<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: March 21, 1996
DEL GLOBAL TECHNOLOGIES CORP.
(Exact name of registrant as specified in its charter)
1-10512
(Commission File Number)
13-1784308
(IRS Employer Identification Number)
New York
(State of Incorporation)
1 Commerce Park, Valhalla, New York 10595
(Address of principal executive offices)
914-686-3600
(Registrant's Telephone Number, including area code)
DEL ELECTRONICS CORP.
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
The Registrant and a wholly-owned subsidiary of the Registrant,
Gendex-Del Medical Imaging Corp., a Delaware corporation ("Gendex-Del"),
acquired certain selected assets of the Gendex Medical Division of Dentsply
International Inc., a Delaware corporation ("Dentsply"), in accordance with the
terms and conditions of an asset purchase agreement (the "Asset Purchase
Agreement"), dated as of March 6, 1996, by and among the Registrant, Gendex-Del
and Dentsply.
The consideration received by Dentsply at the Closing on March 6, 1996
in connection with the Asset Purchase Agreement, the amount of which was arrived
at after arms length negotiation among unrelated parties, consisted of: (i)
$5,700,000 in cash and (ii) $1,800,000 payable pursuant to the terms and
conditions of a non-negotiable subordinated promissory note with a term of seven
years. The parties agreed that in the event the EBIT of Gendex-Del exceeds
$2,000,000 in either of the first two (2) twelve month periods immediately
following the Closing, Gendex-Del will pay Dentsply, as contingent
consideration, the additional sum of $1,000,000.
The source of funds for the acquisition of the Gendex Medical Division
of Dentsply by the Registrant was a drawdown from its revolving credit facility
with The Chase Manhattan Bank, N.A. (the "Bank"). In connection with such
acquisition the Registrant entered into an amended and restated credit agreement
with the Bank and granted the Bank a warrant to purchase 17,000 shares of the
Registrant's common stock at an exercise price of $7.00 per share.
In connection with the acquisition, Gendex-Del entered into a supply
agreement ("Supply Agreement") with Dentsply for certain components and parts
used in the manufacture of medical x-ray equipment and systems. Dentsply also
entered into a non-compete agreement with the Registrant and Gendex-Del.
At the Closing, Dentsply assigned its lease to Gendex-Del (the "Lease")
of the premises previously occupied by Dentsply at 11550 West King Street,
Franklin Park, Illinois for a term expiring on January 31, 1998 to Gendex-Del.
The fixed minimum rental payments due under the Lease are approximately $15,200
per month plus all utilities and increases in real estate taxes. Gendex-Del has
an option to renew the Lease for successive periods of two and three years,
respectively, at a rental of approximately $16,000 and $17,000 per month,
respectively.
The Registrant has unconditionally guaranteed the obligations of
Gendex-Del under the Asset Purchase Agreement and the Lease.
The business conducted by the Gendex Medical Division of Dentsply is
the design, manufacture, repair, marketing, distribution and sale of medical
imaging devices and related components, including equipment for veterinary and
chiropractic uses. The Registrant intends to continue to use the plant and
equipment in substantially the same manner as they were used prior to the
acquisition.
1
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
1. Independent Auditors' Report
2. Statement of Net Assets to be Acquired - December 31, 1995
3. Statements of Revenues and Expenses For the Years Ended
December 31, 1995 and 1994
4. Notes to Financial Statements For the Years Ended December 31,
1995 and 1994
(b) Pro Forma Financial Information. It is impracticable to provide the
required pro forma financial information of the Gendex Medical Division
of Dentsply at the present date. The required pro forma financial
information shall be filed no later than May 17, 1996.
(c) Exhibits.
Exhibit Number Description
2.1 Certificate of Amendment of
Certificate of Incorporation
2.2 Asset Purchase Agreement
2.3 Non-Compete Agreement
2.4 Lease, as amended
2.5 Supply Agreement
2.6 Amended and Restated Credit
Agreement
4.1 Additional Warrant Agreement and Warrant
The undersigned Registrant hereby agrees to furnish supplementally to
the Commission a copy of any omitted schedule to the Asset Purchase Agreement
upon request.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DEL GLOBAL TECHNOLOGIES CORP.
By: /s/Leonard A. Trugman
_____________________________
Dated: March 20, 1996 Leonard A. Trugman, President,
Chairman and Chief Executive Officer
3
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Gendex Medical Division
of
DENTSPLY International Inc.
Financial Statements
For the years ended December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
DENTSPLY International Inc.
We have audited the accompanying statement of net assets to be acquired as of
December 31, 1995 and the statements of revenues and expenses for the years
ended December 31, 1995 and 1994 of the Gendex Medical Division of DENTSPLY
International Inc. (DENTSPLY). These financial statements are the responsibility
of DENTSPLY's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in notes 1(a) and 7 to the financial statements, DENTSPLY
International Inc. has entered into an Agreement in Principle to sell all
inventory, fixed assets and certain intangible assets of the Gendex Medical
Division to a third party on or about February 28, 1996.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets to be acquired as of December 31, 1995 and
revenues and expenses for the years ended December 31, 1995 and 1994 of Gendex
Medical Division, in conformity with generally accepted accounting principles.
/s/KPMG Peat Marwick LLP
Chicago, Illinois
February 9, 1996
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Gendex Medical Division
of
DENTSPLY International Inc.
Statement of Net Assets to be Acquired
December 31, 1995
Inventories (Note 2) $6,129,493
Fixed assets, net (Note 3) 650,675
Intangible assets, less accumulated amortization 1,701,961
----------
$8,482,129
==========
See accompanying notes to financial statements.
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Gendex Medical Division
of
DENTSPLY International Inc.
Statements of Revenues and Expenses
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Net sales ...................................... $ 18,895,991 $ 20,664,178
Cost of goods sold (Note 5) .................... 16,364,819 17,521,209
------------ ------------
Gross profit .......................... 2,531,172 3,142,969
Selling, general, and administrative expenses
(Note 4 and 5) 2,627,916 2,812,812
------------ ------------
Operating profit (loss) ............... (96,744) 330,157
Other income (expense) ......................... 13,110 (51,835)
------------ ------------
Net excess (deficiency) of revenues
over expenses .................... $ (83,634) $ 278,322
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Gendex Medical Division
of
DENTSPLY International Inc.
Notes to Financial Statements
For the years ended December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies
(a) Organization
The Gendex Medical Division (Gendex Medical) of DENTSPLY
International Inc. (DENTSPLY) designs, develops, manufactures and markets x-ray
systems and related components for the medical x-ray market.
Gendex Medical entered the medical x-ray market in August 1987
with the introduction of a unique high-frequency generator and an integrated
table/tubestand. In April 1989, Universal/Allied Imaging, Inc., a manufacturer
of a full line of single phase conventional radiographic equipment and
components such as tables, film holders and tube mounts, was acquired. The
acquisition of Universal/Allied Imaging substantially expanded Gendex Medical's
medical product line and enabled it to offer its medical dealers a compliment of
tables, tubestands, film holders and generators, including its high frequency
generators. In January 1993, Gendex Medical acquired a mammography x-ray system
from the Soredex division of Orion Corporation, thereby gaining an entrant in
this attractive, growing portion of the medical x-ray market.
As more fully described in note 7, DENTSPLY International Inc.
has entered into an Agreement in Principle to sell all inventory, fixed assets
and certain intangible assets of Gendex Medical to a third party on or about
February 28, 1996.
(b) Basis of Presentation
The Gendex Medical Division's financial results have
historically been reported in a combined manner with the results of the Gendex
Dental Division's Chicago, Grand Avenue location. For purposes of this
presentation, the accompanying financial statements present only those net
assets of Gendex Medical anticipated to be acquired by a third party as of
December 31, 1995. The statements of revenues and expenses of the division for
the years ended December 31, 1995 and 1994 include only the operating results of
the Gendex Medical Division presented on a stand-alone basis, excluding the
impact, if any, on DENTSPLY International Inc.'s consolidated income tax
provision.
(c) Inventories
Inventories are valued at the lower of cost or market using
the first-in, first-out (FIFO) method.
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Gendex Medical Division
of
DENTSPLY International Inc.
Notes to Financial Statements
(d) Fixed Assets
Fixed assets are recorded at cost. Depreciation is calculated
on the straight-line method over the estimated useful lives of the assets which
range from four to fifteen years. Leasehold improvements are amortized on the
straight-line method over the shorter of the lease term or estimated useful life
of the assets.
(e) Intangible Assets
Intangible assets, which consist primarily of trademarks,
tradenames, patents and product design rights, are being amortized over the
estimated useful lives of the respective assets (which range from 12 to 40
years) using the straight-line method. The cumulative amount of amortization at
December 31, 1995 is $553,807. Amortization expense for the years ended December
31, 1995 and 1994 is $153,321 and $168,087. Management of Gendex Medical
periodically evaluates the carrying value of intangible assets to determine that
no decline in carrying value has occurred. Upon determination of a decline in
value, an appropriate amount would be charged to operations.
(f) Revenue Recognition
Revenue is recognized when title passes upon shipment of the
product.
(2) Inventories
Classification of inventories are as follows as of December 31, 1995:
Finished goods $2,187,988
Work-in-process 1,688,903
Raw materials 2,252,602
----------
$6,129,493
==========
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Gendex Medical Division
of
DENTSPLY International Inc.
Notes to Financial Statements
(3) Fixed Assets
A summary of fixed assets follows as of December 31, 1995:
Leasehold improvements $ 512,347
Machinery and equipment 532,740
Furniture and fixtures 25,013
Tools, dies and molds 100,048
Data handling equipment 107,255
Computer software 6,928
----------
1,284,331
Less accumulated depreciation and amortization 633,656
----------
$ 650,675
==========
Depreciation and amortization expense for the years ended December 31,
1995 and 1994 is $226,226 and $165,073
(4) Selling, General and Administrative Expenses
Selling expenses include all costs associated with selling and
marketing activities including sales commission, advertising and travel. General
and Administrative expenses are primarily an allocation of accounting, human
resource and data processing costs which are shared among various regional
DENTSPLY affiliated locations.
A breakdown of these costs for the years ended December 31, are as
follows:
1995 1994
---- ----
Selling and Marketing Expenses $2,188,095 $2,265,699
General and Administrative Expenses 436,047 525,897
Research and Development Expenses 3,774 21,216
---------- ----------
$2,627,916 $2,812,812
========== ==========
(5) Related Party Transactions
Other DENTSPLY affiliated divisions located in Chicago and Des Plaines,
Illinois produce fabricated components for Gendex Medical. Most of these
components could be readily sourced from local third party vendors. The cost
charged to the Gendex Medical Division for fabricated components approximates
the cost to manufacture. The total cost of components produced for Gendex
Medical by these affiliated divisions in 1995 and 1994 was $4,801,268 and
$6,724,868, respectively.
<PAGE>
Gendex Medical Division
of
DENTSPLY International Inc.
Notes to Financial Statements
Additionally, administrative services such as accounting, computer and
human resources, are performed for Gendex Medical by the DENTSPLY affiliated
division in Des Plaines, Illinois, while legal, tax and other business
administrative services are provided by the DENTSPLY Corporate office in York,
Pennsylvania, the costs of such services are deemed to be not significant. The
cost for administrative services provided by the local DENTSPLY affiliates is a
direct allocation of actual cost with no charge for Corporate services.
(6) Leases
Gendex Medical is obligated under operating leases, principally for its
office and manufacturing facility. Total rental expense for operating leases for
the years ended December 31, 1995 and 1994 was $214,157 and $203,413,
respectively.
(7) Pending Sale of Gendex Medical
On December 15, 1995, DENTSPLY International Inc. entered into an
Agreement in Principle to sell all inventories, fixed assets and certain
intangible assets of the Gendex Medical Division to a third party for
approximately $7,500,000. In accordance with the Agreement in Principle, such
assets existing at the closing date will be transferred to the third party. All
receivables at closing will remain with the Seller. Substantially all contracts
and leases of Gendex Medical will be assigned to the third party. Such terms of
the agreement may be subject to revision upon final negotiation of the
transaction.
CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
OF
DEL ELECTRONICS CORP.
Under Section 805 of the Business Corporation Law
--------------------------
It is hereby certified that:
FIRST: The name of the Corporation is DEL ELECTRONICS CORP.
SECOND: The certificate of incorporation of the Corporation was filed
by the Department of State on October 26, 1954.
THIRD: The amendment of the certificate of incorporation of the
Corporation effected by this certificate of amendment is as follows:
to change the name of the Corporation to
DEL GLOBAL TECHNOLOGIES CORP.
FOURTH: To accomplish the foregoing amendment, paragraph "First" of the
certificate of incorporation of the Corporation is hereby amended to read as
follows:
"FIRST: The name of the Corporation is DEL GLOBAL TECHNOLOGIES
CORP."
FIFTH: The foregoing amendment of the certificate of incorporation of
the Corporation was authorized by the Board of Directors and followed by the
majority vote of the holders of all of the outstanding shares of the Corporation
entitled to vote on such amendment of the certificate of incorporation.
IN WITNESS WHEREOF, we have hereunto signed this certificate this 14th
day of February, 1996, and affirmed that the statements made herein are true
under penalties of perjury.
/s/Leonard A. Trugman
---------------------------
Leonard A. Trugman, President
/s/Michael Taber
---------------------------
Michael Taber, Secretary
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of March 6, 1996, by and among
DEL GLOBAL TECHNOLOGIES CORP. (formerly known as Del Electronics Corp.), a New
York corporation with offices at 1 Commerce Park, Valhalla, New York 10595
("Del"), GENDEX-DEL MEDICAL IMAGING CORP., a Delaware corporation with offices
at 11550 West King Street, Franklin Park, Illinois 60131 and a wholly owned
subsidiary of Del ("Purchaser"), and DENTSPLY INTERNATIONAL INC., a Delaware
corporation with offices at 570 West College Avenue, York, Pennsylvania
17405-0872 ("Seller").
W I T N E S S E T H:
WHEREAS, Del owns all of the issued and outstanding shares of capital
stock of Purchaser;
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase certain selected assets of the GENDEX MEDICAL DIVISION OF DENTSPLY
("Gendex Division"); and
WHEREAS, in connection with and as partial consideration for the sale
of the Assets, as hereafter defined, Del and Seller shall enter into a
Non-Compete Agreement with each other in the form of Schedule 1 attached hereto
(the "Non-Compete Agreement") and Del shall guarantee the performance and
obligation of Purchaser under this Agreement and the agreements referenced
herein.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
Section 1. Definitions. For purposes of this Agreement, the words and
terms listed below shall have the following meanings:
(a) "Assets" means certain selected assets of the Gendex
Division, including inventory, equipment, machinery, leasehold improvements,
patents, manufacturing know-how and technology, plans, diagrams and other
intangible assets of the Gendex Division used in the fabrication of parts or
assemblies of the Gendex Division at the Facility, including toolings owned by
<PAGE>
the Gendex Division and related to the operation at the Facility and presently
in the possession of third party vendors all as more specifically described in
Section 2.1 hereof.
(b) "Business" means the business presently conducted by the
Gendex Division at the Facility including, but not limited to, the design,
manufacture, repair, marketing, distribution and/or sale of medical imaging
devices and related components, including equipment for veterinary and
chiropractic uses.
(c) "Closing" means the events which take place on the
Closing Date for the purpose of consummating this Agreement.
(d) "Closing Date" means 10:00 A.M. on the date hereof, or
such other date and time selected by Del and Seller for the Closing.
(e) "EBIT" means earnings before interest and taxes as
further defined in Section 2.4.
(f) "Environmental Laws" means all laws, regulations, rules
and ordinances of any relevant State or any political subdivision thereof and
the United States of America respecting the environment, including without
limitation the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et. seq.), and the Comprehensive Environmental Responsibility Compensation and
Liability Act, as amended (42 U.S.C. ss.9601 et. seq.).
(g) "Fabricated Parts" means certain fabricated and other
parts relating to the Products which are identified in Schedule 7.9.
(h) "Facility" means the business facility used by the Gendex
Division located at 11550 West King Street, Franklin Park, Illinois.
(i) "Federal Government" means the government of the United
States of America and any agency, department, authority, commission, board,
branch, bureau or division thereof.
(j) "Hazardous Substances" means any pollutants and dangerous
substances including without limitation radon and any hazardous waste or
hazardous substances as defined in any of the Environmental Laws.
(k) "PPI " means the United States Bureau of Labor Statistics
Producer Price Index.
(l) "Products" means the products currently manufactured
and/or sold by the Business.
(m) "Transaction Documents" means this Agreement and all of
the agreements referenced herein.
2
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ARTICLE II
Section 2. Purchase and Sale.
2.1. Subject to the terms and conditions of this Agreement, Seller
hereby agrees to sell, assign, transfer, convey and deliver to Purchaser and
Purchaser hereby agrees to purchase and accept from Seller, on the Closing Date
all of the following Assets of the Gendex Division free and clear of all liens
and encumbrances:
(a) All inventory of the Business, including but not limited
to, work in process, finished goods, stock, packaging and components, as more
specifically described in Schedule 2.1(a) attached hereto (not including raw
materials and input products located at Seller's facilities other than the
Facility);
(b) All books (excluding minute book, stock books and stock
record books and stock ledgers), papers, records, files, including without
limitation, all correspondence, customer lists, credit and sales reports, data
processing records, documents and records relating exclusively to the Business
and the Assets;
(c) All machinery and equipment, tools, dies and related
equipment of the Business, as more specifically described in Schedule 2.1(c)
attached hereto;
(d) All leasehold improvements of the Business, as more
specifically described in Schedule 2.1(d) attached hereto;
(e) All rights of the Business under property, equipment and
other leases, as more specifically described in Schedule 2.1(e) attached hereto;
(f) All trademarks, trade names, copyrights, patents and all
other Business Rights, as hereinafter defined, as more specifically described in
Schedule 2.1(f) attached hereto;
(g) All designs, drawings, specification sheets, test data,
technical literature, manufacturing and process information, manufacturing
know-how, technology, trade secrets, plans, diagrams, schematics, proprietary
data, product development data, related art work including all information
contained on any media (CD-ROM, tape, computer software), supplier lists,
promotional literature, marketing documents, market research, credit
information, open bid and quotation documents and all other intangible property,
including the Gendex Division dealer network and the telephone number of the
Gendex Division and rights to the name "Universal Imaging", which is owned and
used exclusively by or for the Business; and
3
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(h) Certain contracts and long-term supply agreements of the
Business specifically described in Schedules 5.5 and 7.4, respectively, attached
hereto.
It is hereby expressly understood and agreed that the Gendex Division's
Assets are to be transferred and conveyed to Purchaser as above specified, in
the condition existing at the time of this Agreement, by good and sufficient
bill of sale, and other necessary documents of transfer, free and clear of all
liens, charges, encumbrances, debts, liabilities and obligations whatsoever,
except those which are or arise out of obligations which are expressly assumed
by Purchaser hereunder.
2.2. Assets Not Being Acquired. Excluded from the Assets to be
sold, conveyed, transferred, assigned by Seller, and purchased and accepted by
Purchaser under Section 2 hereof, are the following:
(a) All cash and cash equivalents (such as certificates of
deposit, treasury bills and marketable securities);
(b) All accounts or notes receivable of any type;
(c) The computer software and hardware at the Facility which
is licensed by Seller from a third party or not included on Schedule 2.1(c); and
(d) The names "DENTSPLY" and "GENDEX" whether used as
trademarks, service marks, trade names, logos or in any other manner, except
that Seller and Purchaser shall enter a licensing agreement in accordance with
Section 7.3 of this Agreement.
2.3. Purchase Price. In reliance upon the representations and
warranties of Seller contained herein, and subject to the terms and conditions
of this Agreement, Purchaser hereby agrees to purchase the Assets for the
aggregate purchase price set forth below:
(a) Five Million Seven Hundred Thousand ($5,700,000) Dollars
(the "Cash"), payable on the Closing Date by wire transfer to Seller's account
of immediate funds; and
(b) One Million Eight Hundred Thousand ($1,800,000) Dollars,
payable pursuant to the terms and conditions of a non-negotiable subordinated
promissory note (the "Note") in the form attached hereto as Schedule 2.3(b). The
Cash and the Note are collectively referred to herein as the "Purchase Price".
4
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2.4. Contingent Consideration.
(a) Purchaser further agrees, in the event that the EBIT of
Purchaser exceeds $2,000,000 in either of (i) the twelve month period
immediately following the Closing Date ("Year One") or (ii) the twelve month
period immediately following Year One ("Year Two"), to pay to Seller the
additional sum of One Million ($1,000,000) Dollars (the "Contingent
Consideration"). The Contingent Consideration shall be paid by Purchaser to
Seller not later than thirty (30) days following the delivery to Seller of
Purchaser's financial statements for Year One or Year Two, as the case may be.
For purposes of verifying Purchaser's calculation of EBIT during Year One and/or
Year Two, Purchaser shall permit Seller or its authorized agents after
reasonable prior written notice to review, at Seller's expense, Purchaser's
books of account during normal business hours; provided that, if Seller's audit
reveals that EBIT was miscalculated by Purchaser and underreported to Seller by
five percent (5%) or more, then Seller's costs and expenses of such audit shall
be reimbursed by Purchaser within ten (10) days of submission from Seller to
Purchaser of any invoices for such costs and expenses.
(b) It is the intent of the parties to develop a method of
calculating EBIT of the Purchaser which will be equitable to both parties and
which will not artificially increase or decrease the annual EBIT amounts. EBIT
shall be computed using the same U.S. generally accepted accounting principles
("GAAP") used by Del in the preparation of its financial statements. For
purposes of calculating EBIT hereunder, EBIT will be costed using the FIFO
method. For purposes of this Section 2.4, EBIT Products shall include any
products sold by Purchaser which are currently sold by the Gendex Division,
products sold under the Distribution Agreement (as herein defined), and any
comparable or similar new products subsequently developed by Purchaser
(hereinafter "EBIT Products"); provided, however, that existing products
transferred to Purchaser from its affiliates shall not be included in
calculating EBIT so long as the revenues and related costs of any such products
transferred to Purchaser shall be determined in a manner consistent with how
Purchaser determines the revenues and related costs of its other products. Sales
of EBIT Products to other business units of Del shall be recorded at the time of
shipment by Purchaser to Del's other business units. The selling price of EBIT
Products sold or transferred by Purchaser to Del's other business units shall be
determined in accordance with third party pricing practices. Purchaser may
include expenses for direct or indirect costs incurred by or on behalf of
Purchaser but shall not include any general overhead or stewardship charges from
Del or its affiliates, including Del's corporate overhead expenses.
2.5. Reliance on the Non-Compete Agreement. Seller hereby
acknowledges that Purchaser would not have entered into this Agreement but for
the execution by it of the Non-Compete Agreement. The terms of the Non-Compete
Agreements are incorporated herein by reference and made a part hereof.
5
<PAGE>
ARTICLE III
Section 3. Allocation of Purchase Price. The Purchase Price described
in Section 2.3 hereof will be allocated as set forth in Schedule 3. Seller,
Purchaser and Del each agree that it will adopt and utilize the amounts
allocated to each asset or class of assets set forth in Schedule 3 for purposes
of all Federal, state and other income tax returns filed by each of them, file
all such documents and statements required by Section 1060 of the Internal
Revenue Code of 1986 reflecting the allocations set forth in Schedule 3 and that
each of them will not voluntarily take any position inconsistent therewith upon
examination of any such tax return, in any refund claim, in any litigation or
otherwise with respect to such income tax returns.
ARTICLE IV
Section 4. Liabilities.
(a) Except as expressly assumed under this Agreement, Seller
acknowledges and agrees that Purchaser shall not assume, pay perform or
discharge, or, as the case may be, take subject to, any obligations and
liabilities in respect of any agreements and other binding arrangements related
to the Assets or the Business or with respect to claims, actual or contingent,
penalties, interest and fines arising or based on occurrences or events existing
prior to the Closing Date, including but not limited to, liability for the
Facility not being in compliance with Environmental Laws, the claims and actions
described in Schedule 2.1(f) for occurrences or activities prior to the Closing
Date, volume dealer discounts earned and unpaid prior to the Closing Date, bank
or other debt, unemployment liability, commissions, payroll taxes, severance,
vacation, bonus, customer allowances and discounts, intercompany balances,
vendor accounts payable, all other accrued expenses, claims for Federal, state
or local taxes, pending or threatened lawsuits and any claim of any present or
former employee of Seller, whether under any pension, profit sharing, and/or
continuation health coverage, union benefit plan, union contract or otherwise.
(b) Purchaser, in addition to liabilities specifically
identified under this Agreement as assumed by Purchaser, hereby assumes (i)
liabilities relating to the Assets or the Business which arise after the Closing
Date and (ii) any obligations to be performed after the Closing under contracts
assumed by Purchaser, except for liabilities relating to performance or breach
of contracts occurring prior to the Closing Date.
ARTICLE V
Section 5. Representations and Warranties by Seller. Subject to the
Schedules and other agreements in connection with the transactions contemplated
herein or as reflected in the financial information provided by Seller to
Purchaser, Seller represents and warrants to Purchaser and Del as of the date of
this Agreement and Closing, as set forth below:
6
<PAGE>
5.1. Organization, Existence and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Seller has all corporate power and authority to
execute, deliver and perform this Agreement and the other agreements and
instruments to be executed and delivered by Seller pursuant hereto and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by Seller does not, and the consummation of the
transactions contemplated hereby will not, violate any provisions of Seller's
Certificate of Incorporation or By-Laws or, to Seller's knowledge, of any law or
regulation applicable to Seller or the Gendex Division or of any agreement,
mortgage, license, lease, arrangement, instrument, order, arbitration award,
judgment or decree to which Seller or the Gendex Division is a party or by which
Seller or the Gendex Division is bound or result in the creation of any lien,
charge, security interest or other encumbrance on the Assets other than as
contemplated by this Agreement.
5.2. Power and Authority. All corporate acts and other proceedings
required to be taken by or on the part of Seller to authorize Seller to carry
out this Agreement and such other agreements and instruments to be executed and
delivered by Seller pursuant hereto and the transactions contemplated hereby and
thereby have been duly and properly taken. This Agreement has been duly executed
and delivered by Seller and constitutes, and such other agreements and
instruments when duly executed and delivered by Seller will constitute, legal,
valid and binding obligations enforceable against Seller in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting creditors rights or by
general equitable principles under common law. The execution, delivery and
performance by Seller of this Agreement and such other agreements and
instruments and the consummation of the transactions contemplated hereby and
thereby will not violate, conflict with or result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or result in the creation of a lien or encumbrance on the Assets
under, any agreement by which Seller may be bound or affected.
5.3. Consents. Except as set forth in Schedule 5.3 hereof, no
consent, filing or approval of any Federal, state or local governmental agency
or department or any other person not a party to this Agreement is required or
necessary in connection with the execution, delivery and performance under this
Agreement or Transaction Documents, as defined herein, or to consummate the
transactions contemplated hereby and thereby.
5.4. Properties. Seller has good title to or a leasehold interest
in and to all of the Assets except as to the Patents, which are held by a wholly
owned subsidiary of Seller which has good title in accordance with this
representation. All machinery and equipment will be delivered at Closing in the
same condition as on the date hereof. The Assets are free and clear of all
liens, encumbrances, claims, security interests and charges of any kind
whatsoever, other than as disclosed on Schedule 5.4.
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(a) All Inventory of raw materials, components, work in
process and finished goods of the Gendex Division are as set forth in Schedule
2.1(a). Such inventories consist of items of a quality conforming to current
specifications, usable and saleable and, except as provided in Schedule 2.1(a),
not requiring any rework prior to sale in excess of normal operating levels
consistent with past practices, and all such inventory of finished goods is good
and marketable, on a normal basis and is merchantable and fit for the particular
purpose for which it is intended, except for excess and obsolete items of all
such inventory which have been written down to net realizable market value or
for which an adequate reserve has been provided on the Financial Statements, as
defined in Section 10.1(a) of this Agreement, in accordance with past accounting
practices, policies and procedures of the Gendex Division.
