-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QlXfEiSK2qbPN3OiDP6tqDTcqqFIlSgPfxc8eLYh69ULn0r1eprDYLHLlSr0WkQf UeiFBUMXwx5eDJdVGJ1dBw== 0001018893-97-000035.txt : 19971117 0001018893-97-000035.hdr.sgml : 19971117 ACCESSION NUMBER: 0001018893-97-000035 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASTREX INC CENTRAL INDEX KEY: 0000008038 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 131930803 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-04530 FILM NUMBER: 97718742 BUSINESS ADDRESS: STREET 1: 205 EXPRESS ST CITY: PLAINVIEW STATE: NY ZIP: 11803 BUSINESS PHONE: 5164331700 MAIL ADDRESS: STREET 1: 205 EXPRESS STREET CITY: PLAINVIEW STATE: NY ZIP: 11803 10QSB 1 2ND QUARTER REPORT U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 1997 -------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4530 ------ ASTREX, INC. (Exact name of small business issuer as specified in its charter) DELAWARE 13-1930803 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 205 EXPRESS STREET, PLAINVIEW, NEW YORK 11803 (Address of principal executive offices) (516) 433-1700 (Issuer's telephone number, including area code) - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of November 3, 1997 common shares outstanding were 5,375,363. ASTREX, INC." INDEX Page No. PART I: Financial Statements: Consolidated Balance Sheets September 30, 1997 (unaudited) and March 31, 1997 . . . . . . . .1 Consolidated Statements of Income (unaudited) Six months and three months ended September 30, 1997 and 1996 . 2 Consolidated Statements of Cash Flows (unaudited) Six months ended September 30, 1997 and 1996 . . . . . . . . . . 3 Notes to Consolidated Financial Statements (unaudited) . . . . . .4 Management's Discussion and Analysis or Plan of Operations . . 5-6 PART II: Other Information and Signatures . . . . . . . . . . . . . . . . 7-8 PART I - Financial Information ASTREX, INC. AND SUBSIDIARIES" CONSOLIDATED BALANCE SHEETS
September 30, 1997 March 31, 1997 (Unaudited) ----------- ----------------- (000) Omitted Current Assets: Cash $37 $2 Accounts receivable (net of allowance for doubtful accounts of $86 at September 30, 1997" and $87 at March 31, 1997) 1,636 1,584 Inventory 2,876 3,313 Prepaid expenses and other current assets 93 67 ----- ----- Total current assets 4,642 4,966 Property, plant and equipment at cost (net of accumulated depreciation of $302 at September 30, 1997 and $249 at March 31, 1997) 805 841 ----- ----- TOTAL ASSETS $5,447 $5,807 ====== ====== Current Liabilities: Accounts payable 647 868 Accrued liabilities 350 483 Current portion of capital lease obligation 46 43 Total current liabilities 1,043 1,394 Capital lease obligation 102 125 Loans payable 1,000 1,226 ----- ----- 2,145 2,745 Shareholders' Equity: Preferred Stock, Series A - issued, none -- -- Preferred Stock, Series B - issued, none -- -- Common Stock - par value $.01 per share; authorized, 15,000,000 shares; issued, 5,375,363 at September 30, 1997 and at March 31, 1997 54 54 Additional paid-in capital 3,621 3,621 Accumulated deficit (355) (591) ----- ------ 3,320 3,084 Less: deferred compensation (18) (22) ----- ------ Total shareholders' equity 3,302 3,062 ----- ------ Total liabilities and shareholders' equity $5,447 $5,807 ====== ======
See accompanying notes to unaudited consolidated financial statements. -1- ASTREX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
SIX MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1997 1996 1997 1996 -------------------------------------------------------------------------------- (000) Omitted (000) Omitted Net sales $7,787 $7,494 $3,824 $3,735 Cost of sales 5,987 5,676 2,954 2,821 ----- ----- ----- ----- Gross profit 1,800 1,818 870 914 Selling, general and administrative expenses 1,487 1,536 721 764 ----- ----- ----- ----- Income from operations 313 282 149 150 Interest expense 65 94 27 45 ----- ----- ----- ----- Income before provision for income taxes 248 188 122 105 Provision for income taxes 11 17 4 9 ----- ----- ----- ----- Net income $237 $171 $118 $96 ===== ===== ===== ===== Per share data for the six months and three months ended September 30, 1997 and 1996 are as follows: Weighted average number of common shares outstanding 5,375,363 5,314,379 5,375,363 5,375,363 ========= ========= ========= ========= Net income per share $0.04 $0.03 $0.02 $0.02 ========= ========= ========= =========
See accompanying notes to unaudited consolidated financial statements. -2- ASTREX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 1996 ---------------------------------------------- (000) Omitted Cash Flows From Operating Activities: Net income $237 $171 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 51 30 Stock compensation 4 2 Changes in assets and liabilities: (Increase) decrease in accounts receivable, net (52) 126 Increase in prepaid expenses and other current assets (26) (43) Decrease in inventory 437 509 Decrease in accounts payable (221) (442) Decrease in accrued liabilities (131) (7) ---- ---- NET CASH PROVIDED BY OPERATING ACTIVITIES 299 346 ---- ---- Cash flows used in investing activities: Capital expenditures (17) (19) ---- ---- Net cash used in investing activities (17) (19) ---- ---- Cash flows from financing activities: Proceeds from issuance of common stock -- 47 Principal payments under capital lease obligations (21) -- Repayments of loans payable, net (226) (374) ---- ---- NET CASH USED IN FINANCING ACTIVITIES (247) (327) ---- ---- Net increase in cash for the six months ended September 30 35 0 Cash - beginning of period 2 2 ---- ---- Cash - end of period $37 $2 ==== ====
See accompanying notes to unaudited consolidated financial statements. -3- ASTREX, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED FINANCIAL STATEMENTS - ------------------------------ In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly its financial position as of September 30, 1997. The results of operations and cash flows for the six month period ended September 30, 1997 are not necessarily indicative of the results to be expected for the full year. In the opinion of management, the information in this interim report for the six months ended September 30, 1997 and 1996 presents fairly the Company's financial position consistent with the Company's accounting practices and principles used in interim reports. Accordingly, certain items included in these statements are based upon best estimates, particularly cost of goods sold. For the six month and three month periods ended September 30, 1997 and 1996 these costs have principally been determined by utilizing perpetual inventory records. The calculation of the actual cost of goods sold amount is predicated upon a physical inventory taken only at the end of each fiscal year. -4- ASTREX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS RESULTS OF OPERATIONS NET INCOME FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 WAS APPROXIMATELY $237,000, AN INCREASE OF 39% OVER THE SAME PERIOD LAST FISCAL YEAR. THIS INCREASE IS PRINCIPALLY THE RESULT OF HIGHER SALES AND REDUCTIONS IN selling, general and administrative expenses AND INTEREST EXPENSE. Sales increased by approximately $293,000, or 3.9%, for the six months and approximately $89,000, or 2.4%, for the three months ended September 30, 1997, from the comparable six and three month periods in 1996, respectively. Gross profit percentages decreased to 23.1% from 24.3% for the six months, and to 22.8% from 24.5% for the three months ended September 30, 1997 and 1996, respectively. These decreases are a result of continued price pressures in a somewhat soft overall market. Selling, general and administrative expenses decreased approximately $49,000, or 3.2%, for the six months and approximately $43,000, or 5.6%, for the three months ended September 30, 1997 from the comparable previous six and three month periods in 1996, in spite of higher sales and commission expense. These decreases are a result of the Company's ongoing efforts to operate more efficiently. Interest expense decreased approximately $29,000, or 30.9% for six months, and approximately $18,000, or 40.0% for the three months ended September 30, 1997, from the previous comparable six and three month periods in 1996. This decrease is due to both a lower loan balance and a substantially reduced interest rate, as a result of the Company entering into a new lending agreement on July 9, 1997. -5- ASTREX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Company generated $299,000 in cash from its operating activities which was used to primarily paydown the outstanding loan payable balance. At September 30, 1997, the Company had working capital of $3,599,000 and its stockholders' equity was $3,302,000. The Company believes that its present working capital, cash generated from operations and amounts available under the new loan agreement will be sufficient to meet its cash needs during the next year (the new loan agreement is described in the Company's June 30, 1997 Form 10-QSB). The Company's principal credit facility is a line of credit ("Line") measured by its inventory and receivables and secured by substantially all of the Company's assets including a negative pledge of (i.e. that the Company will not otherwise mortgage to any other person) its Plainview office/warehouse facility. On September 30, 1997 the Company owed $1,000,000 on the Line. -6- PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (A) Exhibits --------- Previously Filed and Incorporated Exhibit Description by reference or Filed Herewith - ------------------------------------------------------------------------------- 3 (a) Certificate of Incorporation Filed herewith of Astrex, Inc., as amended (a Delaware corporation) 3 (b) By-Laws of Astrex, Inc., as amended Filed as Exhibit 3 (b) to the Form 10-QSB of the Company for the quarter ended September 30, 1996 10(a) Credit and Security Agreement Filed herewith (Revolver) between Astrex, Inc. and Fleet National Bank dated July 9, 1997 10(b) Appendix A to Credit and Security Filed herewith Agreement (Revolver) between Astrex, Inc. and Fleet National Bank dated July 9, 1997 10(c) Pledge Agreement between Astrex, Filed herewith Inc. and Fleet National Bank dated July 9, 1997 10(d) Revolving Credit Promissory Note Filed herewith between Astrex, Inc. and Fleet National Bank dated July 9, 1997 10(e) Guaranty Agreement between Filed herewith AVest, Inc. and Fleet National Bank dated July 9, 1997 10(f) Guaranty Agreement between Filed herewith T.F. Cushing, Inc. and Fleet National Bank dated July 9, 1997 27 Financial Data Schedule Filed herewith (B) Reports on Form 8-K: None -7- SIGNATURES In accordance with the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ASTREX, INC. Date: November 11, 1997 By: /s/ Michael McGuire ------------------ ------------------- Michael McGuire Director, President and Chief Executive Officer By: /s/ Irene S. Lyons ------------------ Irene S. Lyons Chief Financial Officer, Vice President, Treasurer and Secretary -8- EX-3.(A) 2 EXHIBIT 3(a) CERTIFICATE OF INCORPORATION OF ASTREX, INC. The undersigned, a natural person, for the purpose of organizing a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code, as amended and supplemented, which is hereinafter referred to as the "General Corporation Law of Delaware"), hereby certifies that: FIRST: The name of the corporation (the "Corporation") is Astrex, Inc. SECOND: The address, including street, number, city, and county of the registered office of the Corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, 19901, County of Kent; and the name of the registered agent of the Corporation in the State of Delaware at such address is The Prentice - Hall Corporation System, Inc. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The Corporation shall be authorized to issue the following shares:
Class Number of Shares Par Value - ----- ---------------- --------- Common Stock 5,200,000 $.01 Preferred Stock 200,000 $5.00
FIFTH: The name and the mailing address of the incorporator are as follows: Name Mailing Address - ---- --------------- Michael Harvey 342 Madison Avenue New York, NY 10173 SIXTH: The Corporation is to have perpetual existence. SEVENTH: The number of directors of the Corporation shall consist of not less than five (5) and not more than nine (9) members. EIGHTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation. NINTH: No director shall be liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except with respect to (1) a breach of the director's duty of loyalty to the Corporation or its stockholders, (2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) liability under Section 174 of the Delaware General Corporation Law, or (4) a transaction from which the director derived an improper personal benefit, it being the intention of the foregoing provision to eliminate the liability of the Corporation's directors to the Corporation or its stockholders to the fullest extent permitted by Section 102(b)(7) of the Delaware General Corporation Law. TENTH: The Corporation shall, to the fullest extent permitted by the provisions of Section 145 of the General Corporation Law of the State of Delaware, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person. ELEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power. IN WITNESS WHEREOF, the undersigned hereby executes this document and affirms that the facts set forth herein are true under the penalties of perjury this 23 day of November, 1992. /s/ Michael Harvey --------------------------- Michael Harvey Sole Incorporator Certificate of Amendment of Certificate of Incorporation of ASTREX, INC. It is hereby certified that: 1. The name of the Corporation (hereinafter called the "corporation") is Astrex, Inc. 2. The certificate of incorporation of the corporation is hereby amended by striking out Articles Fourth and Seventh thereof and by substituting in lieu of said Articles the following new Articles: " FOURTH: THE CORPORATION SHALL BE AUTHORIZED TO ISSUE THE FOLLOWING SHARES:
CLASS OF SHARES NUMBER OF SHARES PAR VALUE OF SHARES COMMON STOCK 15,000,000 $0.01 PREFERRED STOCK, SERIES A 200,000 $5.00 PREFERRED STOCK, SERIES B 10,000,000 $0.01
THE SPECIFIC POWERS, RIGHTS, PREFERENCES, DESIGNATIONS, QUALIFICATIONS, RESTRICTIONS AND OTHER CHARACTERISTICS OF EACH SERIES OF PREFERRED SHARES SHALL BE AS DETERMINED BY DUE RESOLUTION OF THE BOARD OF DIRECTORS." And "SEVENTH: THE NUMBER OF DIRECTORS OF THE CORPORATION SHALL CONSIST OF NOT LESS THAN FOUR (4) AND NO MORE THAN NINE (9) MEMBERS." 3. The amendments of the certificate of incorporation herein certified have been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. Signed and attested to on August 8, 1997. /s/ Michael McGuire ------------------------------- Michael McGuire, President Attest: /s/ Irene S. Marcic - ------------------- Irene S. Marcic, Secretary - -------------------------- EX-10.A 3 EXHIBIT 10(A) CREDIT AND SECURITY AGREEMENT (REVOLVER) CREDIT AND SECURITY AGREEMENT, dated as of July 9, 1997 (the "Agreement"), between Astrex, Inc., a Delaware corporation, having offices at 205 Express Street, Plainview, New York 11803 (the "Borrower"), T.F. Cushing, Inc., a Massachusetts corporation having offices at 126 Myron Street, West Springfield, Massachusetts 01089 ("TFCI") and Fleet National Bank, a national banking association, having offices at One Landmark Square, Stamford, Connecticut 06901 (the "Lender" or "Bank"). The Borrower, TFCI and the Lender, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows: ARTICLE 1. THE LOANS 1.1 CERTAIN DEFINITIONS. Certain capitalized terms used herein are defined in Appendix A attached hereto. 1.2 REVOLVING CREDIT LOANS AND RESERVES. Subject to the terms and conditions of this Agreement and in reliance on the representations and warranties of the Borrower contained herein, the Lender agrees to make available to the Borrower from time to time, prior to the Revolving Credit Loan Termination Date, upon the request of the Borrower, revolving credit loans (each a "Loan" or "Revolving Credit Loan" and collectively the "Loans" or "Revolving Credit Loans") in an aggregate principal amount not to exceed, at any one time outstanding, the Revolving Credit Maximum Amount. In addition to any of its other rights hereunder, the Borrower, pursuant to said terms and subject to said conditions, may borrow, repay and reborrow the Revolving Credit Loans up to, at any one time outstanding, the Revolving Credit Maximum Amount. Lender shall have the right to establish reserves in such amounts, and with respect to such matters, as Lender shall deem necessary or appropriate in its reasonable credit judgment, against the amount of Revolving Credit Loans which Borrower may otherwise request hereunder. Such reserves shall be calculated (as deductions) in determining the Borrowing Base. 1.3 THE NOTE. The Loans, and the obligation of the Borrower to repay the Loans with interest, shall be evidenced by a revolving credit promissory note (such promissory note is hereinafter referred to as the "Note" which defined term shall also include such promissory note as it may be extended or otherwise amended, supplemented, or modified from time to time and also any notes (if any) given in extension, renewal, or substitution of such promissory note) in substantially the form of Exhibit A attached hereto. 1.4 INTEREST. The aggregate unpaid principal balance of the Prime Rate Revolving -2- Credit Portion outstanding from time to time shall bear interest at a rate per annum equal to the Prime Rate in effect from time to time. If Borrower properly exercises its LIBOR Option in accordance with Section 1.6(b) below, the aggregate unpaid principal balance of the Libor Revolving Credit Portions outstanding from time to time shall bear interest at a rate per annum equal to the sum of (i) the Libor Rate applicable to each Libor Revolving Credit Portion for the corresponding Interest Period plus (ii) two percent (2%) (i.e., 200 basis points). Anything contained in this Agreement to the contrary notwithstanding, during any period in which an Event of Default is continuing, the interest rate hereunder and under the Note shall, at the option of the Lender, be increased to a rate per annum equal to the Revolving Credit Default Rate and any interest accruing at such Revolving Credit Default Rate shall be payable on demand. All computations of interest shall be made on the basis of a three hundred sixty (360) day year and the actual number of days elapsed. Anything contained in this Agreement or the Note to the contrary notwithstanding, the Lender does not intend to charge and the Borrower shall not be required to pay interest or other charges in excess of the maximum rate permitted by Applicable Law. Any payments in excess of such maximum shall be refunded to Borrower or credited against principal. 1.5 PAYMENT OF PRINCIPAL AND INTEREST AND OTHER AMOUNTS. The Borrower shall pay the unpaid principal of all Revolving Credit Loans on the Revolving Credit Maturity Date. Interest on the Revolving Credit Loans shall be due and payable, in arrears, on each Revolving Credit Interest Payment Date and also on the Revolving Credit Maturity Date. (The Lender in its sole and absolute discretion may make a Loan to cover an interest payment due on a Revolving Credit Interest Payment Date; provided, that it is understood and agreed that the Lender shall have no obligation to do so). All payments of principal, interest, and other amounts due hereunder or under the Note shall be made without any deductions whatsoever, including, but not limited to, any deduction for any set-off, recoupment, or counterclaim. All payments shall be made in United States Dollars and immediately available funds. Unless the Lender otherwise agrees (and subject to Section 1.8 below), all payments shall first be applied to fees, costs and expenses which the Borrower is obligated to pay under the Financing Documents, then to accrued and unpaid interest and then to unpaid principal (nothing contained herein shall limit the rights of the Lender under Section 7.4). If any payment hereunder or under the Note or other Financing Document shall be specified to be made upon a day which is not a Business Day, it shall (subject to the provisions regarding Business Days in the definition of Interest Period) be made on the next succeeding day which is a Business Day and such extension of time shall in such case, to the extent applicable, be included in computing any interest in connection with such payment. The records of the Lender shall be prima facie evidence of the making of any Revolving Credit Loans, any accrued interest thereon, the amount of Loans bearing interest at the Prime Rate or with reference to the Libor Rate, and all principal and interest payments made in respect thereof; provided, that no failure of the Lender to timely record any transaction, or any error in any such recordation, shall in any way affect or impair any liability or other obligation of the Borrower to the Lender. -3- 1.6 NOTICE OF BORROWING; AUTHORITY FOR BORROWING; LIBOR REQUESTS. (a) The Borrower shall give the Lender written (or, if acceptable to the Lender, telephonic) notice of the amount and date of each Revolving Credit Loan requested under the Revolving Credit Facility received no later than 12:00 p.m. on the date on which the requested Revolving Credit Loan is to be made, provided, that if all or any portion of such Loan is to be included (as of the making of such Loan) as part (or all) of a Libor Revolving Credit Portion, Borrower shall give the Lender at least two (2) Business Days prior notice of such requested Revolving Credit Loan and give to Lender a LIBOR Request pursuant to Section 1.6(b) below. Such notice shall be accompanied by a true and correct and current Borrowing Base Certificate (if acceptable to the Lender, the Borrowing Base Certificate can also serve as notice of the request of the Loan). Such Notice shall specify the proposed effective date and amount of such Revolving Credit Loan. (If requested by Lender (at its option) telephonic notice shall be followed by written confirmation.) No failure to give any such notice (or confirmation) or supply any such certificate shall impair the obligation of the Borrower to repay any Loan made by the Lender. The Lender may assume that any person whom the Lender in good faith believes is an employee or officer of the Borrower and who requests any Revolving Credit Loan is authorized to do so on behalf of the Borrower unless the Lender has received prior specific written notice from the Borrower to the contrary. Lender shall have no responsibility to verify the origin of any oral, electronic or other communication. (b) (i) Upon the conditions that: (1) Lender shall have received a LIBOR Request from Borrower at least two (2) Business Days prior to the first day of the Interest Period requested, (2) there shall have occurred no change in Applicable Law which would make it unlawful for Lender to obtain deposits of U.S. Dollars in the London interbank foreign currency deposits market, (3) as of the date of the LIBOR Request and the first day of the Interest Period, there shall exist no Default or Event of Default, (4) Lender is able to determine the Libor Rate in respect of the requested Interest Period and (5) as of the first date of the Interest Period, there is no more than two (2) outstanding LIBOR Revolving Credit Portions including the LIBOR Revolving Credit Portion being requested, then interest on the LIBOR Revolving Credit Portion requested during the Interest Period requested will be based on the applicable LIBOR Rate. No LIBOR Revolving Credit Portion shall be less than $500,000.00. (ii) Each LIBOR Request shall be irrevocable and binding on Borrower. Borrower shall indemnify Lender for any loss, penalty or reasonable expense incurred by Lender due to failure on the part of Borrower to fulfill, on or before the date specified in any LIBOR Request, the applicable conditions set forth in this Agreement, or due to any other failure to make a borrowing requested in a LIBOR Request or due to the prepayment or payment (including without limitation any payment after acceleration) of the applicable LIBOR Revolving Credit Portion prior to the last day of the applicable Interest Period, including, without limitation, any loss (including loss of anticipated profits) or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by Lender to fund or maintain the applicable LIBOR Revolving Credit Portion (or requested LIBOR Revolving Credit Portion). -4- (iii) If any change in any Legal Requirement shall (1) make it unlawful for Lender to fund through the purchase of U.S. Dollar deposits any LIBOR Revolving Credit Portion or otherwise give effect to its obligations as contemplated under this Section 1.6(b) (or other applicable provision hereof) or (2) shall impose on Lender any additional restrictions on the amount of such a category of liabilities or assets which Lender may hold, then, in each such case, Lender may, by notice thereof to Borrower, terminate the LIBOR Option. If any change in any Legal Requirement shall impose of Lender any additional costs (not already taken into account under Eurocurrency Reserve Requirements) based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of Lender which includes deposits by reference to which the LIBOR Rate is determined as provided herein or a category of extensions of credit or other assets of Lender which includes any LIBOR Revolving Credit Portion or there shall be imposed on Lender or the London interbank market any other condition (with respect to a Legal Requirement or otherwise) with respect to this Agreement or the Loans and the result of such condition is to impose any additional costs on the Lender (including any reduction in Lender's return), then Borrower shall, upon demand of Lender, pay to Lender the amount of any and all such additional costs. Also, at the Lender's option, any LIBOR Revolving Credit Portion subject thereto shall immediately bear interest thereafter at the rate and in the manner provided for Prime Rate Revolving Credit Portions pursuant to Section 1.4 above. Borrower shall indemnify Lender against any loss, penalty or expense incurred by Lender due to liquidation or redeployment of deposits or other funds acquired by Lender to fund or maintain any LIBOR Revolving Credit Portion that is terminated under this paragraph. (iv) Lender shall receive payments of amounts of principal of and interest with respect to the LIBOR Revolving Credit Portions free and clear of, and without deduction for, any Taxes. If (1) Lender shall be subject to any Tax in respect of any LIBOR Revolving Credit Portion or any part thereof or (2) Borrower shall be required to withhold or deduct any Tax from any such amount, the LIBOR Rate applicable to such LIBOR Revolving Credit Portion shall be adjusted by Lender to reflect all additional costs incurred by Lender in connection with the payment by Lender or the withholding by Borrower of such Tax and Borrower shall provide Lender with a statement detailing the amount of any such Tax actually paid by Borrower. Determination by Lender of the amount of such costs shall, in the absence of manifest error, be conclusive. If after any such adjustment any part of any Tax paid by Lender is subsequently recovered by Lender, Lender shall reimburse Borrower to the extent of the amount so recovered. A certificate of an officer of Lender setting forth the amount of such recovery and the basis therefor shall, in the absence of manifest error, be conclusive. (v) Any amounts owed by Borrower under this Section 1.6(b) shall be due and payable upon demand. The Lender shall supply a certificate(s) or statement(s) to the Borrower setting forth any amount(s) so owed under this Section 1.6(b) and such certificate or statement shall be conclusive and binding upon the Borrower absent manifest error. Any amount(s) showing as owed in such certificate(s) or statement(s) shall be due and payable by the Borrower within fifteen (15) days after the applicable certificate or statement is sent. -5- (c) Lender may, in Lender's discretion, permit electronic transmittal of instructions, authorization, agreements or reports to Lender. Unless Borrower specifically directs Lender in writing not to accept or act upon telephonic or electronic communications from Borrower, Lender shall have no liability to Borrower for any loss or damage suffered by Borrower as a result of Lender's honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically or electronically and purporting to have been sent to Lender by Borrower and Lender shall have no duty to verify the origin of any such communication or the authority of the person sending it. 1.7 OPTIONAL AND MANDATORY PREPAYMENTS. (a) The Borrower may optionally prepay the principal of Loans, in whole or in part, at any time, (i) in the case of the Prime Rate Loans, without penalty or premium and (ii) in the case of Libor Loans, accompanied by any payment(s) required by Section 1.6 above. All such prepayments shall first be applied to the Prime Rate Revolving Credit Portion and then to the LIBOR Revolving Credit Portion. (b) Borrower shall make any payments or prepayments required by Section 4.3 below or by any provision of any other applicable Financing Document. (c) Pursuant to Section 1.8 below, all payments with respect to Receivables or other Collateral shall be applied to the mandatory prepayment of the Loans. All such prepayments shall first be applied to the Prime Rate Revolving Credit Portion and then to the LIBOR Revolving Credit Portion. (d) To the extent that at any time the aggregate unpaid principal amount of the Loans shall exceed the Borrowing Base or otherwise shall exceed the Revolving Credit Maximum Amount, the Borrower shall immediately prepay the Loans (with such prepayment to be in the amount of such excess). The Borrower shall specify in writing that a prepayment is being made pursuant to this Section 1.7(d). (e) Amounts prepaid prior to the Revolving Credit Loan Termination Date on account of the Loans may, upon the terms and subject to the conditions of this Agreement, be reborrowed prior to such Date. 1.8 PAYMENTS ON COLLATERAL. Upon the Borrower or TFCI (or any other Affiliate of Borrower or of TFCI or any Person acting for or in concert with the Borrower or TFCI) receiving any checks, notes, drafts, other instruments, cash, other monies or any other items of payment, representing payments on or otherwise with respect to or relating to any and all Receivables or any other Collateral, Borrower or TFCI, as the case may be, shall receive same in trust for the Lender and immediately upon receipt thereof shall (i) deliver same duly endorsed by Borrower or TFCI, as the case may be, for deposit, to Lender for immediate deposit in a cash collateral account established by the Lender (and same shall be deposited in such account), and (ii) if requested by the -6- Lender, forward to the Lender, on a daily basis, copies of all such items and deposit slips related thereto, together with a collection report in form and substance satisfactory to the Lender. All such checks, notes, drafts, other instruments, cash, other monies or other items of payment shall be the sole and exclusive property of the Lender immediately upon receipt of such items by the Borrower or TFCI and shall (at all times), until actually applied to the payment of the Secured Obligations as hereinafter set forth, be part of the Collateral securing the payment and performance of the Secured Obligations. After allowing two (2) days for collection of checks and other instruments, the Lender will credit (conditional upon final collection) all such payments to such collateral account. Such collateral account shall be a blocked account to which the Lender shall have sole access and sole dominion and control. The amounts in such account shall (unless otherwise determined by the Lender) be drawn upon by the Lender (at any time and from time to time and without the need for notice) and applied to the (i) prepayment or payment of the Revolving Credit Loans, (ii) the payment of interest on the Revolving Credit Loans (and any other amounts then due hereunder), and (iii), if a Default or Event of Default is then continuing, to the payment (or prepayment) of any other Secured Obligations; provided, that, after such application by the Lender (and provided further, no Event of Default then exists hereunder) the Borrower or TFCI, as the case may be, shall be entitled to any remaining amounts in such account (provided, it is understood that any balances in such account shall not accrue interest in favor of the Borrower or TFCI). (Nothing contained herein shall, or shall be interpreted or construed to, limit the unconditional obligation of the Borrower (or of any Guarantor) to pay all Secured Obligations in full when due, and if the amount in the collateral account is insufficient to pay all Secured Obligations then due Borrower shall immediately pay any deficiency; and, provided, further, that the Lender shall not be required to look to such account as its first source of repayment.) Nothing contained in this Section 1.8 shall be construed or interpreted to limit any right or remedy of the Lender under Section 8.15 hereof or under any other term or provision of any of the Financing Documents. Borrower shall pay all standard charges of the Lender for operating such account and other related charges. TFCI hereby agrees, notwithstanding the fact that it is a Guarantor and not the borrower of the Loans, that all payments on account of its Receivables (and its other applicable Collateral) shall be applied as set forth above. At the request of the Lender, which request may be made at any time (whether or not an Event of Default has occurred), the Borrower and TFCI shall enter into a lockbox arrangement with the Lender and, if such lockbox arrangements are so requested, the Borrower and TFCI shall cause each of their account debtors and other obligers to at all times send all of their payments directly to the lockbox. Such lockbox arrangements shall be pursuant to a lockbox agreement, in form and substance satisfactory to the Bank, to be entered into by the Lender, the Borrower and TFCI. 1.9 LATE CHARGES. [Intentionally Omitted] 1.10 FURTHER ASSURANCES. Each of the Borrower and TFCI hereby agrees to do and perform any and all acts and to execute any and all further instruments from time to time reasonably requested by the Lender to more fully effect the purposes of this Agreement. -7- 1.11 FEES. (a) The Borrower shall pay to the Lender a non-refundable one-time facility fee equal to Three Thousand Dollars ($3,000) payable on or before the Closing Date. ARTICLE 2. REPRESENTATIONS AND WARRANTIES To induce the Lender to enter into this Agreement and to make the Revolving Credit Loans, the Borrower hereby represents and warrants to the Lender that, except as set forth in Schedule A attached hereto: 2.1 CORPORATE EXISTENCE AND POWER. The Borrower and each of its Subsidiaries is, and will continue to be, a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly qualified to do business and in good standing, and authorized to do business, in all other jurisdictions (the "Foreign Jurisdictions"), if any, in which the property or assets owned, leased or operated by it or the nature of the business conducted by the Borrower requires such qualification or authorization, except for qualifications and authorizations the lack of which, singly or in the aggregate, has not had and will not have a Material Adverse Effect upon the Borrower or such Subsidiary, as the case may be. Borrower and each of its Subsidiaries has the corporate power and authority, the legal right, and all the requisite permits, authorizations, licenses and other general intangibles (as defined in the Connecticut UCC), without unusual restrictions or limitations, to own, operate and lease all of its material properties and assets, to conduct the business in which it is presently engaged or presently proposes to be engaged, and to execute, deliver and perform its obligations under all Financing Documents to which the Borrower or such Subsidiary is a party, and all such permits, authorizations, licenses and other general intangibles are in full force and effect. 