessary, to provide that proceeds in the amount of replacement
cost may be retained by Mortgagee without the obligation to rebuild) as its
interest may appear, without contribution, under a "standard" or "New York"
mortgagee clause acceptable to Mortgagee and be written by insurance companies
having an A.M. Best Company, Inc. rating of A or higher and a financial size
category of not less than XII, or otherwise as approved by Mortgagee. Liability
insurance policies shall name Mortgagee as an additional insured and contain a
waiver of subrogation against Mortgagee; all such policies shall indemnify and
hold Mortgagee harmless from all liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and passageways. The amounts of
each insurance policy and the form of each such policy shall at all times be
satisfactory to Mortgagee. Each policy shall expressly provide that any proceeds
which are payable to Mortgagee shall be paid by check payable to the order of
Mortgagee only and requiring the endorsement of Mortgagee only. If any required
insurance shall expire, be withdrawn, become void by breach of any condition
thereof by Mortgagor or by any lessee of any part of the Mortgaged Property or
become void or unsafe by reason of the failure or impairment of the capital of
any insurer, or if for any other reason whatsoever such insurance shall become
unsatisfactory to Mortgagee, Mortgagor shall immediately obtain new or
additional insurance satisfactory to Mortgagee. Mortgagor shall not take out any
separate or additional insurance which is contributing in the event of loss
unless it is properly endorsed and otherwise satisfactory to Mortgagee in all
respects.
8
<PAGE>
(b) Mortgagor shall deliver to Mortgagee an original of each
insurance policy required to be maintained, or a certificate of such insurance
acceptable to Mortgagee, together with a copy of the declaration page for each
such policy. Mortgagor shall (i) pay as they become due all premiums for such
insurance, (ii) not later than 15 days prior to the expiration of each policy to
be furnished pursuant to the provisions of this Section, deliver a renewed
policy or policies, or duplicate original or originals thereof, marked "premium
paid," or accompanied by such other evidence of payment satisfactory to
Mortgagee with standard non-contributory mortgage clauses in favor of and
acceptable to Mortgagee. Upon request of Mortgagee, Mortgagor shall cause its
insurance underwriter or broker to certify to Mortgagee in writing that all the
requirements of this Mortgage governing insurance have been satisfied.
(c) If Mortgagor is in default of its obligations to insure or
deliver any such prepaid policy or policies, then Mortgagee, at its option and
without notice, may effect such insurance from year to year, and pay the premium
or premiums therefor, and Mortgagor shall pay to Mortgagee on demand such
premium or premiums so paid by Mortgagee with interest from the time of payment
at the Default Rate.
(d) Mortgagor shall increase the amount of property insurance
required to equal 100% replacement cost pursuant to the provisions of this
Section at the time of each renewal of each policy (but not later than 12 months
from the date of this Mortgage and each successive 12 month period to occur
thereafter) by using the F.W. Dodge Building Index to determine whether there
shall have been an increase in the replacement value since the most recent
adjustment and, if there shall have been such an increase, the amount of
insurance required shall be adjusted accordingly.
(e) Mortgagor promptly shall comply with and conform to (i)
all provisions of each such insurance policy, and (ii) all requirements of the
insurers applicable to Mortgagor or to any of the Mortgaged Property or to the
use, manner of use, occupancy, possession, operation, maintenance, alteration or
repair of any of the Mortgaged Property. Mortgagor shall not use or permit the
use of the Mortgaged Property in any manner which would permit any insurer to
cancel any insurance policy or void coverage required to be maintained by this
Mortgage.
(f) If the Mortgaged Property, or any part thereof, shall be
destroyed or damaged by fire or any other casualty, whether insured or
uninsured, or in the event any claim is made against Mortgagor for any personal
injury, bodily injury or property damage incurred on or about the Premises,
Mortgagor shall give immediate notice thereof to Mortgagee. If the Mortgaged
Property is damaged by fire or other casualty and the cost to repair such damage
is less than the lesser of (i) 5% of the replacement cost of the Improvements at
the affected Real Estate site and (ii) $100,000, then provided that no Event of
Default shall have occurred and be continuing, Mortgagor shall have the right to
adjust such loss, and the insurance proceeds relating to such loss may be paid
over to Mortgagor; provided that Mortgagor shall, promptly after any such
damage, repair all such damage regardless of whether any insurance proceeds have
been received or whether such proceeds, if received, are sufficient to pay for
the costs of repair. If the Mortgaged Property is damaged by fire or other
casualty, and the cost to repair such damage
9
<PAGE>
exceeds the above limit, or if an Event of Default shall have occurred and be
continuing, then Mortgagor authorizes and empowers Mortgagee, at Mortgagee's
option and in Mortgagee's sole discretion, as attorney-in-fact for Mortgagor, to
make proof of loss, to adjust and compromise any claim under any insurance
policy, to appear in and prosecute any action arising from any policy, to
collect and receive insurance proceeds and to deduct therefrom Mortgagee's
expenses incurred in the collection process. Each insurance company concerned is
hereby authorized and directed to make payment for such loss directly to
Mortgagee. Mortgagee shall have the right to require Mortgagor to repair or
restore the Mortgaged Property, and Mortgagor hereby designates Mortgagee as its
attorney-in-fact for the purpose of making any election required or permitted
under any insurance policy relating to repair or restoration. The insurance
proceeds or any part thereof received by Mortgagee may be applied by Mortgagee
toward reimbursement of all costs and expenses of Mortgagee in collecting such
proceeds, and the balance, at Mortgagee's option in its sole and absolute
discretion, to (i) the Indebtedness and the Note Indebtedness (whether or not
matured) and/or (ii) the restoration or repair of the property damaged (upon
such conditions as Mortgagee shall impose, including those set forth in Section
11 below). Application by Mortgagee of any insurance proceeds toward the
Indebtedness and the Note Indebtedness shall not excuse Mortgagor from making
any other payments with respect to the Indebtedness and the Note Indebtedness.
(g) In the event of foreclosure of this Mortgage or other
transfer of title to the Mortgaged Property in extinguishment of the
Indebtedness, all right, title and interest of Mortgagor in and to any insurance
policies then in force shall pass to the purchaser or grantee and Mortgagor
hereby appoints Mortgagee its attorney-in-fact, in Mortgagor's name, to assign
and transfer all such policies and proceeds to such purchaser or grantee.
(h) Upon written notice to Mortgagor, Mortgagee after an Event
of Default shall be entitled to require Mortgagor to pay monthly in advance to
Mortgagee the equivalent of 1/12th of the estimated annual premiums due on such
insurance. Mortgagee may commingle such funds with its own funds and Mortgagor
shall not be entitled to interest thereon.
6. Restrictions on Liens and Encumbrances. Except for the lien
of this Mortgage and the Permitted Exceptions, Mortgagor shall not further
mortgage, nor otherwise encumber the Mortgaged Property nor create or suffer to
exist any lien, charge or encumbrance (whether voluntary or non-voluntary) on
the Mortgaged Property, or any part thereof, whether superior or subordinate to
the lien of this Mortgage and whether recourse or non-recourse.
7. Due on Sale and Other Transfer Restrictions. Mortgagor
shall not sell, transfer, convey or assign all or any portion of, or any
interest in, the Mortgaged Property.
8. Limitation on Fundamental Changes. Mortgagor agrees that:
(i) Mortgagor shall not enter into any transaction of merger
or consolidation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), or acquire by
10
<PAGE>
purchase or otherwise all or substantially all the business or assets
of, or any stock or other evidence of beneficial ownership of, any
entity; and
(ii) Mortgagor shall not engage in any business other than the
ownership and operation of the Mortgaged Property and the business
conducted there as of the date of this Mortgage.
9. Maintenance; No Alteration; Inspection; Utilities. (a)
Mortgagor shall maintain or cause to be maintained all the Improvements in good
condition and repair and shall not commit or suffer any waste of the
Improvements. Mortgagor shall repair, restore, replace or rebuild promptly any
part of the Premises which may be damaged or destroyed by any casualty
whatsoever. The Improvements shall not be demolished or materially altered, nor
any material additions built, without the prior written consent of Mortgagee.