5.5. Compliance with Agreements. To the best of Seller's
knowledge, set forth on Schedule 5.5 is a complete and accurate list of all
Material (as defined herein) contracts and other agreements, oral and written,
to which Seller is a party on behalf of the Gendex Division. The term "Material"
as used herein, means any contract or agreement pursuant to which the Gendex
Division is either entitled to receive or obligated to perform services and/or
monies in an amount in excess of $25,000 per contract or agreement. Seller on
behalf of the Gendex Division is not a party to any contract or other agreement
with respect to which the Federal Government may require a novation agreement as
a result of the transactions contemplated herein. Seller does not know of any
fact, circumstance, or condition amounting to a default under any of such
contracts or other agreements. All such contracts and other agreements will be
in full force and effect at the time of Closing, unless by their terms they
expire prior thereto and except as the result of a default by the other party to
any such contracts and agreements. Other than such enumerated contracts and
other agreements, Seller has no other presently existing Material contract or
agreement, oral or written, relating to the Assets or the operation of the
Business, except as set forth on Schedule 5.5 or as required or contemplated by
this Agreement.
5.6. Trademarks, Licenses, Etc. Seller (or one of its wholly owned
subsidiaries) owns free and clear of any rights or claims of others, the patents
and patent applications, right to use all the trademarks and service marks and
registrations thereof and applications therefor, trade names, brands,
copyrights, copyright applications and copyright registrations, licenses,
patents and patent applications, franchises, permits, processes, formulas, trade
secrets, inventions and royalties, and rights with respect thereto, and all
technical know-how, and non-competition covenants accruing to the benefit of
Seller (collectively "Business Rights") as set forth on Schedule 2.1(f) and
which are used in the Business as currently conducted and, to the knowledge of
Seller, without any conflict or infringement with the right of others, and,
except as set forth on Schedule 2.1(f), Seller has not received or to Seller's
knowledge been threatened with notice of any claim or assertion that any of the
Business Rights infringe or conflict with the rights of others.
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5.7. Insurance. Attached as Schedule 5.7 is a summary of insurance
which lists all insurance policies and fidelity bonds covering the Assets and
the Business. Except as set forth on Schedule 5.7 or Schedule 5.9, there are no
claims against the Assets or the Gendex Division pending under any of such
policies or bonds as to which coverage has been questioned or denied or disputed
with underwriters, and all premiums due and payable thereunder have been paid.
Except as set forth on Schedule 5.7, there are no pending or threatened
terminations with respect to any of such policies and bonds (other than pursuant
to the terms thereof). All such policies and bonds are, and will be until the
time of the Closing, in full force and effect.
5.8. Taxes. Except as set forth on Schedule 5.8, (i) Seller has
timely paid or made provision for all Federal, state and local income, real
estate, manufacturer's excise, Federal and state withholding, FICA, FUTA, state
unemployment taxes, state and municipal sales and use taxes, license fees and
other taxes, fees, or charges levied or imposed upon Seller that are payable or
have accrued prior to the Closing Date with respect to the Gendex Division or
the Assets, (ii) Seller has not incurred any tax liability, including interest,
penalties or assessments which may result in the imposition of any lien, claim,
security interest or any other encumbrance on the Gendex Division or the Assets
other than as to property taxes not yet due and payable, and (iii) there are no
outstanding fines, liens or disputes between Seller and any taxing authority
which relate to the Gendex Division or the Assets other than as to property
taxes not yet due and payable. Seller is responsible for real property taxes
which are related to the period up to the Closing Date and an adjustment for
such taxes shall be made at Closing. Such real property taxes are set forth on
Schedule 5.8. Seller shall be liable for all taxes, fees or charges levied or
imposed upon Seller with respect to the Gendex Division or the Assets, before or
after the Closing Date, for any tax periods prior to the Closing Date.
5.9. Litigation, Proceedings and Disputes. Except as set forth in
Schedule 5.9, to the best of Seller's knowledge after due inquiry, there are no
suits, actions, judgments, administrative, arbitration or other proceedings
(including proceedings concerning product liability, municipal or other
governmental laws or regulations, labor disputes or grievances or union
recognition) or, to Seller's knowledge, governmental investigations by any
Federal, state, or local agency or prosecutor's office or of any other kind
(collectively "Claims") pending or threatened against the Gendex Division or the
Assets. Except as set forth in Schedule 5.9, there are no unsatisfied judgments,
orders, stipulations, injunctions, decrees or awards (whether by a court,
administrative agency, arbitration, grievance procedure) against Seller with
regard to the Gendex Division or which relate to the Assets. Seller acknowledges
that, notwithstanding the inclusion of any Claims on Schedule 5.9, it shall
indemnify and hold harmless Purchaser against all such Claims.
5.10. Employees. Subject to the exceptions set forth in the
following sentence, Schedule 5.10 hereto lists all employees and consultants of
the Gendex Division and indicates their salaries, fees and most recent bonuses,
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if any, their rights to future bonuses (or deferred portions of prior bonuses),
if any, vacation, severance, insurance and other benefits and their respective
ages, job titles, dates of hire and social security numbers. Except as disclosed
on Schedule 5.10 and as provided in the employee manuals which have been
delivered to Del, there are no written or oral commitments by Seller to any of
the Gendex Division's employees relating to employment, compensation, wages,
bonuses, raises, vacations, severance pay, benefits or similar matters. Seller
will pay, through the Closing Date, all salary, wages, bonuses, severance,
commissions, accrued vacation and sick days. Purchaser agrees that it shall
employ substantially all of the employees of the Gendex Division after Closing,
provided that to the extent Purchaser does not continue the employment of
certain employees of the Gendex Division, Seller shall pay, within a reasonable
time after Closing, the severance benefits, if any, to such employees. Seller
has paid all unemployment insurance payments due and payable through the Closing
Date and does not have a negative account balance with any unemployment taxing
authority with respect to the Gendex Division. Except as disclosed in Schedule
5.10, there are no union plans or collective bargaining agreements.
5.11. Employee Plans.
(a) For purposes of this Agreement, the term "Employee Plan"
means each employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each other
bonus, incentive compensation, deferred compensation, severance or similar plan,
policy or payroll practice providing compensation or employee benefits
maintained by Seller on behalf of or for the benefit of the Gendex Division or
to which Seller is a participating employer or is obligated to contribute or has
any legally enforceable liability and under which any person presently employed
by Seller as an employee or consultant of the Gendex Division (an "Employee") or
formerly employed by Seller or its predecessors as an employee or consultant of
the Gendex Division (a "Former Employee") participates or has accrued any rights
or under which Seller is liable in respect of an Employee or Former Employee.
The terms "Employee" and "Former Employees, will include, where applicable, the
beneficiaries, spouses and dependents of an Employee or Former Employee.
Schedule 5.11 lists or describes all Employee Plans of Seller or its
subsidiaries or affiliates regarding the Gendex Division. Each Employee Plan has
been maintained in all respects in accordance with its terms and with applicable
law. Except as set forth on Schedule 5.11, each Employee Plan (including the
related trust) which is intended to qualify under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or comparable foreign law, does
so qualify and is exempt from taxation pursuant to Section 501(a) of the Code.
None of the Employee Plans listed on Schedule 5.11 are Multi-employer Plans (as
defined within the meaning of Section 3(37) of ERISA) and Seller has no
liability under or with respect to, and does not contribute to, any
Multi-employer Plan.
(b) As of the Closing Date, Seller will have made or will
make full payment by direct contributions of all amounts which Seller is
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required to make under the terms of each Employee Plan regarding the Gendex
Division in respect of periods ending on or prior to the Closing Date.
(c) There is no accumulated funding deficiency (as defined in
Section 412 of the Code), waived funding deficiency (as defined in Section 412
of the Code), or failure to make any payment on or before a required installment
due date (as defined in Section 412(m) of the Code) with respect to any defined
benefit plan (as defined in Section 3(35) of ERISA) maintained by Seller or any
member of the controlled group (within the meaning of Sections 414(b), (c), (m),
(n) and (o) of the Code ("Controlled Group") of which Seller is a member, that
is or could after the Closing Date become a liability of Del or Purchaser.
(d) Neither Seller nor any member of Seller's Controlled
Group has incurred or reasonably expects to incur any liability under Title IV
of ERISA (or comparable foreign law) arising in connection with the termination
of, or withdrawal from, any plan covered or previously covered by Title IV of
ERISA (or comparable foreign law) that is or could become a liability of Del or
Purchaser after the Closing Date.
(e) No event has occurred that could subject Seller, Del or
Purchaser to an excise tax under Section 4975 of the Code or a civil penalty
under Section 502(i) of ERISA or any comparable section under any foreign law.
(f) There exists no condition or set of circumstances which
could result in the imposition of any liability under ERISA (including, without
limitation, Title I or Title IV thereof), the Code or other applicable law with
respect to the Employee Plans. From and after the Closing, Seller shall, subject
to Section 12 hereof, indemnify and hold Del and Purchaser harmless from, all
liabilities and obligations arising at any time with respect to Employees or
Former Employees of Seller under Employee Plans (and all related reporting
requirements), and any other employee benefits mandated by law, regardless of
the applicable funding arrangements, attributable to periods of employment by
Seller of its Gendex Division employees prior to the Closing Date.
5.12. Compliance with Laws. Seller is not in violation of any
material applicable Federal, state, local or foreign law, regulation or order or
requirement of any governmental, regulatory or administrative agency or
authority or court or other tribunal relating to the Gendex Division ("Laws").
Except as set forth in Schedule 5.9, Seller is not now charged with, nor is
Seller now to its knowledge under investigation with respect to, any possible
violation of any Law and Seller has filed all material reports required to be
filed with regard to the Gendex Division with any governmental authority and
taken all other actions required by any Law.
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5.13. Facility.
(a) The Facility is presently leased to Seller.
(b) To Seller's knowledge, the Facility is in compliance with
all, and is not in violation of any, applicable Federal, state or local statute,
ordinance, order, requirement, law, rule or regulation (including without
limitation any applicable covenant, condition, restrictions or easement), nor
has any notice of violation of any applicable Federal, state or local statute,
law, ordinance, rule, regulation, order or requirement, or of any covenant,
condition, restriction or easement affecting the Facility been given to Seller
by any governmental authority or by any person entitled to enforce same.
(c) The Facility is not subject to zoning, use or building
code restrictions which prohibits, and, no state of facts relating to the
actions or inaction of Seller exists which prevents, the continued effective
leasing or use of such Facility property for the Business consistent with the
manner in which the Gendex Division has conducted its business.
(d) No permit, approval, certificate or consent of any
governmental authority or public or private utility is required by Purchaser to
occupy and utilize the Facility as presently utilized by Seller consistent with
the past conduct of the Business.
5.14. Licenses and Registrations. Seller has all material
registrations, licenses, permits, approvals or other authorizations or
exemptions ("Licenses and Registrations") of or by government authorities
required by it in the conduct of the Gendex Division Business. All such Licenses
and Registrations are listed in Schedule 5.14 hereof. All Licenses and
Registrations listed in Schedule 5.14 will be in full force and effect on the
Closing Date.
5.15. Relationships. The Gendex Division will use commercially
reasonable efforts to maintain all relationships with suppliers, subcontractors
and customers and will not enter into any new material contractual obligations
prior to the Closing Date without the consent of Del, such consent not to be
unreasonably withheld.
5.16. Customers and Suppliers. Set forth on Schedule 5.16 is an
accurate list of each customer and of each supplier which was responsible for,
respectively, at least 5% of the gross revenues or 5% of the gross purchases of
the Gendex Division in connection with the Products, during the calendar years
ended December 31, 1995 and 1994.
5.17. Environmental Matters. Except as set forth on Schedule 5.17,
Seller has not and has no knowledge that there has been generated, stored,
treated, discharged, handled, refined, spilled, released or disposed any
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Hazardous Substances in violation of any applicable law or regulation at or on
the Facility. Except as set forth on Schedule 5.17, to Seller's knowledge, no
underground storage tanks exist or have existed at the Facility. Seller has no
knowledge of any Hazardous Substances on or in the Facility in violation of any
applicable law or regulation and has received no notice, nor is it on notice of,
any claim, investigation, litigation or administrative proceeding, actual or
threatened, or any order, writ or judgment that relates to any discharge, spill,
handling, refining, release, emission, leaching or disposal of pollutants of any
kind (including any Hazardous Substances) at the Facility.
5.18. Representations and Warranties. Neither the representations
and warranties of Seller contained (i) herein nor (ii) in any certificate,
Exhibit, Schedule or other writing required by the terms hereof to be delivered
by Seller (and so delivered) contain any untrue statement of a material fact or
taken together omit to state a material fact necessary in order to make the
statements herein and therein not misleading, in light of the circumstances in
which made.
ARTICLE VI
Section 6. Representations and Warranties by Del and Purchaser. Each of
Del and Purchaser represents and warrants to Seller as of the date of this
Agreement and Closing, as set forth below:
6.1. Organization, Existence and Authority of Del and Purchaser.
Each of Del and Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and Delaware,
respectively, and has and will have at the time of Closing, all corporate power
and authority to execute, deliver and perform this Agreement and the other
agreements and instruments to be executed and delivered by each of Del and
Purchaser pursuant hereto and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by each of Del and
Purchaser does not, and the consummation of the transactions contemplated hereby
will not, violate any provision of Del's or Purchaser's respective Certificate
of Incorporation or By-Laws or, to Del and Purchaser's knowledge, of any law or
regulation applicable to Del or Purchaser or of any agreement, mortgage,
license, lease, arrangement, instrument, order, arbitration award, judgment or
decree to which Del or Purchaser is a party or by which Del or Purchaser is
bound.
6.2. Power and Authority. On or prior to the Closing Date all
corporate acts and other proceedings required to be taken by or on the part of
each of Del and Purchaser to authorize each of them to carry out this Agreement
and such other agreements and instruments to be executed and delivered by each
of them pursuant hereto and the transactions contemplated hereby and thereby
will have been duly and properly taken. This Agreement has been duly executed
and delivered by each of Del and Purchaser and constitutes, and such other
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agreements and instruments when duly executed and delivered by each of Del and
Purchaser will constitute, legal, valid and binding obligations of each of them
enforceable against them in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization or other laws relating
to or affecting creditors rights or by general equitable principles under common
law. The execution, delivery and performance by each of Del and Purchaser of
this Agreement and such other agreements and instruments and the consummation of
the transactions contemplated hereby and thereby will not violate, conflict with
or result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or result in the
creation of a lien or encumbrance under, any agreement by which Del or Purchaser
may be bound or affected.
6.3. Consents. Subject to Section 10.1(b), no consent, filing or
approval of any Federal, state or local governmental agency or department or any
other person not a party to this Agreement is required or necessary in
connection with the execution, delivery and performance under this Agreement or
the Transaction Documents or to consummate the transactions contemplated hereby
and thereby.
6.4. Representations and Warranties. Neither the representations
and warranties of Del or Purchaser contained (i) herein nor (ii) in any
certificate, Exhibit, Schedule or other writing required by the terms hereof to
be delivered by Del or Purchaser (and so delivered) contain any untrue statement
of a material fact or taken together omit to state a material fact necessary in
order to make the statements herein and therein not misleading in light of the
circumstances in which made.
ARTICLE VII
Section 7. Additional Covenants and Agreements.
7.1. Plant Closing Law. Seller and Purchaser shall comply, to the
extent applicable, with The Worker Adjustment and Retraining Notification Act
and the rules and regulations promulgated thereunder. Subject to Section 12
hereof, each party shall indemnify the other party for all Indemnified Amounts,
as hereinafter defined, incurred or suffered by such other party arising out of
the indemnitor's failure to comply with such Act, its rules or regulations.
7.2. "Universal Imaging". Seller shall assign and transfer to
Purchaser all of its right, title and interest in and to the trademark/trade
name "Universal Imaging".
7.3. "Gendex" License. Seller shall grant to Purchaser an
exclusive license and right to use the trademark/trade name "Gendex" (in
conjunction with the word "medical" and "Del" if used in any corporate name) for
a period of five (5) years following the Closing Date in connection with the
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manufacture and sale of (i) the Products; and (ii) all other new medical imaging
products that may be developed by Purchaser in accordance with the Trademark
License Agreement attached as Schedule 7.3.
7.4. Long Term Supply Contracts. Seller shall assign to Purchaser,
and Purchaser shall assume from Seller, the outstanding long term supply
contracts listed on Schedule 7.4 attached hereto ("Long Term Supply Contracts")
of the Gendex Division which have been entered into in the ordinary course of
business on commercially reasonable terms. Seller shall use commercially
reasonable efforts to obtain each supplier's consent, if so required, to such
assignment. Such assignment and assumption shall be evidenced by the assignment
and assumption agreement (the "Assignment and Assumption Agreement") in the form
attached hereto as Schedule 7.4A.
7.5. Gendex Division Accounts Receivable. Purchaser shall use
commercially reasonable efforts (including follow-up phone calls made to account
debtors) to request from account debtors the accounts receivable of the Gendex
Division for a period of twelve (12) months following the Closing Date. Within
two (2) weeks following collection thereof, Purchaser shall pay all such
collected amounts to Seller and in addition shall notify Seller of all disputed
invoices for action by Seller. Purchaser shall prepare and transmit to Seller
monthly statements of account within two (2) weeks of the end of the month with
respect to such accounts receivable. Purchaser shall in addition promptly advise
Seller in the event that any account debtor shall pay its invoices out of
sequence. Purchaser shall not disparage Seller or the Gendex Division with
respect to such accounts receivable of the Gendex Division or advise any account
debtor not to pay an invoice of Seller. Purchaser shall cooperate with Seller in
connection with the collection of such accounts receivable. Except as set forth
above, Purchaser shall have no obligation for uncollected receivables and no
obligation to undertake collection efforts on behalf of Seller.
7.6. The Facility Lease. Subject to the provisions of Section 13
hereof, on the Closing Date, Seller shall assign to Purchaser the lease for the
Facility where the Gendex Division currently conducts its operations, and
Purchaser shall assume Seller's obligations thereunder. Seller represents that
there are no existing tax abatements or pending assessments in connection with
the premises upon which the Facility is located which affect the Business.
Seller has obtained and delivered to Purchaser the landlord's consent to such
assignment, a copy of which is attached as Schedule 7.6, including the options
for the renewal of the Facility lease (the "Landlord Consent"). Purchaser's
obligations in connection with the assumption of the Facility lease are
expressly contingent upon (i) the receipt by Purchaser of a satisfactory
engineer's report, and (ii) the receipt by Purchaser of a satisfactory Phase I
environmental audit. The cost of such audit shall be allocated in accordance
with the Environmental Due Diligence Agreement, a copy of which is attached as
Schedule 7.6A.
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7.7. Confidentiality Agreement. Del and Seller shall enter into a
confidentiality agreement (the "Confidentiality Agreement") in the form attached
hereto as Schedule 7.7, pursuant to which each company shall agree to hold in
strict confidence all confidential information of the other.
7.8. Distribution Agreement. On the Closing Date Seller shall
enter into a distribution agreement (the "Distribution Agreement") with
Purchaser in the form attached hereto as Schedule 7.8, whereby Purchaser shall
have the right to sell to hospitals and medical clinics (not including clinics
that primarily provide dental services) Seller's intra-oral and panoramic dental
systems as set forth in the Distribution Agreement for a period of five (5)
years following the Closing Date. During Year One, Seller shall sell such dental
systems to Purchaser at prices equal to Seller's intra-company transfer prices
charged to the Gendex Division during calendar year 1995 (which shall include a
three (3%) percent increase over the current transfer prices) plus seven (7%)
percent ("Dental Systems Base Prices"). During Year Two and each of the three
consecutive twelve month periods immediately following Year Two, Seller shall
sell such dental systems to Purchaser at prices equal to the Dental Systems Base
Prices, plus or minus for each of such twelve month periods, an adjustment equal
to the cumulative percentage increase or decrease, as the case may be, in the
PPI during the immediately prior twelve, twenty-four, thirty-six and forty-eight
month periods, respectively.
7.9. Fabricated Parts. On the Closing Date, Seller shall enter
into a supply agreement (the "Supply Agreement") with Purchaser in the form
attached hereto as Schedule 7.9, pursuant to which, during the six month period
after Closing, Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, selected Fabricated Parts in the aggregate amount of Two Million Five
Hundred Thousand ($2,500,000). The price of such Fabricated Parts shall be equal
to Seller's intra-company transfer prices ("Base Prices") charged to the Gendex
Division during calendar year 1995 (the "Base Year") (a complete list of
Fabricated Parts and Base Prices is specifically attached to Schedule 7.9) plus
an increase not to exceed three (3%) percent.
7.10. MIS and Data Processing Services. Seller shall provide
Purchaser with MIS and data processing services as set forth in the Data
Processing Agreement attached as Schedule 7.10, for a period not to exceed three
(3) years following the Closing Date. Purchaser shall provide Seller with not
less than ninety (90) days prior written notice of its intent to terminate such
MIS and Data processing services at any time prior to the expiration of such
three (3) year period. During Year One, in payment for such services Purchaser
shall pay to Seller a sum not to exceed $100,000 (the "Base Service Fee").
During the second and third twelve (12) month periods ("Year Two" and "Year
Three"), in payment for such services Purchaser shall pay to Seller a sum equal
to the Base Service Fee actually paid by Purchaser during Year One, plus or
minus for each of Year Two and Year Three, an adjustment equal to the cumulative
percentage increase or decrease, as the case may be, in the PPI during the
immediately prior twelve and twenty-four month periods, respectively.
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Seller shall use good faith efforts to provide accurate and timely services,
provided however, that Seller does not guarantee the accuracy of data and
information from such services and assumes no liability for direct or
consequential damages arising from any alleged inaccuracies of such information
unless caused by the knowing and intentional act of Seller.
7.11. Reasonable Access By Del and Purchaser Pending Closing. In
accordance with the provisions of a Confidentiality Agreement entered into
between Seller and Del dated November 1, 1995, Seller will give to Del and
Purchaser, their counsel, accountants, engineers and other representatives,
after reasonable notice, reasonable access during normal business hours
throughout the period prior to the Closing, to all of the properties, books,
contracts, commitments and records relating to the Gendex Division Business.
7.12. Taxes. The parties hereto will cooperate with each other in
connection with any audit by the Internal Revenue Service or any other tax
authority of any tax return to the extent relevant to the operations of the
Gendex Division prior or subsequent to the Closing Date. From and after the
Closing Date, Seller shall file when due all tax returns relating to the
Business for all periods up to the Closing Date, and shall pay the taxes shown
to be due on any such returns. Purchaser shall file and pay when due all tax
returns and taxes relating to the Business for periods after the Closing Date.
Any and all sales, use and transfer taxes of any kind or nature required to be
paid in connection with the sale of the Assets to Purchaser shall be paid by
Seller.
7.13. Books and Records. Until the expiration of the applicable
statutory period of limitations, or for such longer period if such statutory
period is extended, each of the parties hereto will to the extent necessary in
connection with any tax or other matters relating to the Gendex Division
Business (i) retain and, as each may reasonably request, permit the other and
their agents to inspect and copy, all books and records relating to the Gendex
Division Business and provide access to such information from such books and
records as may be reasonably requested and (ii) furnish to the other party
access to the information necessary to file required returns with respect to
Taxes.
7.14. Financial Condition. Since December 31, 1995 and through the
Closing Date:
(a) There has been and will be no material adverse change in
the financial condition, results of operations, business, properties, Assets or
liabilities of the Gendex Division.
(b) The operations and business of the Gendex Division have
been and will be conducted only in the ordinary course.
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(c) There has been and will be no accepted purchase order or
quotation, arrangement or understanding for future sale of the products or
services of the Gendex Division which is not in the ordinary course of business
and consistent with past practices.
(d) The Gendex Division has not suffered and will not suffer
an extraordinary loss (whether or not covered by insurance) or waived any right
of substantial value.
There is no fact known to Seller which materially adversely
affects the financial condition, results of operations, business, properties,
Assets or liabilities of the Gendex Division other than as set forth in this
Agreement.
7.15. Conduct of Business Pending the Closing. From the date
hereof until the Closing Date, Seller shall conduct the Business only in the
ordinary course and will use reasonable commercial efforts to:
(a) preserve intact the Assets and the current business
operations and properties of the Gendex Division;
(b) take no action or fail to take such action the
consequence of which will cause a breach of or default in any contract,
agreement, commitment or obligation to which it is a party or by which it may be
bound;
(c) keep at all times full and complete books and records,
consistent with past practices for the Gendex Division.
7.16. Access to Books and Records. Prior to Closing, Purchaser and
Del shall have access to all books and records of Seller which contain
information regarding the Business and the Assets.
7.17. Supplemental Disclosure. Seller, on the one hand and
Purchaser and Del, on the other hand, shall have the right from time to time
prior to the Closing to supplement the Schedules hereto with respect to any
matter hereafter arising which, if existing or known as of the date of this
Agreement, would have been required to be set forth or described in such
Schedule. Any such supplemental disclosure will be deemed not to have cured any
breach of any representation or warranty made in this Agreement for purposes of
the indemnification obligations set forth in Articles XI and XII hereof.
7.18. Employees. Del and Purchaser, on the one hand, and Seller on
the other hand, agree that for a period of two (2) years after the Closing they
shall not contact, solicit or hire any employees of the other, except for those
employees of the Gendex Division hired at Closing as part of the transaction
contemplated herein.
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7.19. License Back. From and after the Closing, Seller shall have
a non-exclusive, paid-up license to use, sell, make or have made under the
Patents and business and technical information to the extent that such Patents
and business and technical information apply to the design, manufacture, sale or
service of any non-medical x-ray product or business of Seller (or upgrade
thereof) and with respect to products produced under the Supply Agreement.
Seller shall have no right to sublicense or assign the Patents.
ARTICLE VIII
Section 8. Bulk Sales. The parties agree that compliance with the bulk
sales laws of the State of Illinois is waived and Seller hereby indemnifies,
subject to the provisions of Section 12, and holds Del and Purchaser harmless
from any and all Indemnified Amounts arising from any creditor claims as a
result of such bulk transfer which were not disclosed pursuant to any Schedule
or Exhibit to this Agreement.
ARTICLE IX
Section 9. Closing.
9.1. Location of The Closing. The Closing shall be held at the
offices of Tashlik, Kreutzer & Goldwyn P.C., 833 Northern Boulevard, Great Neck,
New York 11021.
9.2. Documents to be Delivered by Seller. On the Closing Date,
Seller shall deliver to Del and Purchaser:
(a) Executed copies of:
(i) the Non-Compete Agreement;
(ii) the Assignment and Assumption Agreement;
(iii) the Lease Assignment;
(iv) the Confidentiality Agreement;
(v) the Distribution Agreement;
(vi) the Supply Agreement;
(vii) the Trademark License Agreement; and
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(viii) the Data Processing Agreement.
(b) a certificate of the Secretary of Seller as to the
resolutions duly adopted by the Board of Directors of Seller authorizing the
execution, delivery and performance of this Agreement by Seller; the incumbency
and signatures of officers of Seller; and a certificate stating that the
resolutions authorizing the execution, delivery and performance of this
Agreement are in full force and effect;
(c) a Bill of Sale;
(d) an opinion of counsel for Seller, reasonably satisfactory
to Purchaser's counsel, dated as of the Closing Date;
(e) a cross receipt evidencing receipt by Seller of the
Purchase Price;
(f) Any other document or instrument of conveyance and
transfer necessary to implement and consummate this Agreement or any other
documents which may be reasonably requested by Del or Purchaser to consummate
the transactions contemplated herein.
9.3. Documents to be Delivered by Del and Purchaser. On the
Closing Date, Del and Purchaser shall deliver to the Seller:
(a) The Cash and executed original Note;
(b) Executed copies of each of the Transaction Documents;
(c) The opinion of counsel for Del and Purchaser, reasonably
satisfactory to Seller's counsel, dated as of the Closing Date;
(d) The Guaranty of Del with respect to the performance of
Purchaser under the Transaction Documents and any other documents necessary to
consummate the transactions contemplated herein.
(e) The resolutions duly adopted by the Board of Directors of
Del and Purchaser authorizing the execution, delivery and performance of this
Agreement by Del and Purchaser, certified by the Secretary of Del and Purchaser;
a certificate of the Secretary of Del and Purchaser as to the incumbency and
signatures of officers of Del and Purchaser; and a certificate stating that the
resolutions authorizing the execution, delivery and performance of this
Agreement are in full force and effect;
(f) A cross receipt evidencing delivery of the Assets to
Purchaser; and
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(g) Any other documents which may be reasonably required to
consummate the transactions contemplated herein or any other documents
reasonably requested by Seller in connection with the transactions contemplated
herein.
Unless otherwise provided in this Agreement, all documents
and instruments delivered shall be dated the Closing Date and shall be
reasonably satisfactory as to form and content to each party and its respective
counsel.
9.4. Real Estate Taxes. Purchaser shall forward any tax bills to
Seller for periods prior to Closing promptly upon receipt and Seller shall be
responsible for the payment of any such bills.