2.2 CORPORATE AUTHORITY; NO CONFLICTS; BINDING AGREEMENTS. The execution, delivery and performance by the Borrower and each Guarantor of this Agreement, the Note and any other Financing Document to which Borrower and/or any such Guarantor is a party, and any borrowings hereunder, have been duly authorized by all necessary corporate and, if required, stockholder action. The execution, and delivery and performance of this Agreement, the Note, and any other Financing Document to which Borrower and/or any Guarantor is a party, and any borrowings hereunder, are and will be within the Borrower's or any such Guarantor's, as the case may be, powers, corporate and otherwise, and do not and will not (i) violate any Applicable Law or Borrower's or such Guarantor's certificate of incorporation, by-laws or other organizational document or (ii) result in the breach of, conflict with, constitute a default under, or give rise to the right of acceleration or mandatory prepayment under, any material Contract or any judgment, decree or order which is binding upon the Borrower or any such Guarantor or to which the Borrower or any Guarantor or any of their respective properties may be subject, or result in the creation of any Lien (other than in favor of the Lender) upon any property or assets of the Borrower or any Guarantor pursuant to any Contract or any such judgment, decree or order. This Agreement has been, and the Note and each other Financing Document to which the Borrower and/or any -8- Guarantor is a party will be, duly executed and delivered on behalf of the Borrower or such Guarantor, as the case may be. This Agreement constitutes, and the Note and each other Financing Document to which the Borrower and/or any Guarantor is a party when executed and delivered, will constitute, a legal, valid and binding obligation of the Borrower or such Guarantor, as the case may be, enforceable against the Borrower in accordance with its terms. No Governmental Approval is or will be required in connection with the execution, delivery and performance of this Agreement or any other Financing Document or any borrowing hereunder. 2.3 FINANCIAL CONDITION. The Financial Statements, copies of which have been furnished to the Lender, are true and correct in all material respects and fairly present the financial condition of the Borrower and its Subsidiaries as of the respective dates thereof and the results of the operations and cash flows of the Borrower and its Subsidiaries for the periods covered thereby, all in accordance with GAAP consistently applied (subject to normal year-end adjustments in the case of any interim financial statements). None of the Borrower or any Subsidiary has any material direct or contingent Liabilities not disclosed in the Financial Statements (including any notes thereto) or in Schedule A attached hereto other than Trade Debt arising in the ordinary course of business since March 31, 1997. 2.4 NO ADVERSE CHANGE. Since March 31, 1997, no material, adverse change in the business, assets or other properties, Liabilities, financial condition, results of operations or business prospects of the Borrower or any of its Subsidiary has occurred, no dividends, redemptions or other distributions have been declared or made to or with respect to any stockholders of the Borrower and no other event has occurred or failed to occur, which has had or could reasonably be expected to have in the future, either alone or in conjunction with all other such events and failures, a Material Adverse Effect upon the Borrower or any of its Subsidiaries or on any Financing Document. 2.5 INFORMATION COMPLETE. Subject to any limitations stated therein or in connection therewith, all information (whether past financial statements, the financial statements delivered pursuant to Section 4.2 below or other information) furnished or to be furnished by the Borrower or any of its Subsidiaries in connection with, or pursuant to the terms hereof or any other Financing Document is, or will be at the time the same is furnished, as the case may be true, accurate and complete in all material respects necessary in order to make the information furnished, in the light of the circumstances under which such information is furnished, not misleading. 2.6 COMPLIANCE WITH APPLICABLE LAWS. The Borrower and each of its Subsidiaries is in compliance, in all material respects, with all Applicable Laws. 2.7 LITIGATION. There are not any actions, suits or legal, equitable, arbitration, or administrative proceedings, pending or, to the knowledge of the Borrower, threatened (nor, to the knowledge of the Borrower, is there any basis therefor) against or in any other way relating to or affecting the Borrower or any of its Subsidiaries or their respective businesses or any assets or other properties of the Borrower or any of its Subsidiaries or any Financing Document. -9- 2.8 BURDENSOME PROVISIONS; NO DEFAULT. None of the Borrower or any of its Subsidiaries is a party to or bound by any Contract or Applicable Law, that, either alone or in conjunction with any other such Contract or Applicable Law, has had or could reasonably be expected to have in the future a Material Adverse Effect upon the Borrower or such Subsidiary. None of Borrower or such Subsidiary is in default or breach of any material Contract where such breach or default, either alone or in conjunction with any other default or breach, has had or could reasonably be expected to have in the future a Material Adverse Effect upon the Borrower or such Subsidiary. 2.9 NO ADVERSE FACT. Except as may be set forth in the Financial Statements (or in Schedule A), no fact or circumstance is known to the Borrower which, either alone or in conjunction with all other such facts and circumstances, has had or could reasonably be expected to have in the future a Material Adverse Effect upon the Borrower or any of its Subsidiaries or on any Financing Document. 2.10 SUBSIDIARIES; OWNERSHIP. Schedule B sets forth any and all Subsidiaries of the Borrower. The capital stock of each such Subsidiary is owned entirely by the Borrower. Except for such Subsidiaries, the Borrower has not invested in the stock, common or preferred, of any other corporation, and there are no fixed, contingent or other obligations on the part of the Borrower or any of its Subsidiaries to issue any additional shares of its capital stock to any Person. 2.11 EVENTS OF DEFAULT. No Event of Default or Default has occurred and/or is continuing. 2.12 USE OF PROCEEDS. The Borrower shall use the proceeds of the Revolving Credit Loans only for the Permitted Uses, and no part of such proceeds will be used, in whole or in part, for the purpose of purchasing or carrying any "margin security" as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System, or otherwise in a manner which would violate any Regulations of such Board, including without limitation Regulations G, U, T and X. 2.13 TITLE TO PROPERTY. The Borrower and each of its Subsidiaries has good and marketable title to all properties and assets they respectively purport to own, and a valid leasehold interest in, all of its assets and other properties it purports to have a leasehold interest in. Such assets and other properties are subject to no Liens other than Permitted Liens. 2.14 TAXES. Except for the specified Pennsylvania and Connecticut Tax Returns, the Borrower has filed or caused to be filed all Federal, state and local and foreign tax returns and reports required to have been filed by it or any of its Subsidiaries and has paid or caused to be paid all taxes, assessments, fees and other governmental charges payable by it or any of its Subsidiaries which have become due, other than those not yet delinquent and those due that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary shall have set aside on its books adequate reserves in accordance with GAAP. The Borrower has paid or has -10- provided adequate reserves for the payment of all Federal, State, local and foreign income taxes applicable to the Borrower or any of its Subsidiaries for all prior fiscal years and for the current fiscal year to the date hereof. There is no proposed tax assessment against the Borrower or any of its Subsidiaries which would, if the assessment were made, have a Material Adverse Effect upon the Borrower. 2.15 BUSINESS NAME; OFFICES AND LOCATIONS. The Borrower and each of its Subsidiaries conducts its business solely in its own corporate name without the use of a trade name or style, except for any trade name or style set forth in Schedule C attached hereto. The chief executive offices and principal place of business of (i) the Borrower is at the address set forth in the opening paragraph of this Agreement, (ii) of TFCI, is at 126 Myron Street, West Springfield, Massachusetts 01089, and (iii) of Avest, at 205 Express Street, Plainview, New York 11803. 2.16 BORROWER'S QUESTIONNAIRE AND TFCI'S QUESTIONNAIRE. All statements in each of the Borrower's Questionnaire and Company's Questionnaire are true and correct as of the date of this Agreement and, except to the extent the Borrower gives to the Bank prior written notice of any change, shall remain true and correct. Nothing contained in this Section 2.16 shall be interpreted to limit the Borrower's obligations, or the Lender's rights, under Section 6.5 below. 2.17 EMPLOYEE BENEFIT PLANS. Each employee benefit plan, (as such term is defined in Section 3(3) of ERISA), if any, established, maintained or contributed to by the Borrower, any Subsidiary or any other ERISA Affiliate (each a "Plan") is in compliance in all material respects with the applicable provisions of ERISA and the Code. No Plan has an Accumulated Funding Deficiency, as such term is defined in Section 412 of the Code. No Reportable Event, as such term is defined in ERISA, has occurred with respect to any Plan. No Plan is a Multiemployer Plan, as such term is defined in ERISA. 2.18 ENVIRONMENTAL MATTERS. To the best of the Borrower's knowledge and belief (i) Borrower, and each of its Subsidiaries and each of their respective properties, operations and other activities are in compliance, in all material respects, with all Environmental Laws, (ii) no Hazardous Material (other than Hazardous Materials used in the ordinary business of office maintenance in compliance with Environmental Laws) is located at, on or in, or about, to the Borrower's or such Subsidiary's properties and none of Borrower's or such Subsidiary's operations or other activities involve Hazardous Materials or have resulted in the Release of any Hazardous Materials which may have damaged any Natural Resources, and (iii) the Borrower and each of its Subsidiaries has no liability or class of liability under any Environmental Law or with respect to any Hazardous Material. The term "property(ies)" as used in this Section shall mean any property(ies) owned, occupied and/or operated by the Borrower or any of its Subsidiaries. -11- ARTICLE 3. CONDITIONS PRECEDENT 3.1 INITIAL REVOLVING CREDIT LOAN. The initial Revolving Credit Loan shall be subject (in addition to the conditions precedent set forth in Section 3.2 below) to the Borrower fulfilling the following conditions precedent: (a) DELIVERY OF VARIOUS DOCUMENTS. The Lender shall have received each of the following, all of which shall be in form and substance satisfactory to the Lender: (i) originals of each of the applicable Financing Documents, all of which shall have been duly and properly authorized, executed and delivered by the respective party or parties thereto and in full force and effect. (ii) the Obligor Legal Opinion. (iii) certificates of insurance and loss payable clauses, meeting the requirements of Section 4.3 below and all other applicable requirements of any other Financing Document. (iv) current copies of the articles of incorporation and by-laws of each of the Borrower and its Subsidiaries, as restated or amended to the date of the making of such initial Revolving Credit Loan, certified, with respect to the articles of incorporation, by the appropriate Secretary of State, and, with respect to the by-laws, by an appropriate officer of each of the Borrower and its Subsidiaries. (v) certified copies of all corporate (including stockholder, if required) action taken by each of the Borrower and its Subsidiaries to authorize the execution, delivery and performance in accordance with their respective terms of this Agreement, the Note, and any other Financing Document to which Borrower and/or such Subsidiary is a party, such resolutions to be certified by the secretary or assistant secretary of the Borrower or such Subsidiary as of the date of disbursement of such initial Revolving Credit Loan. (vi) a certificate of incumbency with respect to the officers of, as applicable, each of the Borrower and its Subsidiaries authorized to execute and deliver this Agreement, the Note, or any other Financing Document to which the Borrower or such Subsidiaries is a party. (vii) current certificates of good standing for each of the Borrower and its Subsidiaries from the applicable state of incorporation, and, if applicable, in each of the Foreign Jurisdictions. (viii) a certificate, dated the date of the Loan, signed by a Responsible -12- Officer of the Borrower, confirming compliance with Section 3.2(a) hereof. (ix) current UCC search reports with respect to the Borrower and its Subsidiaries. (x) acknowledgement copies of the filing of all UCC financing statements filed in connection with the perfection of any Lien granted in favor of the Lender pursuant to any Financing Document. (xi) pay proceeds letter, executed by Borrower, directing and authorizing the Lender to apply the proceeds of the initial Revolving Credit Loan for the purposes, and in accordance with the instructions, set forth therein and in accordance with Section 2.12 hereof. (xii) a current title report with respect to the Plainview Real Estate. (xiii) postal change of address cards, letter to postmaster and letters in blank to account debtors of Borrower and TFCI. (xiv) the Specified Additional Closing Documents. (b) OTHER DOCUMENTS. The Lender shall have received all such other certificates, reports, statements, opinions of counsel, instruments, assurances, agreements, or other documents as the Lender may reasonably request. (c) LEGAL MATTERS. All legal matters incident to the transactions contemplated by this Agreement and the other Financing Documents shall be satisfactory to the Lender and Messrs. Finn Dixon & Herling, special counsel for the Lender. (d) PAYMENT OF LEGAL FEES. Borrower shall pay the legal fees and disbursements, of Messrs. Finn Dixon & Herling LLP ("FDH"), special counsel to the Lender to be limited to a maximum of $4,000 plus $1,000 for disbursements as set forth in the Commitment Letter (provided, that Borrower shall also reimburse FDH for the costs of all UCC searches, filing fees and corporate searches and certificates). (e) PAYMENT OF CERTAIN EXISTING DEBT. Payment in full by the Borrower of all Indebtedness to the Existing Lender. (f) PAYMENT OF THE FACILITY FEE. Borrower shall pay $3,000 facility fee referred to in Section 1.12. 3.2 ALL REVOLVING CREDIT LOANS. The making of each Revolving Credit Loan (whether the initial Revolving Credit Loan or any subsequent Revolving Credit Loan) shall be subject to the following additional conditions precedent: -13- (a) REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT; NO EVENT OF DEFAULT. (i) All of the representations and warranties made or deemed to be made under this Agreement or any other Financing Document shall be true and correct at the time of the disbursement of the Revolving Credit Loan (except for the representation or warranty contained in Section 2.4 with respect to distributions to the extent it is no longer true by reason of a distribution made in accordance with, and permitted by, Section 5.7 below., with and without giving effect to the making of the Revolving Credit Loan and the application of the proceeds thereof, and (ii) no Event of Default or Default, shall have occurred and be continuing at such time, with and without giving effect to the making of the such Loan and the application of the proceeds thereof. The Lender may, without waiving this condition, consider it fulfilled, and a representation and warranty by the Borrower to such effect made to the Lender, if no written notice to the contrary is received by the Lender from the Borrower prior to the making of the such Loan. (b) DOCUMENTS IN FULL FORCE AND EFFECT. All Financing Documents shall remain in full force and effect and not be terminated. The Lender may, without waiving this condition, consider it fulfilled, and a representation and warranty by the Borrower to the Lender to such effect made, if no written notice to the contrary is received from the Borrower prior to the making of the applicable Loan. (c) CORPORATE ACTIONS IN FULL FORCE AND EFFECT. The corporate actions of the Borrower referred to in Section 3.1(a) shall remain in full force and effect and the incumbency of officers shall be as stated in the certificates of incumbency delivered pursuant to Section 3.1(a) or as subsequently modified and reflected in a certificate of incumbency delivered to the Lender. The Lender may, without waiving this condition, consider it fulfilled, and a representation and warranty by the Borrower to the Lender to such effect made, if no written notice to the contrary is received from the Borrower prior to the making of the applicable Loan. (d) NO MATERIAL ADVERSE CHANGE. There has been no material adverse change in the business, assets, liabilities, financial condition, results of operations or business prospects of the Borrower or any Guarantor since the date of any financial statements delivered to the Lender prior to or after the date of this Agreement. The Lender may, without waiving this condition, consider it fulfilled, and a representation and warranty by the Borrower to the Lender to such effect made, if no written notice to the contrary is received from the Borrower prior to the making of the applicable Loan. (e) REQUEST AND BORROWING BASE CERTIFICATE. The Borrower shall have requested such Revolving Credit Loan and Borrower shall have also supplied and/or executed any other applicable documentation, including a Borrowing Base Certificate, in accordance with the applicable terms and provisions hereof. (f) NOT EXCEED REVOLVING CREDIT MAXIMUM AMOUNT. Immediately prior to and after the applicable Revolving Credit Loan is made, the sum of outstanding Revolving Credit Loans -14- shall not exceed the Revolving Credit Maximum Amount. The Lender may, without waiving this condition, consider it fulfilled, and a representation and warranty by the Borrower to the Lender to such effect made, if no written notice to the contrary is received from the Borrower prior to the making of the applicable Loan. 9 3.3 WAIVER. The Lender, in its sole and absolute discretion, may waive a condition(s) precedent with respect to a Revolving Credit Loan. The giving of a waiver on one occasion shall not obligate the Lender to grant a waiver on any other occasion. ARTICLE 4. AFFIRMATIVE COVENANTS The Borrower (and to the fullest extent applicable, TFCI) covenants and agrees with the Lender that, until payment in full of the Revolving Credit Loans, payment and performance by the Borrower and Guarantors of all of their other obligations under the Financing Documents and the termination of the Revolving Credit Facility, unless the Lender otherwise consents in writing, the Borrower shall and shall cause its Subsidiaries to: 4.1 PRESERVATION OF EXISTENCE AND PROPERTIES; SCOPE OF BUSINESS. (a) Preserve and maintain its corporate existence and all of its other franchises, licenses, rights and privileges, and remain qualified to do business, and authorized to do business, as a foreign corporation in all jurisdictions in which the property or assets owned, leased, or operated by the Borrower or such Subsidiary, as the case may be, or the nature of the business conducted by Borrower or such Subsidiary, as the case may be, requires such qualification or authorization, except for qualifications and authorizations the lack of which, singly or in the aggregate, has not had and will not have a Material Adverse Effect upon the Borrower or such Subsidiary, as the case may be, (b) preserve, protect and obtain all material general intangibles, (c) preserve and maintain in good repair, working order and condition, reasonable wear and tear excepted, all of the Borrower's or such Subsidiary's, as the case may be, material assets and other material properties and (d) engage only in businesses in substantially the same fields as the businesses conducted by the Borrower or such Subsidiary, as the case may be, on the date hereof. Avest shall conduct no business other than the ownership, maintenance, and operation of the Plainview Real Estate. 4.2 FINANCIAL STATEMENTS. A. Deliver to the Lender: (i) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such year and the related statements of operations, stockholders' equity and cash flows of the Borrower and its Subsidiaries for such year, showing the financial condition of the Borrower and its Subsidiaries as of the close of such fiscal year and the results of their operations during such year, all audited by independent public accountants selected -15- by Borrower and reasonably satisfactory to the Lender and accompanied by an opinion of such accountants (which shall not be qualified in any material respect) to the effect that such financial statements fairly present the financial condition and results of operations of the Borrower and its Subsidiaries in accordance with GAAP. Concurrently with the delivery of such financial statements, Borrower shall cause such independent public accountants to deliver a certificate stating that in making the examination necessary therefor no actual knowledge was obtained of any Default or Event of Default, except as may be specified in such certificate. (ii) as soon as practicable, but in any event within thirty (30) days after the end of each calendar month, a copy of a Borrower-prepared consolidated, and, if requested by Lender, consolidating, financial statements including a balance sheet, income statement, source and use of funds statement, and such other supporting schedules as Lender may require, of the Borrower and its Subsidiaries as at the end of such month. (iii) as soon as practicable, but in any event within thirty (30) days after the end of each calendar month, (aa) an accounts receivable aging (on a form acceptable to the Lender) of the Borrower and its Subsidiaries as of the end of such month, (iv) within 5 days after the end of each month, a Borrowing Base Certificate as of the end of such month, in form and substance acceptable to the Lender. (v) copies of all federal income tax returns filed by the Borrower or any of its Subsidiaries, such statements to be delivered to the Lender within thirty (30) days of the filing thereof. (vi) copies of all filings (10-Q) made with the Securities and Exchange Commission as soon as practicable, but in any event within ten (10) Business Days after the applicable deadline thereof (as adjusted for taking any valid extension thereof). (vii) within thirty (30) days after the end of each fiscal year, management prepared financial projections for the next fiscal year which projections shall include consolidated balance sheets, income statements and sources and uses of funds of the Borrower and its Subsidiaries, and other necessary supporting schedules. Such projections shall be the good faith projections of the Borrower's management. The Borrower agrees and covenants with the Lender that all financial statements referred to in subparagraph (i) and (ii) of this Section 4.2.A. will present fairly the financial condition of the Borrower and its Subsidiaries as of the respective dates thereof and the results of operations (and, in the case of the annual statements, cash flows) of the Borrower and its Subsidiaries for the periods covered by such statements in accordance with GAAP applied consistently throughout the periods reflected therein (except as approved by such accountants and disclosed therein). B. Deliver to the Lender: -16- (a) concurrently with the delivery of the financial statements referred to in subsection 4.2.A.(ii) above for any month ending any fiscal quarter, a certificate of the President or Chief Financial Officer of the Borrower (i) stating that, to the best of his or her knowledge, the Borrower during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and in each of the other Financing Documents to be observed, performed or satisfied by it, and that he or she has obtained no knowledge of any Default or Event of Default, except as may be specified in such certificate, (ii) certifying that all such financial statements are true and correct in all material respects and fairly present the consolidated financial condition and results of operations of the Borrower and its Subsidiaries (subject, in the case of interim statements, to normal year-end audit adjustments) and have been prepared in accordance with GAAP applied consistently throughout the periods reflected therein (except as approved by the Borrower's independent certified public accountants and disclosed therein) and (iii) showing in reasonable detail the calculations required to establish whether or not Borrower was in compliance with any applicable Specified Covenant Tests. (b) promptly, such additional financial and other information and certificates as the Lender may from time to time reasonably request. 4.3 GENERAL INSURANCE REQUIREMENTS. (a) Keep all of the Borrower's and each of its Subsidiary's insurable properties (including all physical Collateral) insured against fire and other hazards (so called "All Risk" coverage), with financially responsible companies and in amounts reasonably satisfactory to the Lender and, in any event, in at least such amounts and against at least such risks as are usually insured against in the same general area(s) by companies engaged in the same or similar business, (b) maintain public liability coverage against claims for personal injuries, death or property damage, in amounts reasonably satisfactory to the Lender, (c) maintain product liability insurance in amounts reasonably satisfactory to the Lender, (d) maintain all worker's compensation, employment or similar insurance as may be required by Applicable Law, and (e) maintain such other insurance as may be required by Applicable Law or reasonably required by the Lender. Such All Risk, property insurance, public and product liability coverage shall provide for a minimum of thirty (30) days' prior written notice from the insurer to Lender of any expiration or termination of, or material amendment to, such insurance coverage. Such All Risk property insurance shall name the Lender as loss payee or mortgagee, as the case may be, and shall contain a clause specifying that the interests of Lender shall not be impaired or invalidated by any act or neglect of Borrower (or other owner of the property) or by the occupation of the premises for purposes more hazardous than are permitted by said policy. The Lender shall be named as additional insured on all such public liability and product liability policies. Borrower agrees to deliver copies of all of the aforesaid insurance policies to the Lender. In the event of any loss or damage to the assets or other properties of the Borrower or its Subsidiaries, Borrower shall give immediate written notice to the Lender and to its insurers of such loss or damage and shall promptly file its proofs of loss with said insurers. All obligations of the Borrower, and all rights of the Lender, with respect to insurance contained in this Section 4.3 shall be in addition to, and not in limitation of, any other obligations and rights with respect to insurance set forth in any other -17- Financing Document. Nothing contained in this Agreement or any other Financing Document shall be interpreted or construed to impose on the Lender any obligation or liability with respect to the insurance of the Borrower or its Subsidiaries or the maintenance or adequacy thereof. If Borrower fails to pay any premiums of any insurance, Lender may (but shall have no obligation to) pay same and any payments made by Lender shall be reimbursed by the Borrower upon demand of the Lender, and shall bear interest at the Revolving Credit Default Rate. Pursuant to Section 6.1 and the definition of "Collateral", the Lender has been assigned and granted a security interest in any and all proceeds of all insurance policies covering or otherwise relating to any Collateral. Each of the Borrower and TFCI authorizes and empowers the Lender (i) after the occurrence and during the continuance of any Event of Default to adjust or compromise any loss under such policies and (ii) prior to or after the occurrence of any Event of Default, to collect and receive all such proceeds. If an Event of Default is not continuing, the Borrower or TFCI, as the case may be, shall have the right to adjust or compromise any loss under such policies, provided, that the Borrower shall not agree to any such adjustment or compromise without the prior written consent of the Lender if the loss is involved in excess of $75,000, which consent shall not be unreasonably withheld. Each of the Borrower and TFCI hereby authorizes and directs each insurance company to pay all such proceeds directly and solely to the Lender and not to Borrower or TFCI, as the case may be, and the Lender jointly. Borrower and TFCI authorize and empower the Lender to execute and endorse in Borrower's or TFCI's name (at all times) all proofs of loss, drafts, checks and any other documents or instruments necessary to accomplish such collection, and any Persons making payments to the Lender under the terms of this paragraph are hereby relieved absolutely from any obligation or responsibility to see to the application of any sums so paid. After deduction from any such proceeds of all costs and expenses (including reasonable attorney's fees) incurred by the Lender in the collection and handling of such proceeds, the net proceeds shall be applied as follows. If no Event of Default shall have occurred and then be continuing, such net proceeds may be applied, at Borrower's or TFCI's option, either toward replacing or restoring the applicable Collateral (provided such replacement or restoration is practicable), in a manner and on terms reasonably satisfactory to the Lender, or as a credit against the Secured Obligations, whether matured or unmatured. In the event that Borrower or TFCI may and does elect to replace or restore as aforesaid, then such net proceeds shall be deposited in a segregated account at the Lender subject to the sole order of the Lender and shall be disbursed therefrom by the Lender in such manner and at such times as the Lender reasonably deems appropriate to complete such replacement or restoration; provided, however, that if any Event of Default shall occur and be continuing at any time before or after replacement or restoration has commenced, then thereupon the Lender shall have the option, at its sole discretion, to apply all remaining net proceeds either toward replacing or restoring the applicable Collateral, in a manner and on terms satisfactory to the Lender, or as a credit against such of the Secured Obligations, whether matured or unmatured, as the Lender shall determine in its sole discretion. If an Event of Default shall have occurred and be continuing (including an Event of Default occurring prior to such deposit of the net proceeds), the Lender may, in its sole discretion, apply such net proceeds either toward replacing or restoring the Collateral, in a manner and on terms satisfactory to the Lender, or as a credit against the Secured Obligations, whether matured or unmatured. Notwithstanding the foregoing provisions of this paragraph but -18- without otherwise limiting the rights of the Lender under this paragraph, at all times that no Event of Default is continuing, if the loss involved is $75,000 or less, the Lender shall, at the request of the Borrower rather than deposit the net proceeds for such loss in such a segregated account, promptly pay over such proceeds to the Borrower or TFCI, as the case may be, provided that the Borrower or TFCI, as the case may be, shall promptly apply such proceeds to the replacement or restoration of the applicable Collateral, if practicable. If there shall have occurred a Default, but not at such time an Event of Default, the Lender shall have the right to hold all insurance proceeds in an account at the Lender (subject to the sole order of the Lender) until such time as the event or condition constituting such Default is either timely cured or waived in accordance the terms and provisions hereof or becomes an Event of Default, so as to be able to determine which of the procedures with respect to the application of insurance proceeds set forth in the immediately preceding paragraph should be used. 4.4 COMPLIANCE WITH LAWS; PAYMENT OF TAXES. (a) Comply with all Applicable Laws and all obligations under all Contracts except to the extent that failure to comply therewith could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Borrower or any of its Subsidiaries; and (b) pay all (i) taxes, assessments, governmental charges or levies, and (ii) claims for labor, supplies, rent and other obligations made against it or its property which, if unpaid, might become a lien or charge against the Borrower or such Subsidiary or its respective properties, except, in the case of (b)(i) or (b)(ii), liabilities being contested by the Borrower or such Subsidiary in good faith by appropriate proceedings and against which the Borrower shall set up adequate reserves on its books in conformity with GAAP. 4.5 INSPECTION. Permit representatives (whether or not officers or employees) of the Lender, from time to time, as often as may be reasonably requested, but only during normal business hours and upon reasonable prior notice (provided, however, that prior notice need not be given for the audits referred to in the immediately succeeding sentence or, if an Event of Default has occurred and is continuing), to (a) visit and inspect any offices, assets or other properties of the Borrower or any of its Subsidiaries, (b) inspect, audit and make extracts from the Borrower's or such Subsidiary's books and records, and (c) discuss with Borrower's or such Subsidiary's principal officers, and its independent accountants, the Borrower's or such Subsidiary's businesses, assets and other properties, liabilities, financial condition, results of operations and business prospects. As part of the Lender's rights under the immediately preceding sentence, the Lender shall, at any time and from time to time, have the right to perform audits with respect to the Borrower and its books, records and assets and other properties (including assets in any warehouse). The Borrower shall pay for the costs of such audits which fees will be $500 for each man day plus out-of-pocket expenses; provided, that, as long as no Event of Default shall have occurred, the aggregate amount the Borrower shall be obligated to pay for such audits in any calendar year, commencing with the calendar year 1997, shall not exceed $4,000 (per year). 