(b) Mortgagee and any persons authorized by Mortgagee shall
have the right to enter and inspect the Premises and the right to inspect all
work done, labor performed and materials furnished in and about the Improvements
and the right to inspect and make copies of all books, contracts and records of
Mortgagor relating to the Mortgaged Property.
(c) Mortgagor shall pay or cause to be paid when due all
utility charges which are incurred for gas, electricity, water or sewer services
furnished to the Premises and all other assessments or charges of a similar
nature, whether public or private, affecting the Premises or any portion
thereof, whether or not such assessments or charges are liens thereon.
10. Condemnation/Eminent Domain. Immediately upon obtaining
knowledge of the institution of any proceedings for the condemnation of the
Mortgaged Property, or any portion thereof, Mortgagor will notify Mortgagee of
the pendency of such proceedings. Mortgagor authorizes Mortgagee, at Mortgagee's
option and in Mortgagee's sole discretion, as attorney-in-fact for Mortgagor, to
commence, appear in and prosecute, in Mortgagee's or Mortgagor's name, any
action or proceeding relating to any condemnation of the Mortgaged Property, or
any portion thereof, and to settle or compromise any claim in connection with
such condemnation. If Mortgagee elects not to participate in such condemnation
proceeding, then Mortgagor shall, at its expense, diligently prosecute any such
proceeding and shall consult with Mortgagee, its attorneys and experts and
cooperate with them in any defense of any such proceedings. All awards and
proceeds of condemnation shall be assigned to Mortgagee to be applied in the
same manner as insurance proceeds, as provided above, and Mortgagor agrees to
execute any such assignments of all such awards as Mortgagee may request.
11. Restoration. If Mortgagee elects to release funds to
Mortgagor for restoration of any of the Mortgaged Property, then such
restoration shall be performed only in accordance with the following conditions:
11
<PAGE>
(i) prior to the commencement of any restoration, the plans
and specifications for such restoration, and the budgeted costs, shall
be submitted to and approved by Mortgagee;
(ii) prior to making any advance of restoration funds,
Mortgagee shall be satisfied that the remaining restoration funds are
sufficient to complete the restoration and to pay all related expenses,
including real estate taxes on the Premises, during restoration;
(iii) at the time of any disbursement of the restoration
funds, (A) no Event of Default or any event which with the giving of
notice or passage of time, or both, would constitute an Event of
Default ("Default") shall then exist, (B) no mechanics' or
materialmen's liens shall have been filed and remain undischarged,
except those discharged by the disbursement of the requested
restoration funds and (C) a satisfactory bring-down or continuation of
title insurance on the Premises shall be delivered to Mortgagee;
(iv) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of satisfactory evidence of the stage of
completion and of performance of the work in a good and workmanlike
manner and in accordance with the contracts, plans and specifications
acceptable to Mortgagee;
(v) with respect to each advance of restoration funds,
Mortgagee may retain 10% of the amount of such advance as a holdback
until the restoration is fully completed;
(vi) the restoration funds shall bear no interest and may be
commingled with Mortgagee's other funds;
(vii) Mortgagee may impose such other conditions as are
customarily imposed by construction lenders; and
(viii) any restoration funds remaining shall be retained by
Mortgagee and may be applied by Mortgagee, in its sole discretion, to
the Indebtedness in the inverse order of maturity.
12. Leases. (a) Mortgagor shall not (i) execute an assignment
or pledge of any Lease relating to all or any portion of the Mortgaged Property
other than in favor of Mortgagee, or (ii) without the prior written consent of
Mortgagee, execute or permit to exist any Lease of any of the Mortgaged Property
provided, that, it is understood and agreed that the Mortgagee has consented to
that certain Lease of 205 Express Street, dated June 30, 1994, between Mortgagor
as lessor and Borrower as lessee (the "Astrex Lease"). Mortgagor hereby
represents that said Astrex Lease is in full force and effect and that Mortgagor
has not defaulted thereunder nor, to Mortgagor's
12
<PAGE>
knowledge, has the lessee thereunder defaulted thereunder, and, to Mortgagor's
knowledge, no events have taken place that with the passing of time or the
giving of notice would constitute a default thereunder.
(b) As to any Lease (including without limitation the Astrex
Lease) consented to by Mortgagee, Mortgagor shall:
(i) promptly perform all of the provisions of the Lease on the
part of the lessor thereunder to be performed;
(ii) promptly enforce all of the provisions of the Lease on
the part of the lessee thereunder to be performed;
(iii) appear in and defend any action or proceeding arising
under or in any manner connected with the Lease or the obligations of
Mortgagor as lessor or of the lessee thereunder;
(iv) exercise, within 5 days after a request by Mortgagee, any
right to request from the lessee a certificate with respect to the
status thereof;
(v) simultaneously deliver to Mortgagee copies of any notices
of default which Mortgagor may at any time forward to or receive from
the lessee;
(vi) promptly deliver to Mortgagee a fully executed
counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon Mortgagee's request,
any separate assignment of the Mortgagor's interest under such Lease.
(c) Mortgagor shall deliver to Mortgagee, within 10 days after
a request by Mortgagee, a written statement, certified by Mortgagor as being
true, correct and complete, containing the names of all lessees and other
occupants of the Mortgaged Property, the terms of all Leases and the spaces
occupied and rentals payable thereunder, and a list of all Leases which are then
in default, including the nature and magnitude of the default; such statement
shall be accompanied by credit information with respect to the lessees and such
other information as Mortgagee may request.
(d) All Leases (including, without limitation, the Astrex
Lease) and all rights of any lessees thereunder shall be subject and subordinate
in all respects to the lien and provisions of this Mortgage unless Mortgagee
shall otherwise elect in writing.
(e) As to any Lease (including, without limitation, the Astrex
Lease) now in existence or subsequently consented to by Mortgagee, Mortgagor
shall not accept a surrender or terminate, cancel, rescind, supplement, alter,
revise, modify or amend such Lease or permit any such action to be taken nor
shall Mortgagor accept the payment of rent more than thirty (30) days
13
<PAGE>
in advance of its due date. The provisions of this subsection are made with
reference to Section 291-f of the Real Property Law of the State of New York.
(f) If any act or omission of Mortgagor would give any lessee
under any Lease the right, immediately or after lapse of a period of time, to
cancel or terminate such Lease, or to abate or offset against the payment of
rent or to claim a partial or total eviction, such lessee shall not exercise
such right until it has given written notice of such act or omission to
Mortgagee and until a reasonable period for remedying such act or omission shall
have elapsed following the giving of such notice without a remedy being
effected.
(g) In the event of the enforcement by Mortgagee of any remedy
under this Mortgage, the lessee under each Lease shall, if requested by
Mortgagee or any other person succeeding to the interest of Mortgagee as a
result of such enforcement, attorn to Mortgagee or to such person and shall
recognize Mortgagee or such successor in interest as lessor under the Lease
without change in the provisions thereof; provided however, that Mortgagee or
such successor in interest shall not be: (i) bound by any payment of an
installment of rent or additional rent which may have been made more than 30
days before the due date of such installment; (ii) bound by any amendment or
modification to the Lease made without the consent of Mortgagee or such
successor in interest; (iii) liable for any previous act or omission of
Mortgagor (or its predecessors in interest); (iv) responsible for any monies
owing by Mortgagor to the credit of such lessee or subject to any credits,
offsets, claims, counterclaims, demands or defenses which the lessee may have
against Mortgagor (or its predecessors in interest); (v) bound by any covenant
to undertake or complete any construction of the Premises or any portion
thereof; or (vi) obligated to make any payment to such lessee other than any
security deposit actually delivered to Mortgagee or such successor in interest.