9.5. Adjustments for Rental Payments. At Closing, there shall be
an adjustment to the Purchase Price regarding the rental payments in connection
with the Facility.
ARTICLE X
Section 10. Conditions to Closing.
10.1. Conditions to Purchaser's Obligations. All the obligations
of Purchaser and Del under this Agreement are subject to the fulfillment, prior
to or at the Closing, of each of the following conditions, any or all of which
Purchaser may waive in writing:
(a) As a condition precedent to the obligation of Purchaser
and Del to consummate the transaction contemplated by this Agreement, Seller has
delivered to Purchaser and Del certified financial statements (the "Financial
Statements") for the Gendex Division for the last two fiscal years ending
December 31, 1994 and December 31, 1995, respectively. Such certified financial
statements shall include a statement of net assets to be acquired by Purchaser
and a statement of revenues less expenses for such years. Such certified
financial statements shall be prepared in accordance with generally accepted
accounting principles consistently applied throughout the years involved, shall
be acceptable to the U.S. Securities and Exchange Commission ("SEC") and shall
be in accordance with the books and records of Seller and the Gendex Division.
In the event either (i) the above referenced financial statements are not
acceptable to the SEC for any reason whatsoever (other than as to matters or
items prepared by Purchaser or Del) or (ii) such financial statements are not
filed with the SEC as a result of the unwillingness of the auditors of Seller to
consent to the inclusion of such statements in any securities filing of Del or
the Purchaser, then in either of such events, Seller shall be responsible to use
its best efforts to assist Del and Purchaser in the accomplishment of such
events, including the payment of all additional costs and expenses of Seller's
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or Purchaser's and Del's independent certified public accountants to prepare
such financial statements and consent to their inclusion in any securities
filing of Del.
(b) As a condition precedent to the obligation of Purchaser
and Del to consummate the transaction contemplated by this Agreement, Del's
institutional Lender shall grant its consent thereto, the status of which Del
shall keep Seller advised.
(c) Seller shall have performed in all material respects all
of its obligations under this Agreement required to be performed at or before
the Closing, and there shall have been delivered to Purchaser and Del a
certificate of an officer of Seller, dated the Closing Date, to such effect.
(d) The representations and warranties of Seller contained in
Section 5 of this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date with the same force and effect
as though such representations and warranties had been made as of the Closing
Date and there shall have been delivered to Purchaser and Del a certificate of
an officer of Seller, dated the Closing Date, to such effect.
(e) No action or proceeding to enjoin any transaction
contemplated by this Agreement shall have been instituted, and no injunction or
restraining order in any action or proceeding against any such transaction shall
then be in effect.
10.2. Conditions to Seller's Obligations. All the obligations of
Seller under this Agreement are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions, any or all of which Seller may
waive in writing:
(a) Purchaser and Del shall have performed in all material
respects all of its obligations under this Agreement required to be performed at
or before the Closing, and there shall have been delivered to Seller a
certificate of an officer of Purchaser and Del, dated the Closing Date, to such
effect.
(b) The representations and warranties of Purchaser and Del
contained in Section 6 of this Agreement shall be true and correct in all
material respects as of the date hereof and as of the Closing Date with the same
force and effect as though such representations and warranties had been made as
of the Closing Date, and there shall have been delivered to Seller a certificate
of an officer of Purchaser and Del, dated the Closing Date, to such effect.
(c) No action or proceeding to enjoin any transaction
contemplated by this Agreement shall have been instituted, and no injunction or
restraining order in any action or proceeding against any such transaction shall
then be in effect.
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ARTICLE XI
Section 11. Product Liability Responsibility and Environmental
Indemnification.
11.1. Product Liability Responsibility.
(a) Except as set forth below, Seller shall have sole
responsibility for all warranty expense, product liability or other obligation
with respect to the sale and manufacture of all products prior to the Closing
Date and indemnifies Del and Purchaser and holds each of them harmless from any
and all demands, actions, claims, losses, damages and costs and expenses
(including, without limitation, attorneys' fees) ("Del Liability Claim") arising
from or in connection with all products manufactured and sold (shipped) by
Seller and/or the Gendex Division prior to the Closing Date, whether such claims
are based on negligence, breach of warranty or strict liability, regardless of
when such Liability Claim is brought or incurred. The indemnification obligation
hereunder shall be governed by the provisions of Section 12 hereof.
(b) Notwithstanding the foregoing, following the Closing Date
Purchaser shall perform support services for products invoiced and sold by the
Gendex Division prior to the Closing Date and, in Purchaser's sole discretion,
the handling and accepting of returned products by customers of Seller. For
non-warranty work, Purchaser may bill or charge the customer at rates Purchaser
deems appropriate, and for in-warranty work, Purchaser shall from time to time
invoice Seller at Manufacturing Cost (as defined herein) for such in-warranty
support services and Seller shall promptly reimburse Purchaser for such amount
minus any actual realized salvage value, if any. Purchaser agrees to use
reasonable efforts to seek reimbursement for defective parts and components from
the suppliers thereof. The term "Manufacturing Costs" as used herein shall mean
Purchaser's costs of direct material, direct labor and manufacturing overhead,
including freight in applied to labor plus 5% on such aggregate costs, excluding
sales and marketing costs and interest expense. In the event Purchaser, in its
discretion, has elected to accept a returned product originally sold by Seller,
Purchaser shall reimburse Seller for the value of such returned products. The
value of any returned product shall be deemed to be the standard cost of the
product minus the manufacturing cost of any rework and 10% of standard cost. If
Purchaser has, in its discretion, authorized a customer to return a product,
Seller shall have no liability for such returned product.
(c) Except as set forth above, Purchaser shall have sole
responsibility for all warranty expense, product liability or other obligation
with respect to the sale and manufacture of all products after the Closing Date
and indemnifies Seller and holds it harmless from any and all demands, actions,
claims, losses, damages, costs and expenses (including, without limitation,
attorneys' fees) ("Seller Liability Claim") arising from or in connection with
all products manufactured and sold (shipped) by Purchaser after the Closing
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Date, whether such claims are based on negligence, breach of warranty or strict
liability, regardless of when such Seller Liability Claim is brought or
incurred. The indemnification obligation hereunder shall be governed by the
provisions of Section 12 hereof.
11.2. Environmental Indemnification. Seller shall indemnify,
defend and save harmless Purchaser and Del from all damages, costs, penalties,
fines, suits, procedures, claims, liabilities and actions of any kind ("Del
Environmental Liability Claim") arising out of or in any way connected with any
spills or discharges of Hazardous Materials or wastes at the Facility which
occurred prior to the Closing Date and during Seller's possession of the
Facility; and from all fines, suits, procedures, claims and actions of any kind
including, but not limited to, reasonable attorney fees incurred by Purchaser or
Del arising out of Seller's failure to provide all information, make all
submissions and take all actions required by any governmental entity or agency
thereof prior to the Closing Date and during Seller's possession of the
Facility.
ARTICLE XII
Section 12. Indemnification; Survival.
12.1. Survival. The representations and warranties of the parties
hereto contained herein or in any certificate, Schedule or other writing
attached hereto, or required by the terms hereof to be delivered (and so
delivered), by the parties or communicated in writing as of the Closing Date
shall survive the Closing Date for a period of two (2) years, except as to tax
matters as set forth in Sections 5.8 and 7.12, product liability claims as set
forth in Section 11.1, litigation matters as set forth in Section 5.9,
environmental matters as set forth in Sections 5.17 and 11.2 and pension matters
as set forth in Section 5.11, all of which shall survive for a period equal to
the applicable statute of limitations. Notwithstanding the preceding sentence,
the right to indemnity with respect to any representation or warranty in respect
of which indemnity may be sought under Sections 11 and 12 hereof shall survive
the time at which it would otherwise terminate if notice of the inaccuracy or
breach thereof, which shall include with reasonable specificity the elements of
such claim, shall have been given to the party against whom such indemnity may
be sought prior to such time.
12.2. Indemnification by Seller.
(a) Seller hereby indemnifies Del and Purchaser and their
respective officers, directors, controlling persons (if any), employees,
attorneys, agents and stockholders (the "Indemnitees") against and agree to hold
each of them harmless from any and all damage, loss, liability, expense
(including, without limitation, reasonable out-of-pocket expense of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding brought by, against or involving any Indemnitee) and
cost (collectively, "Del Indemnified Amounts") incurred or suffered by any
Indemnitee arising out of (i) any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Seller pursuant to this
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Agreement or any of the Transaction Documents, (ii) any Del Liability Claim; and
(iii) any Del Environmental Liability Claim.
(b) The Indemnitees each agree to give notice within the time
periods specified in Section 12.1 to Seller within sixty (60) days of having
knowledge of such claim after learning of the assertion of or having specific
knowledge as to any claim, or the commencement of any suit, action or
proceeding, in respect of which indemnity may be sought hereunder. The failure
of an Indemnitee to give such notice within sixty (60) days and in sufficient
time thereafter to prevent Seller from being materially prejudiced in the
defense of such claim, suit, action or proceeding shall constitute a waiver of
its rights hereunder in respect of the claim, suit, action or proceeding with
respect to which such notice was required to have been given hereunder.
(c) Seller shall not be liable under this Section 12.2 for
any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder.
(d) The amount required to be paid to an Indemnitee by Seller
for any Del Indemnified Amounts hereunder shall be the amount which, after
taking into account the effect of Federal, state and local tax laws, places the
Indemnitee in the same position as if the matter giving rise to the
indemnification had not occurred and such payment had not been received. Such
amounts shall be paid not later than thirty (30) days after receipt by Seller of
written notice from the Indemnitee stating that such Indemnified Amounts have
been incurred and the amount thereof and of the related indemnity payment;
provided, however, that any disputed amounts shall be due and payable within
thirty (30) days after such amounts are finally determined by mutual agreement
or by a court of competent jurisdiction to be owing by Seller to Del and/or
Purchaser.
12.3. Indemnification by Purchaser and Del.
(a) Each of Purchaser and Del hereby indemnifies Seller and
its respective officers, directors, shareholders, employees, attorneys and
agents against and agrees to hold each of them harmless from any and all damage,
loss, liability, expense (including, without limitation, reasonable
out-of-pocket expense of investigation and reasonable attorneys' fees and
expenses in connection with any action, suit or proceeding brought by, against
or involving Seller) incurred or suffered by Seller and cost (collectively,
"Seller Indemnified Amounts") incurred or suffered by Seller arising out of (i)
any misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Del or Purchaser pursuant to this Agreement or any Transaction
Document; and (ii) any Seller Liability Claim.
(b) Seller agrees to give notice within the time periods
specified in Section 12.1, to Purchaser and Del within sixty (60) days of having
knowledge of such claim after learning of the assertion of or having specific
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knowledge as to any claim, or the commencement of any suit, action or
proceeding, in respect of which indemnity may be sought hereunder. The failure
of Seller to give such notice within such sixty (60) days and in sufficient time
thereafter to prevent Purchaser and Del from being materially prejudiced in the
defense of such claim, suit, action or proceeding shall constitute a waiver of
its rights hereunder in respect of the claim, suit, action or proceeding with
respect to which such notice was required to have been given hereunder.
(c) Purchaser and Del shall not be liable under this Section
12.3 for any settlement effected without their consent for any claim, litigation
or proceeding in respect of which indemnity may be sought hereunder.
(d) The amount required to be paid to Seller by Purchaser or
Del for any Seller Indemnified Amounts hereunder shall be the amount which,
after taking into account the effect of Federal, state and local tax laws,
places the Seller in the same position as if the matter giving rise to the
indemnification had not occurred and such payment had not been received. Such
amounts shall be paid not later than thirty (30) days after receipt by Purchaser
and Del of written notice from Seller stating that such Indemnified Amounts have
been incurred and the amount thereof and of the related indemnity payment;
provided, however, that any disputed amounts shall be due and payable within
thirty (30) days after such amounts are finally determined by mutual agreement
or by a court of competent jurisdiction to be owing by Purchaser and/or Del to
Seller.
12.4. Limitations on Indemnification.
(a) Notwithstanding anything to the contrary contained
herein, the Seller shall be obligated to indemnify Del and the Purchaser, and
Del and the Purchaser shall be obligated to indemnify the Seller, for the
applicable Indemnified Amounts hereunder only up to a maximum aggregate amount
equal to the Purchase Price plus the Contingent Consideration.
(b) Notwithstanding anything to the contrary contained
herein, neither Seller nor Del or Purchaser shall be entitled to any recovery
from the other with respect to any breach of warranty or representation set
forth herein or the indemnification provided for in Sections 5.17, 11 or 12
hereof unless and until the aggregate amount of the applicable Indemnified
Amounts suffered, sustained or incurred by the asserting party, or to which such
party becomes subject, by reason of such breach or indemnity, shall exceed in
the aggregate Fifty Thousand ($50,000) Dollars (the "Cushion Amount"). In the
event that the sum of the applicable Indemnified Amounts for which no
indemnification has been made hereunder (the "Aggregate Indemnified Amount")
shall exceed the Cushion Amount, the indemnification obligations imposed herein
shall apply to all amounts from the first dollar of such claims.
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(c) Notwithstanding anything to the contrary contained
herein, the indemnification limitation and Cushion Amount set forth herein and
in Section 12.1 shall not apply in the event that the Seller, Del or Purchaser,
as the case may be, fraudulently (i) omitted a material fact or (ii)
misrepresented or breached any representation or warranty in this Agreement or
in any agreement or schedule required to be delivered by Seller or by Del or
Purchaser, as the case may be.
12.5. Conduct of Litigation. Each indemnifying party shall be
entitled at its own expense to conduct the defense of any claim or action to be
indemnified hereunder in which event such defense shall be conducted by counsel
chosen by such indemnifying party, which counsel may be any counsel reasonably
satisfactory to the indemnitees, and the indemnified party shall bear all fees
and expenses of any additional counsel retained by them; provided, however, that
if counsel for the indemnified party reasonably determines that there is a
conflict between the positions of the indemnified party and the indemnifying
party in conducting the defense of such action or that there are legal defenses
available to such indemnified party different from or in addition to those
available to the indemnifying party, then counsel for the indemnified party
shall be entitled, if the indemnified party so elects, to conduct the defense to
the extent reasonably determined by such counsel to protect the interests of the
indemnified party, at the expense of the indemnifying party. If the indemnifying
party shall elect not to assume the defense of such claim or action, and such
action is finally determined by a court of competent jurisdiction and such
indemnifying party is determined to be liable for the indemnification
obligations hereunder, then the indemnifying party will reimburse the
indemnitees for the reasonable fees and expenses of any counsel retained by them
in such action and/or in any action brought by the indemnified party to
determine the indemnification obligations of the indemnifying party and all
court costs, interest, and fees and disbursements as permitted by statute, and
the indemnifying party shall be bound by the results obtained by the
indemnitees; provided, however, that no such claim or action shall be settled
without the written consent of the indemnifying party.
12.6. Exclusivity of Remedies. Except (i) for any equitable
remedies to which the parties may be entitled and (ii) as otherwise expressly
provided in this Agreement, the parties' remedies for breach of the
representations, warranties and agreements herein contained and all other rights
and remedies of the parties for breach of this Agreement or in connection with
any dispute arising under this Agreement or the transactions contemplated hereby
or arising out of or relating to the Assets or the Business as heretofore or
hereafter conducted or as existing on the Effective Date shall be exclusively
governed by this Section 12.
12.7. No Implied Representations. Purchaser, Del and Seller
acknowledge that, except as expressly set forth in this Agreement, the
Schedules, or in the agreements referenced herein, neither Purchaser, Del nor
Seller has made or is making any oral or written representation or warranty to
the other, implied or otherwise.
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ARTICLE XIII
Section 13. Termination Fee. In the event for any reason either party
shall breach this Agreement ("Breach") or shall notify the other ("Notice") of
its decision not to proceed with this transaction on the terms provided herein,
except if such breach or Notice is due to a material breach by the other party
of this Agreement, the breaching or notifying party shall pay to the other party
in certified funds, within thirty (30) days of the Breach or the Notice, a
termination fee equal to $500,000; provided, however, that Del shall not be
obligated to pay a termination fee to Seller in the event that Del, in the
course of its due diligence investigation with respect to the Gendex Division
discovers one or more facts and/or circumstances that may adversely and
materially effect the business operations or financial condition of the Gendex
Division (as compared to the financial condition reflected in the audited
financial statements of the Gendex Division for the twelve months ended December
31, 1995 or the Assets; provided, further, however, that neither Del nor Seller
shall be obligated to pay a termination fee to the other in the event that (i)
Del's institutional lender declines to finance the acquisition of the Assets or
(ii) Seller shall have failed to obtain and keep in full force and effect the
Landlord Consent and Del elects not to proceed for such reason. The parties
hereto agree that the termination fee shall not preclude either party from
pursuing any other remedies in equity.
ARTICLE XIV
Section 14. Miscellaneous.
14.1. Notices. Any notices or other communications required or
permitted hereunder shall be in writing and sufficiently given if sent by
confirmed telefax, overnight delivery or by registered or certified mail,
postage prepaid, addressed to the parties hereto as follows:
To Seller:
Dentsply International Inc.
570 West College Avenue
York, PA 17405-0872
Attention: Secretary
Facsimile: (717) 843-6357
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To Del:
Del Global Technologies Corp.
11550 West King Street
Franklin Park, Illinois 60131
Attention: Mr. Leonard A. Trugman
To Purchaser:
Gendex- Del Medical Imaging Corp.
c/o Del Global Technologies Corp.
1 Commerce Park
Valhalla, NY 10595
Attention: Mr. Leonard A. Trugman
Copy to:
Tashlik, Kreutzer & Goldwyn P.C.
833 Northern Blvd.
Great Neck, NY 11021
Attention: Martin M. Goldwyn, Esq.
or such other addresses as shall be furnished by like notice by such party.
14.2. Brokers. Seller, Purchaser and Del each represents to the
other that it has not dealt with any broker for this transaction and has not
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who might be entitled to a fee or any
commission upon consummation of the transactions contemplated hereby. Purchaser
and Del, on one hand, and Seller, on the other hand, agree to indemnify and hold
each other harmless from and against any and all loss, damage, liability, cost
or expense (including reasonable attorneys' fees) suffered or incurred as a
result of any breach of the foregoing representations.
14.3. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors.
The parties may not assign this Agreement.
14.4. Entire Agreement; Amendment. This Agreement including the
Schedules, documents delivered hereunder and any agreements referenced herein,
embodies the entire agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, representations and
understandings with respect thereto. This Agreement may be amended, and any
provision hereof waived, but only in writing signed by the party against whom
such amendment or waiver is sought to be enforced.
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14.5. Counterparts. This Agreement may be executed in
counterparts, including telefax pages which shall be deemed originals with the
originals to be provided within a reasonable time, all of which shall together
constitute one and the same instrument.
14.6. Agreement to Take Necessary and Desirable Actions. Seller,
Del and Purchaser each agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be reasonably necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
14.7. Headings. The headings of Articles and Sections herein are
inserted for convenience of reference only and shall be ignored in the
construction or interpretation hereof.
14.8. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of Delaware applicable to contracts made
and to be performed therein without giving effect to the principles of conflict
of laws thereof. Except in respect of any action commenced by a third party in
another jurisdiction, the parties hereto agree that any legal suit, action, or
proceeding against them arising out of or relating to this Agreement may be
brought in the United States Federal Courts in the State of Delaware or the
Courts of Chancery, in the State of Delaware. The parties hereto hereby accept
the jurisdictions of such courts for the purpose of any such action or
proceeding, and agree that venue for any action or proceeding brought in the
State of Delaware shall lie in the United States Federal Courts or the Courts of
Chancery located in New Castle County, Delaware, as the case may be. Each of the
parties hereto hereby irrevocably consents to the service of process in any
action or proceeding in such courts by the mailing thereof by United States
registered or certified mail postage prepaid at its address set forth herein.
14.9. No Implied Waiver. No failure or delay on the part of the
parties hereto to exercise any right, power or privilege hereunder or under any
instrument executed pursuant hereto shall operate as a waiver; nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. All rights and remedies granted herein shall be in addition to other
rights and remedies to which the parties may be entitled at law or in equity
except or otherwise expressly provided herein.
14.10. No Third Party Beneficiaries. This Agreement is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
14.11. Nondisclosure of Agreement. Prior to Closing, Purchaser,
Del and Seller shall make no public disclosure regarding the negotiations
between the parties, the existence of this Agreement or the specific financial
and other terms and conditions of this Agreement, unless such disclosure is (i)
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agreed upon by prior written approval of the parties hereto, (ii) required by
law (in which case the disclosing party shall, prior to disclosure, advise and
consult with the other party and its counsel concerning such disclosure), or
(iii) if in the opinion of counsel to either party such disclosure is necessary
or appropriate by reason of Federal securities laws. Subsequent to Closing, the
parties hereto shall not be prohibited from disclosing the consummation of the
transaction contemplated by this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of
each of the parties hereto by their duly authorized officers as of the day and
year first above written.
DENTSPLY INTERNATIONAL INC.
By: /s/Edward Yates
----------------------------------
Edward D. Yates
Senior Vice President and CFO
DEL GLOBAL TECHNOLOGIES CORP.
By: /s/David Engel
----------------------------------
David Engel
Executive Vice President and CFO
GENDEX-DEL MEDICAL IMAGING CORP.
By: /s/David Engel
----------------------------------
David Engel
Executive Vice President and CFO
31
NON-COMPETE AGREEMENT
NON-COMPETE AGREEMENT, dated as of March 6, 1996, by and among
GENDEX-DEL MEDICAL IMAGING CORP., a Delaware corporation with offices at 11550
West King Street, Franklin Park, Illinois 60131 ("GDM"), DEL GLOBAL TECHNOLOGIES
CORP., a New York corporation with offices at One Commerce Place, Valhalla, New
York 10595 ("Del") and DENTSPLY INTERNATIONAL INC., a Delaware corporation with
offices at 570 West College Avenue, York, Pennsylvania 17405-0872 ("Dentsply").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement (the "Asset
Purchase Agreement"), dated as of March 6, 1996, by and among GDM, Del and
Dentsply, GDM has acquired certain selected assets of the GENDEX MEDICAL
DIVISION OF DENTSPLY ("Gendex Division"); and
WHEREAS, the Gendex Division was a division of Dentsply and is engaged
in the business of designing, manufacturing, repairing, marketing, distributing
and/or selling medical imaging devices and related components, including
equipment for veterinary and chiropractic uses; and
WHEREAS, as an additional inducement to Del and GDM to consummate the
transactions contemplated by the Asset Purchase Agreement, Dentsply has agreed
to enter into this Non-Compete Agreement, on the terms and subject to the
conditions herein contained.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Covenant Not To Compete and Confidentiality Covenant.
1.1. Non-Compete. Dentsply hereby acknowledges that the Gendex
Division was a division of Dentsply. Dentsply further acknowledges that (i) the
principal business of the Gendex Division is the design, manufacture, repair,
marketing, distribution and/or sale of medical imaging devices and related
<PAGE>
components, including equipment for veterinary and chiropractic uses under the
tradenames "Universal Imaging" and "Gendex" (the "Business"); (ii) Dentsply and
its affiliates have had access to the confidential affairs and proprietary
information of the Gendex Division and their affiliates not readily available to
the public; (iii) the agreements and covenants of Dentsply contained in this
Section 1 are essential to the business and goodwill of the Gendex Division; and
(iv) Del and GDM would not consummate the Asset Purchase Agreement without the
non-compete covenants contained herein. Accordingly, and except as expressly
provided pursuant to Section 1.2 hereof, Dentsply does hereby agree, that, it
will not, nor will its affiliates directly or indirectly, as a shareholder,
director, officer, partner, joint venturer, employee, consultant or agent, in
the Territory, as hereinafter defined, at any time during the Restricted Period,
as hereinafter defined:
(a) engage in the Business for its account or render any
services, which constitute engaging in the Business, in any capacity to any
person (other than Del, GDM or their affiliates); or become interested in any
person engaged in the Business (other than Del, GDM or their affiliates) as a
partner, shareholder (other than as a shareholder of Del), principal, agent,
employee, trustee, consultant or in any other relationship or capacity;
(b) solicit, directly or indirectly, on behalf of itself or
any third party, any client of Del, GDM or the Gendex Division and their
affiliates in connection with the sale of products of the Business; and
(c) have an interest as an owner, independent contractor,
co-venturer, partner, participant, associate or in any other capacity, render
services to or participate in the affairs of, any business which is competitive
with, or substantially similar to, the Business.
As used herein, the term "affiliates" shall mean all entities
directly or indirectly controlling, controlled by or under common control with
Dentsply and/or Del or GDM.
1.2. Acquisitions by Dentsply. In the event, pursuant to a single
transaction or series of transactions following the closing of the transactions
contemplated by the Asset Purchase Agreement, Dentsply shall have acquired a
business or businesses manufacturing or marketing medical imaging devices
including chiropractic and veterinary applications ("Acquired Business") that
shall cause Dentsply to have in the aggregate an amount of gross sales from such
Acquired Business equal to or in excess of $6,000,000 per annum (a
"Transaction") then Dentsply shall, not later than two (2) years following such
Transaction, discontinue or dispose of all or a portion of such Acquired
Business in excess of such amount. Notwithstanding anything to the contrary set
forth in this Section 1.2, Dentsply shall, within a reasonable period of time,
give Del and GDM written notice, describing such acquisition, including the
2
<PAGE>
business acquired. In the event, as a result of a Transaction and in accordance
with this Section 1.2, Dentsply is obligated or desires to dispose of all or a
portion of such Acquired Business acquired as a result of a Transaction,
Dentsply shall give Del and GDM written notice (the "Notice") of its desire or
intent to sell such business.
1.3. GDM, Del Non-Compete. GDM and Del hereby acknowledge that (i)
they have had access to confidential affairs and proprietary information of
Dentsply not readily available to the public, and (ii) Dentsply would not
consummate the Asset Purchase Agreement without the non-compete covenants
contained herein. Accordingly, and except as expressly provided pursuant to
Section 1.4 hereof, GDM and Del do hereby agree, that they will not, nor will
their affiliates, directly or indirectly, as a shareholder, director, officer,
partner, joint venturer, employee, consultant or agent, in the Territory, at any
time during the Restricted Period:
(a) engage in any business which is competitive with the
Dentsply business of manufacturing, design, repair, marketing, distribution
and/or sale of products for the dental industry or dental applications (the
"Dentsply Business"), for its account or render any services, which constitute
engaging in the Dentsply Business, in any capacity to any person (other than
Dentsply or its affiliates); or become interested in any person engaged in the
Dentsply Business (other than Dentsply or its affiliates) as a partner,
shareholder (other than as a shareholder of Del), principal, agent, employee,
trustee, consultant or in any other relationship or capacity;
(b) solicit, directly or indirectly, on behalf of itself or
any third party, any client of Dentsply or its affiliates in connection with the
sale of products of the Dentsply Business; and
(c) have an interest as an owner, independent contractor,
co-venturer, partner, participant, associate or in any other capacity, render
services to or participate in the affairs of, any business which is competitive
with, or substantially similar to the Dentsply Business.
1.4. Exception to Del Non-Compete. Notwithstanding the provisions
of Section 1.3 hereof, the term "Dentsply Business" as used herein shall not
include the manufacture and sale by Del or affiliates of portable intra-oral
dental systems. It is acknowledged by Dentsply that such intra-oral dental
systems are currently manufactured and sold by an affiliate of Del and such
affiliate will continue to sell such systems, as such systems may be upgraded,
modified, or replaced, in the sole discretion of Del and/or its affiliates.
3
<PAGE>
1.5. Unenforceability. If any of the restrictions contained in
this Section 1 shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Section shall
then be enforceable in the manner contemplated hereby.
1.6. Restricted Period. The term "Restricted Period" as used in
this Section 1, shall mean the period commencing on the date hereof and ending
on the date ten (10) years from the date hereof.
1.7. Territory Defined. The term "Territory" as used herein shall
mean the entire world.
Section 2. Injunctive Relief. The parties acknowledge that any breach
or threatened breach by it of Section 1 of this Agreement shall entitle the
other party and their affiliates, in addition to any other legal remedies
available to them, (i) to apply to any court of competent jurisdiction to enjoin
such breach or threatened breach without the requirement of posting a bond or
other security or a showing of special damages and (ii) the right and remedy to
require the breaching party and its affiliates to account for and pay over to
the other party, in their sole discretion, all compensation, profits, monies,
accruals, increments or other benefits (collectively, "Benefits") derived or
received by them as the result of any transactions constituting a breach of the
restrictive covenants of Section 1 hereof, and the breaching party and its
affiliates shall account for and pay over such Benefits to the other party. The
parties understand and intend that each restriction agreed to hereinabove shall
be construed as separable and divisible from every other restriction, that the
unenforceability of any one restriction shall not limit the enforceability, in
whole or in part, of any other restriction, and that one or more or all of such
restrictions may be enforced in whole or in part as the circumstances warrant.