4.6 NOTICE OF DEFAULT; LITIGATION, ETC. Furnish to the Lender prompt written notice of any of the following: (i) the occurrence of any Event of Default or Default; (ii) the commencement -19- of any actions, suits or proceedings or investigations in any court or before any arbitrator of any kind or by or before any governmental or non-governmental body against or in any other way relating adversely to, or affecting, the Borrower or any of its Subsidiaries or their respective businesses or properties, which, singly or in the aggregate, have an amount involved in excess of $50,000; (iii) any material amendment of the certificate of incorporation, by-laws, or other organizational document of the Borrower or any of its Subsidiaries; (iv) any change with respect to the business, assets or other properties, liabilities, financial condition, results of operations or business prospects of the Borrower or any of its Subsidiaries other than changes in the ordinary course of business which, singly or in the aggregate, have not had a Material Adverse Effect on the Borrower or any of its Subsidiaries. 4.7 EMPLOYEE BENEFIT PLAN. Cause each Plan to comply in all material respects with the applicable provisions of ERISA and the Code. The Borrower shall promptly give written notice to the Lender of the details of (i) any Reportable Event (as such term is defined in ERISA) with respect to a Plan, (ii) any Accumulated Funding Deficiency (as such term is defined in Section 412 of the Code) with respect to a Plan, (iii) the material modification or termination (or proposed termination) of any Plan or (iv) the establishment or agreement to maintain or make contributions to any new Plan. Neither the Borrower nor any ERISA Affiliate will establish, maintain or make contributions to any Multiemployer Plan (as such term is defined in ERISA). 4.8 ENVIRONMENTAL COMPLIANCE. (i) Comply with, and cause all of the Borrower's and each of its Subsidiary's properties, operations and other activities to comply with all Environmental Laws except for non-compliance which could not reasonably be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries; (ii) not Release any Hazardous Materials which Release damages or threatens to damage any Natural Resources in any material manner; (iii) not engage in the handling, use, storage or transportation of Hazardous Materials (except for the storage and use of Hazardous Materials used in normal office maintenance and except for the use of any such materials normally used in the assembly and distribution of connectors for original equipment manufacturers, in compliance in all material respects with Environmental Laws); and (iv) promptly notify the Lender of any material notice received by the Borrower or any of its Subsidiaries with respect to (aa) any alleged material violation by the Borrower of any Environmental Law, (bb) any liability or class of liability under any Environmental Law, or (cc) any Lien imposed or threatened to be imposed on any of the Borrower's or such Subsidiary's properties pursuant to any Environmental Law. 4.9 OPERATING ACCOUNTS. To the fullest extent permitted under Applicable Law, maintain all of Borrower's and TFCI's operating accounts with Lender. ARTICLE 5. NEGATIVE COVENANTS The Borrower (and, to the fullest extent applicable, TFCI) covenants and agrees with the Lender that, until payment in full of all Revolving Credit Loans, payment and performance by the Borrower and Guarantors of all of their other obligations under the Financing Documents and the -20- termination of the Revolving Credit Facility, unless the Lender otherwise consents in writing, the Borrower shall not, and shall cause its Subsidiaries not to, (directly or indirectly): 5.1 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien against any of the Borrower's or such Subsidiary's assets or other properties, whether now existing or hereafter acquired, except: (a) Liens in favor of the Lender or (b) Permitted Liens. 5.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume, suffer to exist any Indebtedness except for Permitted Indebtedness. 5.3 CONTINGENT LIABILITIES. Assume, guarantee, endorse or otherwise become liable upon or otherwise become obligated with respect to, any liability or other obligation of any other Person, except for endorsements of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business. 5.4 CONSOLIDATION OR MERGER; ACQUISITION OR SALE OF ASSETS. (a) Dissolve or liquidate or discontinue its normal operations with intent to liquidate; (b) merge or consolidate with any other Person; (c) acquire by purchase, lease or otherwise all or a material portion of the properties or assets of any other Person; or (d) sell, transfer, lease or otherwise dispose of any of its assets or other properties (whether tangible or intangible) except that the Borrower or TFCI (or, in the case of clause (ii) below, Avest), so long as no Event of Default shall have occurred and be continuing or would result therefrom, may (i) sell inventory (as defined in the Connecticut UCC) in the ordinary course of business for value received and (ii) replace, in the ordinary course of business, equipment (as defined in the Connecticut UCC) which has become worn out or obsolete, with equipment of at least comparable value. 5.5 TRANSACTIONS WITH AFFILIATES. Enter into, or be a party to, any transaction with any Affiliate of the Borrower or any of its Subsidiaries (including, without limitation, transactions involving the purchase, sale or exchange of assets or properties or the rendering of services), except in the ordinary course of business pursuant to the reasonable requirements of the Borrower or such Subsidiary and upon fair and reasonable terms no less favorable to the Borrower of such Subsidiary than Borrower or such Subsidiary would obtain in a comparable arm's-length transaction with a Person other than an Affiliate. Without limiting the generality of the immediately preceding sentence, such sentence shall apply to transactions between the Borrower and its Subsidiaries, PROVIDED, however, that intercompany charges between the Borrower and its Subsidiaries may be made in accordance with the prior practices of such parties. 5.6 LOANS, ADVANCES, INVESTMENTS. Purchase or otherwise acquire any shares of stock or obligations of, make any loans or advances to, make a capital contribution to, or make any other investments in, any Person other than investments in direct obligations of the United States of America, or commercial paper rated the highest grade by two or more national credit rating agencies, or deposit or time accounts of Lender or, subject to Section 4.9 hereof, any other United States bank and which account is insured by the Federal Deposit Insurance Corporation. -21- 5.7 ACQUISITION OF STOCK OF BORROWER; DIVIDENDS. (i) Purchase, acquire, redeem or retire, or make any commitment to purchase, acquire, redeem or retire, any of the capital stock of the Borrower, whether now or hereafter outstanding, provided, however, that the Borrower and/or TFCI shall be permitted to purchase, acquire, redeem or retire the capital stock of the Borrower so long as (x) the aggregate amount of the capital stock thus purchased, acquired redeemed or retired does not exceed $100,000 and (y) neither at the time of such purchase, acquisition, redemption or retirement nor as a result thereof no Default or Event of Default exists or occurs or (ii) pay any dividends on, or otherwise make any distributions with respect to, any capital stock of the Borrower if at the time of such dividend or other distribution an Event of Default or Default exists or if an Event of Default or Default shall result from such payment. 5.8 [INTENTIONALLY OMITTED.] 5.9 SUBSIDIARIES. Acquire (other than, in the case of the Borrower, TFCI and Avest), form or dispose of any Subsidiary. 5.10 CURRENT RATIO. Permit the ratio of Consolidated Current Assets to Consolidated Current Liabilities, as of the end of any fiscal quarter (commencing with the fiscal quarter ending September 30, 1997), (i) for any such fiscal quarter ending prior to June 30, 1998, to be less than 1.00 to 1.00 and (ii) for any such fiscal quarter ending on or after June 30, 1998, to be less than 1.25 to 1.00. 5.11 DEBT SERVICE COVERAGE. Permit the ratio of (a) Consolidated EBITDA less Cash Capital Expenditures to (b) Interest Expense plus CMTLD, for any Elapsed Fiscal Year (commencing with the Elapsed Fiscal Period ending September, 1997), to be less than 1.25 to 1.00. 5.12. MINIMUM INTEREST COVERAGE. Permit the Interest Coverage Ratio for any Elapsed Fiscal Year (commencing with the Elapsed Fiscal Period ending September, 1997), to be less than 1.50 to 1.00. 5.13. LIABILITIES TO TANGIBLE NET WORTH RATIO. Permit the ratio of Consolidated Liabilities to Consolidated Tangible Net Worth, as of the end of any fiscal quarter (commencing with the fiscal quarter ending September 30, 1997), to exceed 1.50 to 1.00. 5.14 LEASE OBLIGATIONS. Incur, create, or assume any commitment to make any Lease Payments (as defined below) if the aggregate amount payable thereunder in any one fiscal year (commencing with the fiscal year ending March 31, 1997) would exceed $175,000. "Lease Payments" means any direct or indirect payment or payments, whether as rent or otherwise, exclusive of, however, any rent payments to Avest made pursuant to that certain lease of the property at the Plainview Site between Avest, as lessor, and Astrex, as lessee, dated June 30, 1989, including fees or service or finance charges, under any lease, rental or other agreement for the use of the property of any Person other than the Borrower whether or not such agreement contains an -22- option to purchase. 5.15 FISCAL YEAR. Cause its fiscal year to end on any date other than March 31. 5.16 DOUBLE NEGATIVE PLEDGE. Enter into or suffer to exist, or permit any of Borrower's Subsidiaries to enter into or suffer to exist, other than in favor of the Lender, any agreement prohibiting (or restricting) the creation or assumption of any Lien upon any property(ies) or assets of the Borrower or any of its Subsidiaries. ARTICLE 6. COLLATERAL. 6.1. SECURITY INTEREST. To secure the due and punctual payment and performance of all of the Secured Obligations, each of the Borrower and TFCI do hereby each pledge and assign all of the Collateral to the Lender, and grant to the Lender a present and continuing security interest in and lien upon all of its respective Collateral. 6.2. CONTINUED PRIORITY OF SECURITY INTEREST. Borrower and TFCI represent, warrant and covenant that (i) the Security Interest is and shall at all times be a valid and perfected security interest enforceable against the Borrower, TFCI and all third parties and securing, in accordance with the terms of this Agreement, the Secured Obligations, and (ii) the Collateral shall not at any time be subject to any Liens that are prior to, on a parity with or junior to the Security Interest other than Permitted Liens. 6.3. FILING; VERIFICATION. (a) The Borrower and TFCI shall, at their sole cost and expense, take or cause to be taken all action which may be necessary or desirable, or that the Lender may reasonably request, in order to assure that the Security Interest will at all times comply with the provisions of Section 6.2 and the other provisions of the Financing Documents and to enable the Lender to exercise or enforce its rights hereunder and under the other Financing Documents, including, but not limited to, (i) executing, delivering and, where applicable, filing financing statements, continuation statements, pledges, designations, mortgages, hypothecation, notices and assignments, in each case in form and substance satisfactory to the Lender, (ii) causing to be executed and delivered (a) landlord's waivers and (b) postal change of address cards, letters to postmasters and pre-signed letters to account debtors under Accounts of the Borrower and/or TFCI, all in form and substance satisfactory to the Lender, (iii) delivering to the Lender, endorsed or accompanied by such instruments of assignment as the Lender may specify, any and all chattel paper, securities, instruments, letters of credit and advices thereof and documents evidencing or forming a part of the Collateral. The Borrower and TFCI shall mark their books and records as may be necessary or appropriate to evidence, protect and perfect the Security Interest. (b) A carbon, photographic or other reproduction of this Agreement or of any financing -23- statement shall be sufficient as a financing statement. (c) The Lender shall have the right at any time and by any reasonable means (including by mail, telephone, telecopy or otherwise), in the name of the Lender or the Borrower or its Subsidiaries (or other name), to verify (or require the Borrower or TFCI to verify) the validity, ownership, amount or any other matter relating to any Collateral. Borrower and its Subsidiaries shall cooperate in connection with same. 6.4. CERTAIN COVENANTS AS TO COLLATERAL. So long as any of the Secured Obligations are outstanding and unpaid or the Revolving Credit Facility exists and unless the Lender shall otherwise consent in writing: (a) The Borrower and TFCI will: (i) at all times be the sole owner of each and every item of Collateral respectively owned by it; (ii) discharge all Liens other than Permitted Liens and otherwise defend the Security Interest and its title to the Collateral at its own expense; (iii) endeavor to make collection of the Receivables of Borrower and TFCI, provided, that nothing contained in this sentence shall, or shall be interpreted to, limit any right of the Lender to collect any Receivable upon the occurrence or continuance of any Event of Default (or any other right or remedy of the Lender). (iv) at all times keep, in all material respects, accurate and complete records of the Collateral; (v) (A) for purposes of computing the Borrowing Base, and not in limitation of any of the provisions of Section 4.2 above, furnish to the Lender information and documentation adequate to identify Receivables at times and in form and substance as may be required by the Lender and from time to time, as determined by the Lender, provide the Lender with aging schedules describing all Receivables created or acquired by Borrower or TFCI, (B) together with each such schedule, upon the request of the Lender, provide the Lender with copies of customers' invoices or the equivalent, original shipping and delivery receipts and such other documents as the Lender shall specify, (C) upon the request of the Lender from time to time, execute and deliver confirmatory written assignments of any Receivables or other Collateral to the Lender, but any failure by the Borrower or TFCI to execute and deliver such schedules and other materials or assignments shall not limit or otherwise affect the Security Interest or the Lender's other rights in and to the Collateral, (D) upon the request of the Lender, from time to time, (i) a current listing of inventory of the Borrower and (ii) a listing of the inventory of TFCI based upon (x) the current annual physical inventory count or (y) at any time other than when the annual physical inventory -24- count is taken, estimates derived from a gross profit roll forward method of inventory calculation, and (E) upon request of the Lender, from time to time, provide such information with respect to any collateral or the operations of the Borrower or TFCI as shall in good faith be requested by the Lender; (vi) maintain all physical property that constitutes Collateral in good condition and repair, reasonable wear and tear excepted, make all necessary repairs thereto and all replacement of parts thereof so that the value and operating efficiency thereof shall at all times be maintained and preserved, reasonable wear and tear excepted, and exercise proper custody over all such property; (vii) upon Borrower or TFCI becoming aware of such matter or event, give prompt notice to the Lender of (A) any matter or event which has resulted in, or may result in, the actual or reasonably foreseeable potential diminution in the value of, or reasonably foreseeable potential offsets to, any of the Collateral in excess of $50,000 in the aggregate, (B) any fact which would render any Receivables in the aggregate in excess of $50,000 invalid or uncollectible, (C) any dispute with respect to any Receivable, provided, however, that notice need only be given if the aggregate amount of Receivables in dispute is in excess of $50,000, (D) all returns, repossessions and recoveries in excess of $50,000 per month or which are otherwise material, (E) Borrower's or TFCI's failure or inability to perform on accounts over $50,000 in the aggregate, and (F) any information relating to the material adverse change in the financial condition of any account debtor or other obligor owing, at the applicable time, an aggregate of $50,000 or more to the Borrower or TFCI; and (viii) (A) upon the Lender's request, verify the amount, quantity, ownership, value or any other documentation or matter relating to any of the Collateral and (B) furnish to the Lender, upon the Lender's request, such other information and documentation with respect to the Collateral as the Lender may in good faith request from time to time, including, without limitation, a master address list with respect to the Receivables of Borrower or TFCI, a price list (setting forth both cost and proposed retail price) of and physical listings and schedules of Inventory, a schedule of Equipment setting forth each of the items of Equipment and any details with respect thereto as the Lender may in good faith request, and schedules of General Intangibles, all in form and substance reasonably satisfactory to the Lender; and (b) Borrower and TFCI represent, warrant and covenant that (i) all Receivables that are Eligible Receivables or otherwise material Accounts shall at all times represent bona fide transactions, and at all times shall be complete and require no further act under any circumstances on the Borrower's or TFCI's part to make such Receivables payable by the account debtors thereunder, (ii) no Receivable or Receivables that is or are Eligible Receivables shall at any time be subject to any defense or dispute or to any present, future or contingent offset or counterclaim or any contract prohibiting assignment thereof or requiring notice of or consent to assignment, or -25- represent a bill-and-hold sale, consignment sale, guaranteed sale, sale-or-return or other similar understanding, and (iii) none of the transactions underlying or giving rise to any Receivable shall at any time violate any Applicable Law in a manner affecting the validity or enforceability of the Receivable (including, without limitation, access to the courts of any State to enforce such Receivable) and all such Receivables shall be legal, valid and binding on the applicable obligor and fully enforceable by the Borrower or TFCI, as the case may be; provided, that the failure of any Receivable or other Collateral to comply with the terms of any of the provisions of any Financial Document shall in no way impair the Lender's Security Interest therein. (c) Neither the Borrower nor TFCI shall: (i) rescind or cancel any obligation evidenced by any Receivable or modify any term thereof or make any adjustment with respect thereto, or extend or renew the same, or compromise or settle any dispute, claim, suit or legal proceeding relating thereto, without the prior written consent of the Lender, except that, if no Event of Default shall then exist (or result therefrom), and subject to the rights of the Lender under Section 6.6, the Borrower or TFCI, as the case may be, may, with respect to any Receivable, but only in the ordinary course of its business and in accordance with commercially reasonable business judgment and its customary collection practices (aa) extend the time of payment thereof, (bb) in the case of an Account that represents the right to payment for goods sold or leased, grant a refund or credit with respect thereto for returned, damaged or non-complying merchandise and (cc) settle the same for an amount less than the then unpaid balance thereof; or (ii) sell, assign, transfer or otherwise dispose of any Collateral to anyone other than the Lender, provided, however, that, notwithstanding the foregoing, so long as no Event of Default exists or would exist after giving effect to such sale or disposition, (A) Inventory may be sold by the Borrower or TFCI in the ordinary course of business and (B) Equipment which is, in the reasonable commercial business judgment of the Borrower or TFCI, obsolete or no longer useful in the conduct of the Borrower's or TFCI's business may be sold or disposed of by the Borrower or TFCI provided that the Lender is given prompt notice thereof. The sale proceeds of any such sale or other disposition shall, subject to the other rights of the Lender hereunder (including Section 6.6) be applied as set forth in Section 1.8 hereof. The inclusion of "proceeds" of the Collateral under the Security Interest shall not be deemed a consent by the Lender to any sale or other disposition of any part or all of the Collateral. (d) Borrower shall duly fulfill any obligations on its part to be fulfilled under or in connection with the Receivables and other Collateral and shall do nothing to impair the rights of the Lender therein. (e) Neither the Borrower nor TFCI shall attach or affix any material Collateral to any real estate without the prior written consent of the Lender. (f) If any Inventory (or other property of the Borrower or TFCI) is in the possession or -26- control of any of the Borrower's or TFCI's agents or processors, the Borrower or TFCI, as the case may be, shall, after the occurrence and during the continuance of any Event of Default, if requested by the Lender, instruct such Person to hold all such Inventory (and other property) for the account of the Lender and subject to the instructions of the Lender and in all events the Borrower shall cooperate with the Lender in taking possession of any such Inventory. Nothing contained herein shall be interpreted to limit the provisions of Section 6.5 below. 6.5 LOCATION OF COLLATERAL; CHANGE OF NAME, ETC. Each of the Borrower and TFCI represents, warrants and covenants that: (a) The Borrower's Questionnaire was and is true, complete and correct in all respects when originally given and as of the date hereof. (b) The Company's Questionnaire was and is true, complete and correct in all respects when originally given and as of the date hereof. (c) Neither the Borrower nor TFCI, without giving the Lender thirty days' prior notice thereof, and subject to any other additional restrictions set forth in this Agreement or any other Financing Document, will (i) move its chief executive office and, if different from its chief executive office, any office where the books and records relating to any Receivables or General Intangibles are kept, (ii) change the location of any other place of business or open any new place of business, (iii) change its name, identity or corporate structure or (iv) do any business under any name, trade name or trade style not listed on the Borrower's Questionnaire or the Company's Questionnaire, as the case may be. In addition, (i) the Borrower will not move its chief executive office outside of Nassau County, New York without the written consent of the Lender and (ii) TFCI will not move its chief executive office outside of West Springfield, Massachusetts (unless such office is moved to Nassau County, New York with proper notice given to Lender under clause (i) above) without the written consent of Lender. (d) (i) Borrower shall not move the location of any Inventory, Equipment or other tangible Collateral without the prior written consent of the Lender and (ii) TFCI shall not move the location of any Inventory, Equipment or other tangible collateral to any location other than the Plainview Site without the prior written consent of the Bank; provided, that the Borrower and TFCI may each sell Inventory, and replace equipment, in the ordinary course as permitted by Section 5.4 above. 6.6. NOTICE TO ACCOUNT DEBTORS OR OTHER OBLIGORS; POSSESSION OF COLLATERAL. Upon the occurrence and any time during the continuance of any Event of Default, the Lender may do any or all of the following: (i) The Lender may notify (in the Lender's name and/or in the Borrower's or TFCI's name), and/or require the Borrower or TFCI to notify, in writing any account debtor or other obligor with respect to any one or more of the Receivables or other Collateral to -27- make payment to the Lender, or any agent or designee of the Lender, at such address as may be specified by the Lender or its agent or designee, as the case may be, and the Lender or such agent or designee shall have the right to receive all such payments; thereupon, the Borrower and/or TFCI, as the case may be, shall no longer have any right to collect the affected Receivables or other Collateral. If, notwithstanding the giving of any notice, any account debtor or other obligor shall make payment to the Borrower or TFCI's, the Borrower or TFCI, as the case may be, shall hold all such payments it receives in trust for the Lender and shall deliver the same to the Bank, or any such agent or designee, immediately upon receipt by the Borrower or TFCI, as the case may be, in the identical form received, together with any necessary endorsements. Anything contained in this Agreement to the contrary notwithstanding, the Lender may, upon the occurrence and at any time during the continuance of any Event of Default, in its or the Borrower's or TFCI's name, (i) demand, sue for, collect or receive any payment with respect to, (ii) settle or adjust any disputes or claims with respect to, (iii) file any proof of claim or similar document with respect to, or (iv) extend, compromise, renew, discharge, release or otherwise modify any of the terms of, the Receivables and other Collateral, and otherwise exercise any of Borrower's or TFCI's rights, as the case may be in, to or under or otherwise related to the Receivables or other Collateral. Anything herein contained to the contrary notwithstanding, neither the Lender, nor any such agent or designee shall be required or obligated, to (A) make any demand, or to make an inquiry as to the nature or sufficiency of any payment received by it, or to present or file any claim or notice or take any action with respect to any Receivable or other Collateral or the monies due or to become due thereunder, (B) to take any steps necessary to preserve any rights against prior parties, or (C) notify the Borrower or TFCI of any decline in the value of any of the Collateral or, except as required by Applicable Law, take any steps to protect the value of any collateral. Neither the Lender nor its agents or designees shall have any liability to the Borrower or TFCI, as the case may be, for actions or omissions or any error of judgment or mistake of fact or law made in connection with this Agreement or any other Financing Document, other than those occasioned by its or their gross negligence or willful misconduct. (ii) All amounts received or deposited with the Lender pursuant to paragraph (i) of this Section 6.6 representing the proceeds of Receivables and other Collateral shall be applied to the payment of the Secured Obligations (whether or not matured) in such order as the Lender shall in its sole discretion determine. 6.7. APPOINTMENT AS ATTORNEY AND AGENT FOR THE BORROWER WITH RESPECT TO SECURITY INTEREST. To the fullest extent permitted by Applicable Law, each of the Borrower and TFCI hereby irrevocably appoints the Lender as its true and lawful attorney and agent, with full power of substitution, to execute and deliver, on behalf of and in the name of the Borrower and TFCI, such financing statements, assignments, notices, pledges and other documents and agreements, and to take such other action as the Lender may reasonably deem necessary for the purpose of the creation, -28- perfection, maintenance or continuation of the Security Interest, under any Applicable Law, and the Lender is hereby authorized to file on behalf of and in the name of the Borrower and TFCI, at the Borrower's expense, such financing statements, assignments, notices, pledges and other documents and agreements in any appropriate governmental office. The right is expressly granted to the Lender in its discretion, in those jurisdictions where the same is permitted, to file one or more financing statements (including amendments thereof) under the Uniform Commercial Code signed only by the Bank, naming the Borrower or TFCI as debtor and naming the Lender as secured party and indicating therein the types, or describing the items, of the Collateral. 6.8. APPOINTMENT TO ACT FOR THE BORROWER. Each of the Borrower and TFCI hereby: (a) irrevocably authorizes the Lender to perform any and all of the acts that the Lender is permitted to perform under any provision of this Agreement; (b) constitutes and appoints the Lender as each of the Borrower's and TFCI's true and lawful attorney and agent, with full power of substitution, in the place and stead of the Borrower and TFCI and either in its own name or in the name of the Borrower or of TFCI, to take the actions described below, (x) with respect to any action described in clauses (i) and (ii) below, at any time, and (y) with respect to any action described in clauses (iii)-(vi) below, if any Event of Default shall occur and be continuing: (i) to endorse the Borrower's or TFCI's name on any checks, notes, acceptances, money orders, drafts or other forms of payment or security that may come into the Lender's possession; (ii) to sign and endorse the Borrower's or TFCI's name on any invoice, storage or warehouse receipt, express bill or bill of lading relating to any Receivables, on drafts against customers, on schedules and assignments of Receivables, on notices of assignment, financing and continuation statements and other public records, on verifications of accounts, on notices to or from customers and on any and all documents necessary to effectuate drawings under letters of credit and all other instruments or documents relating to any of the foregoing items referred to in this subparagraph (ii); (iii) to notify the post office authorities to change the address for delivery of the Borrower's and TFCI's mail to an address designated by the Bank; (iv) to receive, open and dispose of all mail addressed to the Borrower or TFCI; (v) to exercise any right, remedy or power of the Lender hereunder or any other Financing Document (including without limitation Sections 6.6 or 7.3 hereof); and (vi) to do all things necessary or in the Lender's judgment desirable to carry out this Agreement or other Financing Document to which Borrower or TFCI is a party; -29- (c) agrees to execute from time to time, upon request of the Lender, letters of authorization in the form of Exhibit D attached hereto for use by the Lender and related postal change of address cards, and letters to the account debtors of the Borrower and TFCI (the actual use by the Lender of a letter of authorization, change of address cards and letters to account debtors to be upon the occurrence or anytime during the continuance of any Event of Default); and (d) agrees that neither the Lender nor any other Person or Persons designated by the Lender to exercise any of the foregoing powers of attorney will be liable for any acts or omissions or for any error of judgment or mistake of fact or law other than those occasioned by its or their gross negligence or willful misconduct. Any power of attorney granted hereunder shall be deemed coupled with an interest and shall be irrevocable until the Secured Obligations have been fully satisfied and this Agreement is terminated (including the revolving credit facility hereunder). The Lender may appoint such persons, firms or corporations as, in its sole discretion, it may determine, for the purpose of exercising any powers and taking any action permitted to be exercised or taken by the Lender under or pursuant to any of the provisions of this Agreement. 