Each lessee or other occupant, upon request by Mortgagee or such successor in
interest, shall execute and deliver an instrument or instruments confirming such
attornment. In addition, Mortgagor agrees that each Lease entered into after the
date of this Mortgage shall include language to the effect of subsections
(d)-(g) of this Section; provided that the provisions of such subsections shall
be self-operative and any failure of any Lease to include such language shall
not impair the binding effect of such provisions on any lessee under such Lease.
13. Further Assurances/Estoppel Certificates. To further
assure Mortgagee's rights under this Mortgage, Mortgagor agrees upon demand of
Mortgagee to do any act or execute any additional documents (including, but not
limited to, security agreements on any personalty included or to be included in
the Mortgaged Property and a separate assignment of each Lease in recordable
form) as may be required by Mortgagee to confirm the lien of this Mortgage and
all other rights or benefits conferred on Mortgagee. Mortgagor, within seven
calendar days after request, shall deliver, in form and substance satisfactory
to Mortgagee, a written statement, duly acknowledged, setting forth the amount
of the Indebtedness, and whether any offsets, claims, counterclaims or defenses
exist against the Indebtedness and certifying as to such other matters as
Mortgagee shall reasonably request.
14
<PAGE>
14. Mortgagee's Right to Perform. If Mortgagor fails to
perform any of the covenants or agreements of Mortgagor, Mortgagee, without
waiving or releasing Mortgagor from any obligation or default under this
Mortgage, may, at any time (but shall be under no obligation to) pay or perform
the same, and the amount or cost thereof, with interest at the Default Rate,
shall immediately be due from Mortgagor to Mortgagee. To the extent that any
such amounts or costs paid by Mortgagee shall constitute payment of (i)
Impositions; (ii) premiums on insurance policies covering the Premises; (iii)
expenses incurred in upholding or enforcing the lien of this Mortgage,
including, but not limited to the expenses of any litigation to prosecute or
defend the rights and lien created by this Mortgage; (iv) costs of removal of or
otherwise related to Hazardous Materials or asbestos; or (v) any amount, costs
or charge to which Mortgagee becomes subrogated, upon payment, whether under
recognized principles of law or equity, or under express statutory authority;
then, and in each such event, such amounts or costs, together with interest
thereon at the Default Rate, shall be added to the Indebtedness and shall be
secured by this Mortgage and shall be a lien on the Mortgaged Property prior to
any right, title to, interest in, or claim upon the Mortgaged Property attaching
subsequent to the lien of this Mortgage. No payment or advance of money by
Mortgagee under this Section shall be deemed or construed to cure Mortgagor's
default or waive any right or remedy of Mortgagee.
15. Entity Matters. (a) Mortgagor's Existence, etc. Mortgagor
shall do all things necessary to preserve and keep in full force and effect its
existence, franchises, rights and privileges under the laws of the state in
which it was formed and its right to own property and transact business in each
state in which the Real Estate is located. Mortgagor represents and warrants
that Mortgagor is a duly organized and validly existing corporation in good
standing in the state in which it was formed and each state in which the Real
Estate is located.
(b) Due Authorization, Execution, etc. The execution, delivery
and performance by Mortgagor of this Mortgage, the Guaranty (including all
confirmations and amendments thereto) and any other Financing Documents to which
Mortgagor is a party, have been approved by all necessary action(s) on the part
of the Mortgagor's board, stockholders, partners, managers, members, and/or
other persons. Each of this Mortgage, the Guaranty (including all confirmations
and amendments thereto) and each of the other Financing Documents to which
Mortgagor is a party has been duly executed by a duly authorized partner or
officer of Mortgagor, as applicable. Each of this Mortgage, the Guaranty
(including all confirmations and amendments thereto) and any other Financing
Documents to which Mortgagor is a party constitute the legal, valid and binding
obligation of Mortgagor, enforceable against Mortgagor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally, and does not, itself or taken together with the
other Financing Documents, (i) violate any Applicable Law or Mortgagor's
charter, bylaws, operating agreement, partnership agreement, or other
organizational documents, 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 Mortgagor or the Mortgaged Property, or result
in the creation of any Lien (other than in favor of the Lender) upon any
property or assets of Mortgagor, including the Mortgaged
15
<PAGE>
Property, pursuant to any contract or any such judgment, decree or order. The
security interests granted by Mortgagor pursuant to this Mortgage in the
Mortgaged Property are in full force and effect and secure the payment and
performance of all of the Obligations. The Mortgagor has no claim, defense,
counterclaim, or right of offset against the Mortgagee, whether relating to this
Mortgage, the Guaranty, the Financing Documents or otherwise. All
representations and warranties of the Mortgagor under this Mortgage, the
Guaranty and the other Financing Documents to which it is a party are true and
correct as of the date hereof. No Governmental Approval (except recordation of
this Mortgage with the County Clerk of Nassau County) is or will be required in
connection with the execution, delivery and performance of this Mortgagor or any
other Financing Documents to which Mortgagor is a party.
(c) Litigation. There are not any actions, suits or legal,
equitable, arbitration, or administrative proceedings, pending or, to the
knowledge of Mortgagor, threatened (nor, to the knowledge of Mortgagor, is there
any basis therefor) against or in any other way relating to or affecting
Mortgagor, the Mortgaged Property or any Financing Document to which Mortgagor
is a party.
(d) Burdensome Provisions; No Default. Mortgagor is not 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
Mortgagor, the Mortgaged Property or any Financing Document to which Mortgagor
is a party. Mortgagor is not 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 Mortgagor, the Mortgaged Property or any Financing Document
to which Mortgagor is a party.
(e) No Adverse Fact. Except as may be set forth in the
Financial Statements (or in Schedule A), no fact or circumstance is known to
Mortgagor 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 Mortgagor, the Mortgaged Property or any Financing
Document to which Mortgagor is a party.
16. [Reserved]
17. Notice of Certain Occurrences. Mortgagor shall give notice
to Mortgagee promptly upon the occurrence of:
(a) any Default or Event of Default;
(b) any (i) default or event of default under any provision of
any security issued by or any agreement, instrument or undertaking of
Mortgagor or which binds Mortgagor or any property thereof
(collectively, "Contractual Obligation") or (ii) litigation,
investigation or proceeding which may exist at any time between
Mortgagor and any of the United States of America, any State and any
municipality, local government or other
16
<PAGE>
political subdivision thereof and any agency, department, bureau,
board, commission or other instrumentality of any of them, now existing
or subsequently created (each, a "Governmental Authority") which, with
respect to both clauses (i) and (ii), could have a Material Adverse
Effect on the business, operations, property or financial or other
condition of Mortgagor;
(c) any litigation or proceeding affecting Mortgagor or the
Mortgaged Property or any part thereof in which the amount involved is
$50,000 or more in which injunctive or similar relief is sought; and
(d) a material adverse change in the business, operations,
property or financial or other condition of Mortgagor or the Mortgaged
Property or any part thereof.
18. Hazardous Material. (a) Neither Mortgagor nor, to the best
knowledge of Mortgagor, any other person has ever caused or permitted any
Hazardous Material to be placed, held, located or disposed of on, under or at
the Premises, or any part thereof, and the Premises have never been used
(whether by Mortgagor or, to the best knowledge of Mortgagor, by any other
person, including any tenant) as a dump site or storage (whether permanent or
temporary) site for any Hazardous Material.
(b) Mortgagor represents that (i) to the best of Mortgagor's
knowledge, upon due inquiry, the Premises are free of all Hazardous Material and
(ii) neither the Premises nor any site within the vicinity of the Premises is or
has been adversely affected by any Hazardous Material or is in violation of any
applicable Legal Requirement of any Governmental Authority regulating, relating
to, or imposing liability or standards of conduct concerning Hazardous Material.