In the event that any restriction in this Agreement is more restrictive than
permitted by the laws of the jurisdiction in which enforcement thereof is
sought, such restriction shall be limited to the extent permitted by law.
Section 3. Consideration for Non-Compete Covenants. As an additional
inducement to each party to consummate the transactions contemplated by the
Asset Purchase Agreement, Dentsply and Del and GDM have agreed to enter into
this Non-Compete Agreement, on the terms and subject to the conditions herein
contained.
Section 4. Miscellaneous.
4.1. Entire Agreement. This Agreement constitutes and embodies the
full and complete understanding and agreement of the parties with respect to the
4
<PAGE>
matters covered hereby, supersedes all prior understandings and agreements, if
any, whether oral or written among Del, GDM and Dentsply with respect to such
matters and shall not be amended, modified or changed except by an instrument in
writing executed by the party to be charged. The invalidity or partial
invalidity of one or more provisions of this Agreement shall not invalidate any
other provision of this Agreement. No waiver by either party of any provision or
condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time.
4.2. Binding Effect. This Agreement shall inure to the benefit of,
be binding upon and enforceable against, the parties hereto and their respective
successors. No assignment of any party's rights or obligations shall be
effective without the prior written consent of the other party hereto.
4.3. Captions. The captions contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
4.4. Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered or sent by
confirmed telefax, certified mail, postage prepaid, or special overnight
delivery, to the party at the address set forth above or to such other address
as either party may thereafter give notice of in accordance with the provisions
hereof.
4.5. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
4.6. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of Delaware applicable to contracts made
and to be performed therein without giving effect to the principles of conflict
of laws thereof. Except in respect of any action commenced by a third party in
another jurisdiction, the parties hereto agree that any legal suit, action, or
proceeding against them arising out of or relating to this Agreement shall be
brought exclusively in the United States Federal Courts in the State of Delaware
or the Courts of Chancery, in the State of Delaware. The parties hereto hereby
accept the jurisdictions of such courts for the purpose of any such action or
proceeding, and agree that venue for any action or proceeding brought in the
State of Delaware shall lie in the United States Federal Courts or the Courts of
Chancery located in New Castle County, Delaware as the case many be. Each of the
parties hereto hereby irrevocably consents to the service of process in any
5
<PAGE>
action or proceeding in such courts by the mailing thereof by United States
registered or certified mail postage prepaid at its address set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
GENDEX-DEL MEDICAL IMAGING CORP.
By: /s/David Engel
----------------------------------
David Engel
Executive Vice President and
Chief Financial Officer
DEL GLOBAL TECHNOLOGIES CORP.
By: /s/David Engel
----------------------------------
David Engel
Executive Vice President and
Chief Financial Officer
DENTSPLY INTERNATIONAL INC.
By: /s/Edward Yates
----------------------------------
Edward Yates
6
FRANKLIN PARK FACILITY LEASE
CURTO REYNOLDS OELERICH INC.,
a Delaware corporation
licensed to do business in Illinois
Lessor
and
GENDEX CORPORATION,
a Delaware corporation
Lessee
for
11550 West King Street
Franklin Park, Illinois
<PAGE>
INDEX
I. DESCRIPTION OF PREMISES .................................1
II. TERM ....................................................1
III. RENT ....................................................1
IV. UTILITY CHARGES .........................................2
V. TAXES AND ASSESSMENTS ...................................2
VI. INSURANCE ...............................................3
VII. IMPROVEMENTS TO BE ERECTED ..............................5
VIII. CONDITIONS AND USE OF PREMISES; INDEMNITY ...............6
IX. MAINTENANCE AND SURRENDER OF PREMISES ...................10
X. MECHANICS LIENS .........................................11
XI. ABANDONMENT .............................................11
XII. PENALTY ON DEFAULT - CANCELLATION .......................11
XIII. REMEDIES OF LESSOR ......................................12
XIV. INSPECTION OF PREMISES BY LESSOR ........................14
XV. RESTORATION OR REPAIR ...................................15
XVI. CONDEMNATION ............................................15
XVII. MONTH-TO-MONTH TENANCY ..................................16
XVIII. ASSIGNMENT OR SUBLEASING ................................16
XIX. SUBORDINATION ...........................................17
XX. OPTIONS TO RENEW - EXTENDED TERMS .......................17
XXI. LESSEE'S FINANCIAL STATEMENTS ...........................18
i
<PAGE>
XXII. NOTICES .................................................18
XXIII. SUCCESSORS AND ASSIGNS ..................................18
XXIV. GENERAL .................................................19
ii
<PAGE>
Exhibit "A" - PREMISES
Exhibit "B" - FIXED RENT
Exhibit "C" - IMPROVEMENTS TO BE ERECTED
Exhibit "D" - FIXED RENT DURING EXTENDED TERMS
Exhibit "E" - NEW ON-SITE PARKING LOT
iii
<PAGE>
LEASE
This Lease made and entered into this 4th day of January, 1993, by and
between CURTO REYNOLDS OELERICH INC., a Delaware corporation and licensed to do
business in the State of Illinois (herein called "Lessor"), and GENDEX
CORPORATION, a Delaware corporation (herein called "Lessee").
W I T N E S S E T H:
Lessor, for and in consideration of the rents, covenants and agreements
herein reserved, mentioned and contained on the part of the Lessee to be paid,
kept and performed, does hereby demise and lease to Lessee upon and subject to
the conditions herein expressed, the following described premises (herein called
"Premises") in Cook County, Illinois, to wit:
I. DESCRIPTION OF PREMISES
As set forth on Exhibit "All attached hereto and made a part hereof by
reference thereto and initialed by Lessor and Lessee,
and commonly known as 11550 West King Street, Franklin Park, Illinois (said
Premises and the improvements thereon, together with rights and privileges
thereunto belonging, are herein collectively called "Demised Premises").
II. TERM
TO HAVE AND TO HOLD the Demised Premises unto Lessee for and during the
full term of five (5) years, to wit, from the 1st day of February, 1993, to and
including the 31st day of January, 1998.
III. RENT
A. And Lessee in consideration thereof covenants and agrees to take and
accept said demise and lease on the terms herein recited and to pay fixed rent
for the Demised Premises as set forth on Exhibit "B" attached hereto and made a
part hereof by reference thereto and initialed by Lessor and Lessee.
1
<PAGE>
B. Said payments of fixed rent, as aforesaid, shall be absolutely net
to Lessor (except as may be specifically hereinafter provided) so that this
Lease shall yield, net to the Lessor, the specified fixed rent during the term
of this Lease and said payments of fixed rent, as aforesaid, shall be made by
Lessee, without deduction, discount or abatement (except as may be specifically
hereinafter provided) in lawful money of the United States, at such place in the
City of Des Plaines, Illinois, or otherwise, as Lessor may, from time to time,
designate in writing; and in default of such designation, then at the office of
Lessor at 1400 East Touhy Avenue, Suite 230, Des Plaines, Illinois 60018. Each
and every installment of rent accruing under the covenants of this Lease which
shall not be paid when due, shall bear interest at the rate per annum of two per
cent (2%) over the prime commercial rate of the Harris Trust and Savings Bank,
Chicago, Illinois, from the date when the same is payable under the terms of
this Lease until the same shall be paid; and all other sum or sums becoming due
or payable to Lessor under the term of this Lease, including all reasonable
moneys expended by Lessor pursuant hereto or on account of any default by Lessee
in the performance or observance of any of the covenants and agreements
contained in this Lease, shall likewise bear interest from the respective dates
when the same shall be advanced or paid by Lessor, or otherwise due to Lessor,
at the rate per annum of two per cent (2%) over the prime commercial rate of the
Harris Trust and Savings Bank, Chicago, Illinois, on the respective dates when
said sum or sums shall become due and payable until the same shall be repaid by
Lessee to Lessor. All sum or sums so advanced or paid by Lessor shall become so
much additional and further rent due from Lessee to Lessor hereunder.
C. All sum or sums due hereunder from Lessee to Lessor, except for
fixed rent, are hereby declared to be so much additional and further rent due
and payable by Lessee to Lessor with the installment of fixed rent next falling
due hereunder and may be collected in the same manner as the fixed rent due
hereunder. If such sum or sums are due from Lessee after the expiration of this
Lease, same shall be payable by Lessee ten (10) days after the date Lessor
notifies Lessee of such sum or sums.
IV. UTILITY CHARGES
Lessee shall pay or cause to be paid all charges for any facilities or
services of any kind, such as, but not limited to, water, gas, steam,
electricity, light, heat, power, telephone, rented or supplied to Lessee in
connection with the Demised Premises and shall contract for same in its own
name.
V. TAXES AND ASSESSMENTS
A. Lessee agrees that in addition to the rent herein provided, Lessee
shall pay all general real estate taxes and special assessments levied,
assessed, confirmed or imposed upon the Demised Premises during the term of this
Lease. Lessee shall have the right, but not the obligation, to attempt to reduce
the assessed valuation of the Demised Premises or contest the general real
2
<PAGE>
estate taxes or special assessments at its own cost and may engage its own
attorneys in connection therewith. If Lessee does not elect to attempt to reduce
said assessed valuation or contest said general real estate taxes or special
assessments, Lessor may do so at Lessee's cost, provided that such costs
(including any attorneys' fees and expenses) are based on a reasonable
percentage of any tax savings resulting from such reduction or contest.
B. Lessee agrees that any general real estate taxes or special
assessments levied, assessed, confirmed or imposed upon the Demised Premises
during the term of this Lease but payable in whole or in installments prior to
or after the term of this Lease shall be adjusted and prorated so that Lessor
shall pay its pro rata share for the period prior to the term of this Lease
during the first year of the term of this Lease and subsequent to the term of
this Lease during the last year of the term of this Lease.
C. Lessee agrees that in addition to the rent herein provided, Lessee
shall pay all special assessments, charges for permits or license fees of any
governmental authority, general, special, ordinary, extraordinary of any nature
and kind whatsoever levied, assessed, confirmed or imposed upon or payable for
or in respect of the Demised Premises during the term of this Lease. Lessee
shall pay to Lessor an amount equal to the amount so levied, assessed, confirmed
or imposed upon or payable for or in respect of the Demised Premises during the
term of this Lease; provided further that if any of the aforementioned is
levied, assessed, confirmed or imposed upon the Demised Premises but payable in
whole or in installments prior to or after the term of this Lease, the same
shall be adjusted and prorated so that Lessor shall pay its pro rata share for
the period prior to the term of this Lease during the first year of the term of
this Lease and subsequent to the term of this Lease during the last year of the
term of this Lease.
D. If Lessee shall fail to pay or deposit any sum or sums as required
pursuant to the terms of this Section V, Lessor may pay or deposit same at any
time thereafter, and the amount of any and all such payments or deposits so made
by Lessor, plus interest at the rate specified in Section III hereof shall be
and is hereby declared to be so much additional and further rent due from Lessee
to Lessor hereunder.
E. Taxes and assessments shall include all taxes levied against the
Demised Premises or against Lessor or Lessee on account of same by Federal,
State or local governments, and shall include all taxes equitably determined by
Lessor to be levied in lieu of or in substitution therefor, but shall not
include federal, state or local income taxes based upon Lessor's income or net
worth.
VI. INSURANCE
A. At all times during the term of this Lease, Lessee, at Lessee's sole
cost and expense, shall maintain the following types of insurance:
3
<PAGE>
(1) All risk property insurance initially in an amount of
$1,760,000.00 covering the full replacement costs of the improvements on the
Premises and the building service equipment. Lessor shall have the right
from time to time to reasonably determine and specify the amount to be used
as full replacement cost. Any policy providing such coverage shall contain
the so called special coverage all risk endorsement and the full replacement
cost endorsement.
(2) Comprehensive general liability insurance against claims for
injury or death occurring upon, in or about the Demised Premises such
insurance to afford protection in a combined single limit of not less than
$2,000,000.00 for each occurrence and in the aggregate and such insurance
shall be written on an occurrence basis. The limits of such insurance shall
not limit the liability of Lessee hereunder. Lessee agrees that Lessor shall
have the right to require Lessee to increase the general liability insurance
coverage required in such reasonable amounts as Lessor may, from time to
time, require during the term of this Lease.
(3) Steam boiler insurance with a limit of not less than
$100,000.00. Any policy providing such insurance shall include all steam
pressure equipment and piping.
(4) Business income (rent) insurance covering the rent value of
the improvements on the Demised Premises in the amount of not less than 100%
of the annual rent and any other amounts provided to be paid by Lessee to
Lessor pursuant to the terms of this Lease.
B. All policies of insurance required to be maintained by Lessee
pursuant to this Lease shall:
(1) be effected by valid and enforceable policies issued by
insurers, satisfactory to Lessor, who are authorized to do business in the
State of Illinois and shall be in such form and content as is satisfactory
to Lessor;
(2) provide that same shall not be cancelled or amended in any
respect without at least thirty (30) days prior written notice to each
assured named therein;
(3) be delivered in the form of an original certificate of
insurance with all the proper endorsements to Lessor on or before fifteen
(15) days prior to the occupancy by Lessee of the Demised Premises, and
renewals said policies shall be delivered in the form of an original
certificate of insurance with all the proper endorsements to Lessor at least
fifteen (15) days prior to the expiration date of each policy, together with
evidence satisfactory to Lessor of the payment of all premiums thereon;
4
<PAGE>
(4) name Lessee and Lessor as the insured, as the respective
interests may appear (and if requested by Lessor, shall bear appropriate
endorsements to protect Lessor's agents and employees and the legal title
holder of the Demised Premises);
(5) if the Lessor so requires, be payable to the holder of any
mortgage(s) or trust deed(s), as the interest of such holder may appear,
pursuant to a standard mortgage clause;
(6) to the extent obtainable, provide that any loss shall be
payable to Lessor or to the holder of any mortgage(s) or trust deed(s)
notwithstanding any act of negligence of Lessee which might otherwise result
in forfeiture of such insurance.
C. Whenever (1) any loss, cost, damage or expense resulting from fire,
explosion or any other casualty or occurrence is incurred by either of the
parties to this Lease in connection with the Demised Premises, and (2) such
party is then covered in whole or in part by insurance with respect to such
loss, cost, damage or expense, then the party so insured hereby releases the
other party from any liability it may have on account of such loss, cost, damage
or expense to the extent of any amount recovered by reason of such insurance and
waives any right of subrogation which might otherwise exist in or accrue to any
person on account thereof, provided that such release of liability and waiver of
the right of subrogation shall not be operative in any case where the effect
thereof is to invalidate such insurance coverage or increase the cost thereof
(provided that in the case of the increased cost, the other party shall have the
right within thirty (30) days following written notice, to pay such increased
cost, thereupon keeping such release and waiver in full force and effect).
D. If Lessee shall refuse or fail to maintain in force the insurance
required of Lessee to be maintained by Lessee hereunder and to keep such
policies in Lessor's possession, Lessor may at its election procure and from
time to time renew such insurance, and the amounts expended therefor with
interest thereon from the respective dates of expenditures therefor at the rate
specified in Section III hereof shall be so much additional and further rent due
from Lessee to Lessor hereunder.
VII. IMPROVEMENTS TO BE ERECTED
Lessor agrees to construct and complete at its sole cost and expense
the improvements upon the Demised Premises as described on Exhibit "C" attached
hereto and by reference made a part hereof and initialed by Lessor and Lessee on
or before February 1, 1993, and the improvements upon the Demised Premises as
described on Exhibit "E" attached hereto and by reference made a part hereof and
initialed by Lessor and Lessee in the Spring of 1993, all in a good and
workmanlike fashion, to the reasonable satisfaction of Lessee and in accordance
with all governmental regulations, ordinances and laws.
5
<PAGE>
VIII. CONDITIONS AND USE OF PREMISES; INDEMNITY
A. Entry into possession of the Demised Premises by Lessee shall
constitute an acknowledgment by Lessee that the same have been received by
Lessee in good condition, and that Lessee will during the term of this Lease
carefully keep and maintain the Demised Premises and any appurtenances such as
sidewalks and alleys adjoining the same in a safe, clean and wholesome condition
in accordance with all governmental regulations, ordinances and laws now or
hereafter affecting the Demised Premises, and will at all times at its own
expense comply with all such regulations, ordinances and laws applicable to the
same, and that Lessee will remove, at Lessee's sole cost and expense, any
rubbish of any character whatsoever which may accumulate thereon, and that
Lessee will not at any time during the term of this Lease use, or allow the use
of, the Demised Premises, or any portion thereof, or any building or buildings
and other improvements on the Premises or any portion thereof for the
manufacture or sale of spirituous, malt or other intoxicating liquor or for any
business or use which shall increase the fire hazard to the Demised Premises or
adjoining property, or for any business or activity which constitutes a nuisance
or for any business or purpose calculated to injure the reputation of the
Demised Premises or of the adjoining and neighboring property or to interfere
with the reasonable use of such neighboring property, or for any purpose or use
in violation of the laws of the United States or the State of Illinois or of any
law or local ordinance or for any other than manufacturing, storage or
industrial purposes. Lessee acknowledges and agrees that its possession of the
Demised Premises is subject to all applicable governmental regulations,
ordinances and laws now or hereafter regulating the use of the Demised Premises
and that Lessor has made no representation or warranty as to the present or
future suitability of the Demised Premises for the conduct of Lessee's business.
Lessor represents and warrants that it has full right and power to execute and
perform this Lease and to grant the estate demised herein. Lessor covenants that
Lessee shall peaceably and quietly have, hold and enjoy the Demised Premises and
all rights, appurtenances and privileges pertaining thereto during the full term
of this Lease. No changes, alterations, improvements or additions in the
building or buildings or improvements on the Premises shall be made or permitted
by Lessee without in each case the previous written consent of Lessor.
B. (1) Lessee represents, warrants and covenants to Lessor that during
the term of this Lease, Lessee will not use Hazardous Materials (as defined
hereinafter) on, from or affecting the Demised Premises in any manner which
violates federal, state or local laws, ordinances, rules, regulations or
policies covering the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials. Without
limiting the foregoing Lessee shall not cause or permit the Demised Premises to
be used to generate, manufacture, refine or process Hazardous Materials, except
in compliance with all applicable federal, state and local laws or regulations,
nor shall Lessee cause or permit, as a result of any intentional or
unintentional act or omission on the part of Lessee, a release of Hazardous
Materials onto the Demised Premises, the Building or adjoining property.
6
<PAGE>
(2) Lessee hereby represents, warrants and covenants to Lessor that
Lessee shall promptly notify Lessor as soon as Lessee knows or suspects that
Hazardous Materials have been released on the Demised Premises.
(3) Upon termination of Lessee's right of possession hereunder,
whether this Lease be terminated or not, Lessee shall deliver the Demised
Premises to Lessor free of any and all Hazardous Materials, except for those
existing prior to the commencement of this Lease.
(4) For purposes of this Section VIII B, "Hazardous Materials"
includes, without limit, any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances, or related
materials defined in the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et
seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Sections 6901, et seq.), and in the regulations adopted and publications
promulgated pursuant thereto, or any other federal, state or local environmental
law, ordinance, rule or regulation.
C. Lessee further covenants and agrees that it will protect, indemnify
and forever save and keep harmless Lessor and the Demised Premises of, from and
against any and all penalties, fines, damages, loss, costs, charges and expenses
whatsoever, including reasonable attorneys' fees, such as may arise out of, but
not limited to, the following:
(1) Any breach or default by Lessee in the performance or
observance of any of the covenants of this Lease;
(2) The institution or prosecution against Lessor, and without its
fault as determined by a court of competent jurisdiction, of any litigation
commenced by or against Lessee, pertaining to or affecting the Demised
Premises;
(3) The enforcement by Lessor against Lessee of the covenants and
agreements of this Lease, whether by the institution or prosecution of
litigation or otherwise;
(4) The violation or breach of any law, rule, requirement, order,
direction, ordinance or regulation which may be applicable to the Demised
Premises, whether occasioned by the act or neglect of Lessee or of any
person holding or claiming by, through or under Lessee, or of any occupant
of the Demised Premises during the term of this Lease;
(5) Any accident, injury, loss or damage resulting to person or
property, during the term of this Lease, and due, directly or indirectly, to
the possession, use, occupancy, operation, alteration, repair or maintenance
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of the Demised Premises, or the switchtrack or tracks thereon, if any, or by
reason of any act or thing upon the Demised Premises.
(6) Any violation of any applicable statute, regulation, ordinance
or law for the protection of the environment which occurs upon the Demised
Premises, or by reason of the imposition of any governmental lien for the
recovery of environmental cleanup costs expended by reason of such
violation.
D. (1) Lessor hereby represents, warrants and covenants to Lessee that:
(i) Lessor has not been notified of any potential liability with respect to any
clean up of the Demised Premises and has no information that the Demised
Premises has been or is under investigation by any local, state or federal
governmental body, authority or agency, and (ii) no underground tanks are
located on the Demised Premises, excepting from each of the foregoing such of
the foregoing as set forth in the Environmental Site Assessment Summary for
Building No. 44, 11550 West King Drive, Franklin Park, Illinois 60131, dated
December, 1992, prepared for Curto Reynolds Oelerich Inc. and Lincoln
National-Investment Management Company by Kevin M. Whelan and Linda L. Huff,
P.E., of Huff & Huff, Inc., Environmental Consultants, LaGrange, Illinois
(herein called "Environmental Site Assessment").
(2) Notwithstanding any provision in this Lease to the contrary,
Lessor shall be solely responsible for compliance with all federal, state and
local laws, ordinances, rules, regulations or policies relating to the Hazardous
Materials at, on, under or affecting the Demised Premises, including asbestos
removal and abatement, except to the extent any violation of such laws,
ordinances, rules, regulations or policies was caused by Lessee. To the extent
any violation of such laws, ordinances, rules, regulations or policies was
caused by Lessee, compliance shall be Lessee's sole responsibility. The
obligations of this paragraph D(2) shall survive the expiration or earlier
termination of this Lease.
(3) Lessor hereby represents that prior to the commencement of this
Lease (i) no Hazardous Materials have been used on, from or affecting the
Demised Premises in any manner which violates federal, state or local laws,
ordinances, rules, regulations or policies covering the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials; and (ii) no Hazardous Materials have been released on the
Demised Premises, excepting from each of the foregoing such of the foregoing as
set forth in the Environmental Site Assessment.
(4) Lessor further covenants and agrees that it will protect,
indemnify and forever save and keep harmless Lessee and the Demised Premises of,
from and against any and all penalties, fines, damages, loss, cost, charges and
expenses whatsoever, including reasonable attorneys' fees, such as may arise out
of the following:
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a. Any breach or default by Lessor in the performance or
observances of any of the covenants of this Lease;
b. The institution or prosecution against Lessee, and without
its fault as determined by a court of competent jurisdiction, of any
litigation commenced by or against Lessor, pertaining to or affecting
the Demised Premises;
c. The enforcement by Lessee against Lessor of the covenants and
agreements of this Lease, whether by the institution or prosecution of
litigation or otherwise;
d. The violation or breach of any law, rule, requirement, order,
direction, ordinance or regulation which may be applicable to the
Demised Premises, whether occasioned by the act or neglect of Lessor or
its agents or employees;
e. Any accident, injury, loss or damage resulting to person or
property, during the term of this Lease, and due directly or indirectly
to the alteration, repair or maintenance of the Demised Premises, or by
reason of any act or thing upon the Demised Premises, to the extent
that the foregoing result from the negligence or wrongful act or acts
of Lessor or its agents or employees;
f. Any violation which occurs upon the Demised Premises
occasioned by the act or neglect of Lessor or its agents or employees
of any applicable statute, regulation, ordinance or law for the
protection of the environment or by reason of the imposition of any
governmental lien for the recovery of environmental cleanup costs
expended by reason of such violation.
E. Except for the causes described in paragraph D herein above, in the
event that Lessor is required to pay any sum or sums on account of or by virtue
of any of the foregoing causes, the sum or sums so paid therefor, together with
interest thereon at the rate specified in Section III hereof, shall become
additional and further rent due from Lessee to Lessor hereunder.
F. Lessee shall have the right to contest by appropriate legal
proceedings, without cost or expense to Lessor, any mechanic's lien claim or the
validity of any law, rule, requirement, order, direction, ordinance or
regulation of the nature referred to in Section VIII C (4) hereof, and if by the
terms of any such law, rule, requirement, order, direction, ordinance or
regulation, compliance therewith may legally be held in abeyance without the
occurrence of any lien, charge or liability of any kind against the Demised
Premises or any interest of Lessor therein and without subjecting Lessor to any
liability, civil or criminal, of whatsoever nature for failure so to comply
therewith, Lessee may postpone compliance therewith until the final
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determination of any proceedings, provided that all such proceedings shall be
prosecuted with all due diligence and dispatch. If any lien, charge or civil
liability, but not criminal liability, is incurred by reason of noncompliance,
Lessee may nevertheless make the contest aforesaid and delay compliance as
aforesaid, provided that Lessee prosecutes the contest aforesaid with due
diligence and dispatch.
G. The word "Lessor" when used in this Section VIII shall mean Lessor
herein, Lessor's agents and the fee title holder to the Premises (and if the
same is a land trust, any and all beneficiaries of said land trust and their
agents).
IX. MAINTENANCE AND SURRENDER OF PREMISES
A. Subject to the provisions of Section IX C hereof, Lessee, at its
expense, will carefully keep and maintain the Demised Premises and any
appurtenances such as sidewalks and alleys adjoining the same (including all
driveways and parking areas) in good condition and repair at all times during
the term of this Lease and Lessee will make all necessary repairs, replacements
and renewals thereto, interior and exterior, extraordinary and ordinary,
unforeseen and foreseen, however the necessity or desirability for such repairs
may occur and whether or not necessitated by wear, tear, obsolescence or
defects, latent or otherwise. Lessee will afford Lessor all reasonable
opportunity to inspect the Demised Premises for the purpose of determining
whether the Demised Premises are being properly maintained in such condition and
repair. Lessee agrees that it will not (1) overload the floors; (2) subject the
roof structure to any loads in excess of the load limits of the structural
design criteria; and (3) permit water, snow, ice or any other substance to
accumulate on the roof in excess of the load limits of the structural design
criteria.
B. Lessee agrees that at the termination of this Lease, either by lapse
of time or otherwise, Lessee will surrender up possession of the Demised
Premises in as good condition and repair as the same shall be in upon Lessee's
taking possession thereof, ordinary wear and tear excepted.
C. Lessor agrees, at its expense, to (1) keep and maintain the
structural parts of the building, including the roof and exterior walls, but
excluding all windows, window glass and doors, in good condition and repair at
all times during the term of this Lease and any extensions thereof and will make
all necessary repairs, replacements and renewals thereto; (2) replace the boiler
in the building, when and if necessary; and (3) remove the existing mezzanine
when requested in writing by Lessee, unless such maintenance, repairs,
replacement or renewals shall be required as a result of the negligent or
wrongful act or acts of Lessee, its employees, agents, invitees or licensees, or
as a result of Lessee's default under the terms and provisions of this Lease, in
which case Lessee shall be responsible for such maintenance, repairs,
replacements or renewals.
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X. MECHANICS LIENS
Lessee will not permit any mechanic's or other lien or encumbrance to
be filed against or placed upon the Demised Premises or any building or
buildings or other improvements on the Premises during the term of this Lease,
and in case of any such lien attaching will promptly pay off the same. If
default in the payment thereof shall continue for thirty (30) days after written
notice thereof from Lessor to Lessee, Lessor shall have the right at its option
and without inquiring as to the validity or the correctness of the amount or
amounts thereof, of paying the same or any portion thereof, and any amount or
amounts so paid, including attorneys' fees and expenses, together with interest
at the rate specified in Section III hereof on the amount or amounts of such
expenditures from the respective dates thereof, shall become so much additional
and further rent due from Lessee to Lessor hereunder. Notwithstanding the
foregoing, Lessee shall have the right to contest a mechanic's lien claim. In
the event of such a contest, Lessee shall not be deemed in default hereunder
during the pendency of such contest, and Lessor shall not be entitled to pay the
lien in accordance with the requirements of this Section X. Provided, however,
if Lessee shall contest the validity of any such mechanic's lien claim, Lessee
shall, at its sole expense, defend itself and Lessor against the same and shall
pay and satisfy any adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Demised Premises; and if Lessor
shall require, Lessee shall furnish to Lessor a surety bond satisfactory to
Lessor in an amount equal to such contested mechanic's lien claim indemnifying
Lessor against liability for the same and holding the Demised Premises free from
the effect of such mechanic's lien claim. If Lessee shall fail to defend Lessor
as hereinabove provided, Lessor may require Lessee to pay Lessor's reasonable
attorneys' fees and costs in such action if Lessor shall determine it to be
necessary to so participate to protect Lessor's interest.