6.9 DAMAGE TO OR LOSS OF COLLATERAL. Reference is made to Section 4.3 above with respect to damage or loss of any Collateral. ARTICLE 7. EVENTS OF DEFAULT 7.1 EVENTS OF DEFAULT. Any of the following shall constitute an Event of Default, whatever the reason for such event or circumstance and whether voluntary or involuntary and whether an event or circumstance is mentioned once or more than once: (a) Borrower shall fail to make any payment of any interest or principal, when any of same shall become due under this Agreement or any other Financing Document (whether due at maturity or by reason of acceleration or demand or as part of any prepayment or otherwise); PROVIDED, HOWEVER, that with respect to payments of interest only, Borrower shall have two (2) Business Days after such payment has become due in which to make such payment to Lender in full before such overdue payment shall constitute an Event of Default hereunder. (b) Borrower or any other Person shall fail to make any payment of any other monetary liability or other monetary obligation under the Note, this Agreement or any other Financing Document and such failure shall continue for a period of seven (7) calendar days after written notice of such failure shall have been given to the Borrower or such other person by the Lender. (c) Borrower or TFCI shall default in the due performance or observance of: -30- (i) any agreement or covenant contained in Sections 1.8, 4.1(a) (insofar as such Section requires the preservation of the corporate existence of the Borrower and its Subsidiaries), 4.1(d), or 4.6 hereof or Articles 5 or 6 hereof ; or (ii) any other agreement or covenant contained in this Agreement (other than a covenant or agreement a default in the performance or observance of which is elsewhere in this Section 7.1 specifically dealt with) and such default (in the case of this subparagraph (ii)) shall have continued unremedied for a period of, in the case of Section 4.5, two (2) Business Days after, and, in the case of any such other agreement or covenant, thirty (30) calendar days after written notice of such default shall have been given to Borrower or TFCI by Lender. (d) Any other "Event of Default" (after any other applicable cure period) or "event of default" (after any other applicable cure period) shall occur under any other Financing Document or, if the term "Event of Default" or "event of default" is not defined therein, any material breach of any such Financing Document by a Person other than the Lender shall occur or any Financing Document is terminated (except by reason of the Secured Obligations being paid in full and this Agreement being terminated). (e) Any financial report or statement, certificate, statement, representation or warranty at any time furnished or made by or on behalf of Borrower, its Subsidiaries or any other Guarantor to Lender, including, without limitation, any representation or warranty made or deemed to be made in any Financing Document, proves to have been incorrect, untrue or misleading in any material respect when made. (f) There shall occur any loss, theft, destruction, or damage of or to all or a material portion of the assets or other properties of the Borrower or its Subsidiaries except that such loss, theft, destruction, or damage shall not be an Event of Default if same is covered, in all material respects, by insurance issued by a financially responsible insurance company which has not denied coverage. (g) Borrower or any Guarantor shall (i) fail to pay, when due, any liability or other obligation, whether present or future, absolute or contingent, to the Lender under any instrument or agreement not constituting a Financing Document beyond the period of grace, if any, provided in such instrument or agreement, or (ii) default in the due observance or performance of any other covenant or agreement relating to any such liability or obligation or contained in any instrument or agreement evidencing, governing, securing or otherwise relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or permit the Lender to cause, with the giving of notice if required, such liability or obligation to become due prior to its stated maturity or, in the case of an -31- obligation under a guaranty, endorsement or the like, to become payable. (h) Borrower or any Guarantor shall (i) fail to make, when due, any payment with respect to any Indebtedness owed to any Person other than the Lender or with respect to any guarantee, endorsement, or other obligation relating to any Liability of any other Person (other than a Liability owed to the Lender), which Indebtedness and/or such Liability(ies), individually or in the aggregate, exceed $50,000, beyond the period of grace, if any, applicable thereto, (ii) default in the due observance or performance of any other covenant or agreement relating to any such Indebtedness or such guarantee, endorsement or other obligation, or contained in any instrument or agreement evidencing, governing, securing or otherwise relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or permit the holder(s) thereof to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or, in the case of any such guaranty, endorsement or such other obligation, to become payable, or (iii) fail to pay, within 90 days of the due date thereof, any Trade Debt which individually or in the aggregate exceeds the Trade Debt Default Amount. (i) Borrower or any Guarantor shall cease doing business as a going concern, make an assignment for the benefit of creditors, generally not pay its debts as they become due or admit in writing its inability to pay its debts as they become due, file a petition commencing a voluntary case under any chapter of the Bankruptcy Code, 11 U.S.C.ss.101 ET SEQ. (the "Bankruptcy Code"), be adjudicated an insolvent, file a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar arrangement under the Bankruptcy Code or any other present or future statute, law, rule or regulation, or file an answer admitting the material allegations of a petition filed against Borrower or such Guarantor, as the case may be, in any such case or proceeding, consent to the filing of such a petition or apply for or acquiesce in the appointment of a trustee, receiver, custodian or other similar official for Borrower or such Guarantor, as the case may be, or of all or any substantial part of Borrower's or such Guarantor's, as the case may be, assets or other properties, or take any action looking to Borrower's or such Guarantor's, as the case may be, dissolution or liquidation. (j) A case, proceeding or other action shall be instituted against Borrower or any Guarantor seeking the entry of an order for relief against Borrower or any Guarantor as a debtor, to adjudicate Borrower or any Guarantor as a bankrupt or insolvent, or seeking reorganization, arrangement, readjustment, liquidation, dissolution or similar relief against Borrower or any Guarantor under the Bankruptcy Code or other present or future statute, law, rule or regulation, which case, proceeding or other action either (i) results in such entry, or adjudication, or relief or issuance or entry of any other order or judgment having a similar effect or (ii) remains undismissed for sixty (60) calendar days, or within sixty (60) calendar days after the -32- appointment without Borrower's or any Guarantor's consent or acquiescence of any trustee, receiver, custodian or other similar official for Borrower or such Guarantor or of all or any substantial part of Borrower's or such Guarantor's assets and other properties, and such appointment shall not be vacated. (k) (i) A writ of execution, attachment, foreign attachment, garnishment, replevin or any similar process shall be issued or levied with respect to (aa) any deposits of the Borrower with the Lender or any other property of the Borrower in which the Lender has a lien or right of set-off or (bb) any other property which individually or in the aggregate exceeds $100,000 or (ii) any final order, judgment or decree shall be entered against Borrower or any Guarantor by a court of competent jurisdiction which, together with other outstanding orders, judgments, and decrees against Borrower or such Guarantor, as the case may be, exceed $100,000 (exclusive of amounts actually insured against by adequate liability insurance policies issued by financially responsible companies who have not denied coverage), and any such execution, attachment, foreign judgment, garnishment, replevin, similar process, or judgment(s) shall continue in effect for any period of ten (10) consecutive calendar days or more without being released or a stay of execution. (l) There shall occur any material adverse change with respect to the Borrower's or any of its Subsidiary's business, assets, liabilities, financial condition, results of operations, or business prospects (a "Material Adverse Change"), and the Lender shall reasonably believe that as a result of such Material Adverse Change the prospects for the Borrower's or any Guarantor's payment of the Secured Obligations or performance of any material covenant or agreement hereunder or under any other Financing Document shall be impaired. A Material Adverse Change shall be determined with reference to the business, assets, liabilities, financial condition, results of operations or business prospects, as the case may be, of the Borrower or such Subsidiary as of March 31, 1997 (i.e., a Material Adverse Change will be a material adverse change in the Borrower's or any of its Subsidiary's business, assets, liabilities, financial condition, results of operations or business prospects, as the case may be, as compared to the Borrower's or any of its Subsidiary's business, assets, liabilities, financial condition, results of operations or business prospects, as the case may be, as of March 31, 1997). (m) There shall occur, for any reason (voluntary or involuntary), any change in senior management of the Borrower and (i) a period of 60 (calendar) days shall expire after the date of any such change and (ii) the Lender shall not consent in writing, within such sixty day period, to any proposed replacement of the person who formerly held the applicable senior management position, it being understood that the Lender may withhold its consent in its absolute (but good faith) discretion. 7.2 ACCELERATION. Upon the occurrence and at any time during the continuance of any -33- Event of Default, the Lender, by written notice to the Borrower, may (i) terminate the right of the Borrower to borrow any further Revolving Credit Loans under the Revolving Credit Facility, and/or (ii) declare the entire unpaid principal balance of the Note and all Revolving Credit Loans and any or all other Secured Obligations, and all accrued and unpaid interest under the Note and on all Revolving Credit Loans, to be due and payable immediately, and upon any such declaration the entire unpaid principal balance of the Note and all Revolving Credit Loans and all accrued and unpaid interest under the Note and on all Revolving Credit Loans (and any other Secured Obligations so declared by the Lender) shall become and be immediately due and payable, without the need for presentment, demand for payment, protest, notice of dishonor or protest or other notice of any kind all of which are expressly waived by the Borrower; provided, however, that upon the occurrence of any of the events specified in subparagraphs (i) and (j) above, (i) the right of the Borrower to borrow under the Revolving Credit Facility shall automatically be terminated and (ii) the entire unpaid principal balance of the Revolving Credit Loans and the Note, and all unpaid and accrued interest under the Note and all Revolving Credit Loans and all other Secured Obligations, shall be immediately due and payable without any notice whatsoever, and all without the need for presentment, demand for payment, protest, notice of dishonor or protest or other notice of any kind all of which are hereby expressly waived by the Borrower. Lender shall have, upon the occurrence and during the continuance of any Event of Default, all other rights, remedies, and powers provided to the Lender under the Financing Documents, any other agreement, instrument or other document or Applicable Law. 7.3 OTHER REMEDIES. If an Event of Default shall have occurred and be continuing, the Lender may, without presentment, demand, protest or other notice of any kind (except as may be specifically required by this Agreement), all of which are hereby expressly waived, exercise all of the rights and remedies of a secured party under the Uniform Commercial Code upon a default (whether or not the Uniform Commercial Code is in effect in the jurisdiction where such rights and remedies are exercised) or other Applicable Law. In addition, the Borrower agrees that the Lender may exercise any or all of the following rights and remedies: (i) The Lender may exercise any and all of its rights and remedies hereunder or under any other Financing Document or other applicable agreement, instrument or other document or Applicable Law; (ii) The Lender may at any time and from time to time do any of the following: (aa) with or without judicial process or the aid or assistance of others, enter upon any premises (including without limitation any premises of the Borrower or TFCI) in which any Collateral may be located and take physical possession of any items of Collateral and maintain such possession on such premises and/or move the same or any part thereof to such other places as the Lender shall choose (the Lender shall not be liable to the Borrower or TFCI on account of any losses, damage or depreciation that may occur as a result thereof so long as the Lender shall act in good faith), (bb) dispose of all or any part of the Collateral on any premises of the Borrower or TFCI (or on or at any other location), (cc) require the -34- Borrower or TFCI (at their expense) to assemble the Collateral and maintain or deliver the Collateral into the possession of the Lender or any other Person designated by the Lender at such place or places as the Lender (or such other Person) may designate and as are reasonably convenient to both the Lender and the Borrower, (dd) cause any or all of the Collateral to be placed in or removed from any public, private or field warehouse, (ee) remove all or any part of the Collateral from any premises (including without limitation any premises of the Borrower or TFCI or any warehouse) in which any such Collateral may be located for the purpose of effecting sale or other disposition thereof and (ff) take delivery of any Collateral. The Lender may exercise any or all of its rights and remedies under this paragraph (ii) or any of its other rights and remedies under any of the Financing Documents or Applicable Law (1) without payment of any rent, license fee or compensation of any kind to Borrower or TFCI and (2) for the account and at the expense of the Borrower and TFCI. Borrower and TFCI will not resist or interfere with any such exercise. The Borrower and TFCI hereby agree to cooperate with the Lender in the Lender's exercise of any of the foregoing rights and remedies (and the other rights and remedies of the Lender). Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Lender will give the Borrower or TFCI, as the case may be, at least ten (10) Business Days prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition is to be made. The Borrower and TFCI agree that such ten (10) Business Day period is a reasonable time for such notice. Any sale or other disposition by the Bank of any Collateral may be for cash or credit or any combination thereof (and the Bank shall not assume any credit risk). (To the fullest extent permitted by Applicable Law, the Bank may, at its discretion, adjourn any such sale (or other dispositions).) The Bank may sell or dispose of the Collateral in whole or in part or parts at any time and from time to time as it, in its sole discretion, may deem advisable. If the Bank purchases any Collateral at any sale, it may, in lieu of actual payment of the purchase price, set-off the amount of such price against the Secured Obligations (or portion thereof). The Bank, if it is in possession of the Collateral, shall be deemed to have exercised reasonable care in the custody, preservation and management of the Collateral if it takes such action for those purposes as the Borrower or TFCI, as the case may be, shall request in writing, provided, however, that the Lender shall not be required to take any such action. No omission on the part of the Lender to take any action, whether or not requested, shall of itself be deemed a failure to exercise reasonable care; and (iii) without the same having the effect of releasing any or all of the Collateral or otherwise prejudicing any rights of the Lender hereunder, the Lender may (A) sell or cause to be sold or otherwise dispose of such of the Collateral as it may in its sole discretion deem desirable without being required simultaneously or later similarly to sell or dispose of the balance of the Collateral or any other property or other security at the time available to it and without being required to resort to any other security or sources of reimbursement which may at the time be available to it; and (B) apply to the Secured Obligations the -35- proceeds of the Collateral or any portion thereof, or any other amount received on account of the Collateral or any portion thereof, by the exercise of any right or remedy permitted hereunder, without resorting to and without regard to other security or sources of reimbursement which may at the time be available to it. (iv) Lender is hereby granted a license or other right to use, without charge, Borrower's and TFCI's labels, patents, copyrights, rights of use of any name, trade secrets, tradenames, trademarks and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in advertising for sale and selling any Collateral and Borrower's and TFCI's rights under all licenses and all franchise agreements (and other rights) shall inure to Lender's benefit. (v) The Lender may require the Borrower to cause Avest to grant a mortgage to the Lender (in form and substance satisfactory to Lender) with respect to the Plainview Real Property to secure the Secured Obligations and Borrower or Avest shall pay all mortgage, recording an other taxes, fees or charges in connection with such mortgage. 7.4. APPLICATION OF PROCEEDS. All proceeds from each sale of, or other realization upon, all or any part of the Collateral following an Event of Default and all other payments during the continuance of an Event of Default shall be applied or paid over as follows: First: To the payment of all costs and expenses incurred in connection with such sale or other realization (including all costs and expenses of collecting, retaking, completing, protecting, removing, storing, advertising for sale, selling and/or delivering, any Collateral), including reasonable attorneys' fees and disbursements (all such costs and expenses shall constitute Secured Obligations); Second: To the payment of the other Secured Obligations (with the Borrower and all applicable Guarantors remaining jointly and severally liable for any deficiency) in any order which the Lender may elect; and Third: The balance (if any) of such proceeds to the Borrower or TFCI, as the case may be, subject to applicable law and to any duty to pay such balance to the holder of any subordinate Lien in the Collateral. ARTICLE 8. MISCELLANEOUS 8.1 CERTAIN WAIVERS. Each of Borrower and TFCI waives presentment, diligence, protest, demand, notice of demand, notice of acceptance of or reliance, notice of all non-payment, notice of dishonor, notice of protest, and all other notices (except for those expressly provided for herein) to parties in connection with the delivery, acceptance, performance, default or enforcement -36- of any Financing Document or any collateral or security. Lender shall have no obligation to preserve rights against prior parties. 8.2. SEVERABILITY. Any provision of this Agreement or other Financing Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof in such jurisdiction, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 8.3. PARAGRAPH HEADINGS. The paragraph headings used in this Agreement are for purposes of convenience of reference only and shall not affect the construction hereof or be taken into consideration in the interpretation hereof. 8.4. NO WAIVER; CUMULATIVE REMEDIES. (a) The Lender shall not by any act (except by a written instrument executed and delivered in accordance with subparagraph (b) of this Section), delay, indulgence, omission or otherwise be deemed to have waived any right, remedy or other power hereunder or under any other Financing Document or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Lender, any right, remedy or other power shall preclude any other or further exercise thereof or the exercise of any other right, remedy or other power. No single or partial exercise of any right, remedy, or power hereunder or under any other Financing Document shall preclude any other or further exercise thereof or the exercise of any other right, remedy or power. A waiver by the Lender of any right, remedy or power hereunder or under any other Financing Document on any one occasion shall not be construed as, or constitute a bar to, any right, remedy or other power which the Lender would otherwise have on any future occasion. The rights, remedies and powers provided to the Lender herein or in any other Financing Document are cumulative, may be exercised singly or concurrently and are not exclusive of and shall be in addition to all other rights, remedies, or powers provided by Applicable Law or any other agreement, instrument or other document. Lender may exercise any or all such rights, remedies and powers at any time(s) in any order which Lender chooses in its discretion. (b) No waiver, amendment, supplement or other modification of any of the terms or provisions of this Agreement shall be effective unless set forth in a writing executed and delivered by the party sought to be charged (except that a waiver, amendment, supplement or other modification executed and delivered by Borrower or TFCI, as the case may be, shall be binding upon the other) . 8.5. SUCCESSORS AND ASSIGNS; SALE, ASSIGNMENT OR PARTICIPATION. (a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, heirs, and representatives, except that neither the Borrower nor TFCI may not, without the prior written consent of the Lender, assign or transfer any of its rights or obligations under this Agreement, the Note or other Financing Document, and no such assignment or transfer of any obligation shall relieve either the Borrower or TFCI thereof unless the Lender shall have consented -37- to such release in a writing specifically referring to the obligation from which the Borrower or TFCI is to be released. (b) The Lender may from time to time sell or assign, in whole or in part, or grant participation in some or all of the Financing Documents and/or the Revolving Credit Loans and other Liabilities of Borrower or TFCI evidenced thereby. The holder/transferee of any such sale, assignment or participation, if and to the extent the applicable agreement between the Lender and such holder so provides, (i) shall be entitled to all of the rights, obligations and benefits of the Lender (provided, that, in the case of a participation, it is understood and agreed that, except to the extent such agreement otherwise provides, vis-a-vis the Borrower and TFCI the Lender shall (aa) remain the holder of the Note and all rights, obligations and benefits of the Lender hereunder and under the other Financing Documents, and (bb) the Borrower and TFCI shall continue to deal solely and directly with the Lender with respect to such rights, obligations and benefits, and (ii) shall be deemed to hold and may exercise the rights of setoff or banker's lien with respect to any and all obligations of such holder/transferee to the Borrower, in each case as fully as though the Borrower were directly indebted to such holder/transferee (whether or not Borrower is, in fact, so directly indebted). The Lender may in its discretion, give notice to the Borrower of such sale, assignment or participation; however, the failure to give such notice shall not affect any of the Lender's or such holder/transferee's rights hereunder. In the event of any assignment by the Lender of any obligations of the Lender under any of the Financing Documents, the Lender shall not be liable to the Borrower for the performance of any such obligations so assigned, to the extent same are to be performed after the effective date of the sale or assignment and it shall be solely the obligation of the assignee to perform same. Each of the Borrower and TFCI authorizes the Lender to provide information concerning the Borrower and/or TFCI or other Subsidiary of the Borrower to any prospective purchaser, assignee or participant, provided, that the recipient, with respect to any information that consists of Proprietary Information (as defined below), shall agree to keep such Proprietary Information confidential and not make any use thereof other than for purposes of evaluating Borrower's or such Subsidiary's credit (and/or to exercise any rights or remedies under any of the Financing Documents or otherwise in connection with same) except for disclosure (a) as required by Applicable Law, (b) to its attorneys and accountants and (c) to bank regulatory authorities or other governmental authorities if required (in the case of such other governmental authorities) by lawful order, summons or subpoena. For purposes of this Agreement, the term "Proprietary Information" shall mean all written information about the Borrower and/or TFCI or other Subsidiary of the Borrower which has been furnished to the Lender before or after the date hereof, provided, however that proprietary information does not include information which (x) is or becomes publicly available (other than as a result of a breach of this Agreement), (y) was possessed by or available to the Lender on a nonconfidential basis prior to its disclosure to the Lender or such recipient by the Borrower and/or TFCI or any of its Subsidiaries or (z) becomes available to the Lender or such recipient on a nonconfidential basis from a Person which, to the knowledge of the Lender, is not bound by a confidentiality agreement with the Borrower or TFCI and is not otherwise prohibited from transmitting such information. The information provided may include, but is not limited to, amounts, terms, balances, payment history, return item history and any financial or other information about the Borrower or any of its Subsidiaries. Each of the Borrower -38- and TFCI agrees to indemnify, defend, release the Lender, and hold the Lender harmless, at the Borrower's cost and expense, from and against any and all lawsuits, claims, actions, proceedings, or suits against the Lender or against the Borrower and/or TFCI and the Lender, arising out of or relating to the Lender's reporting or disclosure of such information. 8.6. NOTICES. Except as may otherwise be expressly provided herein, all notices, requests and demands to or upon the respective parties hereto shall be in writing (including by telecopy), and shall be deemed to have been duly given or made when delivered by hand, or one Business Day after being sent by overnight mail by Federal Express or other nationally recognized overnight courier service, or four Business Days after being deposited in the mail, first class postage prepaid, or, in the case of telecopy notice, when sent, confirmation of receipt received (which may include electronic confirmation), addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto and any future holder(s) of the Note: The Borrower or TFCI: Astrex, Inc. 205 Express Street Plainview, New York 11803 Attention: Irene Marcic Telecopy No.: 516 433-5709 With a copy to: John C. Loring, Esq. 700 W. Irving Park Road Suite A1 Chicago, Illinois 60613 Telecopy No.: 773-871-8374 The Lender: Fleet National Bank Commercial Banking Group One Landmark Square Stamford, Connecticut 06901 Attention: Mr. Anthony M. McKiernan Telecopy No.: (203) 358-2039 With a copy to: Finn Dixon & Herling LLP One Landmark Square Stamford, Connecticut 06901 Attention: Edward A. Weiss, Esq. Telecopy No: (203) 348-5777 -39- 8.7 COSTS AND EXPENSES; INDEMNIFICATION. The Borrower and TFCI jointly and severally agree (a) to pay or reimburse the Lender for all its out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or other modification to, this Agreement, the Note or any other Financing Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, professional fees and disbursements and all costs of any appraisals, environmental studies and of any audits of Borrower's or its Subsidiaries' books and records or properties, including without limitation the fees and disbursements of legal counsel to the Lender (limited to, with respect to the preparation of the initial Financing Documents, $4,000 plus all disbursements associated herewith up to a maximum of $1,000 (plus reimbursement of UCC searches and filings and other costs); (b) to pay or reimburse the Lender for all its costs and expenses (including without limitation all reasonable fees and disbursements of legal counsel (whether outside counsel or in-house counsel) and all other professional fees and disbursements and all costs of any appraisals, environmental studies and of any audits of Borrower's or any of its Subsidiaries books and records or properties) incurred by the Lender in connection with the preservation, defense, protection, exercise or enforcement (including without limitation collection and/or realization on any collateral or other security), or attempted preservation, defense, protection, exercise or enforcement (including without limitation collection and/or realization on any collateral or other security) of this Agreement, the Note or any other Financing Document or any of the Lender's rights, remedies or powers hereunder or thereunder, and (c) to pay, indemnify, and hold the Lender and Lender's employees, officers, directors and agents harmless from and against any and all liabilities, obligations, losses, damages, penalties, fines, claims, actions, judgments, suits, cost recovery actions, response costs, compliance costs, costs, expenses or disbursements of any kind or nature whatsoever (including without limitation attorneys' fees and disbursements) arising out of or otherwise related to or connected with (i) this Agreement, the Note or any of the other Financing Documents; (ii) the exercise by the Lender of any of its rights, remedies or powers hereunder, the Note or any of the other Financing Documents; (iii) any misrepresentation, inaccuracy, or breach of any representation, warranty, covenant, or agreement contained or referred to herein or any other Financing Document; or (iv) any Hazardous Material at, on, in, under, or about all or any portion any property owned, occupied and/or operated by the Borrower and/or its Subsidiaries or any Release of any Hazardous Materials by the Borrower and/or its Subsidiaries or any violation by the Borrower and/or its Subsidiaries of, or liability of the Borrower under, any Environmental Laws (all the foregoing under this subparagraph (c), collectively, the "indemnified liabilities"), and, in addition, at Lender's discretion, Borrower and TFCI shall defend (with counsel satisfactory to the Lender) Lender against those indemnified liabilities which the Lender shall choose Borrower and TFCI to defend Lender against (provided, that, it is understood and agreed that all reasonable costs and expenses of counsel incurred by Lender in defending itself any indemnified liability shall be indemnified liabilities for which Borrower or TFCI is responsible for payment under this subparagraph (c)); PROVIDED that neither the Borrower nor TFCI shall have any obligation hereunder to the Lender with respect to indemnified liabilities to the extent that such liabilities are determined by a final and non-appealable decision of -40- a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Lender. The agreements in this Section shall survive any payment of the Note or any other amounts payable hereunder or under any other Financing Document and/or any termination of any Financing Document or the release of any collateral. All amounts payable under this Section shall be payable by the Borrower and TFCI on demand by the Lender. The Borrower and its Subsidiaries, for themselves and their successors and assigns, hereby, to the fullest extent permitted by applicable law, forever waive, release and covenant not to bring any demand, claim, cost recovery action or lawsuit they may now or hereafter have or accrue against the Lender or its officers, directors, employees or agents arising from the same facts or circumstances as any indemnified liability. 8.8. INTEGRATION. This Agreement and the other Financing Documents represent the agreement of the Borrower and TFCI and the Lender with respect to the subject matter hereof and thereof and supersede all negotiations and prior writings with respect to the subject matter hereof and thereof (including the Commitment Letter), AND THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE LENDER RELATIVE TO SUBJECT MATTER HEREOF OR THEREOF THAT ARE NOT EXPRESSLY SET FORTH OR REFERRED TO HEREIN OR IN THE OTHER FINANCING DOCUMENTS. 8.9. GENDER AND NUMBER; "INCLUDING" NO RULE OF STRICT CONSTRUCTION. Whenever the context herein so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice-versa. The word "including", whenever used in any Financing Document, shall mean "including, but not limited to," whether or not the phrase ", but not limited to," or similar phrase, accompanies such word. (b) Borrower and TFCI acknowledge that Borrower and TFCI and their counsel have had an opportunity to review and negotiate the terms and provisions of this Agreement and the other Financing Documents and no rule of strict construction shall be used against the Lender with respect to any of the Financing Documents. 8.10. PAYMENTS SURRENDERED. If, after receipt of any payment of all or any part of any Loan, or with respect to any other obligation under any of the Financing Documents, the Lender is compelled or required or agrees, for settlement purposes, to surrender such payment to any Person for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this Agreement and the other Financing Documents shall continue in full force and effect, and the Borrower and Guarantors shall be fully liable for, and shall indemnify, defend and hold harmless the Lender with respect to the full amount so surrendered. 8.11 COMPLIANCE. The determination of the Borrower's (or TFCI's) compliance with the Specified Covenant Tests, all other applicable covenants in Article 5 hereof and any other applicable provisions hereof shall be based upon GAAP applied on a basis consistent with that used in preparing the Financial Statements unless otherwise subsequently and specifically agreed to in writing by the Lender. -41- 8.12 STAMP TAX. The Borrower will pay any stamp or other tax which becomes payable in respect of the Note or this Agreement or other Financing Document. 8.13 SCHEDULES, EXHIBITS, APPENDICES AND ANNEXES. Any and all schedules, exhibits, appendices and annexes to this Agreement shall constitute a part of this Agreement for all purposes. 8.14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made herein, in the other Financing Documents and in any document, certificate or statement delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery of this Agreement and the Note or any other Financing Document and any investigation by the Lender. 8.15 SET-OFF; LIEN. (a) In addition to any other rights, remedies and powers of the Lender provided by Applicable Law or any agreement, instrument or other document (including this Agreement), the Lender, upon the occurrence and during the continuance of any Event of Default or any Default (or if any order (or the like) for any garnishment, attachment, levy or lien on any deposit account of the Borrower or TFCI with the Lender is issued) shall have the right (and is hereby authorized) at any time or from time to time, without the need for prior notice to the Borrower or TFCI, any such notice being expressly waived by the Borrower and TFCI to the fullest extent permitted by Applicable Law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final, and including, without limitation, any and all bank accounts and certificates of deposit) and any other monies, cash, credits, indebtedness or claims, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Lender to or for the credit of the account of the Borrower or TFCI against any and all of the Liabilities of the Borrower or TFCI to the Lender, whether now or hereafter existing and whether or not arising under any Financing Document, irrespective of whether or not the Lender shall have made any demand under this Agreement or the Note and whether or not any or all such Liabilities are matured, even if affecting such set-off or application results in a loss or reduction of interest or the imposition of a penalty applicable to the early withdrawal of time deposits. Lender agrees promptly to notify the Borrower or TFCI, as the case may be, after any such set-off and application made by Lender; PROVIDED that the failure to give such notice shall not affect the validity of such set-off and application. 8.16 COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, each of which shall be considered an original but all of said counterparts taken together shall be deemed to constitute one and the same instrument. 8.17 LOSS, THEFT, ETC. OF NOTE. Upon receipt by the Borrower of reasonably satisfactory evidence of the loss, theft, mutilation or destruction of the Note, and in the case of any such loss, theft or destruction upon delivery of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Borrower, or in the event of such mutilation upon surrender and -42- cancellation of the Note, the Borrower will execute and deliver without expense to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or mutilated Note; provided, however that if any Institutional Holder is the then owner of any such lost, stolen or destroyed Note, then the affidavit of an authorized officer of such owner, setting forth the fact of loss, theft or destruction and of its ownership of such Note at the time of such loss, theft or destruction shall be accepted as reasonably satisfactory evidence thereof and no further indemnity shall be required as a condition to the execution and delivery of a new Note other than the written agreement of such owner to indemnify the Borrower. 8.18 SUBMISSION TO JURISDICTION; WAIVER OF PUNITIVE OR CONSEQUENTIAL DAMAGES. Each of the Borrower and TFCI hereby irrevocably and unconditionally: (A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR OTHERWISE RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF CONNECTICUT; (b) consents that any such action or proceeding may be brought in such courts, and waives any objection that Borrower or TFCI may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower or TFCI, as the case may be, at its address set forth in Section 8.6 or at such other address of which the Lender shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right of the Lender (or its successors or assigns) to bring any legal action or proceeding in any other jurisdiction; (e) agrees that, notwithstanding the foregoing, any action brought by the Borrower and/or its Subsidiaries against the Lender shall be commenced and maintained only in a state or federal court located in Connecticut; and (f) waives, to the fullest extent permitted under Applicable Law, any right Borrower and/or TFCI may have to claim or recover in any legal action or proceeding arising out of or otherwise related to or connected with this Agreement, the Note or any other Financing Document any special, exemplary, punitive or consequential damages, except to the extent such damages are caused by the willful misconduct of the Lender. -43- 8.19 CERTAIN ACKNOWLEDGEMENTS. Each of the Borrower and TFCI hereby acknowledges that: (a) Each of them has been advised by counsel in the negotiation, execution and delivery of this Agreement and the Note and the other Financing Documents; (b) the Lender does not have any fiduciary relationship to the Borrower and/or its Subsidiaries and the relationship between Lender on the one hand, and the Borrower and its Subsidiaries on the other hand, is solely that of creditor and debtor; (c) no joint venture exists among the Borrower, its Subsidiaries and the Lender; and (d) each of the Borrower and TFCI has made its own independent determination and decision (i) to borrow hereunder and to enter into this Agreement and any other Financing Document to which it is a party and (ii) that it can comply with the terms and provisions hereof and thereof. 