(c) Mortgagor shall comply with any and all applicable Legal
Requirements governing the discharge and removal of Hazardous Material, shall
pay immediately when due the costs of removal of any Hazardous Material, and
shall keep the Premises free of any lien imposed pursuant to such Legal
Requirements. In the event Mortgagor fails to do so, after notice to Mortgagor
and the expiration of the earlier of (i) applicable cure periods, if any,
hereunder, or (ii) the cure period permitted under the applicable Legal
Requirement, Mortgagee may declare such failure an Event of Default or cause the
Premises to be freed from the Hazardous Material and the cost of the removal
with interest at the Default Rate shall immediately be due from Mortgagor to
Mortgagee. Mortgagor further agrees not to release or dispose of any Hazardous
Material at the Premises without the express approval of Mortgagee and any such
release or disposal shall comply with all applicable Legal Requirements and any
conditions established by Mortgagee. In addition, Mortgagor agrees not to allow
the manufacture, storage, transmission, presence or disposal of any Hazardous
Material over or upon the Premises. Mortgagee shall have the right at any time
to conduct an environmental audit of the Premises and Mortgagor shall cooperate
in the conduct of such environmental audit. Mortgagor shall give Mortgagee and
its agents and employees access to the Premises to remove Hazardous Material.
Mortgagor agrees to defend, indemnify and hold Mortgagee free and harmless from
and against all loss, costs,
17
<PAGE>
damage and expense (including attorneys' fees and costs and consequential
damages) Mortgagee may sustain by reason of (i) the imposition or recording of a
lien by any Governmental Authority pursuant to any Legal Requirement relating to
hazardous or toxic wastes or substances or the removal thereof ("Hazardous
Material Laws"); (ii) claims of any private parties regarding violations of
Hazardous Material Laws; (iii) costs and expenses (including, without
limitation, attorneys' fees and fees incidental to the securing of repayment of
such costs and expenses) incurred by Mortgagor or Mortgagee in connection with
the removal of any such lien or in connection with Mortgagor's or Mortgagee's
compliance with any Hazardous Material Laws; and (iv) the assertion against
Mortgagee by any party of any claim in connection with Hazardous Material.
(d) The foregoing indemnification shall be a recourse
obligation of Mortgagor and shall survive repayment of the Note or the delivery
of any satisfaction, release or release deed, discharge or deed of reconveyance,
or the assignment of this Mortgage by Mortgagee.
19. Asbestos. Mortgagor shall not install or permit to be
installed in the Premises friable asbestos or any substance containing asbestos
and deemed hazardous by any Legal Requirement respecting such material, or any
other building material deemed to be harmful, hazardous or injurious by relevant
Legal Requirements and with respect to any such material currently present in
the Premises shall promptly either (a) remove any material which such Legal
Requirements deem harmful, hazardous or injurious and require to be removed or
(b) otherwise comply with such Legal Requirements, at Mortgagor's expense. If
Mortgagor shall fail to so remove or otherwise comply, Mortgagee may declare an
Event of Default and/or do whatever is necessary to eliminate such substances
from the Premises or otherwise comply with the applicable Legal Requirement, and
the costs thereof, with interest at the Default Rate, shall be immediately due
from Mortgagor to Mortgagee. Mortgagor shall give Mortgagee and its agents and
employees access to the Premises to remove such asbestos or substances.
Mortgagor shall defend, indemnify, and save Mortgagee harmless from all loss,
costs, damages and expense (including attorneys' fees and costs and
consequential damages) asserted or proven against Mortgagee by any party, as a
result of the presence of such substances or any removal or compliance with such
Legal Requirements. The foregoing indemnification shall be a recourse obligation
of Mortgagor and shall survive repayment of the Note, or the delivery of any
satisfaction, release or release deed, discharge or deed of reconveyance, or the
assignment of this Mortgage by Mortgagee.
20. Events of Default. The occurrence of any one or more of
the following events shall constitute an Event of Default:
(a) Mortgagor shall fail to pay when due any sum, whether of
principal, interest, or otherwise, becoming due under the Guaranty
(including due under the Note);
(b) any failure of Mortgagor to make any payment under this
Mortgage or to perform any covenant, agreement or other obligation
under this Mortgage; or
18
<PAGE>
(c) a failure of Mortgagor (i) to comply with and conform to
all provisions and requirements of the insurance policies and the
insurers thereunder which would affect Mortgagor's ability to keep in
force the insurance required by this Mortgage or to collect any
proceeds therefrom; or
(d) upon default, seven calendar days after request, in
furnishing a statement of the outstanding amount secured by this
Mortgage and whether any offset or defense exists against the
Indebtedness; or
(e) upon the actual waste, removal or demolition of, or
material alteration to, any part of the Premises (other than necessary
replacements of worn or obsolete Equipment), or construction of any new
Improvements without the consent of Mortgagee; or
(f) upon failure of Mortgagor to comply promptly with any
Legal Requirement or order or notice of violation of law or ordinance
issued by any Governmental Authority having jurisdiction over the
Premises, which failure could materially adverse affect the Mortgaged
Property; or
(g) if any representation or warranty made by Mortgagor in
this Mortgage, the Guaranty, any other Financing Document or any
certificate, document or financial or other statement furnished by it
under or in connection with any of the Financing Documents shall prove
to have been incorrect in any material respect on or as of the date
made or deemed made; or
(h) if any of the Mortgaged Property is damaged or destroyed
by an uninsured casualty and Mortgagor does not immediately provide
funds for the restoration of the damage caused by such casualty; or
(i) the Guaranty shall cease for any reason to be in full
force and effect or Mortgagor shall so assert; or
(j) this Mortgage, the Guaranty or any of the other Security
Document shall cease for any reason to be in full force and effect or
Mortgagor, and other Guarantor or the Borrower shall so assert in
writing; or
(k) an "Event of Default" shall occur under the Credit
Agreement or any other Financing Document, or if Mortgagee shall permit
any additional lien or mortgage to encumber the Mortgaged Property
(whether superior or subordinate, recourse or non-recourse) any event
of default shall occur in connection with such lien or mortgage.
21. Remedies.
(a) Upon the occurrence and any time during the continuance of
any Event of Default, in addition to any other rights and remedies Mortgagee may
have pursuant to the
19
<PAGE>
Financing Documents, or as provided by law, and without limitation, (a) if such
event consists of an Event of Default under Subsections 7.1(i) or (j) of the
Credit Agreement, automatically the Indebtedness and the Note Indebtedness shall
become due and payable, and (b) if such event is any other Event of Default, by
notice to Mortgagor, Mortgagee may declare the Indebtedness and/or the Note
Indebtedness to be immediately due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived. In addition, upon the occurrence and any time
during the continuance of any Event of Default, Mortgagee may immediately take
such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Mortgagor and in and to the Mortgaged Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such manner as Mortgagee
may determine, in its sole discretion, without impairing or otherwise affecting
the other rights and remedies of Mortgagee:
(i) Mortgagee may, to the extent permitted by applicable law,
(A) institute and maintain an action of mortgage foreclosure against
all or any part of the Mortgaged Property, (B) institute and maintain
an action on the Note and/or the Guaranty, , (C) sell all or part of
the Mortgaged Property (Mortgagor expressly granting to Mortgagee the
power of sale), or (D) take such other action at law or in equity for
the enforcement of this Mortgage or any of the Financing Documents as
the law may allow. Mortgagee may proceed in any such action to final
judgment and execution thereon for all sums due hereunder, together
with interest thereon to the fullest extent permitted by applicable
law, and all costs of suit, including, without limitation, reasonable
attorneys' fees and disbursements. To the fullest extent permitted by
applicable law, interest at the Default Rate shall be due on any
judgment obtained by Mortgagee from the date of judgment until actual
payment is made of the full amount of the judgment.