XI. ABANDONMENT
If the Demised Premises shall be abandoned or vacated by Lessee at any
time during the term hereof and Lessee has ceased to pay rent when due, Lessor
may without notice to Lessee take possession thereof for the remainder of said
term, and in its discretion relet the same and apply the net proceeds (after
payment of advertising, other expenses and broker's commissions) on the rent
hereunder, and Lessee shall remain liable for the unpaid balance of the rent
herein provided. Any expenses incurred by Lessor by reason of the abandonment or
vacating of the Demised Premises by Lessee including, but not limited to,
retention of watch service and increased insurance premium, shall be additional
and further rent due from Lessee to Lessor hereunder.
XII. PENALTY ON DEFAULT - CANCELLATION
A. Lessee further covenants and agrees that: (1) if default be made by
Lessee in the payment of any rent or other sums herein provided to be paid by
Lessee (whether to Lessor or to any other person or persons) upon the date that
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any such payment becomes due and payable and such default shall continue after
five (5) days' notice thereof in writing by Lessor to Lessee; or (2) if Lessee
shall make default in any of the covenants of this Lease to be kept and
performed by Lessee; or (3) if at any time after the date of this Lease, whether
prior to or during the term of this Lease, any proceedings in bankruptcy,
insolvency or reorganization shall be instituted by or against Lessee pursuant
to any Federal or State law now or hereafter enacted, or any receiver or trustee
shall be appointed of all or any portion of Lessee's business or property, or
any execution or attachment shall issue against Lessee or any of Lessee's
business or property or any of Lessee's interest in the Demised Premises
acquired by or through this Lease, or if Lessee shall be adjudged a bankrupt or
insolvent, or Lessee shall make an assignment for the benefit of creditors, or
if Lessee shall file a voluntary petition in bankruptcy or shall petition for or
enter into an arrangement or reorganization, composition or any other
arrangement with Lessee's creditors under any Federal or State law now or
hereafter enacted; or (4) if Lessee shall abandon or vacate the Demised Premises
during the term of this Lease and Lessee has ceased to pay rent when due; and
any such default enumerated at (2), (3) and (4) shall continue after thirty (30)
days' notice thereof in writing by Lessor to Lessee, then in that event Lessee's
right to possession of the Demised Premises shall thereupon terminate without
any further notice or demand whatsoever; and mere retention of possession
thereafter by Lessee shall constitute a forcible detainer of the Demised
Premises; and if Lessor so elects (but not otherwise) without further notice of
such election or any other notice or demand whatsoever, this Lease shall
thereupon terminate.
B. The word "Lessee" when used in Section XII A (3) hereof shall
include Lessee herein and its successors and assigns and any guarantor of this
Lease or Lessee's obligations hereunder.
C. If Lessor shall default in any of the covenants of this Lease to be
kept and performed by Lessor and any such default shall continue after thirty
(30) days' notice thereof in writing by Lessee to Lessor, then in that event
Lessee may terminate this Lease and upon termination Lessee shall have no
further obligation to pay rent hereunder. Notwithstanding the foregoing, if such
default is of such nature that it cannot be completely cured within thirty (30)
days after notice thereof in writing by Lessee to Lessor, then in that event the
time permitted to Lessor to cure such default shall be extended for as long as
shall be necessary to cure such default, provided Lessor commences promptly and
proceeds diligently to cure such default.
XIII. REMEDIES OF LESSOR
A. Upon termination of Lessee's right of possession hereunder, whether
this Lease be terminated or not, Lessee agrees to surrender possession of the
Demised Premises immediately without the receipt of any demand for rent, notice
to quit or demand for possession of the Demised Premises whatsoever, and hereby
grants to Lessor full, free and complete license to enter into and upon the
Demised Premises, or any part thereof, to take possession thereof, with or
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without process of law, and to expel and remove Lessee or any other person who
may be occupying the Demised Premises, or any part thereof, and Lessor may use
such force in and about expelling and removing Lessee and said other persons as
may reasonably be necessary, and Lessor may further repossess itself of the
Demised Premises as of its former estate, but said entry and repossession of the
Demised Premises shall not constitute a trespass or forcible entry or detainer,
nor shall it cause a forfeiture or cancellation of rents or other sum or sums
due or to become due during the full stated term of this Lease irrespective of
earlier termination, nor a waiver of any covenant, agreement or promise herein
contained to be performed by Lessee; and Lessee agrees to pay to Lessor, as
liquidated damages, double rent for all the time that Lessee shall retain
possession of the Demised Premises, or any part thereof, after termination of
Lessee's right of possession.
B. Acceptance of rent or other sum or sums due hereunder, whether in a
single instance or repeatedly after the same fall due, or after knowledge of any
breach hereof by Lessee, or the giving or making of any notice or demand,
whether according to any statutory provision or not, or any act or series of
acts, except an express written waiver, shall not be construed as a waiver of
Lessor's right to act without notice or demand, or of any other right hereby
given Lessor, nor as an election not to proceed under the provisions of this
Lease. The obligation of Lessee to pay the rent (or other sums) reserved hereby
during the balance of the stated term of this Lease irrespective of earlier
termination, or during any extension hereof, shall not be deemed to be waived,
released or terminated by the service of any notice to collect, demand for
possession or notice that the tenancy hereby created will be terminated on a
date therein named, or the institution of any action of forcible detainer or
ejectment, or similar action, or any judgment for possession which may be
rendered in such action. Lessor may collect and receive any rent or other sum or
sums due from Lessee, and payment or receipt thereof shall not waive or affect
any such notice, demand, suit or judgment, or in any manner waive, affect,
change, modify or alter any rights or remedies which Lessor may have by virtue
hereof.
C. If Lessee's right to possession of the Demised Premises shall be
terminated in any way on account of default of Lessee, the Demised Premises, or
any part or parts thereof, may, but need not be, relet by Lessor for the account
and benefit of Lessee, for such rent and upon such terms and to such person,
including a corporation or corporations controlled by Lessor, and for such
period or periods as may seem fit to the Lessor, and if a sufficient sum shall
not be received from such reletting to satisfy the rent hereby reserved, after
paying the expenses of reletting and collection, and all expenses of placing the
Demised Premises in condition for such reletting, Lessee agrees to pay and
satisfy all deficiency; but the acceptance of a tenant or tenants by Lessor in
place of Lessee shall not operate as a cancellation hereof nor release Lessee
from the performance of any covenant, promise or agreement herein contained, and
performance by any substituted tenant by the payment of rent or otherwise, shall
constitute only satisfaction pro tanto of the obligation of Lessee arising
hereunder.
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D. It is further covenanted and agreed that Lessor may pursue any of
the remedies in this Lease provided, or any which may be allowed at law, in
equity or by statute, either separately or concurrently, and that any and all of
Lessor's rights and remedies are cumulative and not alternative, and shall not
be exhausted by the exercise thereof on one or more occasions. No delay or
omission to exercise any remedy or right accruing on any default shall impair
any such remedy or right, or be construed as a waiver of any such default, or
acquiescence therein, nor shall it affect any subsequent default of the same or
a different nature, but every such remedy or right may be exercised from time to
time, and as often as may be deemed expedient by Lessor. In case Lessor shall
have proceeded to enforce any right under this Lease by entry, suit or
otherwise, and such proceeding shall have been discontinued or abandoned because
of a waiver, settlement or for any other reason, or shall have been determined
adversely to Lessor, then and every such case, Lessor shall be restored to its
former position and rights hereunder in respect to the Demised Premises, and all
rights, remedies and powers of Lessor shall continue as though no such
proceeding had been taken.
Neither the rights herein nor by law given to receive, collect, sue for
or distrain for any rent or rents, moneys or payments or to enforce any of the
terms, provisions or conditions of this Lease, nor to prevent the breach or
nonobservance thereof, nor the exercise of any such right or remedy hereunder or
otherwise granted or arising, shall in any way affect or impair or limit the
right or power of Lessor to declare the term hereby granted ended, or to
terminate this Lease because of any default or breach, as herein provided.
XIV. INSPECTION OF PREMISES BY LESSOR
Lessee agrees to permit Lessor, and the authorized representatives of
Lessor, to enter the Demised Premises at all reasonable times during usual
business hours, but without interfering with Lessee's conduct of its business,
for the purpose of (a) inspecting same, and (b) maintaining such necessary
repairs to the Demised Premises and performing any work therein that may be
necessary by reason of Lessee's default under the terms of this Lease. Nothing
herein shall imply any duty upon the part of Lessor to do any such work which,
under the provision of this Lease, Lessee may be required to perform, and the
performance thereof by Lessor shall not constitute a waiver of Lessee's default
in failing to perform the same. Provided Lessee has first been given adequate
notice and opportunity to perform such work, Lessee shall pay for such work
performed by Lessor pursuant to the terms of this paragraph and the cost thereof
if paid by Lessor shall be deemed additional and further rent due from Lessee to
Lessor hereunder. Lessor may, during the progress of any work on the Demises
Premises, keep and store upon the parking area of the Premises, all necessary
materials, tools and equipment.
Agents and authorized representatives of Lessor are hereby given the
right, provided they coordinate same with Lessee and do not interfere with
Lessee's conduct of its business, during usual business hours, to enter the
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Demised Premises and exhibit the same for the purpose of sale or mortgage and,
during the last year of the term of this Lease, to exhibit the same to any
prospective Lessee, and during any such year period to install and maintain For
Rent or For Sale signs on the exterior of the building or buildings on the
Premises.
XV. RESTORATION OR REPAIR
If the building on the Premises shall be damaged or destroyed due to
any cause for which insurance is to be provided as specified in Section VI
hereof while this Lease is in force, Lessor shall give Lessee written notice
within forty-five (45) days of the fire or other casualty of its election to
terminate this Lease or to repair or restore the Demised Premises. If Lessor
elects to repair or restore the Demised Premises, Lessor's written notice to
Lessee shall advise Lessee if said repair or restoration can be completed within
150 days of Lessor's written notice. If said repair or restoration cannot be
completed within 150 days of Lessor's written notice, then in that event Lessee
may elect to terminate the Lease by giving written notice thereof to Lessor
within ten (10) days after Lessor's written notice to Lessee. If the Lessor
elects to repair or restore the Demised Premises, the insurance money, if any,
derived from said policy or policies (less Lessor's cost and expenses in
collecting same) shall be applied by Lessor with all due speed to the repair or
restoration thereof, provided that Lessee is not then in any way in default
under this Lease.
Notwithstanding the foregoing, in the event the building on the
Premises is totally destroyed, either Lessor or Lessee shall have the right to
terminate this Lease by sending written notice thereof to the other party within
thirty (30) days after the occurrence of the event causing the destruction, and
if this Lease is so terminated, the insurance money derived from the insurance
to be provided as specified in Section VI hereof shall be paid to Lessor.
In the event Lessor or Lessee elects to terminate this Lease pursuant
to the terms of this Section, rent shall be apportioned on a per diem basis and
shall be paid to the date of the fire or casualty.
During any period the Premises are untenantable in whole or in part,
rent shall abate in whole or in part, as appropriate, to the extent that
business income (rent) insurance is provided as specified in Section VI hereof.
Notwithstanding the provisions of this Section to the contrary, if
required by the holder of any mortgage or any trust deed now on or hereafter
placed on the Demised Premises, the proceeds of any insurance provided for
hereunder shall be used as provided in said mortgage or trust deed.
XVI. CONDEMNATION
A. If the Premises, or a substantial part of the Demises Premises,
shall be lawfully taken or condemned for any public or quasi-public use or
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purpose, the term of this Lease shall end upon and not before the date of the
taking of possession by the condemning authority and without apportionment of
the award and current rent shall be apportioned as of the date of such
termination.
B. If any part of the Demised Premises shall be so taken and the
remaining part of the Demised Premises (at the reconstruction of the then
existing building and improvements) is reasonably suitable for continued
occupancy, this Lease shall, as to the part so taken, terminate as of the date
that possession of such part is taken, and the rent shall be reduced
proportionately in accordance with the bases used in establishing the rent
hereunder. The Demised Premises shall be deemed to be reasonably suitable for
continued occupancy if, after reconstruction, the remaining building will be of
sufficient size and contain sufficient facilities to allow the continued
operations of Lessee in the same manner in which they were carried on prior to
the taking or damage. Lessor shall, at its own cost and expense (not, however,
in excess of the net amount of the award received by Lessor), make all necessary
repairs or alterations to the Demised Premises so as to constitute the portion
thereof not taken a complete architectural unit and the remaining Demised
Premises a complete facility.
C. Neither Lessor nor Lessee shall have any rights in or to any award
made to the other by the condemning authority and Lessee shall have the right,
at its own cost and expense, to prove and obtain a separate claim for damages
resulting from such condemnation, including for the loss or damage to Lessee's
trade fixtures and personal property and for damages for loss of use of the
Demised Premises and/or interruption of Lessee's business and moving expenses
incurred as a result of such condemnation.
XVII. MONTH-TO-MONTH TENANCY
It is agreed by both parties that the payment of rent by Lessee and
acceptance of rent by Lessor after the expiration of the term of this Lease,
shall, in the absence of a written agreement signed by both Lessor and Lessee,
be deemed to establish a month-to-month tenancy; and such payment and acceptance
shall not be construed to have created a holdover tenancy. Lessee further agrees
that during any agreed extension or renewal, whether on a month-to-month basis
or otherwise, all of the obligations and covenants to be performed by Lessee
pursuant to this Lease shall remain in full force and effect but all options and
rights of first refusal, if any, granted to Lessee under the terms of this Lease
shall be deemed terminated and shall be of no further effect during said
month-to-month tenancy.
XVIII. ASSIGNMENT OR SUBLEASING
Lessee shall not assign this Lease or sublet the Demised Premises, or
any portion thereof, without in each case first obtaining the written consent
thereto of Lessor, and shall not permit any transfer by operation of law,
bankruptcy or otherwise of Lessee's interest in the Demised Premises acquired by
or through this Lease. Any assignment or sublease without such previous written
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consent of Lessor shall be null and void. No sublease or assignment hereof shall
release Lessee from any of its obligations hereunder or alter the primary
liability of Lessee to pay the rent and perform all other obligations to be
performed by Lessee hereunder.
XIX. SUBORDINATION
The rights and interest of Lessee under this Lease shall be subject and
subordinate to any mortgage or trust deed that may hereafter be placed upon the
Demised Premises and to any and all advances to be made thereunder, and to the
interest thereon, and all renewals, replacements and extensions thereof, if the
mortgagee or trustee named in said mortgages or trust deeds shall elect to
subject and subordinate the rights and interest of Lessee under this Lease to
the lien of its mortgage or trust deed and shall agree to recognize this Lease
of Lessee in the event of foreclosure if Lessee is not in default. Any mortgagee
or trustee may elect to give the rights and interest of Lessee under this Lease
priority over the lien of its mortgage or trust deed. In the event of either
such election and upon notification by such mortgagee or trustee to Lessee to
that effect, the rights and interest of Lessee under this Lease shall be deemed
to be subordinate to, or to have priority over, as the case may be, the lien of
said mortgage or trust deed, whether this Lease is dated prior to or subsequent
to the date of said mortgage or trust deed. Lessee shall execute and deliver
whatever instruments may be required for such purposes.
XX. OPTIONS TO RENEW - EXTENDED TERMS
A. At the expiration of the initial term hereof, if this Lease shall
then be in full force and effect and Lessee shall have fully performed all of
its terms and conditions and if Lessee has paid and deposited all sums required
to be paid to or deposited with Lessor, the term of this Lease may be extended
at the option of Lessee for a successive period of two (2) years (sometimes
hereinafter referred to as "first extended term"). The first extended term
option shall be exercised by Lessee giving written notice to Lessor on or before
August 31, 1997.
B. At the expiration of the first extended term, if this Lease shall
then be in full force and effect and Lessee shall have fully performed all of
its terms and conditions and if Lessee has paid and deposited all sums required
to be paid to or deposited with Lessor, the term of this Lease may be extended
at the option of Lessee for a successive period of three (3) years (sometimes
hereinafter referred to as "second extended term"). The second extended term
option shall be exercised by Lessee giving written notice to Lessor on or before
August 31, 1999.
C. Each extended term shall be upon the same terms, covenants and
conditions as provided in this Lease for the initial term, except the amount of
the fixed rent for the Demised Premises shall be adjusted, and Lessee shall pay
fixed rent for the Demised Premises for the first extended term and for the
second extended term as set forth on Exhibit "D" attached hereto and made a part
hereof by reference thereto and initialled by Lessor and Lessee. Payment of all
17
<PAGE>
additional rent and other charges and deposits required to be made by Lessee as
provided in this Lease for the initial term shall continue to be made during
each extended term. Lessee shall not be permitted to extend this Lease beyond
the second extended term. Any termination of this Lease during the initial term
or during any extended term shall terminate all further rights of extension
hereunder.
XXI. LESSEE'S FINANCIAL STATEMENTS
Lessee, upon not less than ten (10) days' prior written request from
Lessor, and not more often than semi-annually, shall deliver to Lessor copies of
current financial statements of Lessee and of any Guarantor of this Lease,
prepared in accordance with generally accepted accounting principles
consistently applied. Lessor may deliver copies of such financial statements to
any mortgagee, prospective mortgagee or prospective purchaser of the Demised
Premises; provided, however, that Lessor hereby agrees to, and agrees to use its
best efforts to cause such mortgagee, prospective mortgagee or prospective
purchaser to, retain such financial statements in the strictest trust and
confidence and not to reveal or disclose the information contained therein or
any part thereof.
XXII. NOTICES
All notices and demands required or desired to be given hereunder shall
be in writing and may be delivered in person or sent by United States certified
or registered mail, and the certifying or registering and depositing of any such
notice or demand in a United States Post Office, mail chute or mail box, postage
prepaid, shall be deemed as good and legal service of such notice or demand.
Notices or demands to Lessee so delivered or sent shall be delivered in person
or addressed to Lessee at the Demised Premises, and notices or demands so
delivered or sent to Lessor shall be delivered in person to or addressed to
Lessor at Suite 230, 1400 East Touhy Avenue, Des Plaines, Illinois 60018;
provided, however, that either of the parties hereto may by written notice
delivered to or sent to the other party hereby change the address to which such
notices or demands are to be delivered or sent and thereafter, such notices or
demands shall be delivered or sent to such new address. Notices or demands
delivered in person shall be deemed delivered upon personal service, and notices
and demands sent by United States certified or registered mail shall be deemed
delivered forty-eight (48) hours after depositing the notice or demand in the
United States Post Office, mail chute or mail box.
XXIII. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and the successors and assigns of the parties hereto
respectively, provided, however, that Lessee may not assign and/or sublet except
as herein provided.
18
<PAGE>
XXIV. GENERAL
A. Lessee shall at any time and from time to time upon not less than
ten (10) days' prior written request from Lessor execute, acknowledge and
deliver to Lessor a written statement certifying (1) that Lessee has accepted
the Demised Premises, (2) that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect), (3) the date to
which rental and other charges have been paid in advance, if any, and (4) that
Lessor is not in default hereunder (or if Lessor is in default, stating the
nature of the default), and agreeing to give copies to any mortgagee of Lessor
of all notices by Lessee to Lessor. It is intended that any such statement
delivered pursuant to this paragraph may be relied upon by any prospective
purchaser of the Demised Premises or any mortgagee of Lessor and their
respective successors and assigns.
B. Lessee shall at any time and from time to time upon not less than
five (5) days prior written request from Lessor, complete, execute and deliver
to Lessor a statement in writing certifying to Lessor as to all information and
data as required by a Transferor to a Transferee and Lender of Transferee on an
Environmental Disclosure Document for Transfer of Real Property pursuant to and
in accordance with the Illinois Responsible Property Act of 1988. Lessee's
failure to provide such statement shall be a material breach of this Lease.
C. As used in this Lease, the phrases "term of this Lease" and "lease
term" shall be deemed to include extended terms, if any, unless specifically
provided to the contrary.
D. Whenever approval or consent is required herein, such approval or
consent shall not be arbitrarily or unreasonably withheld or delayed.
E. This Lease contains all agreements of the parties with respect to
any matter mentioned herein. No prior agreement or understanding pertaining to
any such matter shall be effective. This Lease may be modified in writing only,
signed by the party against whom enforcement of such change is sought.
F. This Lease is to be construed according to the laws of the State of
Illinois.
G. If any term, condition or provision of this Lease or the application
thereof to any party hereto or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to any party hereto or circumstances other than those as to which it
is held invalid or unenforceable, shall not be affected thereby, and each term,
condition and provision of this Lease shall be valid and be enforced to the
fullest extent permitted by law.
19
<PAGE>
H. Feminine or neuter pronouns shall be substituted for masculine form
or vice versa, and the plural shall be substituted for the singular number or
vice versa in any place or places herein in which the context may require such
substitution or substitutions.
I. The headings or captions of Sections of this Lease are for
convenience and reference only, and in no way define, limit or describe the
scope of this Lease or the provisions of such Section.
IN WITNESS WHEREOF, Lessor has caused this Lease to be executed by its
duly authorized officers, and its corporate seal to be hereto affixed, and
Lessee has caused this Lease to be executed by its duly authorized officers, and
its corporate seal to be hereto affixed, all as of the day and year first above
written.
LESSOR:
ATTEST: CURTO REYNOLDS OELERICH INC.,
a Delaware corporation
/s/Sharon Cottone By: /s/C.L. Botthof, Jr.
- ---------------------------------- ----------------------------------
Asst. Secretary Vice President
ATTEST: LESSEE:
GENDEX CORPORATION, a Delaware
corporation
/s/Allison McDonough
- ---------------------------------- By: /s/Edwin J. McDonough
____________ Secretary ----------------------------------
LESSOR: __________ President
20
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
The undersigned, a Notary Public in and for the County and State
aforesaid, do hereby certify that C.L. Botthof, Jr., Vice President, and Sharon
Cottone, Asst. Secretary of said CURTO REYNOLDS OELERICH INC., a Delaware
corporation, personally known to me to be the same persons whose names are
subscribed to the foregoing instrument as such Vice President and Asst.
Secretary respectively, and personally known to me to be such Vice President and
Asst. Secretary, respectively, appeared before me this day in person and
acknowledged that they signed, sealed and delivered said instrument as their
free and voluntary act and deed and as the free and voluntary act and deed of
said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 5th day of February, 1993.
/s/Susan T. Griseta
-----------------------------
Notary Public
STATE OF )
) ss.
COUNTY OF )
The undersigned, a Notary Public in and for the County and State
aforesaid, do hereby certify that Edwin J. McDonough, _____ President, and
Allison J. McDonough, _____ Secretary of said GENDEX CORPORATION, a Delaware
corporation, personally known to me to be the same persons whose names are
subscribed to the foregoing instrument as such _______ President and ________
Secretary respectively, and personally known to me to be such __________
President and __________ Secretary, respectively, appeared before me this day in
person and acknowledged that they signed, sealed and delivered said instrument
as their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 5th day of February, 1993.
/s/Jane A. Holland
-----------------------------
Notary Public
<PAGE>
Exhibit "A"
PREMISES
THAT PART OF THE SOUTH EAST 1/4 OF SECTION 19, TOWNSHIP 40 NORTH, RANGE 12 EAST
OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS: COMMENCING AT A POINT IN THE EAST
LINE OF SAID SOUTH EAST 1/4 WHICH IS 1122.93 FEET NORTH OF THE SOUTH EAST CORNER
THEREOF; THENCE SOUTH 89 DEGREES 59 MINUTES 13 SECONDS WEST, IN A LINE DRAWN AT
RIGHT ANGLES TO SAID EAST LINE, FOR A DISTANCE OF 1927.41 FEET TO A POINT OF
BEGINNING OF THE TRACT OF LAND TO BE DESCRIBED: THENCE NORTH 0 DEGREES 00
MINUTES 47 SECONDS WEST IN A LINE PARALLEL TO SAID EAST LINE, 144.48 FEET;
THENCE NORTH 89 DEGREES 59 MINUTES 13 SECONDS EAST, 266.41 FEET TO A POINT IN A
LINE 1661.0 FEET WEST OF (AT RIGHT ANGULAR MEASUREMENT) AND PARALLEL WITH SAID
EAST LINE; THENCE SOUTH 0 DEGREES 00 MINUTES 47 SECONDS EAST IN SAID PARALLEL
LINE (BEING THE WEST LINE OF A PUBLIC STREET KNOWN AS NORTH RUNGE AVENUE),
410.27 FEET TO ITS POINT OF INTERSECTION WITH THE NORTHERLY LINE OF A PUBLIC
STREET KNOWN AS KING STREET; THENCE SOUTH 79 DEGREES 22 MINUTES 23 SECONDS WEST
IN SAID NORTHERLY LINE, 190.31 FEET TO AN ANGLE POINT OR BEND IN SAID NORTHERLY
LINE OF WEST KING STREET; THENCE SOUTH 89 DEGREES 09 MINUTES WEST IN SAID
NORTHERLY LINE 79.37 FEET TO ITS POINT OF INTERSECTION WITH A LINE 1927.41 FEET
WEST OF (AT RIGHT ANGULAR MEASUREMENT) AND PARALLEL WITH SAID EAST LINE OF SOUTH
EAST 1/4; THENCE NORTH 0 DEGREES 00 MINUTES 47 SECONDS WEST IN SAID PARALLEL
LINE, 302.00 FEET TO POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.
PROPERTY ADDRESS: P.I.N.: 12-19-400-067
11550 W. KING STREET
FRANKLIN PARK, IL (PROP. #44)
Lessor:________
Lessee:________
<PAGE>
Exhibit "B"
FIXED RENT
(1) Ten Thousand Thirteen and 00/100 Dollars ($10,013.00) on the first day
of February, 1993, and the same amount on the first day of each and
every month thereafter through and including the first day of December,
1993.
(2) Fourteen Thousand Five Hundred Ninety-One and 00/100 Dollars
($14,591.00) on the first day of January, 1994, and the same amount on
the first day of each and every month thereafter through and including
the first day of January, 1996.
(3) Fifteen Thousand One Hundred Sixty-Three and 00/100 Dollars
($15,163.00) on the first day of February, 1996, and the same amount on
the first day of each and every month thereafter through and including
the first day of January, 1998.
Lessor:_______
Lessee:_______
<PAGE>
Exhibit "C"
IMPROVEMENTS TO BE ERECTED
1. Renovate the offices to a condition and appearance at least equal to those
in Gendex's Des Plaines headquarters ("General Headquarters"). The work
will include new carpeting or floor tile, new ceiling and light fixtures,
repair of cracks in interior office walls and fresh paint on all walls.
2. Upgrade the washrooms to a condition and appearance equal to Gendex's
Headquarters and modify them to meet the requirements for 100 employees.
Convert the janitor's utility room in the general office area to a unisex
washroom that conforms with the Americans with Disabilities Act of 1990
("ADA") and ensure ADA compliant access to said washroom from all areas of
the facility.
3. Seal the floors in the plant area.
4. Prep and paint all walls, columns and ceilings throughout the plant area.
5. Restripe the existing parking lot to provide approximately 40 spaces,
including appropriate handicapped accessible spaces.
6. Install a ramp with appropriate railings from the parking lot to the back
office door of the building situated on the Premises. Door width and
hardware on back office door and vestibule door to conform with ADA
requirements.
7. Paint exterior truck and man doors.
8. Place all heating and air-conditioning systems in the office and warehouse
in good working order.
9. Place all electrical systems in good working order and in conformance with
all local and state codes.
10. Add exit lights and emergency battery lights as required.
11. Install 24 ceiling fans in the plant per layout supplied by the Gendex
Facilities Group.
12. Relamp lighting in plant as necessary.
13. Modify the back plant entrance door with appropriate ADA compliant hardware
and assure grade level access.
<PAGE>
14. Add a fourth exterior exit (onto the "new on-site parking lot" described on
Exhibit "E" attached hereto) that conforms with ADA hardware and access
requirements.