8.20. GOVERNING LAW; JURY TRIAL AND CHAPTER 903A WAIVERS. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE BORROWER AND TFCI UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT, REGARDLESS OF ANY PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER. (B) THE BORROWER AND TFCI HEREBY KNOWINGLY AND VOLUNTARILY WAIVE TRIAL BY JURY AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR OUT OF, OR OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT. (C) EACH OF THE BORROWER AND TFCI ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A "COMMERCIAL TRANSACTION" WITHIN THE MEANING OF CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, AND THAT ANY MONIES, PROPERTY OR SERVICES WHICH ARE THE SUBJECT OF SUCH TRANSACTION ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE BORROWER AND TFCI HEREBY VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT WHICH THE BORROWER OR TFCI MIGHT HAVE TO A NOTICE AND HEARING UNDER SECTIONS 52-278A TO 52-278G, INCLUSIVE, OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER APPLICABLE FEDERAL OR STATE LAW, IN THE EVENT THAT THE LENDER (OR ITS SUCCESSORS OR ASSIGNS) SEEKS ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OTHER FINANCING -44- DOCUMENT. IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed and delivered as of the day -45- and year first above written. WITNESS: ASTREX, INC. /s/ Edward A. Weiss By: /s/ Irene Marcic - -------------------------------------------------------------------------------- Name: Edward A. Weiss Name: Irene Marcic Title: Vice President T.F. CUSHING, INC. /s/ Edward A. Weiss By: /s/ Irene Marcic - -------------------------------------------------------------------------------- Name: Edward A. Weiss Name: Irene Marcic Title: Vice President FLEET NATIONAL BANK /s/ Edward A. Weiss By /s/ Anthony McKiernan - -------------------------------------------------------------------------------- Name: Edward A. Weiss Name: Anthony McKiernan Title: Assistant Vice-President -46- STATE OF CONNECTICUT) ) ss: Stamford COUNTY OF FAIRFIELD ) The foregoing instrument was acknowledged before me this 9th day of July, 1997 by Irene Marcic, the Vice President of ASTREX, INC., a Delaware corporation, on behalf of the corporation. /s/ Judith P. Pepler -------------------------------- Name: Judith P. Pepler Notary Public My Commission Expires 2/28/2000 -47- STATE OF CONNECTICUT) ) ss: Stamford COUNTY OF FAIRFIELD ) The foregoing instrument was acknowledged before me this 9th day of July, 1997 by Michael McGuire, the President of T.F. CUSHING, Inc., a Massachusetts corporation, on behalf of the corporation. /s/ Judith P. Pepler -------------------------------- Name: Judith P. Pepler Notary Public My Commission Expires 2/28/2000 [SEAL] STATE OF CONNECTICUT) ) ss: Stamford COUNTY OF FAIRFIELD ) The foregoing instrument was acknowledged before me this 9th day of July, 1997 by Anthony McKiernan, an Assistant Vice-President of Fleet National Bank, a national banking association, on behalf of the corporation. /s/ Judith P. Pepler --------------------------------- Name: Judith P. Pepler Notary Public My Commission Expires 2/28/2000 [SEAL] -48- EXHIBITS -------- A - Form of Promissory Note B - Borrowing Base Certificate C - Letter of Authorization to Postmaster SCHEDULES --------- A - Exceptions B - Subsidiaries C - Trade Names APPENDIX -------- A - Definitions Schedule A None. EX-10.B 4 EXHIBIT 10(B) APPENDIX A TO CREDIT AND SECURITY AGREEMENT (REVOLVER) This Appendix A which is attached to and a part of the Credit and Security Agreement (Revolver), dated as of July 9, 1997, between Astrex Inc., a Delaware corporation, (the "Borrower"), T.F. Cushing, Inc., a Massachusetts corporation ("TFCI"), and Fleet National Bank, a national banking association, having offices at One Landmark Square, Stamford, Connecticut 06901, (the "Lender" or "Bank"), as same may be amended, supplemented or otherwise modified from time to time (the "Credit Agreement"), is a glossary of certain defined terms which may be used in the Credit Agreement and/or other Financing Documents and is part of the substantive agreement of the Borrower and the Lender. "ACCOUNT": as defined in the UCC as in effect in Connecticut on the date hereof. "AFFILIATE": of any Person shall mean (a) any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person or (b) any other Person who is a director or executive officer of or is in the same family as (i) such Person, (ii) any Subsidiary of such Person or (iii) any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, to (i) vote 5% or more of the securities having ordinary voting power for the election of directors of such Person or (ii) direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "APPLICABLE LAW": all applicable provisions of all (a) constitutions, statutes, laws, rules, regulations, guideline ordinances and orders of governmental bodies, (b) Governmental Approvals and (c) orders, decisions, rulings, judgments and decrees of all courts and arbitrators. "AVEST" or "Avest": AVest, Inc., a Delaware corporation. "BANKRUPTCY CODE": as defined in Section 7.1(i) of the Credit Agreement. "BORROWER'S QUESTIONNAIRE": the Borrower's Questionnaire of even date herewith. "BORROWING BASE": as of any particular time, the sum of (i) eighty-five percent (85%) of the amount of the then Eligible Receivables and (ii) the lesser of (a) twenty-five percent (25%) of the amount of the then Eligible Inventory or (b) $1,000,000.00; provided that it is further understood and agreed that for purposes of calculating the Borrowing Base, (1) Eligible Inventory of TFCI shall not exceed $500,000, (2) Eligible Receivables of TFCI shall not exceed $500,000 and (3) Eligible Inventory at the Massachusetts Site shall not exceed $500,000. The Lender shall have the right to decrease any such percentages provided that the Lender acts in good faith in doing so. "BORROWING BASE CERTIFICATE": a borrowing base certificate in the form of Exhibit C to the Credit Agreement or in such other form as the Lender may reasonably request, signed by the President of the Borrower and TFCI or other officer or employee of the Borrower or TFCI who is designated or authorized by the Borrower or TFCI or its respective President to sign the Borrowing Base Certificate (the Lender can conclusively presume that any officer or employee who executes -2- any such Certificate is so designated or authorized unless the Borrower or TFCI, as the case may be, informs the Lender to the contrary prior to the applicable Certificate being delivered). Any differences in terms used in this Agreement and such Certificate shall not be interpreted against the Lender. At Lender's election, the Borrowing Base Certificate may be signed by Borrower and TFCI together or each of Borrower and TFCI may sign separate Borrowing Base Certificates. "BUSINESS DAY": any day other than Saturday, Sunday or other day in which banks are authorized to be closed in the State of Connecticut, provided, that, at the Lender's election, with respect to any Loans bearing (or to bear) interest with reference to the LIBOR Rate, Business Day shall mean a Eurodollar Business Day. "CASH CAPITAL EXPENDITURES": with respect to any fiscal period, all capital expenditures made by the Borrower or its Subsidiaries in such period except that portion (if any) of such capital expenditures which are financed to the extent such financing is permitted under the Credit Agreement. "CLOSING DATE": July 9, 1997. "CMLTD": with respect to any fiscal period, the aggregate of all principal and other payments (excluding interest payments) made or payable during such fiscal period on account of any and all Indebtedness (but excluding from such Indebtedness for purposes of this definition any Indebtedness which, pursuant to its original terms, was due within one year of the date such Indebtedness was created) of the Borrower and/or its Subsidiaries, all on a consolidated basis in accordance with GAAP. "CODE": the Internal Revenue Code of 1986, as the same may be amended from time to time. "COLLATERAL": as it applies to the Borrower or TFCI, as the case may be, all personal property and fixtures of the Borrower or TFCI, as the case may be (the term "Debtor" as used below in this definition shall refer to each of the Borrower and TFCI), of every kind, nature and description, including, without limitation, all of the following, in each case whether now or hereafter existing or now owned or hereafter acquired by any Debtor, or in which any Debtor otherwise at any time has any right, title or interest, and wherever located and whether or not the same is subject to Article 8 or 9 of the Uniform Commercial Code or constitutes Collateral by reason of one or more than one of the following clauses (or is mentioned once or more than once within a clause): (a) all Receivables of any Debtor; (b) all Equipment of any Debtor; (c) all Inventory of any Debtor; -3- (d) all General Intangibles of any Debtor; (e) all of any Debtor's right, title and interest in and to all goods and other property, whether or not delivered, (i) the sale or lease of which gives or purports to give rise to any Receivable, including but not limited to all merchandise returned or rejected by or repossessed from customers, or (ii) securing any Receivable, including all of any Debtor's rights as an unpaid vendor or lienor, including stoppage in transit, replevin and reclamation with respect to such goods and other properties; (f) all guaranties, letters of credit, mortgages and other Liens on real or personal property, leases and other agreements or property securing or relating to any Receivable or other Collateral, or acquired for the purpose of securing and enforcing any item thereof; (g) all documents of title (as defined in the UCC as adopted in Connecticut as of the date hereof), policies and certificates of insurance, securities, chattel paper, contracts or other documents or instruments either (i) evidencing, pertaining to or in any other way relating to any and all goods (as defined in the UCC as adopted in Connecticut as of the date hereof) of any Debtor and/or (ii) in which any Debtor, at any time, otherwise has any right, title or interest; (h) to the extent not otherwise constituting Collateral, (i) all cash collateral accounts and (ii) all other deposit and other bank accounts, certificates of deposit, money, securities, instruments and other property of any Debtor with, in the possession of, or in transit to or from, or under the control of the Bank, and any and all other claims of any Debtor against the Lender at any time existing; (i) all claims (i) to any items of the Collateral, (ii) under warranties relating to any of the Collateral, and (iii) against third parties for (A) (l) loss, destruction, damage, requisition, confiscation, condemnation, seizure, forfeiture or infringement of, or damage to, and (2) payments due or to become due under leases, rentals or hires of, any and all of the Collateral and (B) proceeds payable under, and unearned premiums with respect to, any and all policies of insurance; (j) any and all other rights to, and payments under (or other proceeds of), any and all insurance policies and all rights to make claims thereunder; (k) all ledger sheets, books, records, files, customer lists, correspondence, computer hardware, printouts, computer programs, tapes, discs and related data processing software (owned by any Debtor or in which it has an interest), or any other documentation, which contain information identifying or pertaining to any of the Collateral or any account debtor or other obligor, or showing the amounts thereof or payments thereon or otherwise necessary or helpful in the realization thereon or the collection thereof; and (l) any and all accessions to or substitutions for, and any and all products and proceeds -4- (whether cash or non-cash) of, any of the above Collateral, in whatever form. It is the intent of the parties that the Security Interest and Collateral cover all personal property and fixtures of each of the Borrower and TFCI of every kind, nature and description. "COMMITMENT LETTER": that certain letter dated June 9, 1997, from Lender to Borrower and accepted by the Borrower setting forth certain of the terms of the terms hereof. "COMPANY'S QUESTIONNAIRE": the Company's Questionnaire of even date herewith. "CONSOLIDATED CURRENT ASSETS": at any particular date, the aggregate amount of assets of the Borrower and its Subsidiaries, on a consolidated basis, as of such date which, in accordance with GAAP, may properly be classified as current assets. "CONSOLIDATED CURRENT LIABILITIES": at any particular date, the aggregate amount of all liabilities of the Borrower and its Subsidiaries, on a consolidated basis, as of such date which, in accordance with GAAP, may properly be classified as current liabilities and also including, notwithstanding GAAP, all Revolving Credit Loans outstanding as of such date. "CONSOLIDATED EBIT": for the applicable period, consolidated net earnings (or loss) of the Borrower and its Subsidiaries from continuing operations for such period before interest expense and income taxes, and excluding any extraordinary items, all determined in accordance with GAAP. "CONSOLIDATED EBITDA": for the applicable period, the consolidated net earnings (or loss) of the Borrower and its Subsidiaries from continuing operations for such period before interest expense, income taxes, depreciation and amortization, and excluding any extraordinary items, all determined in accordance with GAAP. "CONSOLIDATED LIABILITIES": at any particular date, the aggregate amount of all Liabilities of the Borrower and its Subsidiaries, on a consolidated basis. "CONSOLIDATED TANGIBLE NET WORTH": at any particular date, the consolidated Tangible Net Worth of the Borrower and its Subsidiaries. "CONTRACT": an indenture, agreement (other than the Credit Agreement), other contractual restriction, lease, or instrument. "DEFAULT": any event or circumstance which, with the giving of notice or passage of time or both, would become an Event of Default. "ELAPSED FISCAL PERIOD": shall mean the elapsed portion of any fiscal year of the Borrower ending as of the last day of any fiscal quarter of such year. For example the four Elapsed Fiscal -5- Periods for the Borrower's fiscal year ending March 31, 1998 would be (i) April 1, 1997 to June 30, 1997, (ii) April 1, 1997 to September 30, 1997, (iii) April 1, 1997 to December 31, 1997 and (iv) April 1, 1997 to March 31, 1998. "ELIGIBLE INVENTORY": Inventory of the Borrower or TFCI (valued at lesser of cost to Borrower or TFCI (as the case may be) or market value, determined on a first-in-first-out basis) which consists of finished goods and continually meets the following additional criteria: (i) It is in first class condition and not damaged in any way, not obsolete, not in-transit goods or goods intended to be sold by consignment sale and is saleable through normal trade channels in the Borrower's or TFCI's normal course of business and meets all applicable legal requirements; (ii) (a) It is new and unused, (b) it is located at either (x) the Plainview Site or (y) the Massachusetts Site and, if located at the Massachusetts Site, a maximum of $500,000 of such inventory may be included in the calculation of Eligible Inventory for purposes of determining the Borrowing Base and (c) the Lender has a first priority attached and perfected security interest in such Inventory; (iii) It is owned by the Borrower or TFCI and is not subject to (a) any Lien or (b) any dispute, and the Borrower or TFCI had and has the absolute, lawful, undisputed and unquestioned right to own and sell same (and to collect any Receivable which results from any potential sale thereof); (iv) No event has occurred and no condition exists which could impede in any material manner the Borrower's or TFCI's ability to continue to sell such Inventory in the normal course (including for normal prices); (v) Eligible Inventory may include only finished goods and shall specifically exclude any raw materials or work-in-progress; and (vi) It is not determined by the Lender to be ineligible for any other reason generally accepted in the commercial finance business as a reason for ineligibility. "ELIGIBLE RECEIVABLES": the net amount of those Accounts of the Borrower or TFCI (net of any applicable reserves) which arise in the ordinary course of business and which continually meet the following requirements: (i) The Account shall not be unpaid more than 90 days from the date of original invoice and shall not be more than 60 days past due; (ii) The account debtor with respect to the Account shall not have more than 50% of its then total outstanding Accounts with the Borrower or TFCI remaining -6- unpaid more than 90 days from the applicable dates of original invoice or more than 60 days past due; (iii) The Account arose from the performance of services by the Borrower or TFCI which have been fully and satisfactorily performed or from the absolute sale of goods by the Borrower or TFCI in which Borrower or TFI had the sole and complete ownership and which have been shipped or delivered to the account debtor evidencing which delivery the Borrower, TFCI or the Lender has the possession of shipping and delivery receipts; (iv) The Account is not subject to any prior or subsequent assignment, claim, lien, security interest or other Lien except that of the Lender and is not subordinated in any manner and the Account does not arise from a Contract prohibiting the assignment thereof or requiring the consent of any Person to such assignment (unless such consent is obtained and Lender has given its prior written approval of the form and substance of such consent); (v) (a) The Account is not subject to (aa) any set-off, counterclaim, claim, defense, allowance or adjustment other than discounts (given in the Borrower's or TFCI's ordinary course of business) for prompt payment shown on the invoice, or (bb) dispute, objection or complaint (whether by the Account debtor concerning its liability on the Account or otherwise), (b) the goods, the sale of which gave rise to the Account, have not been returned, rejected, lost or damaged and are not subject to any right of return sales or guaranty or any consignment, and (c) the Account is otherwise fully enforceable and the Borrower or TFCI does not need to be qualified to do business in the State where the Account Debtor is located in order to enforce the Account; (vi) The Account arose in the ordinary course of business from a bona-fide transaction and all transactions relating thereto are in full compliance with Applicable Law; (vii) The Account is not due from (a) the United States or any agency, department or subdivision thereof unless the rights to such Account have been validly assigned to the Lender in accordance with all applicable requirements of Applicable Law; or (b) any state or municipality or any agency, department or subdivision thereof, or (c) any account debtor located outside the United States unless such Account is secured by a letter of credit from a bank acceptable to the Lender and which letter of credit is in form and substance acceptable to the Lender; (viii) No petition in bankruptcy or other application for relief under the Bankruptcy Code or other insolvency law has been filed with respect to the account debtor; and the account debtor has not made an assignment for the benefit of -7- creditors, become insolvent, or suspended or terminated business; and the account debtor is generally paying its debts as they become due; (ix) The account debtor is not an Affiliate of the Borrower or its shareholders; (x) The Lender has a first priority attached and perfected security interest in the Account; (xi) The Account complies with Section 6.4(b) hereof and with any other covenant, agreement, representation, warranty, or other applicable term or provision of any Financing Document; and (xii) The Account is not determined by the Lender to be ineligible for any other reason generally accepted in the commercial finance business as a reason for ineligibility. In addition, in the event that the Lender in its reasonable discretion determines that the Accounts owed by a particular account debtor constitute too high a percentage of the then aggregate amount of Accounts, the Lender shall have the right to lower the amount of Accounts of such account debtor which shall be considered Eligible Receivables. "ENVIRONMENTAL LAWS": all laws, rules, codes, ordinances, and regulations, and all consent decrees, administrative orders or judgments relating to public health or safety and/or the environment, including without limitation those laws, rules, codes, ordinances and regulations identified in the definition of the term "Hazardous Materials," all as amended, supplemented or otherwise modified from time to time. "EQUIPMENT": (a) all machinery, equipment, spare parts, tools, furniture, and furnishings and instruments of conveyance, including motor vehicles, (b) all other goods except goods that constitute Inventory, and (c) all replacements and substitutions for, and all accessions to, the foregoing, in each case whether now or hereafter existing or now owned or hereafter acquired by the Borrower or TFCI, as the case may be, and wherever located and whether or not the same is subject to Article 9 of the Uniform Commercial Code or constitutes a "fixture" or constitutes Equipment by reason of any one or more than one of the preceding clauses. "ERISA AFFILIATE": any trade or business (whether or not incorporated) that is member of a group of which the Borrower or any of its Subsidiaries is a member and which is treated as a single employer under Section 414 of the Code. "EUROCURRENCY RESERVE REQUIREMENTS": for any day, the aggregate (without duplication) of the maximum reserve percentages, expressed as a decimal, including, without limitation, basic, supplemental, marginal and emergency reserves, in effect on such day, established by the Board of Governors of the Federal Reserve System (or any successor) or any other banking authority, -8- domestic or foreign, to which the Lender is subject, for "Eurocurrency Liabilities" as defined in Regulation D. Such reserve percentages shall include, without limitation, those imposed under Regulation D. Loans that are part of any Libor Revolving Credit Portion shall be considered to constitute Eurocurrency Liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to Lender under Regulation D. The Eurocurrency Reserve Requirements shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Requirements. "EURODOLLAR BASE RATE": with respect to each day during each Interest Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/32 of one percent) for deposits in United States dollars for one month, three month, or six month maturities (as applicable to such Interest Period), as the case may be, which appears on the Telerate Page 3750 as of 11:00 a.m., London time, on the day that is two Eurodollar Business Days prior to the commencement of such Interest Period. If such rate does not appear on the Telerate Page 3750, the rate to be utilized shall be the offered rate (rounded upwards, if necessary, to the nearest 1/32 of one percent) which appears, or if two or more such rates appear, the average (rounded upwards, if necessary, to the nearest 1/32 of one percent) of the offered rates which appear on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the day that is two Eurodollar Business Days prior to the commencement of such Interest Period. If both the Telerate and Reuters systems are unavailable, then the rate will be determined on the basis of the offered rates for which deposits in U.S. dollars for a period equal to or approximately equal to the applicable Interest Period are offered by four major banks (selected by the Lender) in the London interbank market, at approximately 11:00 a.m., London time, on the day that is two Eurodollar Business Days preceding the first day of the proposed Interest Period. The principal London office of each of the four major banks will be requested to provide a quotation of its U.S. dollar deposit offered rate. If at least two such quotations are provided, the rate will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Lender, at approximately 11:00 a.m., New York City time, on the date that is two Eurodollar Business Days prior to the first day of the applicable Interest Period, for loans in U.S. dollars to leading European banks for a period equal to or approximately equal to the applicable Interest Period. In the event that the Bank is unable to obtain any such quotation as provided above, interest shall accrue at a rate per annum equal to the Prime Rate. "EURODOLLAR BUSINESS DAY": any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London or such other eurodollar interbank market as may be selected by the Lender in its sole discretion acting in good faith. "EVENT OF DEFAULT": any of the events specified in Section 7.1 of the Credit Agreement. "EXISTING LENDER": Congress Financial Corporation, 1133 Avenue of the Americas, New -9- York, NY 10036. "FINANCIAL STATEMENTS": the consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 1997 and the related statements of operations, stockholder's equity and cash flows of the Borrower and such Subsidiaries for the fiscal year then ended, and the accompanying footnotes together with the report thereon, dated the date hereof, by KPMG Peat Marwick LLP, independent public accountants, and the interim balance sheet of the Borrower and such Subsidiaries as at June 30, 1997 and the related statements of operations and source and use of funds for the three (3) month period then ended. "FINANCING DOCUMENTS": (a) this Agreement, the Note, the Guaranty Agreement, of even date herewith, between TFCI and the Lender, and the Guaranty Agreement, of even date herewith, between AVest, and the Lender, the Pledge Agreement, of even date herewith, from the Borrower to the Lender, the Borrower's Questionnaire, and the Company's Questionnaire, any landlord's waiver(s), and (b) any other written agreement, instrument, certificate, financing statement or other document, whether now or hereafter existing, executed or delivered in connection with or otherwise related to any of the agreements, instruments or other documents referred to in clause (a) or otherwise relating in any way to any of the Revolving Credit Loans or any collateral, as any of the foregoing referred to in clause (a) or (b) may be amended, supplemented or otherwise modified from time to time. "FOREIGN JURISDICTIONS": as defined in Section 2.1 of the Credit Agreement. "GAAP": generally accepted accounting principles as in effect in the United States of America. "GENERAL INTANGIBLES": (a) any and all intangible, personal property of the Borrower or TFCI, as the case may be, of every kind, nature and description including, without limitation, (i) rights to the payment or receipt of money or other forms of consideration of any kind at any time now or hereafter owing or to be owed to the Borrower or TFCI, as the case may be, (ii) claims for tax refunds, (iii) causes of action, whether sounding in tort, contract, patent infringement or otherwise and whether or not currently in litigation (provided, that, it is understood and agreed that nothing contained in any Finance Document shall, or shall be interpreted to, obligate the Lender to prosecute any such cause of action), (iv) judgments, (v) patents, patent rights, trademarks, trademark rights, copyrights, trade names, trade name rights, all rights under applications for any of the foregoing, all rights under licenses relating to any of the foregoing, and all other rights with respect to the foregoing, (vi) inventions, (vii) trade secrets, (viii) designs, (ix) goodwill, (x) franchises, (xi) customer lists, (xii) licenses, and (xiii) corporate and other business records, and (b) any and all tangible, personal property, in the nature of documents, records and the like, constituting, evidencing or otherwise relating to any such intangible personal property, in each case whether now or hereafter existing or now owned or hereafter acquired by the Borrower or TFCI and whether the same is subject to Article 8 or 9 of the Uniform Commercial Code or constitutes a General Intangible by reason of any one or more than one of the preceding clauses. -10- "GOVERNMENT APPROVAL": any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any governmental unit. "GUARANTORS": T.F. Cushing, Inc., a Massachusetts corporation, AVest, Inc., a Delaware corporation, and any other Person (if any) who is a guarantor, endorser, or surety with respect to any of Secured Obligations. "HAZARDOUS MATERIAL": (aa) "hazardous substances" or "toxic substances" as those terms are defined by the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601, ET SEQ., or the Hazardous Materials Transportation Act, 49 U.S.C. ss.1801, all as amended and amended after this date; (bb) "hazardous wastes," as that term is defined by the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901, ET SEQ., as amended and amended after this date; (cc) any pollutant, contaminant or hazardous, dangerous, or toxic chemicals, materials, or substances within the meaning of any other applicable federal, state or local law, regulation, ordinance, or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste substance or material, all as amended or amended after this date; (dd) any other substance the presence of which requires investigation or remediation under any law, regulation, ordinance or requirement; (ee) crude oil or any fraction thereof which is liquid at standard conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute); (ff) any radioactive material; (gg) asbestos in any form or condition; and (hh) polychlorinated biphenyls (PCBs) or substances or compounds containing PCBs. "INDEBTEDNESS": of any Person at any particular date, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than Trade Debt) or which is evidenced by a note, bond, debenture or similar instrument, (b) all obligations of such Person upon which interest charges are customarily paid, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (d) all obligations of such Person under capitalized leases, (e) all obligations of such Person in respect of acceptances or letters of credit issued or created for the account of such Person, (f) all liabilities secured by any Lien on any property owned by such Person, whether or not such Person has assumed or otherwise become liable for the payment thereof, and (g) all obligations of such Person in respect of interest rate protection agreements, interest rate future agreements, foreign currency exchange agreements and any other hedging arrangements. "INSTITUTIONAL HOLDER": any bank, insurance company, savings and loan association, trust company, investment company, charitable foundation, employee benefit plan (as defined in ERISA) or other financial institution or institutional investor. "INTANGIBLE ASSETS" with respect to any Person, (i) those assets of such Person which, in accordance with GAAP, are properly classified as intangible assets on a balance sheet of such -11- Person including without limitation goodwill, franchises, licenses, patents, trademarks, tradenames, and copyrights, plus (ii) any advance or other loan from such Person to any officer, shareholder, director or employee of such Person or of any Affiliate of such Person. "INTEREST EXPENSE": for the applicable period, all interest paid or payable by the Borrower or any of its Subsidiaries in such period, including, but not limited to, interest paid or payable on the Revolving Credit Loans and on all other Indebtedness (including without limitation imputed interest on capitalized lease obligations), determined in accordance with GAAP on a consolidated basis. "INTEREST COVERAGE RATIO": for the applicable period, the ratio of Consolidated EBIT for such period to Interest Expense for such period. "INTEREST PERIOD": with respect to any Libor Revolving Credit Portion, any period of 1, 3 or 6 months, commencing on a Eurodollar Business Day, selected as provided for in Section 1.6(b) of the Credit Agreement and the definition of LIBOR Request, provided, however, that: (1) any Interest Period (other than an Interest Period determined pursuant to clause (3) below) that would otherwise end on a day that is not a Eurodollar Business Day shall be extended to the next succeeding Business Day unless such Eurodollar Business Day falls in the next calendar month, in which case such Interest Period shall end on the immediately preceding Eurodollar Business Day; (2) any Interest Period that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (3) below, end on the last Eurodollar Business Day of a calendar month; (3) any Interest Period that would otherwise end after the Revolving Credit Maturity Date shall end on the Revolving Credit Maturity Date; and (4) notwithstanding clause (2) above, no Interest Period shall (unless otherwise agreed to by the Lender) have a duration of less than one month and if any Interest Period would be for a period shorter than one month, such Interest Period shall (unless the Lender otherwise agrees) not be available hereunder. "INVENTORY": (a) all inventory (as defined in the UCC, as adopted in the State of Connecticut on the date hereof), including, but not limited to, (i) all goods held by Borrower or TFCI, as the case may be, for sale or lease or to be furnished under contracts of service or furnished under such contracts; (ii) all work in process; (iii) all raw materials and other materials and supplies of every nature and description used or which might be used in connection with the manufacture, -12- packing, shipping, advertising, selling, leasing or furnishing of such inventory or otherwise used or consumed in Borrower's or TFCI's business; and (b) all documents evidencing and general intangibles relating to any of the foregoing, in each case whether now or hereafter existing or now owned or hereafter acquired by Borrower or TFCI and wherever located and whether or not the same is subject to Article 9 of the Uniform Commercial Code or constitutes Inventory by reason of any one or more than one of the preceding clauses. "LEGAL REQUIREMENT": any requirement imposed upon Lender by any law of the United States of America or the United Kingdom or by any regulation, order, interpretation, ruling or official directive (whether or not having the force of law) of the Federal Reserve Board, the Bank of England or any other board, central bank or governmental or administrative agency, institution or authority of the United States of America, the United Kingdom or any political subdivision of either thereof. "LIABILITIES": as of any date, shall mean, without duplication, (i) all indebtedness, obligations and liabilities of the Borrower and/or its