(ii) Mortgagee may personally, or by its agents, attorneys and
employees and without regard to the adequacy or inadequacy of the
Mortgaged Property or any other collateral as security for the
Indebtedness and the Obligations enter into and upon the Mortgaged
Property and each and every part thereof and exclude Mortgagor and its
agents and employees therefrom without liability for trespass, damage
or otherwise (Mortgagor hereby agreeing to surrender possession of the
Mortgaged Property to Mortgagee upon demand at any such time) and use,
operate, manage, maintain and control the Mortgaged Property and every
part thereof. Following such entry and taking of possession, Mortgagee
shall be entitled, without limitation, (x) to lease all or any part or
parts of the Mortgaged Property for such periods of time and upon such
conditions as Mortgagee may, in its discretion, deem proper, (y) to
enforce, cancel or modify any Lease and (z) generally to execute, do
and perform any other act, deed, matter or thing concerning the
Mortgaged Property as Mortgagee shall deem appropriate as fully as
Mortgagor might do.
(b) The holder of this Mortgage, in any action to foreclose
it, shall be entitled to the appointment of a receiver. In case of a foreclosure
sale, the Real Estate may be sold, at
20
<PAGE>
Mortgagee's election, in one parcel or in more than one parcel and Mortgagee is
specifically empowered, (without being required to do so, and in its sole and
absolute discretion) to cause successive sales of portions of the Mortgaged
Property to be held.
(c) In the event of any breach of any of the covenants,
agreements, terms or conditions contained in this Mortgage, Mortgagee shall be
entitled to enjoin such breach and obtain specific performance of any covenant,
agreement, term or condition and Mortgagee shall have the right to invoke any
equitable right or remedy as though other remedies were not provided for in this
Mortgage.
22. Right of Mortgagee to Credit Sale. Upon the occurrence of
any sale made under this Mortgage, whether made under the power of sale or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Mortgagee may bid for and acquire the Mortgaged Property or any part
thereof. In lieu of paying cash therefor, Mortgagee may make settlement for the
purchase price by crediting upon the Indebtedness or other sums secured by this
Mortgage the net sales price after deducting therefrom the expenses of sale and
the cost of the action and any other sums which Mortgagee is authorized to
deduct under this Mortgage. In such event, this Mortgage, the Note and documents
evidencing expenditures secured hereby may be presented to the person or persons
conducting the sale in order that the amount so used or applied may be credited
upon the Indebtedness as having been paid.
23. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, Mortgagee as a matter of right and without notice to
Mortgagor, unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Mortgaged Property or any other collateral as
security for the Indebtedness and the Obligations or the interest of Mortgagor
therein, shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers or other manager of the Mortgaged Property, and
Mortgagor hereby irrevocably consents to such appointment and waives notice of
any application therefor (except as may be required by law). Any such receiver
or receivers shall have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of Mortgagee in case of entry as
provided in this Mortgage, including, without limitation and to the extent
permitted by law, the right to enter into leases of all or any part of the
Mortgaged Property, and shall continue as such and exercise all such powers
until the date of confirmation of sale of the Mortgaged Property unless such
receivership is sooner terminated.
24. Extension, Release, etc. (a) Without affecting the lien or
charge of this Mortgage upon any portion of the Mortgaged Property not then or
theretofore released as security for the full amount of the Indebtedness,
Mortgagee may, from time to time and without notice, agree to (i) release any
person liable for the Indebtedness or the Note Indebtedness, (ii) extend the
maturity or alter any of the terms of the Indebtedness or the Note Indebtedness
or any guaranty thereof, (iii) grant other indulgences, (iv) release or
reconvey, or cause to be released or reconveyed at any time at Mortgagee's
option any parcel, portion or all of the Mortgaged Property, (v) take or release
any other or additional security for any obligation herein mentioned, or (vi)
make compositions or other arrangements with debtors in relation thereto.
21
<PAGE>
(b) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect the lien of this Mortgage or any liens,
rights, powers or remedies of Mortgagee hereunder, and such liens, rights,
powers and remedies shall continue unimpaired.
(c) If Mortgagee shall have the right to foreclose this
Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose the lien of
this Mortgage subject to the rights of any tenants of the Mortgaged Property.
The failure to make any such tenants parties defendant to any such foreclosure
proceeding and to foreclose their rights will not be asserted by Mortgagor as a
defense to any proceeding instituted by Mortgagee to collect the Indebtedness or
to foreclose the lien of this Mortgage.
(d) Unless expressly provided otherwise, in the event that
ownership of this Mortgage and title to the Mortgaged Property or any estate
therein shall become vested in the same person or entity, this Mortgage shall
not merge in such title but shall continue as a valid lien on the Mortgaged
Property for the amount secured hereby.
25. Security Agreement under Uniform Commercial Code. (a) It
is the intention of the parties hereto that this Mortgage shall constitute a
Security Agreement within the meaning of the Uniform Commercial Code (the
"Code") of the State of New York. If an Event of Default shall occur and be
continuing under this Mortgage, then in addition to having any other right or
remedy available at law or in equity, Mortgagee shall have the option of either
(i) proceeding under the Code and exercising such rights and remedies as may be
provided to a secured party by the Code with respect to all or any portion of
the Mortgaged Property which is personal property (including, without
limitation, taking possession of and selling such property) or (ii) treating
such property as real property and proceeding with respect to both the real and
personal property constituting the Mortgaged Property in accordance with
Mortgagee's rights, powers and remedies with respect to the real property (in
which event the default provisions of the Code shall not apply). If Mortgagee
shall elect to proceed under the Code, then ten days' notice of sale of the
personal property shall be deemed reasonable notice and the reasonable expenses
of retaking, holding, preparing for sale, selling and the like incurred by
Mortgagee shall include, but not be limited to, attorneys' fees and legal
expenses. At Mortgagee's request, Mortgagor shall assemble the personal property
and make it available to Mortgagee at a place designated by Mortgagee which is
reasonably convenient to both parties.
(b) Mortgagor and Mortgagee agree, to the extent permitted by
law, that: (i) this Mortgage upon recording or registration in the real estate
records of the proper office shall constitute a financing statement filed as a
"fixture filing" within the meaning of Sections 9-313 and 9-402 of the Code;
(ii) Mortgagor is the record owner of the Real Estate; and (iii) the addresses
of Mortgagor and Mortgagee are as set forth on the first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee from time to time,
shall execute, acknowledge and deliver to Mortgagee one or more separate
security agreements, in form satisfactory to Mortgagee, covering all or any part
of the Mortgaged Property and will further
22
<PAGE>
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, any financing statement, affidavit, continuation statement or
certificate or other document as Mortgagee may request in order to perfect,
preserve, maintain, continue or extend the security interest under and the
priority of this Mortgage and such security instrument. Mortgagor further agrees
to pay to Mortgagee on demand all costs and expenses incurred by Mortgagee in
connection with the preparation, execution, recording, filing and re-filing of
any such document and all reasonable costs and expenses of any record searches
for financing statements Mortgagee shall reasonably require. Mortgagor shall
from time to time, on request of Mortgagee, deliver to Mortgagee an inventory in
reasonable detail of any of the Mortgaged Property which constitutes personal
property. If Mortgagor shall fail to furnish any financing or continuation
statement within 10 days after request by Mortgagee, then pursuant to the
provisions of the Code, Mortgagor hereby authorizes Mortgagee, without the
signature of Mortgagor, to execute and file any such financing and continuation
statements. The filing of any financing or continuation statements in the
records relating to personal property or chattels shall not be construed as in
any way impairing the right of Mortgagee to proceed against any personal
property encumbered by this Mortgage as real property, as set forth above.