15. Install a dispenser on drinking fountains to conform with ADA requirements.
16. Replace kitchen lavatory in kitchen area.
17. Test city water supply to the building situated on the Premises for both
supply pressure and volume.
Lessor:______
Lessee:______
<PAGE>
Exhibit "D"
FIXED RENT DURING EXTENDED TERMS
FIRST EXTENDED TERM:
Sixteen Thousand Twenty-One and 00/100 Dollars ($16,021.00) on the first day of
February, 1998, and the same amount on the first day of each and every month
thereafter through and including the first day of January, 2000.
SECOND EXTENDED TERM:
Seventeen Thousand One Hundred Sixty-Six and 00/100 Dollars ($17,166.00) on the
first day of February, 2000, and the same amount on the first day of each and
every month thereafter through and including the first day of January, 2003.
Lessor:______
Lessee:______
<PAGE>
Exhibit "E"
NEW ON-SITE PARKING LOT
Lessor will arrange for Lessee's usage of approximately fifteen (15) parking
spaces in the parking lot at the premises commonly known as 11500 West King
Street, Franklin Park, Illinois, which premises are presently leased by Lessor
to Clad-Rex, Inc.
In the Spring of 1993, Lessor will install a 15-space new on-site parking lot at
the southeast corner of the Premises.
Lessor:______
Lessee:______
<PAGE>
FIRST AMENDMENT TO LEASE
FIRST AMENDMENT TO LEASE dated as of April 3, 1995, amending that
certain Lease dated January 4, 1993, by and between Curto Reynolds Oelerich
Inc., a Delaware corporation, as lessor (herein called "Lessor") and Gendex
Corporation, a Delaware corporation, as lessee (herein called "Gendex").
W I T N E S S E T H:
WHEREAS, Lessor and Gendex entered into a Lease dated January 4, 1993,
said Lease having a term of five (5) years, demising and leasing to Lessee
certain premises commonly known as 11550 West King Street, Franklin Park,
Illinois, and legally described in Exhibit "A" attached hereto and made a part
hereof by reference thereto (herein called "Lease"); and WHEREAS, Gendex is now
known as Dentsply International Inc., a Delaware corporation (herein called
"Lessee"); and
WHEREAS, Lessor and Lessee desire to amend the provisions of the Lease,
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto and other good and valuable consideration paid by each party to
the other, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
<PAGE>
1. The Lease shall be modified as follows:
(a) Exhibit "E" to the Lease is deleted in its entirety and a new
Exhibit "E" attached hereto and made a part hereof by reference thereto and
initialed by Lessor and Lessee is inserted in its place and stead.
2. Except as further modified herein, the Lease shall remain in full
force and effect and the parties shall be bound by all the terms and conditions
thereof.
IN WITNESS WHEREOF, Lessor and Lessee have caused this First Amendment
to Lease to be duly executed and attested in their behalf by their duly
authorized officers and their corporate seals to be affixed all as of the day
and year first above written.
ATTEST: LESSOR:
CURTO REYNOLDS OELERICH INC.
/s/Susan T. Griseta By: /s/John Oelereich
- ----------------------------------- -----------------------------------
Its: Vice President/Asst. Secretary Its: President
------------------------------ -----------------------------------
ATTEST: LESSEE:
GENDEX CORPORATION, now known
as DENTSPLY INTERNATIONAL INC.
/s/J. Patrick Clark By: /s/John C. Miles, II
- ----------------------------------- -----------------------------------
Its: Vice President, Secretary Its: President and COO
------------------------------ -----------------------------------
and General Counsel
- -----------------------------------
2
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
I, Sharon Cottone, a Notary Public in and for the County and State
aforesaid, DO HEREBY CERTIFY that John J. Oelereich, President, and Susan T.
Griseta, Asst. Secretary of said CURTO REYNOLDS OELERICH INC., a Delaware
corporation, personally known to me to be the same persons whose names are
subscribed to the foregoing instrument as such __________ President and Asst.
Secretary, respectively, and personally known to me to be such _______ President
and _______ Secretary, respectively, appeared before me this day in person and
acknowledged that they signed, sealed and delivered the said instrument as their
free and voluntary act and deed, and as the free and voluntary act and deed of
said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 10th day of April, 1995.
/s/Sharon Cottone
------------------------------
Notary Pubic
COMMONWEALTH OF PENNSYLVANIA )
) ss.
COUNTY OF YORK )
I, Jo Ellen Powers, a Notary Public in and for the County and State
aforesaid, DO HEREBY CERTIFY that J. Patrick Clark, John C. Miles II, President,
and ___________________, _______ Secretary of said GENDEX CORPORATION, now known
as DENTSPLY INTERNATIONAL INC., a Delaware corporation, personally known to me
to be the same persons whose names are subscribed to the foregoing instrument as
such __________ President and ________ Secretary, respectively, and personally
known to me to be such _______ President and _______ Secretary, respectively,
appeared before me this day in person and acknowledged that they signed, sealed
and delivered the said instrument as their free and voluntary act and deed, and
as the free and voluntary act and deed of said corporation, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 27th day of April, 1995.
/s/Jo Ellen Powers
------------------------------
Notary Public
<PAGE>
Exhibit "A"
PREMISES
THAT PART OF THE SOUTH EAST 1/4 OF SECTION 19, TOWNSHIP 40 NORTH, RANGE 12 EAST
OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS: COMMENCING AT A POINT IN THE EAST
LINE OF SAID SOUTH EAST 1/4 WHICH IS 1122.93 FEET NORTH OF THE SOUTH EAST CORNER
THEREOF; THENCE SOUTH 89 DEGREES 59 MINUTES 13 SECONDS WEST, IN A LINE DRAWN AT
RIGHT ANGLES TO SAID EAST LINE, FOR A DISTANCE OF 1927.41 FEET TO A POINT OF
BEGINNING OF THE TRACT OF LAND TO BE DESCRIBED: THENCE NORTH 0 DEGREES 00
MINUTES 47 SECONDS WEST IN A LINE PARALLEL TO SAID EAST LINE, 144.48 FEET;
THENCE NORTH 89 DEGREES 59 MINUTES 13 SECONDS EAST, 266.41 FEET TO A POINT IN A
LINE 1661.0 FEET WEST OF (AT RIGHT ANGULAR MEASUREMENT) AND PARALLEL WITH SAID
EAST LINE; THENCE SOUTH 0 DEGREES 00 MINUTES 47 SECONDS EAST IN SAID PARALLEL
LINE (BEING THE WEST LINE OF A PUBLIC STREET KNOWN AS NORTH RUNGE AVENUE),
410.27 FEET TO ITS POINT OF INTERSECTION WITH THE SOUTH 79 DEGREES 22 MINUTES 23
SECONDS WEST IN SAID NORTHERLY LINE, 190.31 FEET TO AN ANGLE POINT OR BEND IN
SAID NORTHERLY LINE OF WEST KING STREET; THENCE SOUTH 89 DEGREES 09 MINUTES WEST
IN SAID NORTHERLY LINE 79.37 FEET TO ITS POINT OF INTERSECTION WITH A LINE
1927.41 FEET WEST OF (AT RIGHT ANGULAR MEASUREMENT) AND PARALLEL WITH SAID EAST
LINE OF SOUTH EAST 1/4; THENCE NORTH 0 DEGREES 00 MINUTES 47 SECONDS WEST IN
SAID PARALLEL LINE, 302.00 FEET TO POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.
PROPERTY ADDRESS: P.I.N: 12-19-400-067
11550 W. KING STREET
FRANKLIN PARK, IL (PROP. #44)
<PAGE>
Exhibit "E"
NEW PARKING LOT
On or about May 1, 1995, Lessor will arrange for Lessee's use of sixteen (16)
parking spaces located at the area shown and cross-hatched on Exhibit "A-1"
attached hereto (herein called "Parking Spaces"), located in the south parking
area servicing the premises commonly known as 3400 North Powell Avenue, Franklin
Park, Illinois (herein called "3400"). 3400 is presently leased by Lessor to
Brockway Standard, Inc., a Delaware corporation (herein called "Brockway").
Lessee shall have the right at all times during the term of this Lease and any
and all extensions thereof, to use that portion of the south parking area
servicing 3400 as is required for the purpose of ingress and egress and passage
along same to and from the Parking Spaces, provided that Lessee shall not
interfere with ingress and egress by Brockway, its invitees, successors or
assigns to and from 3400 or the south parking area servicing 3400.
At all times during the term of this Lease, Lessee, at Lessee's sole cost and
expense, shall maintain comprehensive general liability insurance against claims
for injury or death occurring upon, in or about the Parking Spaces, such
insurance to afford protection in a combined single limit or not less than
$2,000,000 for each occurrence and in the aggregate, and such insurance shall be
written on an occurrence basis. The limits of such insurance shall not limit the
liability of Lessee hereunder. Lessee agrees that Lessor shall have the right to
require Lessee to increase the general liability insurance coverage required in
such reasonable amounts as Lessor may from time to time require during the term
of this Lease. Said insurance shall (1) be effected by valid and enforceable
policies issued by insurers, satisfactory to Lessor, who are authorized to do
business in the State of Illinois and shall be in such form and content as is
satisfactory to Lessor; and (2) provide that same shall not be cancelled or
amended in any respect without at least thirty (30) days prior written notice to
each assured named therein; and (3) be delivered in the form of an original
certificate of insurance with all the proper endorsements to Lessor and Brockway
at 3400 on or before fifteen (15) days prior to the occupancy by Lessee of the
Demised Premises, and renewals of said policies shall be delivered in the form
of an original certificate of insurance with all the proper endorsements, to
Lessor and Brockway at 3400 at least fifteen (15) days prior to the expiration
date of each policy, together with evidence satisfactory to Lessor and Brockway
of the payment of all premiums thereon; and (4) name the following as additional
insured: Lessor, Brockway, its successors and assigns, (and if requested by
Lessor or Brockway, shall bear appropriate endorsements to protect Lessor's or
Brockway's officers, directors, agents and employees and the legal title holder
of 3400).
If Lessee shall refuse or fail to maintain in force said insurance and to keep
such policy in Lessor's possession, Lessor may at its election procure and from
time to time renew such insurance, and the amounts expended therefor with
interest thereon from the respective dates of expenditures therefor at the rate
specified in Section III hereof shall be so much additional and further rent due
from Lessee to Lessor hereunder.
Lessor:_____
Lessee:_____
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (the "Supply Agreement") is made this 6th day of
March, 1996 by and between DENTSPLY INTERNATIONAL INC., a Delaware corporation,
having a place of business at 4014 Grand Avenue, Chicago, Illinois ("DENTSPLY")
AND Gendex-Del Medical Imaging Corp., a Delaware corporation with a principal
place of business at 11550 West King Street, Franklin Park, Illinois
("Purchaser") and DEL GLOBAL TECHNOLOGIES CORP., a New York corporation with
offices at 1 Commerce Park, Valhalla, New York ("Del").
RECITALS
A. Concurrent with the execution hereof, DENTSPLY is selling to
Purchaser and Purchaser is purchasing from DENTSPLY (the "Purchase") certain
assets used in the production and sale of medical x-ray equipment and systems
(the "Medical Products"). The terms of the Purchase are set forth in an Asset
Purchase Agreement between the parties of even date ("Purchase Agreement").
B. DENTSPLY produces some components and parts for the Medical Products
at its facilities located at Grand Avenue, Chicago, IL. ("Grand Avenue") and
Oakton Street, Des Plaines, IL ("Des Plaines") (collectively the "Facilities").
C. After the Purchase, Purchaser desires to have DENTSPLY continue to
supply from the Facilities certain components and parts to Purchaser for the
Medical Products (the "Fabricated Parts").
D. There are supplies of input products and raw materials at the
Facilities which are used exclusively for the production of Fabricated Parts
("Medical Inventory").
E. DENTSPLY desires to continue to supply Fabricated Parts to
Purchaser.
F. DENTSPLY and Purchaser desire to enter into this Agreement in
connection with the Purchase.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, intending to be legally bound, the parties
agree as follows:
<PAGE>
1. Recitals. The Recitals are incorporated herein by this reference.
2. Term. The Term of this Agreement shall be six (6) months from the
date set forth above.
3. Production and Supply of Fabricated Parts. Fabricated Parts shall be
produced and purchased in accordance with the following terms and conditions:
(a) Production and Sale. DENTSPLY shall produce and sell to
Purchaser, and Purchaser shall purchase from DENTSPLY Fabricated Parts
during the Term. In addition to open orders at the date of this
Agreement, Purchaser shall be obligated to place purchase orders for
selected Fabricated Parts from Seller during the Term with an aggregate
dollar value not less than two million, five hundred thousand dollars
($2,500,000). Purchaser shall provide to DENTSPLY, within ten (10)
business days after the date of this Agreement, a purchase order for
all of the Fabricated Parts to be purchased by Purchaser under this
Agreement, which shall include requested delivery dates and other
information as mutually agreed upon by the parties.
(b) Price. The price of the Fabricated Parts shall be as set
forth on Exhibit A, not including the mark-up reflected on Exhibit A,
which DENTSPLY represents is its fully allocated transfer pricing for
the Products during 1995.
(c) Specifications. Specifications for the Fabricated Parts
shall be those in existence at the time of the Purchase, except that
the specifications may be changed upon mutual agreement of the parties
or if required by law or regulation.
(d) Prior Notice. In the event Purchaser is in need of more
Fabricated Parts than the historic requirements, Purchaser shall give
DENTSPLY twenty (20) days written notice of their need for additional
Fabricated Parts. Under such circumstances, DENTSPLY shall either
accept or reject such proposed increase and if accepted, DENTSPLY shall
be allowed to adjust the price to cover increased cost necessitated by
the greater demand requested. Any price increase shall be communicated
and agreed to by Purchaser prior to the production of the increased
Fabricated Parts.
(e) Payment. Purchaser shall pay DENTSPLY for the Fabricated
Parts within thirty (30) days of receipt of invoice from DENTSPLY.
2
<PAGE>
(f) Shipping and Inventory. The Fabricated Parts shall be
delivered to Purchaser F.O.B. the dock at the Facility at which the
Fabricated Parts were produced.
4. Termination. The parties may mutually agree to terminate this
Agreement prior to the expiration of its Term or Renewal Term.
5. Force Majeure. If DENTSPLY or Purchaser is prevented from performing
any term of this Agreement by reason of a labor dispute, an act of God, or the
elements, the inability to obtain necessary labor or materials, or for any other
reason beyond the control of DENTSPLY or Purchaser, DENTSPLY and Purchaser shall
not be considered in default of this Agreement.
6. Compliance with Law. All Fabricated Parts delivered by DENTSPLY to
Purchaser under the terms of this Agreement shall conform to the specifications
and applicable laws and regulations, including those of the United States Food
and Drug Administration. DENTSPLY warrants that its production of Fabricated
Parts hereunder shall be free from defects in workmanship and in accordance with
Good Manufacturing Practices, all applicable laws and regulations and the
specifications.
7. Inspections. Upon receipt of at least twenty-four hours prior
notice, DENTSPLY shall permit Purchaser reasonable access to the Facilities for
purposes of and in connection with the requirements of this Agreement. DENTSPLY
shall promptly notify Purchaser of any discrepancies that affect the Fabricated
Parts noted during any inspection of the Facilities by the United States Food
and Drug Administration or any state or local regulatory agencies.
8. Records. DENTSPLY shall keep complete, true and accurate records
with respect to manufacturing practices, quality assurance measures, analytical
procedures and its resultant data with respect to the Fabricated Parts and shall
allow Purchaser access to those records insofar as they relate to the Fabricated
Parts.
9. Indemnity.
(a) DENTSPLY Indemnity. If any person shall suffer any
damages or personal injury as a result of DENTSPLY's actions or failure
to act hereunder, or alleges to have suffered any such damage or
personal injury, DENTSPLY shall indemnify, hold harmless and defend
Purchaser, its subsidiaries, officers, directors, shareholders, agents,
employees and assigns from and against all such claims of whatever kind
and nature, including all costs, expenses, damages, losses and
liabilities whatsoever incurred or suffered by Purchaser, including
reasonable attorney's fees, unless the cause of said damage or personal
injury was the result of an act or omission or the negligence of
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Purchaser. Purchaser shall send DENTSPLY notice of any suit, claim or
damage of which they have notice and for which these provisions may
apply. In the event a suit is begun, Purchaser shall have the right to
appear in defense of any such suit on its own behalf and, if DENTSPLY
has entered a defense for Purchaser, at its own cost. The appearance of
Purchaser in such a suit shall not otherwise waive its rights to
require DENTSPLY to fulfill its obligations under this Agreement.
(b) Purchaser Indemnity. If any person shall suffer any
damages or personal injury as a result of Purchaser's actions or
failure to act hereunder, or alleges to have suffered any such damage
or personal injury, Purchaser shall indemnify, hold harmless and defend
DENTSPLY, its subsidiaries, officers, directors, shareholders, agents,
employees and assigns from and against all such claims of whatever kind
and nature, including all costs, expenses, damages, losses and
liabilities whatsoever incurred or suffered by DENTSPLY, including
reasonable attorney's fees, unless the cause of said damage or personal
injury was the result of an act or omission or negligence of DENTSPLY.
DENTSPLY shall send Purchaser notice of any suit, claim or damage of
which they have notice and for which these provisions may apply. In the
event a suit is begun, DENTSPLY shall have the right to appear in
defense of any such suit on its own behalf and, if Purchaser has
entered a defense for DENTSPLY, at its own cost. The appearance of
DENTSPLY in such a suit shall not otherwise waive its rights to require
Purchaser to fulfill its obligations under this Agreement.
10. Insurance.
(a) DENTSPLY Insurance. DENTSPLY shall carry and maintain (i)
Product Liability Insurance in the amount of One Million Dollars
($1,000,000.00), combined single limit, for bodily injury and property
damage; (ii) General Liability insurance in the amount of One Million
Dollars ($1,000,000.00), combined single limit, for bodily injury and
property damage which shall cover DENTSPLY's performance of its
obligations hereunder. DENTSPLY shall keep said insurance in full force
and effect. Current certificates of insurance shall be provided to
Purchaser upon request.
(b) Purchaser Insurance. Purchaser shall carry and maintain
(i) Product Liability Insurance in the amount of One Million Dollars
($1,000,000.00), combined single limit, for bodily injury and property
damage; (ii) General Liability insurance in the amount of One Million
Dollars ($1,000,000.00), combined single limit, for bodily injury and
property damage which shall cover Purchaser's performance of its
obligations hereunder. Purchaser shall keep said insurance in full
4
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force and effect. Current certificates of insurance shall be provided
to DENTSPLY upon request.
11. Default. No liability shall accrue for any default of DENTSPLY or
Purchaser hereunder until thirty (30) days after receipt by DENTSPLY or
Purchaser of a written notice from the other, specifying in detail such default.
DENTSPLY or Purchaser shall be deemed to have corrected or remedied any default
when DENTSPLY or Purchaser shall in good faith take action to correct such
default if such action is thereafter pursued with due diligence.
12. Attorney's Fees; Costs. In the event suit is brought or an attorney
is retained by either party to this Agreement to enforce the terms of this
Agreement or to collect for the breach hereof or for the interpretation of any
provision herein in dispute, the prevailing party shall be entitled to recover,
in addition to any other remedy, reasonable attorneys' fees, court costs, costs
of investigation and other related expenses incurred in connection therewith. If
suit is commenced, attorneys' fees shall subject to review and approval by the
Court.
13. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been given
upon personal delivery or confirmed telefax or upon certified, postage prepaid,
return receipt requested, to Purchaser or DENTSPLY, at the addresses set forth
on the first page of this Agreement, or at such other address as Purchaser or
DENTSPLY may specify in writing delivered in a like manner.
14. Governing Law. The substantive law (and not the law of conflicts)
of the State of Delaware will govern all questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement. Except in respect of any action commenced
by a third party in another jurisdiction, the parties hereto agree that any
legal suit, action, or proceeding against them arising out of or relating to
this Agreement may be brought in the United States Federal Courts in the State
of Delaware or the Courts of Chancery, in the State of Delaware. The parties
hereto hereby accept the jurisdictions of such courts for the purpose of any
such action or proceeding, and agree that venue for any action or proceeding
brought in the State of Delaware shall lie in the United States Federal Courts
or the Courts of Chancery located in New Castle County, Delaware, as the case
may be. Each of the parties hereto hereby irrevocably consents to the service of
process in any action or proceeding in such courts by the mailing thereof by
United States registered or certified mail postage prepaid at its address set
forth herein.
15. Construction and Interpretation. This Agreement shall be deemed to
be drafted by both the parties hereto, and no rule of construction shall be
invoked respecting the authorship hereof.
16. Non-Waiver. The failure of either party at any time or times to
require performance of any provision hereof shall in no way affect the right of
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such party at a later time to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach or a waiver of the breach
of any other term or covenant contained in this Agreement.
17. Assignment. This Agreement may be assigned by either party to its
corporate parent or affiliates. All of the provisions hereof will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
18. Captions. The captions used in this Agreement are for the
convenience of reference only and do not constitute a part of this Agreement and
will not be deemed to limit, characterize, or in any way affect any provision of
this Agreement, and all provisions of this Agreement will be enforced and
construed as if no caption had been used in this Agreement.
19. Severability. Whenever possible each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provisions will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
20. Cooperation. The parties shall each provide the documents and
instruments and perform such other acts and deeds and shall otherwise reasonably
cooperate with each other for the purpose of carrying out the transactions
contemplated by this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts (including by means of facsimile signature pages), any one of which
need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same Agreement.
22. Del Subsidiary. Purchaser is a wholly owned subsidiary of Del and
DENTSPLY is entering the Purchase Agreement and this Supply Agreement in
reliance upon Del's guaranty of Purchaser's performance with respect to the
transactions herein contemplated. As such, Del hereby agrees that it shall be
joint and severally liable with Purchaser for any and all obligations of
Purchaser hereunder, including agreements incorporated by reference.
23. Entire Agreement. This Agreement in combination with the Purchase
Agreement, sets forth the entire agreement and understanding of the parties and
supersedes all prior and contemporaneous agreements, arrangements and
understandings, written or oral, relating to the subject matter hereof. This
Agreement may be amended, modified, superseded or canceled, and the terms or
covenants
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hereof may be waived, only by a written instrument executed by both of the
parties hereto, or in the case of a waiver by the party waiving compliance.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
DENTSPLY INTERNATIONAL INC.
By: /s/Edward Yates
----------------------------
Title: Senior Vice President & CFO
----------------------------
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SUPPLY AGREEMENT
GENDEX-DEL MEDICAL IMAGING CORP.
By: /s/David Engel
----------------------------------
Title: Executive Vice President and Chief
----------------------------------
Financial Officer
----------------------------------
DEL GLOBAL TECHNOLOGIES CORP.
By: /s/David Engel
----------------------------------
Title: Executive Vice President and Chief
----------------------------------
Financial Officer
----------------------------------
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EXHIBIT A
PRICES
The prices for any Fabricated Part shall be the prices set forth in the second
column on the attached price list.
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 5, 1996
among
DEL GLOBAL TECHNOLOGIES CORP.,
RFI CORPORATION,
DYNARAD CORP.,
BERTAN HIGH VOLTAGE CORP.,
DEL MEDICAL SYSTEMS CORP.,
GENDEX-DEL MEDICAL IMAGING CORP.
and
THE CHASE MANHATTAN BANK, N.A.
<PAGE>
TABLE OF CONTENTS
Article Section Page
I. DEFINITIONS............................................ 5
II. THE LOANS.............................................. 20
2.1 Term Loan................................. 20
2.2 Revolving Credit Commitment............... 20
2.3 Notes..................................... 20
2.4 Interest.................................. 21
2.5 Procedure for Revolving Credit Borrowing.. 23
2.6 Commitment Fee............................ 24
2.7 Advisory Fee.............................. 24
2.8 Regulatory Changes; Additional Fees....... 24
2.9 Prepayment of Loans....................... 25
2.10 Payments.................................. 26
2.11 Taxes..................................... 26
2.12 Illegality ............................... 27
2.13 Increased Costs........................... 27
2.14 Letter of Credit.......................... 29
2.15 Certain Notices .......................... 31
2.16 Limitation on Types of Loans.............. 32
2.17 Illegality - Eurodollar Loans............. 32
2.18 Certain Conversions....................... 32
2.19 Certain Compensation...................... 33
III. REPRESENTATIONS AND WARRANTIES......................... 33
3.1 Organization, Corporate Power............. 33
3.2 Authorization............................. 34
3.3 Governmental Approvals.................... 34
3.4 Binding Effect............................ 34
3.5 Litigation; Compliance with Laws, etc..... 34
3.6 Financial Statements...................... 35
3.7 Federal Reserve Regulations............... 35
3.8 Taxes..................................... 36
3.9 Employee Benefit Plans.................... 36
3.10 Accuracy and Completeness of Information.. 36
3.11 Investment Company Act; Public Utility
Holding Company Act..................... 36
3.12 Security Interest......................... 37
3.13 Use of Proceeds........................... 37
3.14 Subsidiaries.............................. 37
3.15 Title to Properties; Possession Under
Leases; Trademarks...................... 37
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3.16 Solvency.................................. 38
3.17 Affiliates; Other Names................... 38
3.18 Restrictions of Debtors................... 38
3.19 Acquisition Agreement..................... 38
3.20 Labor Matters............................. 39
3.21 Dentsply/Gendex Representations........... 39
IV. CONDITIONS OF CREDIT EVENTS............................ 39
4.1 All Credit Events......................... 39
4.2 First Borrowing under this Agreement...... 40
V. AFFIRMATIVE COVENANTS.................................. 43
5.1 Corporate Existence....................... 43
5.2 Business and Properties................... 43
5.3 Insurance................................. 43
5.4 Taxes..................................... 45
5.5 Financial Statements, Reports, etc........ 45
5.6 Litigation and Other Notices.............. 46
5.7 Compliances with Laws..................... 47
5.8 ERISA..................................... 47
5.9 Maintaining Records; Acces to Properties
and Inspections......................... 47
5.10 Use of Proceeds........................... 47
5.11 Further Assurances........................ 47
5.12 Environmental Legislation................. 47
5.13 Interest Rate Protection.................. 48
5.14 RFI Capital Stock......................... 48
5.15 Dynarad Capital Stock..................... 48
5.16 Bertan High Voltage Capital Stock......... 48
5.17 Del Medical Capital Stock................. 48
5.18 Gendex-DMI Capital Stock.................. 48
VI. NEGATIVE COVENANTS..................................... 48
6.1 Liens..................................... 48
6.2 Sale and Lease-Back Transactions.......... 50
6.3 Indebtedness.............................. 50
6.4 Capital Expenditures...................... 50
6.5 Dividends and Distributions............... 50
6.6 Consolidations, Mergers and Sales of
Assets.................................. 50
6.7 Investments............................... 50
6.8 Current Ratio............................. 51
6.9 Tangible Net Worth........................ 51
6.10 Business.................................. 52
6.11 Interest Expense Coverage Ratio........... 52
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6.12 Transactions with Affiliates.............. 52
6.13 Accounting Changes........................ 52
6.14 Amendment and Modification of Gendex
Purchase Agreement...................... 52
6.15 Consulting Fees........................... 52
6.16 Leverage Ratio............................ 52
6.17 Operating Leases.......................... 53
VII. EVENTS OF DEFAULT...................................... 53
VIII. TERM OF AGREEMENT...................................... 56
IX. DEBTORS' OBLIGATIONS................................... 56
9.1 Mortgage Obligations...................... 56
9.2 Unconditional Obligation.................. 56
9.3 Period in Force........................... 57
9.4 Waiver.................................... 57
9.5 Effect of Stay............................ 57
9.6 Liability Under Notes..................... 57
X. MISCELLANEOUS.......................................... 58
10.1 Notices................................... 58
10.2 Survival of Agreement..................... 59
10.3 Successors and Assigns; Participations.... 59
10.4 Expenses; Indemnity....................... 61
10.5 Applicable Law............................ 62
10.6 Right of Setoff........................... 62
10.7 Payments on Business Days................. 62
10.8 Waivers; Amendments....................... 62
10.9 Severability.............................. 63
10.10 Entire Agreement; Jurisdiction, etc....... 63
10.11 Counterparts.............................. 64
10.12 Headings.................................. 64
10.13 Prior Agreements.......................... 64
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EXHIBITS and SCHEDULES
Exhibit A Replacement Term Note................................
Exhibit B Replacement Revolving Credit Note....................