Subsidiaries which would be reflected as liabilities on a balance sheet, as of such date, of the Borrower prepared in accordance with GAAP, (ii) all obligations, indebtedness and other liabilities of the Borrower secured by any Lien on any assets or other properties of such Person. "LIBOR OPTION" or "LIBOR OPTION": the option granted pursuant to Section 1.6(b) of the Credit Agreement to have the interest on a portion of the principal amount of the Revolving Credit Loans based on a LIBOR Rate. "LIBOR RATE" or "LIBOR RATE": means, with respect to each day during each Interest Period, the rate determined in accordance with the following formula: EURODOLLAR BASE RATE ------------------------------------------------------ 1.00 - Eurocurrency Reserve Requirements "LIBOR REQUEST" or "LIBOR REQUEST": a notice in writing (or if permitted by Lender, by telephone) from Borrower to Lender requesting that interest on a LIBOR Revolving Credit Portion be based on the LIBOR Rate, specifying: (i) the first day of the Interest Period; (ii) the length of the Interest Period consistent with the definition of that term; and (iii) the dollar amount of the LIBOR Revolving Credit Portion consistent with the definition of such term. "LIBOR REVOLVING CREDIT PORTION" or "LIBOR REVOLVING CREDIT PORTION": that portion of the Revolving Credit Loans specified in a LIBOR Request (including any applicable portion of any Revolving Credit Loans which is being borrowed by Borrower concurrently with such LIBOR Request) which is not less than $500,000 and is an integral multiple of $100,000 which does not exceed the outstanding balance of Revolving Credit Loans not already subject to a LIBOR Option and, which, as of the date of the LIBOR Request specifying such LIBOR Revolving Credit Portion, -13- has met the conditions for basing interest on the LIBOR Rate in Section 1.6(b) of the Credit Agreement and the Interest Period of which has commenced and not terminated. "LIEN": any mortgage, security interest, pledge, title retention agreement, hypothecation, assignment, lien, attachment, garnishment, levy, charge, or other encumbrance of any kind. "LOAN" and "LOANS": as those terms are respectively defined in Section 1.2 of the Credit Agreement. "MASSACHUSETTS SITE": the facility operated by TFCI at 126 Myron Street, West Springfield, Massachusetts 01089 or such other location in Massachusetts as may be approved in writing by the Lender. "MATERIAL ADVERSE EFFECT": (a) with respect to any Person, a material adverse effect upon such Person's business, assets, liabilities, financial condition, results of operations or business prospects, (b) with respect to a group of Persons "taken as a whole", a material adverse effect upon such Persons' business, assets, liabilities, financial conditions, results of operations or business prospects taken as a whole on, where appropriate, a consolidated basis and (c) with respect to this Agreement, any Contract or any other obligation, a material adverse effect, as to any party thereto, upon the binding nature, validity or enforceability thereof or the ability of any party thereto to perform thereunder. "NATURAL RESOURCES": each and all of the atmosphere, air, waters, earth, land, minerals, flora, fauna, fish, shellfish, wildlife, biota and/or other natural resources. "OBLIGOR LEGAL OPINION": an opinion of John C. Loring, Esq., counsel for the Borrower and the Guarantors, dated the date of the making of the initial Revolving Credit Loan. "PATENTS": patents, patent rights or licenses, trademarks, trademark rights, trade names, trade name rights, copyrights, and any other rights with respect to the foregoing. "PBGC": the Pension Benefit Guaranty Corporation referred to and defined in ERISA. "PERMITTED INDEBTEDNESS": ------------------------- (a) any Revolving Credit Loans and any other Indebtedness owed to the Lender; (b) annual real property rental expenses of Borrower permitted under Section 5.14 of the Credit Agreement; (c) Indebtedness in respect of taxes, assessments, governmental charges, levies and claims which at the time are not required to be paid under Section 4.4 of the Credit Agreement; -14- (d) Indebtedness secured by Permitted Liens; and (e) operating leases for personal property entered into in the ordinary course of business consistent with the Borrower's past practices and permitted under Section 5.14 of the Credit Agreement. "PERMITTED LIEN": ----------------- (a) Liens for taxes not yet due or which are being contested as permitted by and in accordance with Section 4.4 of the Credit Agreement; (b) carriers', warehousemen's, mechanics' materialmen's, landlord's, repairmen's or other like Liens arising in the ordinary course of business and not overdue for a period of more than 30 days or (in the case of mechanics' Liens only) the full amount of which has been bonded; (c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; and (e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower. (f) purchase money security interests in equipment or capitalized leases of equipment which (i) cover only the property purchased or leased by Borrower, (ii) only secure the related purchase money debt and (iii) which purchase money debt and capitalized lease obligations do not exceed, in the aggregate, $50,000 at any one time outstanding. "PERMITTED USES": general working capital purposes of the Borrower, provided that (i) the proceeds of the initial Revolving Credit Loan shall first be used to pay off any Indebtedness to the Existing Lender and (ii) the Borrower may, in the ordinary course of its business, loan a portion of the proceeds of Revolving Credit Loans to TFCI provided that such loans to TFCI shall be no greater than the approximate amount of the proceeds of Revolving Credit Loans attributable to Eligible Receivables and Eligible Inventory of TFCI. "PERSON": any individual, corporation, partnership, trust or unincorporated organization, a government or any agency or political subdivision thereof, or any other entity. "PLAN": as defined in Section 2.17 of the Credit Agreement. -15- "PLAINVIEW REAL ESTATE": the real estate (including all buildings and improvements) located at 205 Express Street, Plainview, New York 11803. "PLAINVIEW SITE": the Borrower's offices and other facilities at the Plainview Real Estate. "PRIME RATE": Lender's annual rate of interest designated by Lender from time to time as a standard for setting loan rates on certain types of loans, and is not necessarily the lowest or best rate the Lender charges its customers. Each change in such Prime Rate shall affect an adjustment in the applicable interest rate of the day of such change. In the event the Lender no longer has a prime rate, a reasonably comparable substitute rate (selected by the Lender) shall be used in its place. "PRIME RATE REVOLVING CREDIT PORTION": that portion of the Revolving Credit Loans that is not subject to a LIBOR Option or is not otherwise bearing interest with reference to the LIBOR Rate. "RECEIVABLES": any and all rights and claims to the payment or receipt of money or other forms of consideration or compensation of any kind at any time now or hereafter owing or to be owing or claimed or which could be claimed to be owing to Borrower (whether, if subject to the Uniform Commercial Code, classified thereunder as accounts, contract rights, chattel paper, general intangibles, instruments, securities or otherwise) including, but not limited to, any and all such rights and claims in, to and under: (a) (i) all accounts, (ii) contracts, including guaranties and contracts of insurance of all kinds, including credit and key-man life insurance and property insurance, (iii) letters of credit, (iv) chattel paper, (v) notes, (vi) drafts, (vii) instruments and securities, (viii) documents, (ix) acceptances, (x) tax refunds, (xi) judgments and (xii) all other debts, obligations and liabilities in whatever form now or hereafter owing to Borrower, and (b) all causes of action, whether in sounding in tort, contract or otherwise and whether or not currently in litigation, in each case whether now or hereafter existing or now owned or hereafter acquired by Borrower and whether or not the same is subject to Article 8 or 9 of the Uniform Commercial Code or constitutes a Receivable by reason of one or more than one of the preceding clauses. "REGULATION D": Regulation D of the Board of Governors of the Federal Reserve System (or any successor) as from time to time in effect and all official rulings and interpretations thereunder or thereof. "RELEASE": any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or other discharging into the environment. "RESPONSIBLE OFFICER": with respect to any corporation of the chief executive officer or the president of such corporation and, with respect to any partnership, any general partner of such partnership. "REUTERS SCREEN LIBO PAGE": the display designated as page "LIBO" on the Reuters -16- Monitor Money Rates Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). "REVOLVING CREDIT DEFAULT RATE": a rate per annum equal to the Prime Rate plus two (2%) percent (i.e., 200 basis points). "REVOLVING CREDIT LOAN" and "REVOLVING CREDIT LOANS": as those terms are respectively defined in Section 1.2 of the Credit Agreement including any and all Libor Loans and Prime Rate Loans made pursuant to the Credit Agreement. "REVOLVING CREDIT FACILITY": the revolving credit borrowing facility established pursuant to the Credit Agreement. "REVOLVING CREDIT INTEREST PAYMENT DATE": (i) with respect to the Prime Rate Revolving Credit Portion, the first day of each and every month, commencing on August 1, 1997; and (ii) with respect to any Libor Revolving Credit Portion, the last day of the applicable Interest Period and also, in the case of an Interest Period of 6 months, that date which is three months after the first day of such Interest Period. "REVOLVING CREDIT LOAN TERMINATION DATE": July 9, 1999. "REVOLVING CREDIT MATURITY DATE": July 9, 1999. "REVOLVING CREDIT MAXIMUM AMOUNT": at any time, the lesser of (i) Two Million Five Hundred Thousand Dollars ($2,500,000) or (ii) the Borrowing Base at such time. "SECURED OBLIGATIONS": (a) all indebtedness, obligations and liabilities of the Borrower to the Lender under this Agreement or the Note (including, but not limited to, any and all principal, interest, and all amounts under Section 8.7 of the Credit Agreement) or any other Financing Documents, whether now existing or hereafter arising and whether for payment or performance; and (b) all other indebtedness, obligations, and liabilities of Borrower to the Lender of every kind, nature and description, direct or indirect, secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising (including, but not limited to, any and all future advances), regardless of how the same arise or by what instrument, agreement, or book account they may be evidenced, or whether evidenced by any instrument, agreement, or book account, including, but not limited to, all loans (including any loan by renewal or extension), all other indebtedness, all guarantees, and all reimbursement obligations or other obligations relating to letters of credit and the like; provided that, with respect to TFCI and the Security Interest it grants hereunder in its Collateral, Secured Obligations shall also mean, in addition to the above, all indebtedness, obligations, and liabilities of TFCI to the Lender of every kind, nature and description, direct or indirect, secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising (including, but not limited to, any and all future advances), regardless of how the -17- same arise or by what instrument, agreement, or book account they may be evidenced, or whether evidenced by any instrument, agreement, or book account, including, but not limited to, all loans (including any loan by renewal or extension), all other indebtedness, all guarantees, and all reimbursement obligations or other obligations relating to letters of credit and the like, including without limitation any guaranty of TFCI under any of the Financing Documents. IT IS THE INTENT AND AGREEMENT OF THE PARTIES HERETO THAT ALL INDEBTEDNESS, OBLIGATIONS AND LIABILITIES OF THE BORROWER (AND, IN THE CASE OF TFCI, OF TFCI) TO THE LENDER (WHETHER NOW EXISTING OR HEREAFTER ARISING) BE SECURED BY THE COLLATERAL, REGARDLESS OF WHETHER OR NOT SUCH INDEBTEDNESS, OBLIGATIONS OR LIABILITIES ARE NOW CONTEMPLATED BY SUCH PARTIES. SUCH INDEBTEDNESS, OBLIGATIONS, AND LIABILITIES MAY BE REDUCED TO ZERO OR OTHERWISE SATISFIED AND THEREAFTER NEW INDEBTEDNESS, OBLIGATIONS AND LIABILITIES INCURRED AND ALL SUCH INDEBTEDNESS, OBLIGATIONS AND LIABILITIES SHALL BE SECURED OBLIGATIONS HEREUNDER. "SECURITY INTEREST": shall mean the assignments, security interests, other Liens and rights of setoff in, or with respect to, the Collateral provided for or effected by this Agreement. "SPECIFIED ADDITIONAL CLOSING DOCUMENTS": (i) a true and complete copy of any such additional financial statements of the Borrower as Lender shall reasonably request. (ii) landlord's waivers. (iii)Pay proceeds letter, termination agreement, mortgage releases and UCC-3 termination statements executed by the Existing Lender. (iv) Finance indemnity letter of Existing Lender. (v) (a) current Borrowing Base Certificate; (b) inventory listings; (c) accounts receivable agings; and (d) accounts receivable reconciliations. (vi) title report. (vii)stock certificates and stock powers, in blank with respect to pledged stock of TFCI -18- and AVest. "SPECIFIED COVENANT TESTS": the covenants set forth in Sections 5.10 to 5.13 of the Credit Agreement. "SPECIFIED PENNSYLVANIA AND CONNECTICUT TAX RETURNS: certain tax returns for the States of Pennsylvania and Connecticut for prior years; provided, however, that the total amount owing with respect to all such years does not exceed $15,000 in the aggregate. "SUBSIDIARY": as to any Person, shall mean a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. "TANGIBLE NET WORTH": at any particular date, for any Person, the total shareholder's equity (including capital stock, additional paid-in capital and retained earnings after deducting treasury stock) which would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, LESS the aggregate book value of the Intangible Assets of such Person shown on such balance sheet. "TAX": in relation to any LIBOR Revolving Credit Portion and the applicable LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or charges of whatever nature required by any Legal Requirement (i) to be paid by Lender and/or (ii) to be withheld or deducted from any payment otherwise required hereby to be made by Borrower to Lender; PROVIDED, that the term "Tax" shall not include any taxes imposed upon the net income of Lender. "TELERATE PAGE 3750": the display designated as "Page 3750" on the Dow Jones Telerate Service (or such other page as may replace that page on that service for the purpose of displaying London interbank offered rates of major banks). "TRADE DEBT": Liabilities which consists of trade liabilities incurred in the ordinary course of business and payable in accordance with customary trade practices. "TRADE DEBT DEFAULT AMOUNT": $50,000. "UCC": the Uniform Commercial Code. EX-10.C 5 EXHIBIT 10(C) PLEDGE AGREEMENT PLEDGE AGREEMENT, dated as of July 9, 1997, made by Astrex, Inc., a Delaware corporation, having offices at 205 Express Street, Plainview, New York 11803 (the "Pledgor"), in favor of Fleet National Bank, a national banking association, having offices at One Landmark Square, Stamford, Connecticut 06901 (the "Secured Party"). W I T N E S S E T H : --------------------- WHEREAS, T.F. Cushing, Inc., a Massachusetts corporation having offices at 126 Myron Street, West Springfield, Massachusetts 01089 ("TFCI"), is a wholly-owned subsidiary of Pledgor and Pledgor is the record and beneficial owner of 99 shares of the common stock, no par value, of TFCI (the "TFCI Common Stock"); and WHEREAS, AVest, Inc., a Delaware corporation having offices at 205 Express Street, Plainview, New York ("AVest"), is a wholly-owned subsidiary of Pledgor and Pledgor is the record and beneficial owner of 11,725,907 shares of the common stock, par value $0.001 per share of AVest (the "AVest Common Stock"); and WHEREAS, the TFCI Common Stock and the AVest Common Stock (collectively, the "Common Stock") constitute 100% of the issued and outstanding capital stock of each of TFCI and AVest, respectively; and WHEREAS, simultaneously with the execution and delivery of this Pledge Agreement, the Pledgor and the Secured Party are executing and delivering a Credit and Security Agreement (as same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), of even date herewith; and WHEREAS, the execution and delivery of this Pledge Agreement by Pledgor is a condition precedent to the Secured Party extending any credit or other financial accommodations to the Pledgor under the Credit Agreement; and WHEREAS, the Pledgor shall derive substantial and material benefits, financial and otherwise, from any extension of credit or any other financial accommodation to such Pledgor under the Credit Agreement. NOW, THEREFORE, in consideration of the premises and to induce the Secured Party to extend any credit or any other financial accommodation to the Pledgor under the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby agrees with the Secured Party as follows: -2- 1. DEFINED TERMS. The following terms shall have the following meanings as used herein: "BUSINESS DAY": any day other than Saturday or Sunday or other day in which banks are authorized to be closed in the State of Connecticut. "CODE": the Uniform Commercial Code from time to time in effect in the State of Connecticut. "COLLATERAL": any and all of the following (whether any item is mentioned once or more than once and whether now existing or arising at any time(s) in the future): (i) the shares of Common Stock listed on Schedule I attached hereto and made a part hereof, (ii) all other Pledged Stock, (iii) any and all other property (tangible or intangible) identified herein as additional collateral, and (iv) any and all Proceeds of any and all of the foregoing. "EVENT OF DEFAULT": the occurrence of any of the following (whether or not an event or circumstance is mentioned once or more than once): (i) any failure of the Pledgor to pay when due (whether due at maturity or by reason of demand or acceleration or otherwise) any other Obligation beyond any period of grace (if any) applicable thereto; (ii) any "Event of Default" as defined in the Credit Agreement or the occurrence or existence of any other event or condition the effect of which event or condition is to cause, or permit the Secured Party to cause, with the giving of notice if required, any of the liabilities or other obligations of the Borrower or any of the Obligations to become due prior to its stated maturity or, in the case of any such liabilities or other obligations or any Obligations consisting of a guaranty or the like, to become payable; (iii) any representation or warranty made by the Pledgor hereunder proves to have been incorrect or misleading in any material respect; (iv) any default by the Pledgor in the observance or performance of Section 5(b) hereof; or (v) any default by the Pledgor in the observance or performance of any other covenant or agreement set forth herein and such default shall continue unremedied for a period of thirty (30) calendar days after written notice of such default shall have been given to the Pledgor by the Secured Party. "LIEN": any security interest, mortgage, lien, pledge, charge, title retention agreement, hypothecation, levy, execution, seizure, attachment, garnishment, voting agreement, assignment or other encumbrance. "OBLIGATIONS": any and all Secured Obligations as such term is defined in the Credit Agreement. The Obligations shall include, but shall not be limited to, all -3- indebtedness, liabilities, covenants and duties of, all terms and conditions to be observed by, and all other obligations of the Pledgor under this Pledge Agreement, whether now existing or hereafter arising. "PERSON": any individual, corporation, partnership, trust or unincorporated organization, a government or any agency or political subdivision thereof, or other entity. "PLEDGE AGREEMENT": this Pledge Agreement, as same may be amended, supplemented or otherwise modified from time to time. "PLEDGED STOCK": any and all of the following: (i) the shares of Common Stock listed on Schedule I attached hereto and made a part hereof, (ii) all capital stock, rights, options, or other securities identified herein as additional collateral and (iii) any and all stock certificates or other instruments or other writings evidencing any stock, rights, options or other securities referred to in clauses (i) or (ii) above. "PROCEEDS": proceeds of every kind, nature and description and in whatever form (whether cash or non-cash) including, but not limited to, any and all dividends or other income from the Pledged Stock, collections thereon or distributions with respect thereto. 2. GRANT OF SECURITY INTEREST. The Pledgor hereby delivers to the Secured Party all the Pledged Stock listed on Schedule I and hereby grants to the Secured Party a first priority security interest in the Collateral, as collateral security for the full and prompt payment, performance and observance when due (whether due at the stated maturity, by demand, acceleration or otherwise) of the Obligations. This Pledge Agreement shall create a continuing security interest in the Collateral which shall remain in effect until all the Obligations, now existing or hereafter arises, shall have been paid in full and the Credit Agreement, the Note and the Security Documents shall no longer be in effect. 3. STOCK POWERS. Concurrently with the delivery to the Secured Party of each certificate or other instrument or other writing representing one or more shares of Pledged Stock, the Pledgor shall deliver an undated stock power covering such certificate, instrument or other writing duly executed in blank by the Pledgor with, if the Secured Party so requests, signature guaranteed. 4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants that: -4- (a) the shares of Pledged Stock listed on Schedule I constitute 100% of all the issued and outstanding shares of all classes of the capital stock of each of TFCI and AVest; (b) all the shares of the Pledged Stock listed on Schedule I have been duly and validly issued and are fully paid and nonassessable and there are no pending or contingent restrictions on transferability; (c) the Pledgor is the record, legal and beneficial owner of, and has good and marketable title to, the Pledged Stock listed on Schedule I, free of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Pledge Agreement; (d) upon delivery to the Secured Party of the stock certificates evidencing the Pledged Stock listed in Schedule I, the security interest granted pursuant to this Pledge Agreement will constitute a valid, perfected first priority security interest in the Collateral, enforceable as such against the Pledgor and all those parties; and (e) this Pledge Agreement is the legal, valid and binding obligation of the Pledgor, enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Pledgor does not and will not violate any applicable law, or any agreement or instrument applicable to the Pledgor or any of Pledgor's property. 5. COVENANTS. The Pledgor covenants and agrees with the Secured Party that, from and after the date of this Pledge Agreement until the Obligations are paid in full, any and all credit facilities between Pledgor and the Secured Party are terminated and the security interest granted pursuant to this Pledge Agreement is released: (a) If the Pledgor (i) shall, as a result of Pledgor's ownership of any of the Pledged Stock, become entitled to receive or shall receive any shares of capital stock (including, without limitation, any shares of capital stock representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option(s), rights, or other securities or other property whether in addition to, in substitution of, as a conversion of, or in exchange for any shares of any Pledged Stock, or otherwise in respect thereof or (ii) shall at any time otherwise for any reason receive any capital stock, options, warrants or other equity securities of each of TFCI and AVest or any securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of each of TFCI and AVest (whether or not any of the securities referred to in this clause (ii) are related to the Pledged Stock identified on Schedule I or any other Pledged Stock), the Pledgor shall accept any and all of the same as the agent of the Secured Party, hold the same in trust for the Secured Party and deliver (to the extent same are certificated or otherwise evidenced by an instrument or other writing) any and all certificates, other instruments or other writings evidencing same forthwith to the Secured Party -5- in the exact form received, duly endorsed by the Pledgor to the Secured Party, if required, together with, to the fullest extent applicable, an undated stock power(s) covering same duly executed in blank by the Pledgor and with, if the Secured Party so requests, signature guaranteed, any and all of the foregoing to be held by the Secured Party, subject to the terms hereof, as additional collateral security for the Obligations. Any sums paid upon or in respect of the Pledged Stock (or any other Collateral) upon the liquidation or dissolution of the TFCI and/or AVest, as the case may be, shall be paid over to the Secured Party to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Stock (or any other Collateral) or any property (cash or non-cash) shall be distributed upon or with respect to the Pledged Stock (or any other Collateral) pursuant to the recapitalization or reclassification of the capital of the Borrower or pursuant to the reorganization thereof, the property so distributed shall be delivered to the Secured Party to be held by the Secured Party hereunder as additional collateral security for the Obligations. If any sums of money or property so paid or distributed in respect of the Pledged Stock (or any other Collateral) shall be received by the Pledgor, the Pledgor shall, until such money or property is paid or delivered to the Secured Party, hold such money or property in trust for the Secured Party, segregated from other funds of the Pledgor, as additional collateral security for the Obligations and so immediately deliver it to the Secured Party. (b) Without the prior written consent of the Secured Party, the Pledgor will not directly or indirectly (i) vote to enable, or take any other action to permit, TFCI and/or AVest, as the case may be, to hereafter issue any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of TFCI and/or AVest, as the case may be, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Collateral, or permit any action to be taken in furtherance of any of the foregoing, or (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral or any interest therein, except for the Lien provided for by this Pledge Agreement and any other Liens in favor of the Secured Party. The Pledgor will defend the right, title and interest of the Secured Party in and to the Collateral against the claims and demands of all Persons whomsoever. (c) At any time and from time to time, upon the written request of the Secured Party, and at the sole expense of the Pledgor, the Pledgor will promptly and duly execute and/or deliver such further instruments and other documents and take such further actions as the Secured Party may request to perfect its security interest in any and all Collateral, or may otherwise reasonably request for the purposes of obtaining or preserving the full benefits of this Pledge Agreement and of any and all of the rights, remedies and powers herein granted. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or chattel -6- paper, such note, instrument or chattel paper shall be immediately delivered to the Secured Party, duly endorsed in a manner satisfactory to the Secured Party, to be held as additional collateral pursuant to this Pledge Agreement. (d) The Pledgor agrees to pay, and to save the Secured Party harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Pledge Agreement or the exercise by the Secured Party of any of its rights, remedies or powers hereunder. 6. VOTING RIGHTS; DIVIDENDS. Unless an Event of Default shall have occurred and be continuing, the Pledgor shall be permitted to exercise all voting and corporate rights with respect to the Pledged Stock, PROVIDED, HOWEVER, that Pledgor covenants to the Secured Party that no vote shall be cast or corporate right exercised or other action taken by Pledgor which, in the Secured Party's reasonable judgment, would impair the Collateral or which would be inconsistent with or result in any violation of any provision of any agreement or instrument relating to any Obligation or any agreement or instrument between Secured Party and Borrower or from Borrower to Secured Party, including without limitation the Credit Agreement, this Agreement, or any other Financing Document (as defined in the Credit Agreement). The Secured Party, if an Event of Default shall have occurred or be continuing, shall have the right to receive and hold as additional collateral any dividends or other distributions on the Pledged Stock or other Collateral and, in the event that the Pledgor shall be delivered or otherwise have received (or be entitled to receive) any such dividends or other distributions, Pledgor shall hold same in trust and immediately turn over same to the Secured Party who may hold same as additional collateral. 7. RIGHTS OF THE SECURED PARTY. (a) If any Event of Default shall occur and be continuing, (A) any and all shares of the Pledged Stock (and any other applicable Collateral) may, at the Secured Party's option, be registered in the name of the Secured Party or its nominee, and/or (B) the Secured Party or its nominee may exercise (i) all voting, corporate and any other rights pertaining to the Pledged Stock (and any other applicable Collateral), whether at any meeting of shareholders of TFCI and/or AVest, as the case may be, or otherwise and/or (ii) any and all rights of conversion, exchange, subscription and any other rights, privileges or options pertaining to the Pledged Stock (and any other applicable Collateral) as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Stock (and any other applicable Collateral) upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of TFCI and/or AVest, as the case may be, or upon the exercise by the Pledgor or the Secured Party of any right, privilege or option pertaining to such shares of the Pledged Stock (and any other applicable Collateral), and in connection therewith, the right to deposit and -7- deliver any and all of the Pledged Stock (and any other applicable Collateral) with any committee, depository, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine), all without liability to the Pledgor, but the Secured Party shall have no duty to the Pledgor to exercise any of the foregoing rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. (b) The rights of the Secured Party under this Agreement shall not be conditioned or contingent upon the pursuit by the Secured Party of any right or remedy against the Pledgor or against any other Person or against any security or collateral. The Secured Party shall have no obligation or duty (and shall not be liable for any failure) to demand, collect, apply or realize upon all or any part of the Collateral or for any delay in doing so, to collect or to sell or otherwise dispose of any Collateral (whether upon the request of the Pledgor or any other Person or otherwise and whether or not an Event of Default has occurred or the value of the Collateral has (or may) increase or decrease), to advise the Pledgor of any actual or anticipated changes in the value of the Collateral, to act as an investment advisor or insurer of any of the Collateral, to preserve rights against prior parties, to protect Collateral (except, with respect to Collateral in its possession, as specifically set forth in Section 12 below), to take any other action whatsoever with regard to the Collateral or any part thereof, or to seek payment from any particular source, and any such obligation or duty is hereby waived to the fullest extent permitted by applicable law. 8. REMEDIES. If an Event of Default shall occur and be continuing, the Secured Party may exercise, in addition to all other rights, remedies and powers granted in this Pledge Agreement or in any other instrument or agreement, all rights, remedies, and powers whether as a secured party or otherwise, under the Code or other applicable law. Without limiting the generality of the foregoing, the Secured Party, without the need for demand of payment or other performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Pledgor, TFCI, AVest or any other Person (all of which demands, defenses, advertisements and notices are hereby waived), may at any and all times demand, sue for, collect, receive, appropriate and/or realize upon any or all of the Collateral, and/or make any settlement or compromise which the Secured Party reasonably deems desirable with respect to any or all Collateral, and/or sell, assign, give option or options to purchase or otherwise dispose of and deliver any and all the Collateral (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, in the over-the-counter market, at any exchange, broker's board or office of the Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in the Pledgor, which right or equity is, to the fullest extent permitted under applicable law, hereby waived. The Secured -8- Party shall have the right to apply any Proceeds from time to time held by it and the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred in respect thereof or incidental to the care or safekeeping by the Secured Party (or any agent or representative of the Secured Party) of any of the Collateral or in any way relating to the Collateral or the rights, remedies or powers of the Secured Party hereunder, including, without limitation, reasonable attorneys' fees and disbursements of counsel to the Secured Party, to the payment of any and all of the Obligations (whether matured or unmatured), in such order and manner as the Secured Party may elect, and only after such application and after the payment by the Secured Party of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the Secured Party account for the surplus, if any, to the Pledgor. To the extent permitted by applicable law, the Pledgor waives all claims, damages and demands it may acquire against the Secured Party arising out of the exercise by the Secured Party of any rights, remedies or powers hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, ten (10) calendar days prior written notice of the time and place of any public sale or of the time after which any private sale or other intended disposition is to be made shall be deemed reasonable. The Pledgor further waives and agrees not to assert any rights or privileges which it may acquire under Section 9-112 of the Code. The Pledgor shall remain fully liable for any deficiency if the proceeds of any sale or other disposition or any application of the Collateral are insufficient to pay the Obligations and the costs and expenses of the Secured Party. Nothing contained in this Agreement shall be interpreted or construed so as to require the Secured Party to realize upon the Collateral prior to attempting to collect any of the Obligations, and the Secured Party may exercise all of its various rights, remedies and powers in such order and manner as Secured Party, in its discretion, shall deem advisable. 9. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the Secured Party shall determine to exercise its right to sell any or all of the Pledged Stock (or other applicable Collateral) pursuant to Section 8 hereof, and if in the reasonable judgment of the Secured Party it is necessary or advisable to have the Pledged Stock (or other applicable Collateral), or any portion thereof, to be sold in a transaction which is required to be registered under the provisions of the Securities Act of 1933, as amended (the "Securities Act"), the Pledgor will cause TFCI and/or AVest, as the case may be, to (i) execute and deliver, and cause the directors and officers of the to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Secured Party, necessary or advisable to register the Pledged Stock (and, if requested by the Secured Party, such other Collateral), or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use Pledgor's best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock (and if requested by the Secured Party, such other Collateral) or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the -9- Secured Party, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. The Pledgor agrees to cause TFCI and/or AVest, as the case may be, to comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions which the Secured Party shall designate and to make available to its security holders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 11(a) of the Securities Act. (b) The Pledgor recognizes that the Secured Party may be unable to effect a public sale of any or all the Pledged Stock (or other applicable Collateral), by reasons of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise (including without limitation the impracticability of such a public sale due to the value of the Pledged Stock or otherwise), and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. The Pledgor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Secured Party shall be under no obligation to delay a sale of any of the Pledged Stock (or other Collateral) for the period of time necessary to permit the Borrower to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if the Borrower would agree to do so. (c) The Pledgor further agrees to use Pledgor's best efforts to do or cause to be done all such other acts as may be necessary to make any sale or sales of all or any portion of the Pledged Stock (or other Collateral) pursuant to this Pledge Agreement valid and binding and in compliance with any and all other applicable requirements of law. The Pledgor further agrees that a breach of any of the covenants contained in this Section 9 will cause irreparable injury to the Secured Party, that the Secured Party has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 9 shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred. 10. RIGHTS OF SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY. The Pledgor shall not enforce any rights that the Pledgor may at any time have against TFCI and/or AVest, as the case may be, any other guarantor or any applicable collateral, including, but not limited to, rights of subrogation, exoneration, indemnity, reimbursement and contribution and whether arising by operation of law or otherwise, until all of the Obligations have been paid, observed -10- and performed in full, except that this Section shall not apply to routine acts, such as the giving of notices and the filing of continuation statements, necessary to preserve any such rights. 11. CERTAIN WAIVERS. The Pledgor waives (i) diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon TFCI and/or AVest, as the case may be, or the Pledgor with respect to the Obligations or any obligations or liabilities of the Borrower to the Secured Party and (ii) the benefit of any marshalling doctrine with respect to the Secured Party's exercise of its rights, remedies or powers hereunder or otherwise. 12. LIMITATION ON DUTIES REGARDING COLLATERAL. The Secured Party's sole duty with respect to the custody, safekeeping and physical preservation and protection of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Secured Party deals with similar securities and property for its own account. Neither the Secured Party nor any of its officers, employees or agents shall be (i) liable or responsible for any failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or for any change in the value of any Collateral (whether before or after an Event of Default) or (ii) under any obligation to sell or otherwise dispose of any Collateral, whether upon the request of the Pledgor or otherwise. 13. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. 14. SEVERABILITY. Any provision of this Pledge Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in such jurisdiction, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15. PARAGRAPH HEADINGS. The paragraph headings used in this Pledge Agreement are for convenience of reference only and shall not affect the construction hereof or be taken into consideration in the interpretation hereof. 16. NO WAIVER; CUMULATIVE REMEDIES; WAIVERS AND AMENDMENTS. (a) The Secured Party shall not by any act (except by a written instrument executed and delivered by the Secured Party in accordance with subparagraph (b) below), delay, indulgence, omission or otherwise be deemed to have waived any right, remedy or power hereunder or to have acquiesced in any Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, remedy or power shall operate as a waiver thereof. No single or partial exercise of any right, remedy or power hereunder shall preclude any other or further exercise thereof or the exercise of any other right, remedy or power. A waiver by the Secured Party of any right, remedy or power hereunder on -11- any one occasion shall not be construed as a bar to any right, remedy or power which the Secured Party would otherwise have on any future occasion. The rights, remedies and powers of the Secured Party herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights, remedies or powers provided by applicable law or any other agreement, instrument or other document. Secured Party may exercise any or all such rights, remedies and powers at any time(s) in any order which Secured Party chooses. (b) None of the terms or provisions of this Pledge Agreement may be amended, waived, supplemented or otherwise modified except by a written instrument executed and delivered by the party sought to be charged. 17. SUCCESSORS AND ASSIGNS. This Pledge Agreement shall be binding upon the successors, assigns, heirs and representatives of the Pledgor and shall inure to the benefit of the Secured Party and its successors and assigns. 18. NOTICES. Notices by one party to the other shall be in writing and may be given by mail, by overnight mail sent by Federal Express or other nationally recognized overnight courier, or delivery by hand, addressed to such party at the address set forth in the first paragraph hereof and shall be deemed given (a) in the case of mail, four (4) Business Days after being deposited in the mail, first class postage pre-paid, (b) in the case of overnight mail, one (1) Business Day after being sent by overnight mail, and (c) in the case of delivery by hand, when delivered. Either party may change its address for delivery of notices by written notice to the other in the manner set forth in this Section 18. 19. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO BORROWER. The Pledgor hereby irrevocably authorizes and instructs each of TFCI and AVest to comply with any instruction received by it from the Secured Party, on demand, in writing that (a) states that an Event of Default has occurred and (b) is otherwise in accordance with the terms of this Pledge Agreement, without any other or further instructions from the Pledgor, and the Pledgor agrees that TFCI and AVest shall be fully protected in so complying. 20. COSTS AND EXPENSES. The Pledgor hereby agrees to pay or reimburse the Secured Party, on demand, for all costs and expenses (including without limitation all reasonable attorneys' fees and disbursements and the reasonable fees and disbursements of all other experts including without limitation all accountants and appraisers) incurred by the Secured Party in connection with administrating, preserving, defending, protecting, exercising or enforcing this Pledge Agreement or any of its rights, remedies and powers hereunder, or attempting to do any of the foregoing, including without limitation all costs and expenses incurred in connection with the exercise of any right, remedy or power with respect to the Collateral. -12- 21. INTEGRATION. This Pledge Agreement represents the agreement of the Pledgor to the Secured Party with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Secured Party relative to the subject matter hereof not expressly set forth or referred to herein or in the Guaranty. 22. GENDER. Whenever the context herein so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice-versa. 23. COUNTERPARTS. This Pledge Agreement may be executed in counterparts, each of which shall be considered an original but all of which together shall be deemed one instrument. 24. GOVERNING LAW; JURY TRIAL WAIVER. (a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PLEDGOR UNDER THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER. (b) THE PLEDGOR HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR OUT OF, OR OTHERWISE RELATED TO OR CONNECTED WITH, THIS PLEDGE AGREEMENT. -13- IN WITNESS WHEREOF, the undersigned has executed and delivered this Pledge Agreement as of the day and year first above written. WITNESS: ASTREX, INC. /S/ EDWARD A. WEISS /S/ IRENE MARCIC - ------------------------ ------------------------- Name: Edward A. Weiss Name: Irene Marcic Title: Vice President -14- ACKNOWLEDGMENT AND CONSENT Each of TFCI and AVest as referred to in the foregoing Pledge Agreement hereby acknowledges receipt of a copy thereof and agrees to be bound thereby, to comply with the terms thereof insofar as such terms are in any way applicable to each of them, and to not take any action inconsistent with such terms. TFCI and AVest agree to notify the Secured Party promptly in writing of the occurrence of any of the events described in Section 5(a) of the Pledge Agreement. T.F. CUSHING, INC. By: /S/ IRENE MARCIC ------------------------- Name: Irene Marcic Title: Vice President AVEST, INC. By: /S/ IRENE MARCIC ------------------------- Name: Irene Marcic Title: Vice President -15- SCHEDULE I To Pledge AGREEMENT --------- DESCRIPTION OF PLEDGED STOCK ================================================================================ GUARANTOR OWNED BY CLASS STOCK NO. OF OF STOCK CERTIFICATE NO. SHARES ================================================================================ T.F. Cushing, Inc. Astrex, Inc. Common 8 99 ================================================================================ AVest, Inc. Astrex, Inc. Common 1 11,725,907 ================================================================================ EX-10.D 6 EXHIBIT 10(D) REVOLVING CREDIT PROMISSORY NOTE $2,500,000.00 Stamford, Connecticut July 9, 1997 FOR VALUE RECEIVED, ASTREX INC., a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of Fleet National Bank (the "Lender" or "Bank"), at the office of the Lender located at One Landmark Square, Stamford, Connecticut, or such other office as the holder hereof may designate, in lawful money of the United States and in immediately available funds, the principal sum of Two Million Five Hundred Thousand Dollars ($2,500,000.00) or, if less, the aggregate unpaid amount of all Revolving Credit Loans (as defined in the Credit and Security Agreement referred to below) made by the Lender to the Borrower pursuant to the Credit and Security Agreement, together with interest thereon as provided for below. All capitalized terms unless defined herein shall have the meanings assigned to them in the Credit and Security Agreement. 1. PAYMENT OF PRINCIPAL. Borrower shall pay the outstanding principal balance of each Revolving Credit Loan in full on the Revolving Credit Maturity Date. 2. INTEREST RATE; PAYMENT OF INTEREST. Borrower shall pay interest on the aggregate unpaid principal balance of the Revolving Credit Loans outstanding from time to time at the applicable rate or rates set forth in Credit and Security Agreement, dated of even date herewith between the Borrower, T.F. Cushing, Inc. and the Lender, as same may be amended, supplemented or otherwise modified from time to time (the "Credit and Security Agreement"). Interest shall be payable, in arrears, and on each Revolving Credit Interest Payment Date and shall also be payable on the Revolving Credit Maturity Date. Anything contained in this Note to the contrary notwithstanding, during any period in which an Event of Default is continuing, the interest rate hereunder shall, at the option of the Lender, be increased to the Revolving Credit Default Rate, and all interest accruing at such rate shall be payable upon demand by the Lender. Interest shall commence to accrue on the date hereof and shall continue to accrue until all principal hereof is paid in full (whether before or after maturity or judgment). Interest under this Note shall be computed on the basis of a year of three hundred sixty (360) days and the actual number of days elapsed. 3. OPTIONAL AND MANDATORY PREPAYMENTS. Optional and mandatory prepayments of the Revolving Credit Loans shall be made in accordance with Section 1.7 of the Credit and Security Agreement. 4. EXPENSES. Borrower shall pay or reimburse the Lender, on demand, for all costs and expenses, including, but not limited to, the reasonable fees and disbursements of legal counsel, appraisers, accountants and other experts employed by the Lender, incurred in the administration, -2- preservation, defense, protection, or collection or other enforcement of this Note or in foreclosing or otherwise enforcing any security interest securing the payment of this Note or in sustaining or protecting the lien or priority of any such security interest, or in attempting to do any of the foregoing. 5. CREDIT AND SECURITY AGREEMENT; LENDER'S RECORDS. This Note evidences Revolving Credit Loans under, and has been executed and delivered by the Borrower in accordance with, the terms and conditions of the Credit and Security Agreement, which Credit and Security Agreement, among other things, contains provisions with respect to prepayment (optional and mandatory), and the acceleration of the unpaid principal of, and accrued and unpaid interest on the Revolving Credit Loans upon the occurrence and at any time during the continuance of any Event of Default. The Lender is entitled to the benefits of the Credit and Security Agreement and the other Financing Documents and may enforce the covenants and other agreements of the Borrower contained therein, and the Lender may exercise the respective rights, remedies and powers provided for thereby or otherwise available in respect thereof, all in accordance with the respective terms thereof. The records of the Lender shall be prima facie evidence of the Revolving Credit Loans, any accrued interest thereon and all principal and interest payments made in respect thereof; provided, that no failure of the Lender to timely record any transaction, or any error therein, shall in any way affect or impair any liability or other obligation of the Borrower to the Lender. 6. CERTAIN WAIVERS. Borrower and any indorser hereof or any other party hereto or any guarantor hereof (collectively, the "Obligors") and each of them (i) waive(s) presentment, diligence, protest, demand, notice of demand, notice of acceptance or reliance, notice of non-payment, notice of dishonor, notice of protest and all other notices to parties in connection with the delivery, acceptance, performance, default or enforcement of this Note, any indorsement or guaranty of this Note, or any collateral or other security; (ii) consent(s) to any and all delays, extensions, renewals or other modifications of this Note, any other Financing Document or the debt(s) or collateral evidenced hereby or thereby or any waivers of any term hereof or thereof, any release, surrender, taking of additional, substitution, exchange, failure to perfect or record any interest in, failure to preserve or realize upon, failure to lawfully dispose of, or any other impairment of, any collateral or other security, or any other failure to act by the Lender or any other forbearance or indulgence shown by the Lender, from time to time and in one or more instances (without notice to or assent from any of the Obligors) and agree(s) that none of the foregoing shall release, discharge or otherwise impair any of their liabilities; (iii) agree(s) that the full or partial release or discharge of any Obligor(s) shall not release, discharge or otherwise impair the liabilities of any other Obligor(s); and (iv) waive(s) any defenses based on suretyship or impairment of collateral. 7 COMMERCIAL TRANSACTION; JURY WAIVER. (a) THE BORROWER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A "COMMERCIAL TRANSACTION" WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, AND THAT ANY MONIES, PROPERTY OR SERVICES WHICH ARE THE SUBJECT OF SUCH TRANSACTION ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE BORROWER HEREBY -3- WAIVES ANY RIGHT WHICH BORROWER MIGHT HAVE TO A NOTICE AND A HEARING, UNDER SECTIONS 52-278a-52-278g, INCLUSIVE, OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER APPLICABLE FEDERAL OR STATE LAW, IN THE EVENT THE LENDER (OR ITS SUCCESSORS OR ASSIGNS) SEEKS ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS NOTE, THE CREDIT AND SECURITY AGREEMENT OR ANY OTHER FINANCING DOCUMENT. (b) THE BORROWER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR OUT OF, OR OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH THIS NOTE OR ANY OTHER FINANCING DOCUMENT. 8. BINDING NATURE. This Note shall bind the Borrower and Borrower's successors and assigns and shall inure to the benefit of the Lender and its successors and assigns. The term "Lender" as used herein shall include, in addition to the Lender, any successors, indorsees, or other assignees of Lender and shall also include any other holder of this Note. Any transferee of this Note shall have the rights of a holder in due course under Article 3 of the Connecticut Uniform Commercial Code if the transferee took rights under this Note in good faith for value and without notice of a claim or defense. 9. GOVERNING LAW. This Note shall be governed by, and construed and interpreted in accordance with the laws the State of Connecticut, without regard to its rules pertaining to conflicts of laws thereunder. IN WITNESS WHEREOF, the Borrower has executed and delivered this Note as of the day and year first written above. WITNESS: ASTREX, INC. BY: /S/ EDWARD A. WEISS BY: /S/ IRENE S. MARCIC - -------------------------------------------------------------------------------- Name: Edward A. Weiss Name: Irene S. Marcic Title: Vice President EX-10.E 7 EXHIBIT 10(E) GUARANTY AGREEMENT Guaranty Agreement, dated as of July 9, 1997, between AVEST, INC., a Delaware corporation, (the "Guarantor"), having an address at 205 Express Street, Plainview, New York, and FLEET NATIONAL BANK, a national banking association (the "Guaranteed Party" or "Lender"), having offices at One Landmark Square, Stamford, Connecticut 06901. W I T N E S S E T H ------------------- WHEREAS, simultaneously with the execution and delivery of this Agreement, Astrex, Inc. (the "Borrower"), T.F. Cushing, Inc., a Massachusetts corporation, and the Guaranteed Party are executing and delivering a Credit and Security Agreement (as same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement") of even date herewith; and WHEREAS, it is a condition precedent to the Guaranteed Party extending any credit (or other financial accommodations) to the Borrower under the Credit Agreement that the Guarantor execute and deliver this Agreement; and WHEREAS, the Guarantor shall derive substantial and material benefits, financial and otherwise, from any extension of credit or other financial accommodation to the Borrower under the Credit Agreement, including, without limitation, the fact that loans under the Credit Agreement will enable the Borrower to make payments to the Guarantor under that certain Lease Agreement dated June 30, 1994 by and between Borrower and the Guarantor; and WHEREAS, the Borrower owns 100% of the capital stock of the Guarantor; and WHEREAS, the Guarantor benefits, financially and otherwise, from its relationship with the Borrower; and NOW THEREFORE, in consideration of the premises, and to induce the Guaranteed Party to make any extension of credit or other financial accommodation to the Borrower under the Credit Agreement, and in consideration of any other accommodations, financial or otherwise, given or to be given or continued by the Guaranteed Party to the Borrower, and for other good and valuable consideration, the receipt and sufficiency of which the parties hereto hereby acknowledge, the Guarantor and Guaranteed Party hereby agree as follows: -2- GUARANTY A. GUARANTY. (a) The Guarantor unconditionally and absolutely guarantees to the Guaranteed Party the full and prompt payment and performance when due (whether at maturity or by reason of acceleration, demand, mandatory prepayment, the provisions of Section 1(b) below, or otherwise) of any and all of the Guaranteed Obligations (as hereinafter defined). "Guaranteed Obligations" shall mean all indebtedness, liabilities, and other obligations of the Borrower due or owing to, or in favor or for the benefit of, the Guaranteed Party, of every kind, nature and description, direct or indirect, absolute or contingent, independent, joint or several, due or not due, contractual or tortious, liquidated or unliquidated, arising by reason of any agreement, instrument or other document or by operation of law or otherwise, and whether now existing or hereafter arising, and whether or not incurred after other Guaranteed Obligations have been paid (whether in full or in part), and whether or not now contemplated, including without limitation all principal, interest, reimbursement obligations and costs and fees (including, without limitation, all attorneys' fees and disbursements), and all amounts owed pursuant to any indemnification provisions. The Guaranteed Obligations shall include, but shall not be limited to, (i) all present and future indebtedness, liabilities and other obligations under, arising out of or otherwise relating to the Credit Agreement, the Note (as defined in the Credit Agreement), or any other Financing Document (as defined in the Credit Agreement), including without limitation all principal, interest and costs and fees (including, without limitation, all attorneys' fees and disbursements) and also any and all overadvances or overdrafts. (b) In addition to, and not in any way in limitation of, any other event(s) or circumstance(s) pursuant to which any or all of the Guaranteed Obligations shall or may become due, all Guaranteed Obligations shall, for purposes of this Guaranty Agreement, be deemed and considered due upon any Act of Insolvency (as defined below). "Act of Insolvency" shall mean the commencement of any case, proceeding or other action, whether voluntary or involuntary, under any bankruptcy, insolvency, receivership, reorganization, liquidation, arrangement, composition, readjustment or similar law, whether state or federal, with respect to the Borrower, the Guarantor or any other Person (as defined in the Credit Agreement) liable for any or all of the Guaranteed Obligations, or the Borrower, Guarantor or any such Person shall make an assignment for the benefit of creditors, generally not be paying its debts when they become due or admit in writing such Person's inability to pay such Person's debts as they become due. 2. DUE ON DEMAND; NO DEDUCTION IN CONNECTION WITH PAYMENT. All obligations of the Guarantor under Section 1 above are payable on demand by the Guaranteed Party, without the need to first take action against the Borrower or any other Person (as defined in the Credit Agreement) or any collateral. All payments due the Guaranteed Party hereunder (whether under Section 1 or otherwise), shall be made by the Guarantor without any deduction whatsoever, including, but not limited to, any deduction for any set-off, recoupment, or counterclaim. 3. UNCONDITIONAL NATURE OF GUARANTOR'S OBLIGATIONS; NO RELEASE OF GUARANTOR; JOINT AND SEVERAL. (a) The Guarantor's obligations hereunder (i) are absolute and unconditional, and (ii) constitute a guaranty of payment and not merely a guaranty of collection. THE OBLIGATIONS OF THE GUARANTOR HEREUNDER SHALL NOT BE REDUCED, LIMITED OR TERMINATED, NOR SHALL THE GUARANTOR BE DISCHARGED FROM ANY -3- THEREOF, FOR ANY REASON WHATSOEVER (other than, subject to Section 5, the full payment and performance of the Guaranteed Obligations and termination of all credit facilities between the Lender and the Borrower), including, but not limited to, any or all of the following (and whether or not any or all of the following shall have occurred or failed to occur once or more than once or in whole or in part, and whether or not the Guarantor shall have received notice thereof or assented thereto): (i) any increase or decrease in principal or any interest rate, any extension, indulgence, postponement, renewal, waiver, amendment or other modification with respect to any of the Guaranteed Obligations or any agreement or instrument related thereto, or the taking or the omission of any of the actions referred to in any such agreement or instrument or otherwise; (ii) any addition, substitution, exchange, sale, surrender, or release of any collateral or other property; (iii) any failure, omission or delay (whether any of the foregoing is intentional or unintentional) to attach, grant, perfect or record any security interest, mortgage, assignment or other Lien (as defined in the Credit Agreement) in or on any collateral, or any failure to record any document; (iv) any failure, omission or delay (whether any of the foregoing is intentional or unintentional) in enforcing, assenting to or exercising any right, remedy or power; (v) any realization upon or other dealings with any collateral or other property; (vi) the addition, release (whether by contract, operation of law or otherwise), discharge, death, bankruptcy or insolvency of any Person primarily, secondarily or otherwise liable for any of the Guaranteed Obligations, or any settlement or compromise of any of the Guaranteed Obligations or with respect to any such Person; (vii) any direction of application of payment with respect to, or any subordination of the right to payment of or of any collateral for, any Guaranteed Obligations or for any guaranty of same; or (viii) ANY OTHER ACT OR FAILURE TO ACT WHICH (A) VARIES THE RISK OF THE GUARANTOR HEREUNDER OR (B), BUT FOR THE PROVISIONS HEREOF, WOULD, AS A MATTER OF STATUTE OR RULE OF LAW OR EQUITY, OPERATE TO REDUCE, LIMIT OR TERMINATE THE OBLIGATIONS OF THE GUARANTOR HEREUNDER OR DISCHARGE THE GUARANTOR FROM ANY THEREOF. Guaranteed Party shall have no obligation to take, to collect or to protect any collateral (or other property) or any income thereon, nor to preserve any rights against prior or other parties, and the Guaranteed Party may proceed under this Guaranty immediately upon Borrower's default without resorting to or regard to any action against or with respect to the Borrower, any collateral or any other guaranty or source of payment. -4- (b) Settlement of any claim by the Guaranteed Party against the Borrower, whether or not in any proceeding, and whether voluntary or involuntary, shall not reduce the amount due under this Agreement except to the extent (subject to Section 5 hereof) of the amount actually paid by Borrower and legally retained by the Guaranteed Party in connection with the settlement. (c) The invalidity, irregularity, or unenforceability of all or any part of the Guaranteed Obligations or any agreement or instrument relating thereto, or the lack of validity, enforceability, perfection, impairment or loss of any Liens granted in connection therewith, whether caused by any action or inaction of the Guaranteed Party, or otherwise, shall not affect, impair, or be a defense to the Guarantor's obligations under this Agreement. (d) The obligations of the Guarantor hereunder are joint and several with any other guarantor (if any) of any of the Guaranteed Obligations, and the obligations of the Guarantor hereunder shall not be affected by any event or circumstance with respect to any such other guarantor. (e) In addition to, and in no way in limitation or impairment of, the Guarantor's other obligations under this Agreement, the Guarantor hereby covenants to take all actions (or non-action, if applicable) necessary so that the Borrower (and, to the extent applicable, TFCI) performs all obligations under the Credit Agreement relating to the Guarantor or its assets or other properties. As part of this, Guarantor covenants to not permit any Lien (as defined in the Credit Agreement) on the Plainview Real Estate (as defined in the Credit Agreement) and to not sell or otherwise transfer the Plainview Real Estate (or any part thereof). 4. CERTAIN WAIVERS. The Guarantor waives (to the fullest extent permitted by applicable law): (i) presentment, diligence, protest, demand, notice of demand, notice of acceptance or reliance, notice of the creation of any Guaranteed Obligation in reliance hereon, notice of non-payment, notice of dishonor, notice of protest, and all other notices (except notices, if any, expressly provided for herein), (ii) any requirement that any right, remedy or power first be exercised or any action first be taken against the Borrower, any other guarantor or any collateral for any of the Guaranteed Obligations or for any guaranty prior to the Guaranteed Party exercising its rights, remedies or powers, or taking any other action, with respect to the Guarantor; (iii) any right to defer or modify Guarantor's obligations hereunder by reason of any Act of Insolvency; (iv) notice of disposition of any collateral; (v) any defense based upon, arising out of or in any way related to (a) any claim that any sale or other disposition of any collateral for any of the Guaranteed Obligations was not conducted in a commercially reasonable manner, or that otherwise such sale or disposition was not in compliance with Applicable Law (as defined in the Credit Agreement), or (b) any claim that any election of remedies by the Guaranteed Party, or any other action of Guaranteed Party, impaired, reduced, released or extinguished any rights, including, but not limited to, any rights of subrogation, exoneration, indemnity, reimbursement and contribution, that the Guarantor might otherwise have had against the Borrower or any other guarantor or against any collateral; and (vi) ANY AND ALL OTHER DEFENSES, WHETHER ARISING UNDER ANY STATUTE OR AT LAW OR IN EQUITY, THAT WOULD, BUT FOR THIS CLAUSE (vi), BE AVAILABLE TO THE GUARANTOR AS A DEFENSE AGAINST OR REDUCTION OF ANY -5- OR ALL OF ITS LIABILITIES AND OTHER OBLIGATIONS HEREUNDER INCLUDING WITHOUT LIMITATION ANY DEFENSES OF A SURETY OR IMPAIRMENT OF COLLATERAL. 5. CONTINUING LIABILITY OF GUARANTOR. If, after receipt of any payment of all or any part of the Guaranteed Obligations, the Guaranteed Party is compelled, required or ordered or agrees, whether for settlement purposes or otherwise, to surrender such payment to any Person for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this Agreement shall continue in full force and effect, and the Guarantor shall be fully liable for hereunder, and shall indemnify, defend and hold harmless the Guaranteed Party with respect to, the full amount so surrendered. The provisions of this paragraph shall survive the cancellation, release or other termination of this Agreement or any other agreement or instrument, the release of any collateral or other property and/or any other action which the Guaranteed Party may have taken, whether in reliance upon receipt of such payment or otherwise. 6. SUBORDINATION OF RIGHTS OF SUBROGATION, ETC. The Guarantor hereby unconditionally subordinates, to the prior and indefeasible payment in full of all Guaranteed Obligations, any rights, claims or remedies that the Guarantor may at any time have against the Borrower (or any other guarantor or other Person liable for any of the Guaranteed Obligations) or any collateral for any of the Guaranteed Obligations, and which rights, claims or remedies arise under or otherwise relate to this Agreement or any other Financing Document and/or arise from or otherwise relate to the payment or other performance hereunder or thereunder including, but not limited to, rights, claims or remedies of subrogation, indemnity, exoneration, participation, reimbursement or contribution and whether any such rights, claims or remedies arise in equity, under contract, by statute, under common law or otherwise, and Guarantor hereby agrees not to assert any such rights, claims or remedies unless and until the Guaranteed Obligations are so paid in full and all credit arrangements between the Borrower and the Guaranteed Party are terminated. In addition, if any such rights, claims or remedies result in the Lender being an "insider" of the Borrower for purposes of the Federal Bankruptcy Code (or other similar law), such rights, claims or remedies are hereby waived. 7. CREDIT DECISION. The Guarantor has independently, and without reliance on any information supplied by the Guaranteed Party, taken, and will continue to take, whatever steps Guarantor deems necessary to evaluate the financial condition and affairs of the Borrower, and the Guaranteed Party shall have no duty to advise the Guarantor of information at any time known to Guaranteed Party regarding such financial condition or affairs. 8. CONTINUANCE OF GUARANTY. This is a continuing guaranty and shall remain in full force and effect, and shall be binding upon the Guarantor unless written notice sent by registered or certified mail, addressed to Fleet National Bank, One Landmark Square, Stamford, Connecticut 06901, Attention: Asset-Based Lending, of its revocation as to future Guaranteed Obligations shall actually be received by the Guaranteed Party at least five (5) days prior to the date set for such revocation in such notice. No such revocation shall release the Guarantor, or affect in any manner the Guaranteed Party's rights, remedies or powers under this Agreement, with respect to any Guaranteed Obligation (including without limitation any renewal, modification, substitution, replacement, extension, refunding or other refinancing thereof) arising prior to such date of -6- revocation (and including without limitation, for the avoidance of doubt, any and all reimbursement obligations relating to any letter of credit issued prior to the date of revocation and all loans made prior to such date (both principal and interest (whether such interest accrues before or after such date) and all collection and other costs and expenses (whenever accrued) relating in any way to any such Guaranteed Obligation). The revocation by any other guarantor of his/her/its guaranty shall not revoke or otherwise affect any obligations of the Guarantor hereunder. Guarantor has specifically considered the foregoing termination provisions and agrees they are reasonable. 9. RIGHTS AND REMEDIES CUMULATIVE AND NOT EXCLUSIVE. All of the Guaranteed Party's rights, remedies and powers hereunder shall be cumulative, and not exclusive, and may be exercised singly or concurrently, and shall be in addition to all other rights, remedies and powers of the Guaranteed Party under Applicable Law (as defined in the Credit Agreement) or under any other agreement, instrument or other document. Guaranteed Party may exercise any or all such rights, remedies or powers at any time(s) in any order which the Guaranteed Party chooses. 