26. Assignment of Rents. Mortgagor hereby assigns to Mortgagee
the Rents as further security for the payment of the Indebtedness and
performance of the Obligations, and Mortgagor grants to Mortgagee the right to
enter the Mortgaged Property for the purpose of collecting the same and to let
the Mortgaged Property or any part thereof, and to apply the Rents on account of
the Indebtedness. The foregoing assignment and grant is present and absolute and
shall continue in effect until the Indebtedness is paid in full, but Mortgagee
hereby waives the right to enter the Mortgaged Property for the purpose of
collecting the Rents and Mortgagor shall be entitled to collect, receive, use
and retain the Rents until the occurrence of an Event of Default under this
Mortgage; such right of Mortgagor to collect, receive, use and retain the Rents
may be revoked by Mortgagee upon the occurrence of any Event of Default under
this Mortgage by giving not less than seven calendar days' written notice of
such revocation to Mortgagor; in the event such notice is given, Mortgagor shall
pay over to Mortgagee, or to any receiver appointed to collect the Rents, any
lease security deposits, and shall pay monthly in advance to Mortgagee, or to
any such receiver, the fair and reasonable rental value as determined by
Mortgagee for the use and occupancy of the Mortgaged Property or of such part
thereof as may be in the possession of Mortgagor or any affiliate of Mortgagor,
and upon default in any such payment Mortgagor and any such affiliate will
vacate and surrender the possession of the Mortgaged Property to Mortgagee or to
such receiver, and in default thereof may be evicted by summary proceedings or
otherwise. Mortgagor shall not accept prepayments of installments of Rent to
become due for a period of more than one month in advance (except for security
deposits and estimated payments of percentage rent, if any). The agreement
contained in this Section has been made with reference to section 291-f of the
Real Property Law of the State of New York.
27. Trust Funds. (a) Mortgagor shall receive the advances
secured hereby subject to the trust fund provisions of Section 13 of the Lien
Law of the State of New York.
23
<PAGE>
(b) All lease security deposits of the Real Estate shall be
treated as trust funds not to be commingled with any other funds of Mortgagor.
Within 10 days after request by Mortgagee, Mortgagor shall furnish Mortgagee
satisfactory evidence of compliance with this subsection, together with a
statement of all lease security deposits by lessees and copies of all Leases not
previously delivered to Mortgagee, which statement shall be certified by
Mortgagor.
28. Additional Rights. (a) The clauses and covenants contained
in this Mortgage that are construed by Section 254 of the Real Property Law of
the State of New York shall be construed as provided in those sections, except
that the provisions of subsection 4 of such Section 254 shall not in any manner
apply to or construe the provisions of this Mortgage; the additional clauses and
covenants contained herein shall afford rights supplemental to and not exclusive
of the rights conferred by the clauses and covenants construed by such Section
254 and shall not impair, modify, alter or defeat such rights (except that the
provisions of this Mortgage governing insurance shall be exclusive of and shall
be in substitution for the rights which would be conferred by the clauses and
covenants construed by such subsection 4 of such Section 254), notwithstanding
that such additional clauses and covenants may relate to the same subject matter
or provide for different or additional rights in the same or similar
contingencies as the clauses and covenants construed by such Section 254; the
rights of Mortgagee arising under clauses and covenants contained in this
Mortgage shall be separate, distinct and cumulative and none of them shall be in
exclusion of the others; no act of Mortgagee shall be construed as an election
to proceed under any one provision herein to the exclusion of any other
provision, anything herein or otherwise to the contrary notwithstanding, and in
the event of any inconsistencies between the provisions of such Section 254 and
the provisions of this Mortgage, the provisions of this Mortgage shall prevail.
(b) The holder of any subordinate lien on the Mortgaged
Property shall have no right to terminate any Lease whether or not such Lease is
subordinate to this Mortgage nor shall any holder of any subordinate lien join
any tenant under any Lease in any action to foreclose the lien or modify,
interfere with, disturb or terminate the rights of any tenant under any Lease.
By recordation of this Mortgage all subordinate lienholders are subject to and
notified of this provision, and any action taken by any such lienholder contrary
to this provision shall be null and void. Upon the occurrence of any Event of
Default, Mortgagee may, in its sole discretion and without regard to the
adequacy of its security under this Mortgage, apply all or any part of any
amounts on deposit with Mortgagee under this Mortgage against all or any part of
the Indebtedness. Any such application shall not be construed to cure or waive
any Default or Event of Default or invalidate any act taken by Mortgagee on
account of such Default or Event of Default.
29. Changes in Method of Taxation. In the event of the passage
after the date hereof of any law of any Governmental Authority deducting from
the value of the Premises for the purposes of taxation any lien thereon, or
changing in any way the laws for the taxation of mortgages or debts secured
thereby for federal, state or local purposes, or the manner of collection of any
such taxes, and imposing a tax, either directly or indirectly, on mortgages or
debts secured thereby, the holder of this Mortgage shall have the right to
declare the
24
<PAGE>
Indebtedness due on a date to be specified by not less than 30 days'
written notice to be given to Mortgagor unless within such 30-day period
Mortgagor shall assume as an Obligation hereunder the payment of any tax so
imposed until full payment of the Indebtedness and such assumption shall be
permitted by law.
30. Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been sufficiently given or
served when presented personally, when delivered to an overnight courier service
with guaranteed next business day delivery or when deposited in the mail by
certified or registered mail, postage prepaid, addressed to Mortgagor at the
address given on the first page of this Mortgage and to Mortgagee at the address
given on the first page of this Mortgage, and shall be deemed to have been
received upon the earlier of actual receipt thereof or the third calendar day
after such mailing. Either party may change its address by notice to the other
party. If any party other than Mortgagor shall be entitled to receive copies of
notices, demands or approvals, failure of Mortgagee to send such copies shall
not impair the effectiveness of any notice sent to Mortgagor.
31. No Oral Modification. This Mortgage may not be changed or
terminated orally. Any agreement made by Mortgagor and Mortgagee after the date
of this Mortgage relating to this Mortgage shall be superior to the rights of
the holder of any intervening or subordinate lien or encumbrance.
32. Partial Invalidity. In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, but each shall be
construed as if such invalid, illegal or unenforceable provision had never been
included. Notwithstanding to the contrary anything contained in this Mortgage or
in any provisions of the Indebtedness or the Financing Documents, the
obligations of Mortgagor and of any other obligor under the Indebtedness or the
Financing Documents shall be subject to the limitation that Mortgagee shall not
charge, take or receive, nor shall Mortgagor or any other obligor be obligated
to pay to Mortgagee, any amounts constituting interest in excess of the maximum
rate permitted by law to be charged by Mortgagee.
33. Mortgagor's Waiver of Rights. To the fullest extent
permitted by law, Mortgagor waives the benefit of all laws now existing or that
may subsequently be enacted providing for (i) any appraisement before sale of
any portion of the Mortgaged Property, (ii) any extension of the time for the
enforcement of the collection of the Indebtedness or the Note Indebtedness or
the creation or extension of a period of redemption from any sale made in
collecting such debt and (iii) exemption of the Mortgaged Property from
attachment, levy or sale under execution or exemption from civil process. To the
full extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any
time insist upon, plead, claim or take the benefit or advantage of any law now
or hereafter in force providing for any appraisement, valuation, stay,
exemption, extension or redemption, or requiring foreclosure of this Mortgage
before exercising any other remedy granted hereunder and Mortgagor, for
Mortgagor and its successors and assigns, and for any and all persons ever
claiming any interest in the Mortgaged Property, to
25
<PAGE>
the extent permitted by law, hereby waives and releases all rights of
redemption, valuation, appraisement, stay of execution, notice of election to
mature or declare due the whole of the secured indebtedness and marshalling in
the event of foreclosure of the liens hereby created.
34. Remedies Not Exclusive. Mortgagee shall be entitled to
enforce payment of the Indebtedness and performance of the Obligations and to
exercise all rights and powers under this Mortgage or under any of the other
Financing Documents or other agreement or any laws now or hereafter in force,
notwithstanding some or all of the Indebtedness, the Note Indebtedness and/or
the Obligations may now or hereafter be otherwise secured, whether by mortgage,
security agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this Mortgage nor its enforcement, shall prejudice or in any
manner affect Mortgagee's right to realize upon or enforce any other security
now or hereafter held by Mortgagee, it being agreed that Mortgagee shall be
entitled to enforce this Mortgage and any other security now or hereafter held
by Mortgagee in such order and manner as Mortgagee may determine in its absolute
discretion. No remedy herein conferred upon or reserved to Mortgagee is intended
to be exclusive of any other remedy herein or by law provided or permitted, but
each shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Financing Documents to Mortgagee or to which
it may otherwise be entitled, may be exercised, concurrently or independently,
from time to time and as often as may be deemed expedient by Mortgagee. In no
event shall Mortgagee, in the exercise of the remedies provided in this Mortgage
(including, without limitation, in connection with the assignment of Rents to
Mortgagee, or the appointment of a receiver and the entry of such receiver on to
all or any part of the Mortgaged Property), be deemed a "mortgagee in
possession," and Mortgagee shall not in any way be made liable for any act,
either of commission or omission, in connection with the exercise of such
remedies.