Exhibit C Gendex-DMI Security Agreement........................
Exhibit D Affiliates and Names of Debtors......................
Exhibit E Borrowing Base Certificate...........................
Exhibit F Third Mortgage.......................................
Exhibit G Additional Warrant Agreement.........................
Exhibit H Modification and Reaffirmation of Indemnity..........
Exhibit I Reaffirmation of Modified and Restated
Non-Competition Undertaking.....................
Exhibit J Subordination Agreement..............................
Exhibit K Reimbursement Agreement..............................
Exhibit L Opinion Letter.......................................
Schedule 6.1 Liens................................................
Schedule 6.3 Indebtedness.........................................
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AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT entered into on the fifth day of
March 1996 by and among THE CHASE MANHATTAN BANK, N.A., a national banking
association having an office at 31 Mamaroneck Avenue, White Plains, NY 10601
(the "Bank") and DEL GLOBAL TECHNOLOGIES CORP., formerly known as Del
Electronics Corp., a New York corporation having an office at One Commerce Park,
Valhalla, New York 10595 ("Del"), RFI CORPORATION, a Delaware corporation having
an office at 100 Pine Aire Drive, Bay Shore, New York 11706 ("RFI"), DYNARAD
CORP., a New York corporation having an office at 19 Jefryn Boulevard, Deer
Park, New York 11729 ("Dynarad"), and BERTAN HIGH VOLTAGE CORP., formerly known
as Del Acquisition Corp., a New York corporation having an office at 121 New
South Road, Hicksville, New York 11801 ("Bertan High Voltage"), DEL MEDICAL
SYSTEMS CORP., a New York corporation having an office at One Commerce Park,
Valhalla, New York 10595 ("Del Medical"), and GENDEX-DEL MEDICAL IMAGING CORP.,
a Delaware corporation having an office at 11550 West King Street, Franklin
Park, Illinois 60131 ("Gendex-DMI" and together with Del, RFI, Dynarad, Bertan
High Voltage, and Del Medical hereinafter sometimes referred to collectively as
the "Debtors").
W I T N E S S E T H :
WHEREAS, Del and RFI jointly and severally borrowed from Z-Laenderbank,
f/k/a Oesterreichische Laenderbank, A.G., Grand Cayman Branch ("Z-Laenderbank")
(i) the sum of $5,400,000.00, which sum was subsequently reduced by Del, RFI,
and Z-Laenderbank to $1,314,074.00, in the form of a term loan facility (the
"Term Loan Facility"); (ii) the sum of $2,000,000.00 in the form of a revolving
credit facility (the "Revolving Credit Facility"); and (iii) the sum of
$2,963,000.00 in the form of a credit line loan facility (the "Credit Line
Facility"), pursuant to the terms of a Credit Agreement dated as of December 12,
1989 and modified by amendments made by Del, RFI, and Z-Laenderbank dated as of
July 28, 1990, April 26, 1991, January 1, 1992 (the "Credit Agreement");
WHEREAS, pursuant to the terms of the Credit Agreement, Del and RFI
executed and delivered to Z-Laenderbank, among other things, (i) a term note in
the amount of $5,400,000.00 (the "December 1989 Term Note"); (ii) a revolving
credit note in the amount of $2,000,000.00 (the "December 1989 Revolving Credit
Note"); (iii) a credit line note in the amount of $2,963,000.00 (the "Credit
Line Note");
WHEREAS, pursuant to the terms of the Credit Agreement, Del executed
and delivered to Z-Laenderbank as security for the performance of the
obligations under the Credit Agreement, the December 1989 Term Note, the
December 1989 Revolving Credit Note, and the Credit Line Note, among other
things, (i) a security agreement granting to Z-Laenderbank a full floating lien
on tangible and intangible assets of Del (the "Del Security Agreement"); (ii)
UCC-1 financing statements relating thereto(the "Del Financing Statement"); and
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(iii) an assignment of a life insurance policy on the life of Leonard A.
Trugman;
WHEREAS, pursuant to the terms of the Credit Agreement, RFI executed
and delivered to Z-Laenderbank as security for the performance of the
obligations under the Credit Agreement, the December 1989 Term Note, the
December 1989 Revolving Credit Note, and the Credit Line Note, among other
things, (i) a security agreement granting to Z-Laenderbank a full floating lien
on tangible and intangible assets of RFI (the "RFI Security Agreement"); (ii)
UCC-1 financing statements relating thereto (the "RFI Financing Statements");
(iii) an Agreement of Modification and Extension of Mortgage modifying and
extending the terms of a mortgage made by the Town of Islip Industrial
Development Agency encumbering certain real property owned by RFI (such real
property having been conveyed to RFI by the Town of Islip Industrial Development
Agency) and located in the Town of Islip, County of Suffolk, and State of New
York (the "Mortgage"); and (iv) an environmental indemnification agreement
relating to the real property encumbered by the Mortgage (the "1989
Indemnification Agreement");
WHEREAS, pursuant to the terms of the Credit Agreement, Leonard A.
Trugman executed and delivered to Z-Laenderbank a certain non-competition
undertaking (the "Non-Competition Undertaking");
WHEREAS, pursuant to the terms of (i) an Assignment of Credit Agreement
dated as of August 7, 1992; (ii) an Assignment of Term Note dated as of August
7, 1992; (iii) an Assignment of Credit Line Note dated as of August 7, 1992,
(iv) an Assignment of Revolving Credit Note dated as of August 7, 1992; (v) an
Assignment of Security Agreement Between Del Corporation and Z-Laenderbank dated
August 7, 1992; (vi) an Assignment of Security Agreement Between RFI Corporation
and Z-Laenderbank dated August 7, 1992; and (vii) an Assignment of Mortgage
dated August 6, 1992 (collectively, the "Assignments"), the Bank purchased from
Z-Laenderbank, and Z-Laenderbank assigned to the Bank, all of Z-Laenderbank's
right, title, and interest in and to the Credit Agreement, the Del Security
Agreement, the RFI Security Agreement, the Mortgage, the Non-Competition
Undertaking and other documents related thereto;
WHEREAS, pursuant to the terms of an amendment to the Credit Agreement
dated as of July 31, 1992 (the "Fourth Amendment to Credit Agreement"), the Bank
and Del and RFI modified the Credit Agreement to provide, among other things,
(i) for the merger of the Credit Line Facility into the Revolving Credit
Facility, resulting in a $4,963,000.00 maximum amount available under such
combined facility; (ii) for the execution and delivery by RFI to the Bank of a
guaranty of payment and performance of Del's obligations to the Bank, such
guaranty to be secured by the Mortgage; (iii) for the modification of the
December 1989 Term Note to change the amortization schedule, the prepayment
provision, and various other provisions of the December 1989 Term Note; (iv) for
the modification of the Revolving Credit Note to allow for the merger into it of
the Credit Line Note, to change the prepayment provision and various other
provisions of the Revolving Credit Note, and to provide a payment grid to be
attached to the Revolving Credit Note; (v) for the modification of the
definitions section of the Credit Agreement; (vi) for the modification of
covenants contained in the Credit Agreement; (vii) for the addition of certain
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covenants to the Credit Agreement; and (viii) for certain other changes in the
Credit Agreement;
WHEREAS, in connection with the Fourth Amendment to Credit Agreement,
RFI executed and delivered to the Bank, among other things, (i) a guaranty dated
August 7, 1992 (the "RFI Guaranty") and (ii) a mortgage modification agreement
dated as of July 31, 1992 (the "First Amendment to Mortgage");
WHEREAS, in connection with and to effect the changes required by the
Fourth Amendment to Credit Agreement, Del and RFI executed and delivered to the
Bank, among other things, (i) a certain Revolving Credit Note Modification
Agreement dated as of July 31, 1992 (the "First Amendment to the Revolving
Credit Note"); (ii) a certain Term Note Modification Agreement dated as of
August 7, 1992 (the "First Amendment to Term Note"); and (iii) an environmental
indemnity agreement dated July 31, 1992 with respect to the property encumbered
by the Mortgage (the "Environmental Indemnity");
WHEREAS, in connection with the Assignments, Del executed and delivered
to the Bank an assignment of a life insurance policy on the life of Leonard A.
Trugman (the "Assignment of Life Insurance");
WHEREAS, on November 12, 1992, the Bank and Del and RFI entered into a
letter agreement modifying certain provisions of the Credit Agreement, effective
July 31, 1992 (the "Fifth Amendment to Credit Agreement");
WHEREAS, prior to the execution of the Fifth Amendment to Credit
Agreement, Del acquired the assets and business of another company and merged
such assets and business into a wholly-owned subsidiary of Del now named Dynarad
Corp., a New York corporation having an office at 19 Jefryn Boulevard, Deer
Park, New York 11729 ("Dynarad");
WHEREAS, in connection with such acquisition, the Bank and Del, RFI,
and Dynarad agreed to add Dynarad as a party to the Credit Agreement, and in
furtherance thereof, entered into an amendment to the Credit Agreement dated as
of June 10, 1993 (the "Sixth Amendment to Credit Agreement");
WHEREAS, pursuant to the terms of the Sixth Amendment to Credit
Agreement, the Bank and Del, RFI, and Dynarad modified the Credit Agreement to
provide, among other things, (i) for the addition of Dynarad as a party to the
Credit Agreement, the December 1989 Term Note and the Revolving Credit Note,
(ii) for an increase in the Term Loan Facility to $3,000,000.00; (iii) for an
increase in the Revolving Credit Facility to $10,000,000.00, of which a maximum
of $9,000,000.00 may be used for direct borrowings and a maximum of
$1,000,000.00 may be used for letters of credit; (iv) for the execution and
delivery by RFI to the Bank of a guaranty of payment and performance of Del's
obligations to the Bank; (v) for the modification of the definitions section of
the Credit Agreement; (vi) for the modification of covenants contained in the
Credit Agreement; (vii) for the addition of certain covenants to the Credit
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Agreement; (x) for the possibility of fixing the interest rate on certain
portions of the borrowings under the Revolving Credit Facility; (xi) for the
possibility of fixing the interest rate on certain portions of the Term Loan
Facility; (xii) for certain modifications of provisions relating to fees payable
in connection with the Credit Facility; (xiii) for certain modifications of
provisions relating to insurance proceeds; (xiv) for certain modifications with
respect to interest rate protection; (xv) for certain other changes in the
Credit Agreement;
WHEREAS, in connection with the Sixth Amendment to Credit Agreement,
Dynarad executed and delivered to the Bank, among other things, (i) a guaranty
dated June 10, 1993 (the "Dynarad Guaranty"); (ii) a security agreement dated
June 10, 1993 granting to the Bank a full floating lien on tangible and
intangible assets of Dynarad; and (iii) UCC-1 financing statements relating
thereto;
WHEREAS, in connection with the Sixth Amendment to Credit Agreement,
RFI executed and delivered to the Bank, among other things, a mortgage
modification agreement dated as of June 10, 1993 (the "Second Amendment to
Mortgage"), which, among other things, modified the provisions of the Mortgage
with respect to insurance proceeds;
WHEREAS, in connection with and to effect the changes required by the
Sixth Amendment to Credit Agreement, Del, RFI, and Dynarad executed and
delivered to the Bank, among other things, (i) a certain Revolving Credit Note
Modification Agreement No. 2 dated as of June 10, 1993 (the "Second Amendment to
Revolving Credit Note"); and (ii) a certain Term Note Modification Agreement No.
2 dated as of June 10, 1993 (the "Second Amendment to Term Note");
WHEREAS, pursuant to the terms of an amendment to the Credit Agreement
dated August 3, 1993 (the "Seventh Amendment to Revolving Credit Agreement"),
the Bank and Del, RFI, and Dynarad modified the terms of the Credit Agreement
with respect to permitted indebtedness and operating leases and with respect to
the due dates of amortization payments on the December 1989 Term Note;
WHEREAS, by a certain Modified and Restated Credit Agreement, dated as
of May 10, 1994, among the Bank and Del, RFI, Dynarad, and Bertan High Voltage
(the "Modified and Restated Credit Agreement"), the Credit Agreement, as
formerly amended, was further amended and restated;
WHEREAS, in connection with the Modified and Restated Credit Agreement,
the Revolving Credit Facility was increased to $10,000,000; a subordinate
mortgage was given to the Bank as additional security for the Term Loan
Facility; an additional term loan, in the amount of $3,500,000, was made to the
Debtors to finance the acquisition by Bertan High Voltage, a then newly formed
subsidiary of Del, of assets of a company unrelated to the Debtors; Bertan High
Voltage was added as a Debtor; the maturity date of the Revolving Credit
Facility was extended; and various covenants were modified, among other things;
WHEREAS, by a certain First Amendment to Modified and Restated Credit
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Agreement, dated as of November 4, 1994, among the Bank and Del, RFI, Dynarad,
Bertan High Voltage, and Del Medical, Del Medical, a then newly formed
subsidiary of Del, was added as a Debtor under the Modified and Restated Credit
Agreement, among other things;
WHEREAS, by a certain Second Amendment to Modified and Restated Credit
Agreement, dated as of November 11, 1994, among the Bank and Del, RFI, Dynarad,
Bertan High Voltage, and Del Medical, certain covenants contained in the
Modified and Restated Credit Agreement, as previously amended, were modified,
among other things;
WHEREAS, by a certain Third Amendment to Modified and Restated Credit
Agreement, dated as of January 27, 1995, among the Bank and Del, RFI, Dynarad,
Bertan High Voltage, and Del Medical, the interest rate structure contained in
the Modified and Restated Credit Agreement, as previously amended, was modified,
among other things;
WHEREAS, the Bank and the Debtors desire to modify the Modified and
Restated Credit Agreement, as previously amended, to provide for, among other
things, an increase in the Revolving Credit Facility, an extension of the
maturity dates, and to add Gendex-Del Medical Imaging Corp. as a party, and, in
the interests of clarity, desire to restate the Modified and Restated Credit
Agreement so that there shall be a single credit agreement which shall
incorporate the present modification and all prior modifications;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, the Debtors and the Bank hereby agree as follows:
1. DEFINITIONS
1.1 For purposes hereof, the following terms shall have the meanings
specified below:
Acquisition Assets shall mean capital assets acquired in the Gendex
Acquisition and capital assets acquired in similar types of transactions (i.e.,
transactions in which all or substantially all of the assets of another entity
are acquired).
Additional Advisory Fee shall mean the additional advisory fee set
forth in Section 2.7 in connection with the financing for the Gendex
Acquisition.
Additional Warrant shall mean a warrant issued to The Chase Manhattan
Bank, N.A., dated the Restatement Date, as amended, modified or restated from
time to time, to purchase 17,000 common shares of Del delivered as a portion of
the Additional Advisory Fee pursuant to Section 2.7, and any replacements
thereof.
Additional Warrant Agreement shall mean the agreement dated the
Restatement Date between Del and The Chase Manhattan Bank, N.A. in substantially
the form of Exhibit G, as amended, modified or restated from time to time.
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Additional Warrant Exercise Price shall have the meaning given to it in
Section 2.7.
Advisory Fee shall mean the advisory fee for acquisition financing set
forth in Section 2.7.
Affiliate of any person shall mean any other person which, directly or
indirectly, controls or is controlled by or is under common control with such
person and, without limiting the generality of the foregoing, includes (i) any
person which beneficially owns or holds 5% or more of any class of voting
securities of such person or 5% or more of the equity interest in such person,
(ii) any person of which such person beneficially owns or holds 5% or more of
any class of voting securities or in which such person beneficially owns or
holds 5% or more of the equity interest, and (iii) any director or executive
officer of such person. For purposes of this definition, the term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise.
Agreement shall mean this Amended and Restated Credit Agreement, all
amendments and modifications thereto and restatements thereof, and all schedules
and exhibits attached hereto, now or from time to time executed and/or delivered
to the Bank in connection herewith.
Banking Day shall mean any day on which commercial banks are not
authorized or required to close in New York City.
Bank's predecessor-in-interest shall mean Z-Laenderbank, f/k/a
Oesterreichische Laenderbank, A.G., Grand Cayman Branch.
Bertan High Voltage shall mean Bertan High Voltage Corp., a New York
corporation, formerly known as Del Acquisition Corp., a wholly-owned subsidiary
of Del.
Bertan Security Agreement shall mean the security agreement dated as of
May 10, 1994 made by Bertan High Voltage as Grantor for the benefit of the Bank,
as such may be amended, modified or restated from time to time.
Board shall mean the Board of Governors of the Federal Reserve System
of the United States.
Borrowing Base shall mean the sum of (a) 80% of the net dollar amount
of Eligible Accounts plus (b) the lesser of (i) 50% of the net dollar value of
Eligible Inventory or (ii) 185.71% of (a).
Borrowing Base Certificate shall have the meaning set forth in Section
5.5(c).
Business Day shall mean any day, other than a Saturday, Sunday or legal
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holiday in the State of New York, on which banks are open for substantially all
their banking business in New York State.
Capital Expenditures shall mean, with respect to any Debtor for any
period, all amounts expended or paid by such Debtor to third parties for
additions to its capital assets, excluding Acquisition Assets.
Capitalized Lease Obligation shall mean an obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with generally accepted accounting principles, and for purposes hereof the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with such principles.
Capital Stock shall mean the equity shares in a Debtor authorized by
its certificate of incorporation and issued to its stockholders.
Chase Leasing shall mean Chase Equipment Leasing, Inc., a subsidiary of
the Bank.
Code shall mean the Internal Revenue Code of 1986, as amended from time
to time.
Collateral shall mean all collateral and security as described in the
Security Documents.
Commitment Fee shall mean the revolving credit commitment fee set forth
in Section 2.6.
Consolidated shall mean, in respect of any person, as applied to any
financial or accounting term, such term determined on a consolidated basis in
accordance with generally accepted accounting principles for such person and all
consolidated subsidiaries thereof.
Consolidated Subsidiary means any Subsidiary whose accounts are or are
required to be consolidated with the accounts of the Debtors in accordance with
GAAP.
Consolidated Tangible Net Worth means Net Worth of the Debtors and any
Consolidated Subsidiaries less General Intangibles.
Credit Documents shall mean this Agreement, all of the Security
Documents, promissory notes, mortgages, deeds of trust, chattel mortgages,
pledges, stock purchase warrants, powers of attorney, consents, assignments,
contracts, notices, leases, financing statements, and all other written matter
whether heretofore, now or hereafter executed by or on behalf of any Debtor or
any other person and/or delivered to the Bank, in connection with this
Agreement, or any of the Loans, as such may be amended, modified or restated
from time to time.
Credit Event shall mean each borrowing hereunder, including all
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borrowings pursuant to Letters of Credit hereunder.
Credit Facility shall mean each of the Revolving Credit Loans, the Term
Loan, and the Letters of Credit.
Current Assets shall mean, with respect to any person at any date, the
aggregate amount of all assets of such person which would be classified as
current assets at such date, computed and calculated in accordance with
generally accepted accounting principles applied on a consistent basis.
Current Liabilities shall mean, with respect to any person at any date,
the aggregate amount of all liabilities of such person (including tax and other
proper accruals) which would be classified as current liabilities at such date,
computed and calculated in accordance with generally accepted accounting
principles applied on a consistent basis.
Current Ratio shall mean with respect to any Debtor at any date, the
ratio at such date of (i) the Current Assets (excluding Prepaid Expenses) of
such Debtor to (ii) the Current Liabilities of such Debtor.
Debtors shall mean Del, RFI, Dynarad, Bertan High Voltage, Del Medical,
and Gendex-DMI, or any or all of them, as the case may be.
Del shall mean Del Global Technologies Corp., a New York corporation,
formerly known as Del Electronics Corp.
Del Medical shall mean Del Medical Systems Corp., a New York
corporation and a wholly-owned subsidiary of Del.
Del Medical Security Agreement shall mean the security agreement dated
as of November 4, 1994 made by Del Medical as Grantor for the benefit of the
Bank, as such may be amended, modified or restated from time to time.
Del Security Agreement shall mean the Modified and Restated Security
Agreement dated as of May 10, 1994 made by Del as Grantor for the benefit of the
Bank, as such may be amended, modified or restated from time to time.
Dentsply shall mean Dentsply International, Inc., a Delaware
corporation.
Dollars or the symbol "$" shall mean dollars in lawful currency of the
United States of America.
Dynarad shall mean Dynarad Corp., a New York corporation and a
wholly-owned subsidiary of Del.
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Dynarad Security Agreement shall mean Modified and Restated Security
Agreement dated as of May 10, 1994, made by Dynarad as Grantor for the benefit
of the Bank, as such may be modified from time to time.
EBITDA shall mean with respect to any person for any period, the sum of
(i) Net Income, (ii) Interest Expense, (iii) federal, state and local income tax
expense, and (iv) depreciation and amortization expense, in each case of such
person for such period, computed and calculated in accordance with generally
accepted accounting principles applied on a consistent basis.
Eligible Accounts shall mean those Accounts Receivable of the Debtors
(as such term is defined in the Security Agreements) which, when provided to the
Bank as Collateral under the Security Agreements and at all times thereafter, do
not violate the provisions of this Agreement or the Security Agreements and
which the Bank, in its credit judgment, deems to be Eligible Accounts; provided
that, without in any way limiting the Bank's discretion to determine which
Accounts Receivable shall be deemed Eligible Accounts, until such time as the
Bank shall otherwise notify the Debtors, no Account Receivable shall be deemed,
or continue to be deemed, an Eligible Account if:
(i) It is due or unpaid more than the greater of (a) ninety
(90) days following the date of the original invoice issued by the Debtors with
respect to the sale giving rise thereto and (b) sixty (60) days following the
date on which such Account Receivable is payable in accordance with the terms of
the agreement or other document giving rise thereto; or
(ii) It arises out of a sale not made in the ordinary course
of the Debtors' business or to a person which is an Affiliate or controlled by
an Affiliate, unless such Affiliate or person controlled by an Affiliate has
been approved in writing by the Bank as a party from whom Eligible Accounts can
be generated; or
(iii) Any warranty contained in the Security Agreements with
respect to all Accounts Receivable or any warranty with respect to such Account
Receivable contained in the Security Agreements has been breached; or
(iv) (a) The Account Receivable is subject to any right of
setoff by the account debtor with respect thereto and such account debtor has
not entered into an agreement with the Bank which is acceptable to the Bank with
respect to the waiver of rights of setoff; or (b) the account debtor with
respect thereto has disputed liability or made any claim with respect to any
other Account Receivable due from such account debtor to the Debtors; in any of
which cases, the Account Receivable shall be ineligible to the extent of such
dispute, claim and/or setoff; or
(v) The account debtor with respect thereto has filed a
petition for bankruptcy or any other petition for relief under the Bankruptcy
Code or any other bankruptcy or insolvency law or has made an assignment for the
benefit of creditors, or any petition or other application for relief under the
Bankruptcy Code or any other bankruptcy or insolvency law has been filed against
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such account debtor, or such account debtor has so filed, suspended its business
operations, become insolvent, or suffered a receiver or a trustee to be
appointed for any of its assets or affairs; or
(vi) It arises out of one or more sales within thirty days of
each other for an aggregate amount in excess of $150,000 to Cablage Electronique
de Laval or for an aggregate amount in excess of $50,000 to any other account
debtor outside the United States and Canada, unless the sale is on letter of
credit or acceptance issued or confirmed by a commercial bank in the United
States, and on terms, acceptable to the Bank; or
(vii) It arises out of a sale to a customer on a
bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment,
or any other repurchase or return basis; or
(viii) The Bank believes, in its sole judgment, that
collection of such Account Receivable is insecure or that such Account
Receivable may not be paid by reason of the financial condition of the account
debtor with respect thereto; or
(ix) The Account Receivable exceeds $500,000 and the account
debtor with respect thereto is the United States of America or any department,
agency or instrumentality thereof, unless the Debtors assign their rights to
payment of such Accounts Receivable to the Bank pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. ss.3727 et seq.); or
(x) The goods giving rise to such Account Receivable have not
been shipped and delivered to and accepted by the account debtor or the services
giving rise to such Account Receivable have not been performed by the Debtor and
accepted by the account debtor; or
(xi) The Account Receivable exceeds a credit limit for the
account debtor with respect thereto determined by the Bank, in its sole
discretion, at any time or time hereafter, to the extent such Account Receivable
exceeds such limit.
Eligible Inventory shall mean Inventory (as such term is defined in the
Security Agreements) of the Debtors, determined on a FIFO basis, valued at the
lower of cost or market value, which is located in the United States of America
(or is in transit to the United States of America, provided that the Debtor
shall have delivered to the Bank shipping documents, in form and substance
satisfactory to the Bank, with respect thereto) and which, in the sole judgment
of the Bank, is not unmerchantable or obsolete and which the Bank, in its sole
discretion, shall deem Eligible Inventory, based on such credit and collateral
considerations as the Bank may deem appropriate.
Environmental Legislation shall have the meaning assigned to such term
in Section 5.12.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder, as in effect
from time to time.
ERISA Affiliate shall mean any trade or business (whether or not
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incorporated) which is a member of a group of which either Debtor is a member
and which is under common control within the meaning of Sections 414(b) and
414(c) of the Code, and the regulations promulgated thereunder.
Eurodollar Loan shall mean any Loan when and to the extent the interest
rate therefor is determined on the basis of the Eurodollar Rate.
Eurodollar Rate shall mean, for any Eurodollar Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) determined by the Bank to be equal to the quotient of (i) the
arithmetic mean, as calculated by the Bank, of the respective rates per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted at
approximately 11:00 a.m. London time by the principal London branch of the Bank
two Business Days prior to the first day of such Interest Period for the
offering to leading banks in the London interbank market of Dollar deposits in
immediately available funds, for a period, and in an amount, comparable to the
Interest Period and principal amount of the Eurodollar Loan which shall be made
by the Bank and outstanding during such Interest Period divided by (ii) one
minus the Reserve Requirement for such Loan for such Interest Period.
Event of Default shall have the meaning assigned to such term in
Article VII.
Final Maturity Date shall mean the later to occur of (i) the Term Loan
Maturity Date and (ii) the Revolving Credit Maturity Date.
Financial Officer shall mean, with respect to any Person, Chairman of
the Board, President, Executive Vice President, Treasurer, Chief Financial
Officer, Vice President-Finance, or Controller thereof.
Gendex shall mean the Gendex Medical Division of Dentsply
International, Inc.
Gendex Acquisition shall mean the acquisition by Gendex-DMI of certain
assets of Gendex.
Gendex-DMI shall mean Gendex-Del Medical Imaging Corp., a Delaware
corporation and a wholly-owned subsidiary of Del.
Gendex-DMI Security Agreement shall mean the security agreement dated
as of the Restatement Date made by Gendex-DMI as Grantor for the benefit of the
Bank in substantially the form of Exhibit C, as such may be amended, modified or
restated from time to time.
Gendex Purchase Agreement shall mean the purchase agreement among Del,
Gendex-DMI and Dentsply pursuant to which Gendex-DMI shall acquire from Dentsply
certain assets of Gendex.
General Intangibles shall mean all personal property other than goods,
accounts, chattel paper, documents, instruments, and money, and shall
specifically include things in action, patents, patent applications, copyrights,
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trade names and trademarks and the goodwill of the business symbolized thereby,
and federal, state, and local tax refund claims of all kinds and all right,
title and interest therein and thereto, and all benefits thereunder.
Grantor shall mean any Grantor as defined in the Security Agreements.
Governmental Authority shall mean any federal, state, local, foreign or
other governmental or administrative body, instrumentality, department or agency
or any court, tribunal, administrative hearing body, arbitration panel,
commission or other similar dispute resolving panel or body.
Guarantee shall mean any obligation, contingent or otherwise, of any
person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other person in any manner, whether directly
or indirectly, and including, without limitation, any obligation of such person,
direct or indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (iii) to maintain working capital, equity capital, available cash or other
financial statement condition of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term Guarantee
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
Indebtedness shall mean, with respect to any person, (i) all
obligations of such person for borrowed money, or with respect to advances of
any kind, (ii) all obligations of such person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such person upon
which interest charges are customarily paid, (iv) all obligations of such person
for the deferred purchase price of property or services, except current accounts
payable arising in the ordinary course of business and not overdue, (v) all
obligations of such person under conditional sale or other title retention
agreements relating to property purchased by such person, (vi) all obligations
of such person with respect to interest rate or currency protection agreements,
(vii) all obligations of such person as an account party under any letter of
credit or in respect of bankers' acceptances, (viii) all Indebtedness of any
third party secured by property or assets of such person (regardless of whether
or not such person is liable for repayment of such Indebtedness), (ix) all
Guarantees of such person, (x) the redemption price of all redeemable preferred
stock issued after the date hereof of such person, but only to the extent that
such stock is redeemable at the option of any holder or requires sinking fund or
similar payments at any time prior to the Final Maturity Date and (xi) any
withdrawal or other liability incurred under ERISA by such person (or, if such
person is a Debtor, the Debtor and its ERISA Affiliates) to a Multiemployer
Plan.