10. EXPENSES. The Guarantor shall pay, or reimburse the Guaranteed Party, on demand, for all of the Guaranteed Party's costs and expenses (including without limitation reasonable fees and disbursements of legal counsel, appraisers, accountants, and other experts, employed or retained by the Guaranteed Party) incurred in connection with protecting, preserving, defending, exercising or enforcing this Agreement or any of the rights, powers or remedies of the Guaranteed Party under this Agreement or in attempting to do any of the foregoing. 11. NO WAIVERS OF RIGHTS; AMENDMENTS; WHEREAS CLAUSES. The Guaranteed Party shall not by any act (except by a written instrument pursuant to the provisions of this Section set forth below), delay, indulgence, omission or otherwise be deemed to have waived any right, remedy or power hereunder or to have acquiesced in any default or other breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of the Guaranteed Party, any right, remedy or power shall operate as a waiver thereof. No single or partial exercise of any right, remedy or power hereunder shall preclude any other or further exercise thereof or the exercise of any other right, remedy or power. A waiver by the Guaranteed Party of any right, remedy or power hereunder on any one occasion shall not be construed as, or constituted a bar to, any right, remedy or power which the Guaranteed Party would otherwise have on any future occasion. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed and delivered by the party sought to be charged. The "Whereas" clauses in this Agreement shall form a substantive part of the agreement of the parties and the Lender in entering into the Credit Agreement is relying on the truth and accuracy of same. 12. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Connecticut without regard to rules pertaining to conflicts of laws thereunder. THE GUARANTOR HEREBY SUBMITS TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF CONNECTICUT IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR OTHERWISE RELATED TO OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT AND WAIVES ANY OBJECTION GUARANTOR MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN -7- INCONVENIENT COURT AND AGREES NOT TO PLEAD SAME. GUARANTOR AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE GUARANTOR AT THE ADDRESS OF THE GUARANTOR SET FORTH IN THE FIRST PARAGRAPH HEREOF OR SUCH OTHER ADDRESS OF WHICH THE GUARANTEED PARTY SHALL HAVE BEEN NOTIFIED PURSUANT TO SECTION 18 BELOW. GUARANTOR AGREES THAT NOTHING CONTAINED HEREIN SHALL EFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE GUARANTEED PARTY (OR ITS SUCCESSORS OR ASSIGNS) TO BRING ANY LEGAL ACTION OR PROCEEDING IN ANY OTHER JURISDICTION. 13. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but both of which together shall constitute one and the same instrument. 14. BINDING NATURE. This Agreement shall be binding upon the Guarantor and Guarantor's successors, assigns, heirs and representatives and shall inure to the benefit of and be enforceable by the Guaranteed Party, and Guaranteed Party's successors, assigns and representatives. The Guaranteed Party may sell or assign any or all of the Guaranteed Obligations, and any of its rights and obligations under any agreement or instrument, evidencing, governing, securing or otherwise relating thereto, and the transferee shall have the same rights hereunder with respect to the assigned Guaranteed Obligations as had the Guaranteed Party. Any successor to the Guaranteed Party (including without limitation any successor by merger) shall succeed to the full rights of the Guaranteed Party hereunder. The Guarantor may not assign the Guarantor's rights or duties hereunder without the prior written consent of the Lender. 15. SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in such jurisdiction, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 16. INTEGRATION. This Agreement represents the agreement of the Guarantor with respect to the subject matter hereof and supersede all oral negotiations and prior writings with respect to the subject matter hereof, AND THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE GUARANTEED PARTY RELATIVE TO THE SUBJECT MATTER HEREOF THAT ARE NOT EXPRESSLY SET FORTH OR REFERRED TO HEREIN. 17. LIEN; RIGHT OF SET-OFF. Guarantor hereby grants to the Guaranteed Party a lien and right of set-off for all of the Guarantor's liabilities or other obligations to the Guaranteed Party, whether hereunder or otherwise, upon and against all property of the Guarantor which may now be, or may in the future come into, the possession, custody or control of the Guaranteed Party, or be in transit to the Guaranteed Party, including but not limited to deposits (general or special, time or demand, matured or unmatured), credits, securities, instruments, or the proceeds thereof. The Guaranteed Party may at any time (whether or not Guaranteed Party has made demand hereunder) set-off and apply such property or any part thereof to any of the Guarantor's liabilities or other obligations to the Guaranteed Party, whether under this Agreement or otherwise, and whether or not any or all -8- such liabilities or other obligations are matured at the time of such set-off or application, even if effecting such set-off or application results in a loss or reduction of interest or the imposition of a penalty applicable to the early withdrawal of time deposits. 18. NOTICES. Notices by one party to the other hereunder shall be in writing, and shall be deemed to have been duly given or made when delivered by hand, or one Business Day (as defined in the Credit Agreement) after being sent by overnight mail by Federal Express or other nationally recognized overnight courier service, or four Business Days after being deposited in the mail, first class postage prepaid, in each case addressed to such other party at the address set forth in the first paragraph hereof. Either party may change its address for purposes of this paragraph by written notice to the other party sent in the manner set forth in this Section. Anything contained herein to the contrary, any notices to the Guaranteed Party referred to in Section 8 above are to be sent in accordance with the provisions thereof and shall only be deemed given when actually received. 19. NO RULE OF STRICT CONSTRUCTION; NUMBER AND GENDER. Guarantor acknowledges that Guarantor and Guarantor's counsel have had an opportunity to review this Agreement and no rule of strict construction shall be used against the Guaranteed Party. Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa. 20. INSURANCE COLLATERAL. As security for its obligations hereunder, the Guarantor hereby collaterally assigns to the Guaranteed Party all insurance (including casualty) proceeds with respect to the Plainview Real Estate (or any part thereof). In the event of any casualty or other loss with respect to the Plainview Real Estate (or part thereof), the insurance proceeds shall be dealt with and applied in the same manner as insurance proceeds with respect to Collateral (as defined in the Credit Agreement) are dealt with and applied pursuant to Section 4.3 of the Credit Agreement, the provisions of which Section are hereby incorporated by reference as if fully stated herein (with such conforming changes as shall be necessary, for such incorporation by reference including (i) "Collateral" shall mean the Plainview Real Estate (or applicable portion thereof) and (ii) applicable references to "Borrower" or "TFCI", as the case may be, shall refer to the Guarantor). 21. CERTAIN REPRESENTATIONS AND COVENANTS. IN ORDER TO INDUCE THE GUARANTEED PARTY TO MAKE EXTENSIONS OF CREDIT UNDER THE CREDIT AGREEMENT, THE GUARANTOR HEREBY REPRESENTS AND WARRANTS TO THE GUARANTEED PARTY THAT (I) THIS AGREEMENT IS THE LEGAL, VALID AND BINDING OBLIGATION OF THE GUARANTOR, ENFORCEABLE AGAINST THE GUARANTOR IN ACCORDANCE WITH ITS TERMS, (II) THE EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS AGREEMENT HAS BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE AND, IF REQUIRED, STOCKHOLDER ACTION, (III) THE EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS AGREEMENT IS AND WILL BE WITHIN THE GUARANTOR'S POWERS, CORPORATE AND OTHERWISE, AND DOES NOT AND WILL NOT VIOLATE OR BREACH ANY STATUTE, REGULATION, OR OTHER APPLICABLE LAW (AS DEFINED IN THE CREDIT AGREEMENT) OR THE GUARANTOR'S CERTIFICATE OF INCORPORATION OR BY-LAWS. 22. WAIVER OF TRIAL BY JURY; CHAPTER 903(A) WAIVER; WAIVER OF CONSEQUENTIAL DAMAGES. -9- (a) THE GUARANTEED PARTY AND THE GUARANTOR EACH VOLUNTARILY AND KNOWINGLY WAIVE TRIAL BY JURY AND THEIR RESPECTIVE RIGHTS THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND TO WHICH THEY ARE BOTH PARTIES AND THAT IN ANY WAY ARISES UNDER OR OUT OF OR IS OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT OR INSTRUMENT (INCLUDING WITHOUT LIMITATION ANY FINANCING DOCUMENT). (b) THE GUARANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A "COMMERCIAL TRANSACTION" WITHIN THE MEANING OF CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, AND THAT ANY MONIES, PROPERTY OR SERVICES WHICH ARE THE SUBJECT OF SUCH TRANSACTION ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE GUARANTOR KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT WHICH GUARANTOR MIGHT HAVE TO A NOTICE AND A HEARING UNDER SECTIONS 52-278A TO 52-278G, INCLUSIVE, OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER APPLICABLE FEDERAL OR STATE LAW, IN THE EVENT THE GUARANTEED PARTY (OR ITS SUCCESSORS OR ASSIGNS) SEEKS ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS AGREEMENT. (c) GUARANTOR HEREBY FURTHER WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT GUARANTOR MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR OTHERWISE RELATED TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first written above. WITNESSES: AVEST, INC. /S/ EDWARD A. WEISS By: /S/ IRENE MARCIC - ----------------------- -------------------------------------- Name: Edward A. Weiss Name: Irene Marcic Title: Vice President Fleet National Bank /S/ EDWARD A. WEISS By: /S/ ANTHONY MCKIERNAN - ----------------------- -------------------------------------- Name: Edward A. Weiss Name: Anthony M. McKiernan Title: Assistant Vice-President EX-10.F 8 EXHIBIT 10(F) GUARANTY AGREEMENT Guaranty Agreement, dated as of July 9, 1997, between T.F. Cushing, Inc., a Massachusetts corporation, (the "Guarantor"), having an address at 126 Myron Street, West Springfield, Massachusetts, and FLEET NATIONAL BANK, a national banking association (the "Guaranteed Party" or "Lender"), having offices at One Landmark Square, Stamford, Connecticut 06901. W I T N E S S E T H ------------------- WHEREAS, simultaneously with the execution and delivery of this Agreement, Astrex, Inc. (the "Borrower"), the Guarantor and the Guaranteed Party are executing and delivering a Credit and Security Agreement (as same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement") of even date herewith; and WHEREAS, it is a condition precedent to the Guaranteed Party extending any credit (or other financial accommodations) to the Borrower under the Credit Agreement that the Guarantor execute and deliver this Agreement; and WHEREAS, the Guarantor shall derive substantial and material benefits, financial and otherwise, from any extension of credit or other financial accommodation to the Borrower under the Credit Agreement. NOW THEREFORE, in consideration of the premises, and to induce the Guaranteed Party to make any extension of credit or other financial accommodation to the Borrower under the Credit Agreement, and in consideration of any other accommodations, financial or otherwise, given or to be given or continued by the Guaranteed Party to the Borrower, and for other good and valuable consideration, the receipt and sufficiency of which the parties hereto hereby acknowledge, the Guarantor and Guaranteed Party hereby agree as follows: GUARANTY A. GUARANTY. (a) The Guarantor unconditionally and absolutely guarantees to the Guaranteed Party the full and prompt payment and performance when due (whether at maturity or by reason of acceleration, demand, mandatory prepayment, the provisions of Section 1(b) below, or otherwise) of any and all of the Guaranteed Obligations (as hereinafter defined). "Guaranteed Obligations" shall mean all indebtedness, liabilities, and other obligations of the Borrower due or owing to, or in favor or for the benefit of, the Guaranteed Party, of every kind, nature and description, direct or indirect, absolute or contingent, independent, joint or several, due or not due, contractual or tortious, liquidated or unliquidated, arising by reason of any agreement, instrument or -2- other document or by operation of law or otherwise, and whether now existing or hereafter arising, and whether or not incurred after other Guaranteed Obligations have been paid (whether in full or in part), and whether or not now contemplated, including without limitation all principal, interest, reimbursement obligations and costs and fees (including, without limitation, all attorneys' fees and disbursements), and all amounts owed pursuant to any indemnification provisions. The Guaranteed Obligations shall include, but shall not be limited to, (i) all present and future indebtedness, liabilities and other obligations under, arising out of or otherwise relating to the Credit Agreement, the Note (as defined in the Credit Agreement), or any other Financing Document (as defined in the Credit Agreement), including without limitation all principal, interest and costs and fees (including, without limitation, all attorneys' fees and disbursements) and also any and all overadvances or overdrafts. (b) In addition to, and not in any way in limitation of, any other event(s) or circumstance(s) pursuant to which any or all of the Guaranteed Obligations shall or may become due, all Guaranteed Obligations shall, for purposes of this Guaranty Agreement, be deemed and considered due upon any Act of Insolvency (as defined below). "Act of Insolvency" shall mean the commencement of any case, proceeding or other action, whether voluntary or involuntary, under any bankruptcy, insolvency, receivership, reorganization, liquidation, arrangement, composition, readjustment or similar law, whether state or federal, with respect to the Borrower, the Guarantor or any other Person (as defined in the Credit Agreement) liable for any or all of the Guaranteed Obligations, or the Borrower, Guarantor or any such Person shall make an assignment for the benefit of creditors, generally not be paying its debts when they become due or admit in writing such Person's inability to pay such Person's debts as they become due. 2. DUE ON DEMAND; NO DEDUCTION IN CONNECTION WITH PAYMENT. All obligations of the Guarantor under Section 1 above are payable on demand by the Guaranteed Party, without the need to first take action against the Borrower or any other Person (as defined in the Credit Agreement) or any collateral. All payments due the Guaranteed Party hereunder (whether under Section 1 or otherwise), shall be made by the Guarantor without any deduction whatsoever, including, but not limited to, any deduction for any set-off, recoupment, or counterclaim. 3. UNCONDITIONAL NATURE OF GUARANTOR'S OBLIGATIONS; NO RELEASE OF GUARANTOR; JOINT AND SEVERAL. (a) The Guarantor's obligations hereunder (i) are absolute and unconditional, and (ii) constitute a guaranty of payment and not merely a guaranty of collection. THE OBLIGATIONS OF THE GUARANTOR HEREUNDER SHALL NOT BE REDUCED, LIMITED OR TERMINATED, NOR SHALL THE GUARANTOR BE DISCHARGED FROM ANY THEREOF, FOR ANY REASON WHATSOEVER (other than, subject to Section 5, the full payment and performance of the Guaranteed Obligations and termination of all credit facilities between the Lender and the Borrower), including, but not limited to, any or all of the following (and whether or not any or all of the following shall have occurred or failed to occur once or more than once or in whole or in part, and whether or not the Guarantor shall have received notice thereof or assented thereto): (i) any increase or decrease in principal or any interest rate, any extension, indulgence, postponement, renewal, waiver, amendment or other modification with respect to any of the Guaranteed Obligations or any agreement or instrument related thereto, or the taking or the -3- omission of any of the actions referred to in any such agreement or instrument or otherwise; (ii) any addition, substitution, exchange, sale, surrender, or release of any collateral or other property; (iii) any failure, omission or delay (whether any of the foregoing is intentional or unintentional) to attach, grant, perfect or record any security interest, mortgage, assignment or other Lien (as defined in the Credit Agreement) in or on any collateral, or any failure to record any document; (iv) any failure, omission or delay (whether any of the foregoing is intentional or unintentional) in enforcing, assenting to or exercising any right, remedy or power; (v) any realization upon or other dealings with any collateral or other property; (vi) the addition, release (whether by contract, operation of law or otherwise), discharge, death, bankruptcy or insolvency of any Person primarily, secondarily or otherwise liable for any of the Guaranteed Obligations, or any settlement or compromise of any of the Guaranteed Obligations or with respect to any such Person; (vii) any direction of application of payment with respect to, or any subordination of the right to payment of or of any collateral for, any Guaranteed Obligations or for any guaranty of same; or (viii) ANY OTHER ACT OR FAILURE TO ACT WHICH (A) VARIES THE RISK OF THE GUARANTOR HEREUNDER OR (B), BUT FOR THE PROVISIONS HEREOF, WOULD, AS A MATTER OF STATUTE OR RULE OF LAW OR EQUITY, OPERATE TO REDUCE, LIMIT OR TERMINATE THE OBLIGATIONS OF THE GUARANTOR HEREUNDER OR DISCHARGE THE GUARANTOR FROM ANY THEREOF. Guaranteed Party shall have no obligation to take, to collect or to protect any collateral (or other property) or any income thereon, nor to preserve any rights against prior or other parties, and the Guaranteed Party may proceed under this Guaranty immediately upon Borrower's default without resorting to or regard to any action against or with respect to the Borrower, any collateral or any other guaranty or source of payment. (b) Settlement of any claim by the Guaranteed Party against the Borrower, whether or not in any proceeding, and whether voluntary or involuntary, shall not reduce the amount due under this Agreement except to the extent (subject to Section 5 hereof) of the amount actually paid by Borrower and legally retained by the Guaranteed Party in connection with the settlement. (c) The invalidity, irregularity, or unenforceability of all or any part of the Guaranteed Obligations or any agreement or instrument relating thereto, or the lack of validity, enforceability, perfection, impairment or loss of any Liens granted in connection therewith, whether -4- caused by any action or inaction of the Guaranteed Party, or otherwise, shall not affect, impair, or be a defense to the Guarantor's obligations under this Agreement. (d) The obligations of the Guarantor hereunder are joint and several with any other guarantor (if any) of any of the Guaranteed Obligations, and the obligations of the Guarantor hereunder shall not be affected by any event or circumstance with respect to any such other guarantor. 4. CERTAIN WAIVERS. The Guarantor waives (to the fullest extent permitted by applicable law): (i) presentment, diligence, protest, demand, notice of demand, notice of acceptance or reliance, notice of the creation of any Guaranteed Obligation in reliance hereon, notice of non-payment, notice of dishonor, notice of protest, and all other notices (except notices, if any, expressly provided for herein), (ii) any requirement that any right, remedy or power first be exercised or any action first be taken against the Borrower, any other guarantor or any collateral for any of the Guaranteed Obligations or for any guaranty prior to the Guaranteed Party exercising its rights, remedies or powers, or taking any other action, with respect to the Guarantor; (iii) any right to defer or modify Guarantor's obligations hereunder by reason of any Act of Insolvency; (iv) notice of disposition of any collateral; (v) any defense based upon, arising out of or in any way related to (a) any claim that any sale or other disposition of any collateral for any of the Guaranteed Obligations was not conducted in a commercially reasonable manner, or that otherwise such sale or disposition was not in compliance with Applicable Law (as defined in the Credit Agreement), or (b) any claim that any election of remedies by the Guaranteed Party, or any other action of Guaranteed Party, impaired, reduced, released or extinguished any rights, including, but not limited to, any rights of subrogation, exoneration, indemnity, reimbursement and contribution, that the Guarantor might otherwise have had against the Borrower or any other guarantor or against any collateral; and (vi) ANY AND ALL OTHER DEFENSES, WHETHER ARISING UNDER ANY STATUTE OR AT LAW OR IN EQUITY, THAT WOULD, BUT FOR THIS CLAUSE (vi), BE AVAILABLE TO THE GUARANTOR AS A DEFENSE AGAINST OR REDUCTION OF ANY OR ALL OF ITS LIABILITIES AND OTHER OBLIGATIONS HEREUNDER INCLUDING WITHOUT LIMITATION ANY DEFENSES OF A SURETY OR IMPAIRMENT OF COLLATERAL. 5. CONTINUING LIABILITY OF GUARANTOR. If, after receipt of any payment of all or any part of the Guaranteed Obligations, the Guaranteed Party is compelled, required or ordered or agrees, whether for settlement purposes or otherwise, to surrender such payment to any Person for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this Agreement shall continue in full force and effect, and the Guarantor shall be fully liable for hereunder, and shall indemnify, defend and hold harmless the Guaranteed Party with respect to, the full amount so surrendered. The provisions of this paragraph shall survive the cancellation, release or other termination of this Agreement or any other agreement or instrument, the release of any collateral or other property and/or any other action which the Guaranteed Party may have taken, whether in reliance upon receipt of such payment or otherwise. 6. SUBORDINATION OF RIGHTS OF SUBROGATION, ETC. The Guarantor hereby unconditionally subordinates, to the prior and indefeasible payment in full of all Guaranteed Obligations, any rights, -5- claims or remedies that the Guarantor may at any time have against the Borrower (or any other guarantor or other Person liable for any of the Guaranteed Obligations) or any collateral for any of the Guaranteed Obligations, and which rights, claims or remedies arise under or otherwise relate to this Agreement or any other Financing Document and/or arise from or otherwise relate to the payment or other performance hereunder or thereunder including, but not limited to, rights, claims or remedies of subrogation, indemnity, exoneration, participation, reimbursement or contribution and whether any such rights, claims or remedies arise in equity, under contract, by statute, under common law or otherwise, and Guarantor hereby agrees not to assert any such rights, claims or remedies unless and until the Guaranteed Obligations are so paid in full and all credit arrangements between the Borrower and the Guaranteed Party are terminated. In addition, if any such rights, claims or remedies result in the Lender being an "insider" of the Borrower for purposes of the Federal Bankruptcy Code (or other similar law), such rights, claims or remedies are hereby waived. 7. CREDIT DECISION. The Guarantor has independently, and without reliance on any information supplied by the Guaranteed Party, taken, and will continue to take, whatever steps Guarantor deems necessary to evaluate the financial condition and affairs of the Borrower, and the Guaranteed Party shall have no duty to advise the Guarantor of information at any time known to Guaranteed Party regarding such financial condition or affairs. 8. CONTINUANCE OF GUARANTY. This is a continuing guaranty and shall remain in full force and effect, and shall be binding upon the Guarantor unless written notice sent by registered or certified mail, addressed to Fleet National Bank, One Landmark Square, Stamford, Connecticut 06901, Attention: Asset-Based Lending, of its revocation as to future Guaranteed Obligations shall actually be received by the Guaranteed Party at least five (5) days prior to the date set for such revocation in such notice. No such revocation shall release the Guarantor, or affect in any manner the Guaranteed Party's rights, remedies or powers under this Agreement, with respect to any Guaranteed Obligation (including without limitation any renewal, modification, substitution, replacement, extension, refunding or other refinancing thereof) arising prior to such date of revocation (and including without limitation, for the avoidance of doubt, any and all reimbursement obligations relating to any letter of credit issued prior to the date of revocation and all loans made prior to such date (both principal and interest (whether such interest accrues before or after such date) and all collection and other costs and expenses (whenever accrued) relating in any way to any such Guaranteed Obligation). The revocation by any other guarantor of his/her/its guaranty shall not revoke or otherwise affect any obligations of the Guarantor hereunder. Guarantor has specifically considered the foregoing termination provisions and agrees they are reasonable. 9. RIGHTS AND REMEDIES CUMULATIVE AND NOT EXCLUSIVE. All of the Guaranteed Party's rights, remedies and powers hereunder shall be cumulative, and not exclusive, and may be exercised singly or concurrently, and shall be in addition to all other rights, remedies and powers of the Guaranteed Party under Applicable Law (as defined in the Credit Agreement) or under any other agreement, instrument or other document. Guaranteed Party may exercise any or all such rights, remedies or powers at any time(s) in any order which the Guaranteed Party chooses. 10. EXPENSES. The Guarantor shall pay, or reimburse the Guaranteed Party, on demand, for all of the Guaranteed Party's costs and expenses (including without limitation reasonable fees and disbursements of legal counsel, appraisers, accountants, and other experts, employed or -6- retained by the Guaranteed Party) incurred in connection with protecting, preserving, defending, exercising or enforcing this Agreement or any of the rights, powers or remedies of the Guaranteed Party under this Agreement or in attempting to do any of the foregoing. 11. NO WAIVERS OF RIGHTS; AMENDMENTS; WHEREAS CLAUSES. The Guaranteed Party shall not by any act (except by a written instrument pursuant to the provisions of this Section set forth below), delay, indulgence, omission or otherwise be deemed to have waived any right, remedy or power hereunder or to have acquiesced in any default or other breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of the Guaranteed Party, any right, remedy or power shall operate as a waiver thereof. No single or partial exercise of any right, remedy or power hereunder shall preclude any other or further exercise thereof or the exercise of any other right, remedy or power. A waiver by the Guaranteed Party of any right, remedy or power hereunder on any one occasion shall not be construed as, or constituted a bar to, any right, remedy or power which the Guaranteed Party would otherwise have on any future occasion. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed and delivered by the party sought to be charged. The "Whereas" clauses in this Agreement shall form a substantive part of the agreement of the parties and the Lender in entering into the Credit Agreement is relying on the truth and accuracy of same. 12. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Connecticut without regard to rules pertaining to conflicts of laws thereunder. THE GUARANTOR HEREBY SUBMITS TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF CONNECTICUT IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR OTHERWISE RELATED TO OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT AND WAIVES ANY OBJECTION GUARANTOR MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD SAME. GUARANTOR AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE GUARANTOR AT THE ADDRESS OF THE GUARANTOR SET FORTH IN THE FIRST PARAGRAPH HEREOF OR SUCH OTHER ADDRESS OF WHICH THE GUARANTEED PARTY SHALL HAVE BEEN NOTIFIED PURSUANT TO SECTION 18 BELOW. GUARANTOR AGREES THAT NOTHING CONTAINED HEREIN SHALL EFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE GUARANTEED PARTY (OR ITS SUCCESSORS OR ASSIGNS) TO BRING ANY LEGAL ACTION OR PROCEEDING IN ANY OTHER JURISDICTION. -7- 13. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but both of which together shall constitute one and the same instrument. 14. BINDING NATURE. This Agreement shall be binding upon the Guarantor and Guarantor's successors, assigns, heirs and representatives and shall inure to the benefit of and be enforceable by the Guaranteed Party, and Guaranteed Party's successors, assigns and representatives. The Guaranteed Party may sell or assign any or all of the Guaranteed Obligations, and any of its rights and obligations under any agreement or instrument, evidencing, governing, securing or otherwise relating thereto, and the transferee shall have the same rights hereunder with respect to the assigned Guaranteed Obligations as had the Guaranteed Party. Any successor to the Guaranteed Party (including without limitation any successor by merger) shall succeed to the full rights of the Guaranteed Party hereunder. The Guarantor may not assign the Guarantor's rights or duties hereunder without the prior written consent of the Lender. 15. SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in such jurisdiction, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 16. INTEGRATION. This Agreement represents the agreement of the Guarantor with respect to the subject matter hereof and supersede all oral negotiations and prior writings with respect to the subject matter hereof, AND THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE GUARANTEED PARTY RELATIVE TO THE SUBJECT MATTER HEREOF THAT ARE NOT EXPRESSLY SET FORTH OR REFERRED TO HEREIN. 17. LIEN; RIGHT OF SET-OFF. Guarantor hereby grants to the Guaranteed Party a lien and right of set-off for all of the Guarantor's liabilities or other obligations to the Guaranteed Party, whether hereunder or otherwise, upon and against all property of the Guarantor which may now be, or may in the future come into, the possession, custody or control of the Guaranteed Party, or be in transit to the Guaranteed Party, including but not limited to deposits (general or special, time or demand, matured or unmatured), credits, securities, instruments, or the proceeds thereof. The Guaranteed Party may at any time (whether or not Guaranteed Party has made demand hereunder) set-off and apply such property or any part thereof to any of the Guarantor's liabilities or other obligations to the Guaranteed Party, whether under this Agreement or otherwise, and whether or not any or all such liabilities or other obligations are matured at the time of such set-off or application, even if effecting such set-off or application results in a loss or reduction of interest or the imposition of a penalty applicable to the early withdrawal of time deposits. 18. NOTICES. Notices by one party to the other hereunder shall be in writing, and shall be deemed to have been duly given or made when delivered by hand, or one Business Day (as defined in the Credit Agreement) after being sent by overnight mail by Federal Express or other nationally recognized overnight courier service, or four Business Days after being deposited in the mail, first class postage prepaid, in each case addressed to such other party at the address set forth -8- in the first paragraph hereof. Either party may change its address for purposes of this paragraph by written notice to the other party sent in the manner set forth in this Section. Anything contained herein to the contrary, any notices to the Guaranteed Party referred to in Section 8 above are to be sent in accordance with the provisions thereof and shall only be deemed given when actually received. 19. NO RULE OF STRICT CONSTRUCTION; NUMBER AND GENDER. Guarantor acknowledges that Guarantor and Guarantor's counsel have had an opportunity to review this Agreement and no rule of strict construction shall be used against the Guaranteed Party. Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa. 20. [INTENTIONALLY OMITTED.] 21. CERTAIN REPRESENTATIONS AND COVENANTS. IN ORDER TO INDUCE THE GUARANTEED PARTY TO MAKE EXTENSIONS OF CREDIT UNDER THE CREDIT AGREEMENT, THE GUARANTOR HEREBY REPRESENTS AND WARRANTS TO THE GUARANTEED PARTY THAT (I) THIS AGREEMENT IS THE LEGAL, VALID AND BINDING OBLIGATION OF THE GUARANTOR, ENFORCEABLE AGAINST THE GUARANTOR IN ACCORDANCE WITH ITS TERMS, (II) THE EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS AGREEMENT HAS BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE AND, IF REQUIRED, STOCKHOLDER ACTION, AND (III) THE EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS AGREEMENT IS AND WILL BE WITHIN THE GUARANTOR'S POWERS, CORPORATE AND OTHERWISE, AND DOES NOT AND WILL NOT VIOLATE OR BREACH ANY STATUTE, REGULATION, OR OTHER APPLICABLE LAW (AS DEFINED IN THE CREDIT AGREEMENT) OR THE GUARANTOR'S CERTIFICATE OF INCORPORATION OR BY-LAWS. 22. WAIVER OF TRIAL BY JURY; CHAPTER 903(A) WAIVER; WAIVER OF CONSEQUENTIAL DAMAGES. (a) THE GUARANTEED PARTY AND THE GUARANTOR EACH VOLUNTARILY AND KNOWINGLY WAIVE TRIAL BY JURY AND THEIR RESPECTIVE RIGHTS THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND TO WHICH THEY ARE BOTH PARTIES AND THAT IN ANY WAY ARISES UNDER OR OUT OF OR IS OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT OR INSTRUMENT (INCLUDING WITHOUT LIMITATION ANY FINANCING DOCUMENT). (b) THE GUARANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A "COMMERCIAL TRANSACTION" WITHIN THE MEANING OF CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, AND THAT ANY MONIES, PROPERTY OR SERVICES WHICH ARE THE SUBJECT OF SUCH TRANSACTION ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE GUARANTOR KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT WHICH GUARANTOR MIGHT HAVE TO A NOTICE AND A HEARING UNDER SECTIONS 52-278A TO 52-278G, INCLUSIVE, OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER APPLICABLE FEDERAL OR STATE LAW, IN THE EVENT THE GUARANTEED PARTY (OR ITS SUCCESSORS OR ASSIGNS) SEEKS ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS AGREEMENT. -9- (c) GUARANTOR HEREBY FURTHER WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT GUARANTOR MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR OTHERWISE RELATED TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. -10- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first written above. WITNESSES: T.F. Cushing, Inc. /S/ EDWARD A. WEISS By: /S/ IRENE MARCIC - ----------------------- ----------------------------------- Name: Edward A. Weiss Name: Irene Marcic Title: Vice President Fleet National Bank /S/ EDWARD A. WEISS By: /S/ ANTHONY M. MCKIERNAN - ----------------------- ----------------------------------- Name: Edward A. Weiss Name: Anthony M. McKiernan Title: Assistant Vice-President EX-27 9 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 This schedule contains summary financial information extracted from the Consolidated Financial Statements at September 30, 1997 (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 U.S. Dollars 6-Mos MAR-31-1998 SEP-30-1997 37 0 1,722 (82) 2,876 4,642 1,107 (302) 5,447 1,043 0 0 0 54 3,248 5,447 7,787 7,787 5,987 5,987 1,487 0 65 248 11 237 0 0 0 237 0 0
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