35. Multiple Security. If (a) the Premises shall consist of
one or more parcels, whether or not contiguous and whether or not located in the
same county, or (b) in addition to this Mortgage, Mortgagee shall now or
hereafter hold one or more additional mortgages, liens, deeds of trust or other
security (directly or indirectly) for the Indebtedness upon other property in
the State in which the Premises are located (whether or not such property is
owned by Mortgagor or by others) or (c) both the circumstances described in
clauses (a) and (b) shall be true, then to the fullest extent permitted by law,
Mortgagee may, at its election, commence or consolidate in a single foreclosure
action all foreclosure proceedings against all such collateral securing the
Indebtedness (including the Mortgaged Property), which action may be brought or
consolidated in the courts of any county in which any of such collateral is
located. Mortgagor acknowledges that the right to maintain a consolidated
foreclosure action is a specific inducement to Mortgagee to extend the
Indebtedness, and Mortgagor expressly and irrevocably waives any objections to
the commencement or consolidation of the foreclosure proceedings in a single
action and any objections to the laying of venue or based on the grounds of
forum non conveniens which it may now or hereafter have. Mortgagor further
agrees that if Mortgagee shall be prosecuting one or more foreclosure or other
proceedings against a portion of the Mortgaged Property or against any
collateral other than the Mortgaged Property, which collateral directly or
indirectly secures the
26
<PAGE>
Indebtedness, or if Mortgagee shall have obtained a judgment of foreclosure and
sale or similar judgment against such collateral, then, whether or not such
proceedings are being maintained or judgments were obtained in or outside the
State in which the Premises are located, Mortgagee may commence or continue
foreclosure proceedings and exercise its other remedies granted in this Mortgage
against all or any part of the Mortgaged Property and Mortgagor waives any
objections to the commencement or continuation of a foreclosure of this Mortgage
or exercise of any other remedies hereunder based on such other proceedings or
judgments, and waives any right to seek to dismiss, stay, remove, transfer or
consolidate either any action under this Mortgage or such other proceedings on
such basis. Neither the commencement nor continuation of proceedings to
foreclose this Mortgage nor the exercise of any other rights hereunder nor the
recovery of any judgment by Mortgagee in any such proceedings shall prejudice,
limit or preclude Mortgagee's right to commence or continue one or more
foreclosure or other proceedings or obtain a judgment against any other
collateral (either in or outside the State in which the Premises are located)
which directly or indirectly secures the Indebtedness, and Mortgagor expressly
waives any objections to the commencement of, continuation of, or entry of a
judgment in such other proceedings or exercise of any remedies in such
proceedings based upon any action or judgment connected to this Mortgage, and
Mortgagor also waives any right to seek to dismiss, stay, remove, transfer or
consolidate either such other proceedings or any action under this Mortgage on
such basis. It is expressly understood and agreed that to the fullest extent
permitted by law, Mortgagee may, at its election, cause the sale of all
collateral which is the subject of a single foreclosure action at either a
single sale or at multiple sales conducted simultaneously and take such other
measures as are appropriate in order to effect the agreement of the parties to
dispose of and administer all collateral securing the Indebtedness (directly or
indirectly) in the most economical and least time-consuming manner.
36. Expenses; Indemnification. (a) Mortgagor shall pay or
reimburse Mortgagee for all expenses incurred by Mortgagee before and after the
date of this Mortgage with respect to any and all transactions contemplated by
this Mortgage including without limitation, the preparation of any document
reasonably required hereunder or any amendment, modification, restatement or
supplement to this Mortgage, the delivery of any consent, non-disturbance
agreement or similar document in connection with this Mortgage or the
enforcement of any of Mortgagee's rights. Such expenses shall include, without
limitation, all title and conveyancing charges, recording and filing fees and
taxes, mortgage taxes, intangible personal property taxes, escrow fees, revenue
and tax stamp expenses, insurance premiums (including title insurance premiums),
title search and title rundown charges, brokerage commissions, finders' fees,
placement fees, court costs, surveyors', photographers', appraisers',
architects', engineers', consulting professional's, accountants' and attorneys'
fees and disbursements. Mortgagor acknowledges that from time to time Mortgagor
may receive statements for such expenses, including without limitation
attorneys' fees and disbursements. Mortgagor shall pay such statements promptly
upon receipt.
(b) If (i) any action or proceeding shall be commenced by
Mortgagee (including but not limited to any action to foreclose this Mortgage or
to collect the Indebtedness), or any action or proceeding is commenced to which
Mortgagee is made a party, or in which it
27
<PAGE>
becomes necessary to defend or uphold the lien of this Mortgage (including,
without limitation, any proceeding or other action relating to the bankruptcy,
insolvency or reorganization of any Obligor), or in which Mortgagee is served
with any legal process, discovery notice or subpoena and (ii) in each of the
foregoing instances such action or proceeding in any manner relates to or arises
out of this Mortgage or Mortgagee's lending to Mortgagor or acceptance of a
guaranty from a Guarantor of the Indebtedness or of any of the Obligations or
any of the transactions contemplated by this Mortgage, then Mortgagor will
immediately reimburse or pay to Mortgagee all of the expenses which have been or
may be incurred by Mortgagee with respect to the foregoing (including reasonable
counsel fees and disbursements), together with interest thereon at the Default
Rate, and following the occurrence of a Default any such sum and the interest
thereon shall be a lien on the Mortgaged Property, prior to any right, or title
to, interest in or claim upon the Mortgaged Property attaching or accruing
subsequent to the lien of this Mortgage, and shall be deemed to be secured by
this Mortgage. In any action or proceeding to foreclose this Mortgage, or to
recover or collect the Indebtedness, the provisions of law respecting the
recovering of costs, disbursements and allowances shall prevail unaffected by
this covenant.
(c) Mortgagor shall indemnify and hold harmless Mortgagee and
Mortgagee's affiliates, and the respective directors, officers, agents and
employees of Mortgagee and its affiliates from and against all claims, damages,
losses and liabilities (including, without limitation, reasonable attorneys'
fees and expenses) arising out of or based upon any matter related to this
Mortgage, the Mortgaged Property or the occupancy, ownership, maintenance or
management of the Mortgaged Property by Mortgagor, including, without
limitation, any claims based on the alleged acts or omissions of any employee or
agent of Mortgagor. This indemnification shall be in addition to any other
liability which Mortgagor may otherwise have to Mortgagee.
37. Successors and Assigns. All covenants of Mortgagor
contained in this Mortgage are imposed solely and exclusively for the benefit of
Mortgagee and its successors and assigns, and no other person or entity shall
have standing to require compliance with such covenants or be deemed, under any
circumstances, to be a beneficiary of such covenants, any or all of which may be
freely waived in whole or in part by Mortgagee at any time if in its sole
discretion it deems such waiver advisable. All such covenants of Mortgagor shall
run with the land and bind Mortgagor, the successors and assigns of Mortgagor
(and each of them) and all subsequent owners, encumbrancers and tenants of the
Mortgaged Property, and shall inure to the benefit of Mortgagee, its successors
and assigns. The word "Mortgagor" shall be construed as if it read "Mortgagors"
whenever the sense of this Mortgage so requires and if there shall be more than
one Mortgagor, the obligations of the Mortgagors shall be joint and several.
38. No Waivers, etc. Any failure by Mortgagee to insist upon
the strict performance by Mortgagor of any of the terms and provisions of this
Mortgage shall not be deemed to be a waiver of any of the terms and provisions
hereof, and Mortgagee, notwithstanding any such failure, shall have the right
thereafter to insist upon the strict performance by Mortgagor of any and all of
the terms and provisions of this Mortgage to be
28
<PAGE>
performed by Mortgagor. Mortgagee may release, regardless of consideration and
without the necessity for any notice to or consent by the holder of any
subordinate lien on the Mortgaged Property, any part of the security held for
the obligations secured by this Mortgage without, as to the remainder of the
security, in anywise impairing or affecting the lien of this Mortgage or the
priority of such lien over any subordinate lien.
39. Governing Law, etc. This Mortgage shall be governed by and
construed and interpreted in accordance with the laws of the State of New York,
except that Mortgagor expressly acknowledges that by their terms, the Credit
Agreement, the Note, the Guaranty and other Financing Documents shall be
governed and construed in accordance with the laws of the State of Connecticut,
without regard to principles of conflict of law, and, for purposes of
consistency, Mortgager agrees that in any in personam proceeding relating to
this Mortgage, the rights of the parties to this Mortgage shall also be governed
by and construed in accordance with the laws of the State of Connecticut
governing contracts made and to be performed in that State, without regard to
the principles of conflict of law. Mortgagor hereby irrevocably agrees that any
legal action, suit, or proceeding against it with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Mortgage or the other Financing Documents or for recognition or enforcement
of any judgment rendered in any such action, suit or proceeding may be brought
in the United States Courts for the District of Connecticut or the Southern
District of New York, or in the courts of the State of Connecticut or of the
State of New York, as Mortgagee may elect, and, by execution and delivery of
this Mortgage, Mortgagor hereby irrevocably accepts and submits to the
non-exclusive jurisdiction of each of the aforesaid courts in personam,
generally and unconditionally with respect to any such action, suit or
proceeding for itself and in respect of its property. Mortgagor further agrees
that final judgment against it in any action, suit, or proceeding referred to
herein shall be conclusive and may be enforced in any other jurisdiction, by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and of the amount of its indebtedness.
40. Waiver of Trial by Jury. Mortgagor and Mortgagee each
hereby irrevocably and unconditionally waive trial by jury in any action, claim,
suit or proceeding relating to this Mortgage and for any counterclaim brought
therein. Mortgagor hereby waives all rights to interpose any counterclaim in any
suit brought by Mortgagee hereunder and all rights to have any such suit
consolidated with any separate suit, action or proceeding.
41. Certain Definitions. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words used
in this Mortgage shall be used interchangeably in singular or plural form and
the word "Mortgagor" shall mean "each Mortgagor or any subsequent owner or
owners of the Mortgaged Property or any part thereof or interest therein," the
word "Mortgagee" shall mean "Mortgagee or any subsequent holder of the Guaranty
and the Note," the word "person" shall include any individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, or other entity, and the words "Mortgaged Property" shall include any
portion of the Mortgaged Property or interest therein. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns
29
<PAGE>
shall include the plural and vice versa. The captions in this Mortgage are for
convenience or reference only and in no way limit or amplify the provisions
hereof.
42. Nonresidential. THIS MORTGAGE DOES NOT COVER REAL PROPERTY
PRINCIPALLY IMPROVED BY ONE OR MORE STRUCTURES CONTAINING IN THE AGGREGATE NOT
MORE THAN SIX RESIDENTIAL DWELLING UNITS, EACH HAVING ITS OWN SEPARATE COOKING
FACILITIES.
43. Judgement Lien. As a condition and in consideration of
Mortgagee's accepting this Mortgage and making the loan evidenced by the Note,
if the judgment (the "Prior Judgement") in the action docketed as Case No.
85-12904-7 in the Circuit Court of the Sixth Judicial Circuit in and for
Pinellas County, Florida, Civil Division, and the related judgment lien (the
"Prior Judgement Lien") filed in the Supreme Court of the State of New York,
County of Nassau, on December 19, 1990, under Index No. 28611/90, have not both
been discharged of record as of the date hereof, Mortgagor hereby agrees that,
if Mortgagee or Mortgagor ever receives notice (of any kind) of an action to
foreclose the Prior Judgment Lien or of any other claim, case or proceeding
against Mortgagor or the Mortgaged Property being, or threatened to be, asserted
under or in connection with the Prior Judgement or Prior Judgement Lien, then
Mortgagor shall immediately, at its sole cost and expense, (a) if Mortgagee does
not already have actual written notice of same, send written notification to
Mortgagee of said action, claim, case or proceeding, and (b) pay the Prior
Judgement in full or take such other action as shall be necessary to immediately
release and discharge or dismiss the Prior Judgement and the Prior Judgement
Lien.
44. Any Outstanding Taxes. As a condition and in consideration
of Mortgagee's accepting this Mortgage and making the loan evidenced by the
Note, Mortgagor hereby agrees that, if Mortgagee or Mortgagor ever receives
notice (of any kind) of any lien or any action to foreclose any lien relating to
taxes or fees relating to the Mortgagee's owning property or doing business in
the State of New York, or of any other claim, case or proceeding against
Mortgagor or the Mortgaged Property being claimed, threatened or asserted
relating to or in connection with any such taxes or fees, then Mortgagor shall
immediately, at its sole cost and expense, (a) if Mortgagee does not already
have actual written notice of same, send written notification to Mortgagee of
said action, claim, case or proceeding, and (b) pay any such taxes or fees in
full or take such other action as shall be necessary to immediately release and
discharge or dismiss any such liens and actions.
45. Maximum Indebtedness Secured by this Mortgage.
Notwithstanding anything contained herein to the contrary, the maximum amount of
indebtedness secured by this Mortgage at execution or which under any
contingency may become secured hereby at any time hereafter is $850,000.00 and
interest thereon, plus amounts expended by Mortgagee after a declaration of
default hereunder to maintain the lien of this Mortgage or to protect the
property secured by this Mortgage, including, without limitation, amounts in
respect of insurance premiums, real estate taxes and litigation expenses to
prosecute or defend the rights, remedies and lien of this Mortgage or title to
the Property.
30
<PAGE>
This Mortgage has been duly executed by Mortgagor on the date
first above written.
WITNESSES: AVEST, INC.
/s/ Keri Jones By: /s/ Michael McGuire
- ------------------------------- --------------------
Name: Keri Jones Michael McGuire
President
/s/ Lori Sarnataro
- ------------------
Name: Lori Sarnataro
31
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On the ____ day of May, 1999, before me personally came
Michael McGuire, to me known, who, being by me duly sworn, did depose and say
that he resides at 4 Great Oak Road, St. James, New York 11780 (insert full
address, include street address, city and state); that he is the President of
AVEST, INC., a Delaware corporation, the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by
authority of the board of directors of said corporation.
Notary Public
[Notarial Seal/Stamp]
<PAGE>
Schedule A
Description of the Premises
[Attach Legal Description of all parcels]
<PAGE>
MORTGAGE
from
AVEST, INC., Mortgagor
to
FLEET NATIONAL BANK, Mortgagee
Dated as of May _14__, 1999
After recording, please return to:
Edward A. Weiss, Esq.
Finn Dixon & Herling LLP
One Landmark Square, 14th Floor
Stamford, Connecticut 06901
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements at June 30, 1999 (unaudited) and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 1,821
<ALLOWANCES> (79)
<INVENTORY> 4,160
<CURRENT-ASSETS> 6,051
<PP&E> 1,154
<DEPRECIATION> (463)
<TOTAL-ASSETS> 6,912
<CURRENT-LIABILITIES> 1,058
<BONDS> 0
0
0
<COMMON> 65
<OTHER-SE> 3,203
<TOTAL-LIABILITY-AND-EQUITY> 6,912
<SALES> 3,853
<TOTAL-REVENUES> 3,853
<CGS> 2,972
<TOTAL-COSTS> 2,972
<OTHER-EXPENSES> 759
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 80
<INCOME-TAX> 9
<INCOME-CONTINUING> 71
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