Indemnification Agreement shall mean collectively the letter of
indemnity dated July 31, 1992 made by Del and RFI for the benefit of the Bank
and the Modification and Reaffirmation of Indemnity, as such may be further
amended or modified, or restated, from time to time.
Interest Expense shall mean, with respect to any person for any period,
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the interest expense of such person during such period determined in accordance
with generally accepted accounting principles applied on a consistent basis, and
shall in any event include, without limitation, (i) the amortization of debt
discounts, (ii) the amortization of all fees payable in connection with the
incurrence of Indebtedness to the extent included in interest expense, (iii) the
portion of any Capitalized Lease Obligation allocable to interest expense and
(iv) all fixed or calculable dividend payments on preferred stock.
Interest Expense Coverage Ratio shall mean with respect to any Debtor
the ratio of (i) EBITDA (minus Capital Expenditures) of such Debtor for the four
most recent consecutive fiscal quarters ending on or prior to the date of
determination to (ii) the aggregate Interest Expense of such Debtor of such
four-quarter period.
Interest Measurement Date shall mean the last day of each fiscal
quarter of Del.
Interest Period shall mean, with respect to any Eurodollar Loan, the
period commencing on the date such Eurodollar Loan is made, converted from
another type of Loan or renewed, as the case may be, and ending, as a Debtor may
select pursuant to Section 2.4(c), on the numerically corresponding day in the
first, second, third, or sixth calendar month thereafter, or for such shorter
period that a Debtor may so select, when and if the Bank shall, in its
discretion, make such period available, provided that each such Interest Period
which commences on the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Day of the appropriate calendar
month.
L/C Issuance Notice is defined in Section 2.14.2 hereof.
Leasing Facility shall mean any and all financial accommodations now or
hereafter made by Chase Leasing to any of the Debtors pursuant to a master lease
agreement between such Debtor and Chase Leasing and any equipment schedules
executed in connection therewith.
Lending Office shall mean, for each type of Loan, the lending office of
the Bank (or of an affiliate of the Bank) designated by the Bank as the office
by which its Loans of such type are to be made and maintained.
Letter of Credit of a Person shall mean a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable,
and shall include a Standby Letter of Credit and a Sight Letter of Credit.
Letter of Credit Facility is defined in Section 2.14.1 hereof.
Letter of Credit Obligation shall mean, as at the time of determination
thereof, all liabilities, whether actual or contingent, of the Debtors to the
Bank with respect to Letters of Credit, including the sum of (i) the
Reimbursement Obligations; (ii) the aggregate undrawn face amount of
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outstanding Standby Letters of Credit; and (iii) the aggregate undrawn face
amount of outstanding Sight Letters of Credit.
Leverage Ratio shall mean the ratio of Consolidated Total Liabilities
minus Subordinated Debt to Consolidated Tangible Net Worth plus Subordinated
Debt.
Lien shall mean, with respect to any asset, (i) any mortgage, lien,
pledge, encumbrance, charge or security interest in or on such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset, (iii) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities or (iv) any other right of or arrangement with
any creditor to have his claim satisfied out of such assets, or the proceeds
therefrom, prior to the general creditors of the owner thereof.
Loans shall mean the Term Loan, the Revolving Credit Loan, the Letter
of Credit Facility or any or all of them, as the context may required.
Margin shall have the meaning assigned such term in Section 2.4(d),
with respect to the Term Loan, and in Section 2.4(e), with respect to Revolving
Credit Loans.
Margin Stock shall have the meaning assigned such term in Regulation U.
Modified and Restated Credit Agreement shall mean the Modified and
Restated Credit Agreement, dated May 10, 1994, as amended, among the Bank, Del,
RFI, Dynarad, Bertan High Voltage, and Del Medical; all references to the
Modified and Restated Credit Agreement contained in any Credit Documents other
than this Agreement shall mean the Modified and Restated Credit Agreement as
restated in this Agreement and as such may be further amended, modified or
restated from time to time.
Modification and Reaffirmation of Indemnity shall mean the Modification
and Reaffirmation of Indemnity substantially in the form of Exhibit H, made by
the Debtors for the benefit of the Bank, and dated the Restatement Date, as such
may be amended, modified or restated from time to time.
Mortgage shall mean the mortgage dated December 7, 1989, made by the
Town of Islip to Oesterreichische Laenderbaenk, A.G., Grand Cayman Branch, and
recorded in the Suffolk County Clerk's office on December 15, 1989 in Liber
15639 of Mortgages at Page 7, as modified by (i) modification and extension
agreement dated December 12, 1989 by and between RFI Corporation and
Oesterreichische Laenderbaenk, A.G.; (ii) Mortgage Modification Agreement dated
as of July 31, 1992 by and between RFI and the Bank; (iii) Mortgage Modification
Agreement No. 2 dated as of June 10, 1993 by and between RFI and the Bank, and
recorded in the aforesaid Clerk's office on March 3, 1994 in Liber 18781 at Page
859; (iv) Mortgage Modification Agreement No. 3; and (v) all amendments and
modifications thereto and restatements thereof hereafter made.
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Mortgage Modification Agreement No. 3 shall mean the mortgage
modification agreement dated May 10, 1994 by and between RFI and the Bank,
modifying the Mortgage.
Mortgagor shall mean RFI.
Multiemployer Plan shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any Debtor or any ERISA Affiliate thereof
is making or accruing any obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.
Net Income with respect to any person for any period shall mean the
aggregate net income (or net loss) of such person for such period equal to net
revenues and other proper income less the aggregate for such person of any and
all items that are treated as expenses (including taxes based on income), but
excluding from the definition of Net Income any extraordinary gains or losses or
any gains or losses from the sale or disposition of assets other than in the
ordinary course of business, all treated, computed and calculated in accordance
with generally accepted accounting principles applied on a consistent basis.
Net Worth shall mean with respect to any Person at any time (i) the sum
of such Person's capital stock, capital in excess of par or stated value of
shares of its capital stock, retained earnings, paid-in capital from the
exercise of stock options and any other account which, in accordance with
generally accepted accounting principles applied on a consistent basis,
constitutes stockholders' equity, less (ii) treasury stock.
Note or Notes shall mean the Term Note and/or the Revolving Credit
Note, as the context may require.
Obligations shall mean the obligations of the Debtors in respect of the
due and punctual payment of the principal of and interest on each of the Notes,
when and as due, whether at maturity, by acceleration, by notice or prepayment
or otherwise, and all other monetary obligations of the Debtors to the Bank
under this Agreement, each of the Security Documents and in connection herewith
and therewith, including without limitation all Letter of Credit Obligations.
PBGC shall mean the Pension Benefit Guaranty Corporation.
Person shall mean any natural person, corporation, business trust,
association, company, joint venture, partnership or government or any agency or
political subdivision thereof.
Plan shall mean any employee plan which is subject to the provisions of
Title IV of ERISA and which is maintained (in whole or in part) for employees of
either Debtor, or any Grantor.
Prepaid Expenses shall mean with respect to any Debtor at any date the
aggregate amount of all assets of such Debtor which would be classified as
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prepaid expenses at such date, computed and calculated in accordance with
generally accepted accounting principles applied on a consistent basis.
Prime Rate shall mean that rate of interest from time to time announced
by the Bank at the Principal Office as its prime commercial lending rate.
Reaffirmation of Modified and Restated Non-Competition Undertaking
shall mean the Modified and Restated Non-Competition Undertaking substantially
in the form of Exhibit I, made by Leonard A. Trugman for the benefit of the Bank
and dated the Restatement Date, as such may be amended, modified or restated
from time to time.
Regulation D shall mean Regulation D of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
Regulation G shall mean Regulation G of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
Regulation T shall mean Regulation T of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
and thereof.
Regulation U shall mean Regulation U of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
Regulation X shall mean Regulation X of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder.
Regulatory Change shall mean any change after the date of this
Agreement in United States federal, state, municipal or foreign laws or
regulations (including without limitation Regulation D) or the adoption or
making after such date of any interpretations, directives or requests applying
to a class of banks including the Bank of or under any United States federal,
state, municipal or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
Reimbursement Agreement shall mean a letter of credit application or
security and reimbursement agreement in substantially the form of Exhibit N
hereto (or such other forms thereof as the Bank may employ in the ordinary
course of business for its own account), with such modifications thereto as may
be agreed upon by the Bank and the Debtors; provided, however, in the event of
any conflict between the terms of any Reimbursement Agreement and this
Agreement, the terms of this Agreement shall control.
Reimbursement Obligations shall mean, at any time, the aggregate of the
obligations of the Debtors to the Bank in respect of all unreimbursed drawings
under all Reimbursement Agreements.
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Reportable Event shall mean a Reportable Event as defined in Section
4043(b) of ERISA.
Reserve Requirement shall mean, for any Interest Period for any
Eurodollar Loan for any Interest Period therefor, the average maximum rate at
which reserves (including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding $1,000,000,000 against "Eurocurrency liabilities" (as such term is
used in Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks by reason of any Regulatory Change against (i) any category of
liabilities which includes deposits by reference to which the Eurodollar Rate is
to be determined as provided in the definition of "Eurodollar Rate" in this
Section 1.01 or (ii) any category of extensions of credit or other assets which
include Eurodollar Loans.
Responsible Officer shall mean, with respect to any person, any
executive officer, or the chief financial officer, treasurer, or controller, of
such person.
Restatement Date shall mean March 5, 1996.
Revolving Credit Commitment shall mean the Revolving Credit Commitment
of the Bank as set forth in Section 2.3.
Revolving Credit Commitment Period shall mean the period from and
including the date hereof to, but not including, the Revolving Credit Maturity
Date.
Revolving Credit Loan shall have the meaning assigned to such term in
Section 2.2.
Revolving Credit Maturity Date shall mean March 31, 2000.
Revolving Credit Note shall mean the replacement revolving Credit note
dated the Restatement Date, executed and delivered by the Debtors in
substantially the form of Exhibit B hereto, as such may be amended, modified or
restated from time to time.
RFI shall mean RFI Corporation, a Delaware corporation and a
wholly-owned subsidiary of Del.
RFI Real Property shall mean the real property located in Bay Shore,
Long Island, owned in fee simple by RFI and which is subject to the Mortgage,
the Subordinate Mortgage, and the Third Mortgage.
RFI Security Agreement shall mean the Modified and Restated Security
Agreement dated May 10, 1994, made by RFI as Grantor for the benefit of the
Bank, as such may be amended, modified or restated from time to time.
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Security Agreement shall mean each of the Del Security Agreement, the
RFI Security Agreement, the Dynarad Security Agreement, the Bertan Security
Agreement, the Del Medical Security Agreement, and the Gendex-DMI Security
Agreement.
Security Documents shall mean all of the Security Agreements, the
Mortgage, the Subordinate Mortgage, the Third Mortgage, the Subordination
Agreement, the assignment of key-man life insurance referred to in Section 5.3,
the Indemnification Agreement, and any other instrument or document given as
security for the Obligations, as such may be amended, modified or restated from
time to time.
Sight Letter of Credit shall mean any sight Letter of Credit issued by
the Bank at the request of the Debtors and for the account of the Debtors in
accordance with Section 2.14 hereof.
Solvent when used in respect to any person, means that:
1. The present fair saleable value of such person's assets is in excess
of the total amount of its liabilities (including contingent liabilities); and
2. Such person is able to pay its debts as they become due.
Standby Letter of Credit shall mean any standby Letter of Credit issued
by the Bank at the request of the Debtors and for the account of the Debtors in
accordance with Section 2.14 hereof.
Subordinate Mortgage shall mean the mortgage dated May 10, 1994 made by
RFI to the Bank in the principal amount of $1,257,358.00, recorded in the
Suffolk County Clerk's Office on June 2, 1994 in Liber 18827 of Mortgages at
page 154, as such may be amended, modified or restated from time to time.
Subordinated Debt shall mean the Debt evidenced by the Subordinated
Note.
Subordinated Note shall mean the note in the original principal amount
of $1,800,000.00, given by Del and/or Gendex-DMI to Dentsply as partial
consideration for the Gendex Acquisition, as such may be amended, modified or
restated from time to time with the consent of the Bank.
Subordination Agreement shall mean the subordination agreement in the
form of Exhibit XX hereto executed by the holder of the Subordinated Note.
Subsidiary shall mean, with respect to any person (the "parent"), any
corporation, association or other business entity of which securities or other
ownership interest representing more than 50% of the ordinary voting power are,
at the time as of which any determination is being made, owned or controlled by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
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Term Loan shall have the meaning assigned to such term in Section 2.1.
Term Loan Increased Amount shall mean $5,553,562.00.
Term Loan Maturity Date shall mean April 30, 2001.
Term Note shall mean the replacement term note dated the Restatement
Date executed and delivered by the Debtors, in substantially the form of Exhibit
A hereto, as such may be amended, modified or restated from time to time.
Termination Date shall mean the Revolving Credit Maturity Date, with
respect to Revolving Credit Loans, and the Term Loan Maturity Date, with respect
to the Term Loan.
Third Mortgage shall mean the subordinate mortgage dated the
Restatement Date made by RFI to the Bank in the principal sum of $500,000.00, in
substantially the form of Exhibit F, to be recorded in the Suffolk County
Clerk's Office, as such may be modified from time to time.
Total Liabilities shall mean with respect to any person, the total of
all items which would properly be included as liabilities on a balance sheet
prepared in accordance with generally accepted accounting principles, but not
including capital stock, additional paid in capital, capital surplus, treasury
stock, retained earnings, minority interest and contingency reserves.
Transactions shall have the meaning assigned such term in Section 3.2.
Variable Rate shall mean, for any day, the higher of (i) the Federal
Funds Rate, as published by the Federal Reserve Bank of New York one Business
Day in arrears, plus 1/2 of 1% and (ii) the Prime Rate.
Variable Rate Loan(s) shall mean any Loan, or portion thereof, when and
to the extent the interest rate for such Loan is determined in relation to the
Variable Rate.
Warrant shall mean the warrant issued to Chase Manhattan Investment
Holdings, Inc., dated as of May 10, 1994, as amended, modified or restated from
time to time, to purchase a number, specified in the Warrant, of common shares
of Del delivered as an Advisory Fee pursuant to Section 2.7.
Unless otherwise expressly provided herein, each accounting term used
herein shall have the meaning given it under generally accepted accounting
principles in effect from time to time in the United States applied on a basis
consistent with those used in preparing the financial statements referred to in
Section 5.5; provided, however, that each reference in Article VI hereof, or in
the definition of any term used in Article VI hereof, to generally accepted
accounting principles shall mean generally accepted accounting principles as in
effect on the date hereof.
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<PAGE>
II. THE LOANS
2.1 Term Loan. The Bank has heretofore made two term loans to the
Debtors, the aggregate outstanding principal balance of which is, as of the
Restatement Date, $4,446,438.00. Subject to the terms and conditions of this
Agreement, the Bank agrees to increase and combine the term loans to form one
term loan in the amount of $10,000,000 (the "Term Loan").
2.2 Revolving Credit Commitment. Subject to the terms and conditions
hereof, the Bank agrees to make Revolving Credit Loans (the "Revolving Credit
Loans") to the Debtors from time to time during the Revolving Credit Commitment
Period which in the aggregate of the principal amount thereof at any one time
outstanding shall not exceed an amount (the "Revolving Credit Loan Limit") which
is equal to the lesser of (i) FOURTEEN MILLION AND 00/100 ($14,000,000.00)
DOLLARS minus the amount of the Letter of Credit Obligations or (ii) the
Borrowing Base minus the amount of the Letter of Credit Obligations. The
determination of the Revolving Credit Loan Limit shall be made monthly based
upon the most recent Borrowing Base Certificate delivered to the Bank. Within
the foregoing limits, during the Revolving Credit Commitment Period, the Debtors
may use the Revolving Credit Commitment for obtaining Revolving Credit Loans by
borrowing, paying, repaying in whole or in part and re-borrowing on a revolving
basis, all in accordance with the terms and conditions hereof. The Debtors shall
have the right to reduce or terminate the amount of the unused Revolving Credit
Commitment at any time or from time to time, provided that: (a) the Debtors
shall have given notice of each such reduction or termination to the Bank as
provided in Section 2.15; and (b) each partial reduction shall be in an
aggregate amount at least equal to $100,000.00. The Revolving Credit Commitment
once reduced or terminated may not be reinstated.
2.3 Notes
(a) Term Loan. The Term Loan shall be evidenced by a
replacement promissory note of the Debtors substantially in the form of Exhibit
A hereto with appropriate insertions (the "Term Note") payable to the order of
the Bank and dated the Restatement Date. The principal amount of the Term Note
shall be payable in 20 consecutive quarterly installments, payable on the last
business day of each fiscal quarter of Del, commencing August 2, 1996 and
continuing thereafter until the entire unpaid principal balance of the Term
Note, together with all accrued and unpaid interest, shall be paid in full on
the Term Loan Maturity Date. The first through the eighth of the foregoing
payments of principal shall be in the amount of $375,000.00 each, the ninth
through twelfth such payments shall be in the amount of $500,000 each, and the
thirteenth through twentieth (final) such payments shall be in the amount of
$625,000 each. The Term Loan, or portions thereof, subject to limitations set
forth in Section 2.4(c) and Section 2.16 hereof, may be outstanding as Variable
Rate Loans or Eurodollar Loans.
(b) Revolving Credit Loans. The Revolving Credit Loans made
by the Bank pursuant to Section 2.2 hereof shall be evidenced by a promissory
note of the Debtors substantially in the form of Exhibit B hereto, dated the
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Restatement Date, with appropriate insertions (the "Revolving Credit Note"),
payable to the order of the Bank and representing the obligation of the Debtors
to pay the aggregate unpaid principal amount of all Revolving Credit Loans made
by the Bank, with interest thereron as hereinafter prescribed. The outstanding
principal balance of the Revolving Credit Note, together with all accrued and
unpaid interest thereon, shall be due and payable on the Revolving Credit
Maturity Date. Revolving Credit Loans may be outstanding as Variable Rate Loans
or Eurodollar Loans.
(c) Endorsement. The Bank is hereby authorized by the Debtors
to endorse on the schedule attached to each Note held by it the amount of each
Loan, the amount of such Loan, if any, to which a Eurodollar Rate applies, the
rate of interest if a Eurodollar Rate applies, and the period during which such
Eurodollar Rate applies and each payment of principal amount received by the
Bank on account of each Loan, which endorsement shall, in the absence of
manifest error, be conclusive as to the outstanding balance of the Loans made by
the Bank; provided, however, that the failure to make such notation with respect
to any Loan or payment shall not limit or otherwise affect the obligations of
the Debtors under this Agreement or the Notes held by the Bank.
2.4 Interest.
(a) Interest shall accrue on the outstanding and unpaid
principal amount of each Loan for the period from the Restatement Date to but
excluding the date such Loan is due at the following rates per annum: (i) for a
Variable Rate Loan, at a variable rate per annum equal to the Variable Rate plus
the applicable Margin, and (ii) for a Eurodollar Loan, at a fixed rate equal to
the Eurodollar Rate plus the applicable Margin. Interest shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed. After any
stated or accelerated maturity thereof, each Note shall bear interest (computed
daily on the basis of a 360-day year for actual days elapsed) at a rate of one
percent (1%) per annum in excess of the rate hereinbefore provided for. In no
event shall interest be payable at a rate which is in excess of the maximum rate
of interest permitted under applicable law.
(b) The interest rate on each Variable Rate Loan shall change
when the Variable Rate changes.
(c) Subject to the terms and conditions of this paragraph and
elsewhere in this Agreement, the Debtors may convert any Loan or portion thereof
to a Eurodollar Loan. In the case of each Eurodollar Loan, the Debtors shall
select an Interest Period of any duration in accordance with the definition of
Interest Period in Section 1.1, subject to the following limitations: (A) no
Interest Period may extend beyond the Termination Date; and (B) if an Interest
Period would end on a day which is not a Business Day, such Interest Period
shall be extended to the next Business Day, unless such Business Day would fall
in the next calendar month in which event such Interest Period shall end on the
immediately preceding Business Day. Eurodollar Loans shall not be available to
the Debtors at such times or in such amounts as would require prepayment of a
Eurodollar Loan in order to satisfy the amortization requirements set forth in
Exhibit A of the Term Note. No Eurodollar Loan (Eurodollar Loans having
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different Interest Periods at the same time hereunder being deemed separate
Eurodollar Loans) may be in an amount less than $250,000.00 (or the U.S. Dollar
equivalent). Upon notice to the Bank as provided in Section 2.15, the Debtors
may renew any Eurodollar Loan on the last day of the Interest Period therefor as
a Eurodollar Loan with an Interest Period of the same or different duration in
accordance with the limitations provided above. If the Debtors shall fail to
give notice to the Bank of such a renewal, such Eurodollar Loan shall
automatically become a Variable Rate Loan on the last day of the current
Interest Period.
(d) The Margin that shall apply to the Term Loan is set forth
below and is based on the Debtors' Consolidated Interest Expense Coverage Ratio
for the six-month period ending on the most recent Interest Measurement Date and
the Debtors' Leverage Ratio on the most recent Interest Measurement Date, as
reported in the applicable financial statement provided to the Bank pursuant to
Section 5.5 hereof:
<TABLE>
<CAPTION>
Criteria Variable Rate: Eurodollar
- ----------------------------------------------- Margin: Margin:
Leverage Ratio Interest Coverage Basis Points Basis Points
Ratio
- ----------------- ----------------- -------------- ------------
<S> <C> <C> <C> <C>
Greater than 1.50 and/or Less than 3.00 to 25 275
to 1.00 1.00
Equal to or less and Equal to or 0 250
than 1.50 to 1.00 greater than 3.00
to 1.00 but less
than 3.50 to 1.00
Equal to or less and Equal to or 0 200
than 1.25 to 1.00 greater than 3.50
to 1.00 but less
than 4.00 to 1.00
Equal to or less and Equal to or 0 175
than 1.00 to 1.00 greater than 4.00
to 1.00
</TABLE>
For each Variable Rate Loan, Variable Rate Margin adjustments resulting from
such calculations shall become effective on the day following the date on which
such calculations shall have been accepted by the Bank. For each Eurodollar
Loan, Eurodollar Margin adjustments resulting from such calculations shall
become effective as to Interest Periods that commence after the date that such
calculations shall have been accepted by the Bank and shall be fixed for the
entirety of such Interest Period.
(e) The Margin that shall apply to the Revolving Credit Loans
is set forth below and is based on the Debtors' Consolidated Interest Coverage
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<PAGE>
Ratio for the six-month period ending on the most recent Interest Measurement
Date and the Debtors' Leverage Ratio on the most recent Interest Measurement
Date, as reported in the applicable financial statement provided to the Bank
pursuant to Section 5.5 hereof:
<TABLE>
<CAPTION>
Criteria Variable Rate: Eurodollar
- ----------------------------------------------- Margin Margin:
Leverage Ratio Interest Coverage Basis Points Basis Points
Ratio
- ----------------- ----------------- -------------- ------------
<S> <C> <C> <C> <C>
Greater than 1.50 and/or Less than 3.00 to 0 250
to 1.00 1.00
Equal to or less and Equal to or 0 225
than 1.50 to 1.00 greater than 3.00
to 1.00 but less
than 3.50 to 1.00
Equal to or less and Equal to or 0 175
than 1.25 to 1.00 greater than 3.50
to 1.00 but less
than 4.00 to 1.00
Equal to or less and Equal to or 0 150
than 1.00 to 1.00 greater than 4.00
to 1.00
</TABLE>
For each Variable Rate Loan, Variable Rate Margin adjustments resulting from
such calculations shall become effective on the day following the date on which
such calculations shall have been accepted by the Bank. For each Eurodollar
Loan, Eurodollar Margin adjustments resulting from such calculations shall
become effective as to Interest Periods that commence after the date that such
calculations shall have been accepted by the Bank and shall be fixed for the
entirety of such Interest Period.
(f) Accrued interest shall be due and payable in arrears upon
any payment of principal or conversion and (i) for each Variable Rate Loan, on
the first day of each calendar month, commencing the first such date after such
Loan and (ii) for each Eurodollar Loan, on the last day of the Interest Period
with respect thereto and, in the case of an Interest Period greater than three
months, at three-month intervals after the first day of such Interest Period
provided that interest accruing after any stated or accelerated maturity of a
Note shall be due and payable from time to time on demand of the Bank.
2.5 Procedure for Revolving Credit Borrowing. The Debtors may borrow
under the Revolving Credit Commitment during the Revolving Credit Commitment
Period on any Business Day by giving the Bank written or facsimile notice of a
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<PAGE>
request for a Revolving Credit Loan hereunder setting forth the amount of the
Revolving Credit Loan requested and the date thereof. Except for borrowings
which exhaust the full remaining amount of the Revolving Credit Commitment and
except for Eurodollar Loans, each borrowing under the Revolving Credit
Commitment shall be in an amount at least equal to $100,000. Such notice shall
be sufficient if given within the time period set forth therefor in Section
2.15.
2.6 Commitment Fee. As additional compensation for the Revolving Credit
Commitment and Letter of Credit Facility provided for herein, the Debtors,
jointly and severally, agree to pay the Bank a Commitment Fee during the
Revolving Credit Commitment Period at a rate equal to one-quarter of one percent
(.25%) per annum of the average daily unused portion of the combined (i)
Revolving Credit Commitment, and, without duplication, (ii) the Letter of Credit
Facility. The Commitment Fee shall be payable quarterly in arrears on the last
day of each January, April, July, and October during the Revolving Credit
Commitment Period and at the time of the termination of the Revolving Credit
Commitment.
2.7 Advisory Fee. As compensation for the increase in the Term Loan
pursuant to Section 2.1, the Debtors, jointly and severally agree to deliver to
the Bank, or its designated nominee, as an Additional Advisory Fee (a) on the
Restatement Date, (i) the sum of $50,000, and (ii) an Additional Warrant, in
form suitable to the Bank, to purchase 17,000 shares of Del common stock at an
exercise price (the "Additional Warrant Exercise Price") equal to the lesser of
(X) the closing market price of Del common stock on the American Stock Exchange
(or closing sale price, or if no sale, final bid price, on the NASDAQ National
Market) on the Restatement Date or (Y) $7.00 per share, and (b) on or before
December 31, 1996, in the event that Del shall not have issued additional shares
of common stock between the Restatement Date and November 29, 1996, the sum of
$50,000. The Additional Warrant shall be exercisable during the period set forth
in the Additional Warrant Agreement.
2.8 Regulatory Changes; Additional Fees. If any change in any law or
regulation or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof, or compliance by
the Bank with any request or directive (whether or not having the force of law)
of any such authority, shall impose, modify, deem applicable or result in the
application of, any capital maintenance, capital ratio or similar requirement
against Loan commitments made by the Bank and the result thereof shall be to
impose upon the Bank or increase any capital requirement applicable as a result
of the making or maintenance of the Bank's Revolving Credit Commitment (which
imposition of or increase in capital requirements may be determined by the
Bank's reasonable allocation of the aggregate of such capital impositions or
increases) then, upon demand by the Bank, the Debtors, jointly and severally,
agree to immediately pay to the Bank from time to time as specified by the Bank
additional commitment fees which shall be sufficient to compensate the Bank for
such imposition of or increases in capital requirements from the date of such
change, together with interest on each such amount from the date demanded until
payment in full thereof at the rate provided in this Agreement with respect to
the Notes. Upon the occurrence of any event referred to above, a certificate
setting forth in reasonable detail the amounts necessary to compensate the Bank
as a result of an imposition of or increase in capital requirements submitted
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<PAGE>
by the Bank to the Debtors shall be conclusive, absent manifest error or bad
faith, as the amount thereof. For purposes of this Section 2.8, in calculating
the amount necessary to compensate the Bank for any imposition of or increase in
capital requirements, the Bank shall be deemed to be entitled to a rate of
return on capital (after federal, state and local taxes) of fifteen percent per
annum. Anything to the contrary in this Section 2.8 notwithstanding, the Debtors
shall have no liability to the Bank under this Section 2.8 with respect to any
demand made by the Bank following the payment of all the Debtors' Obligations to
the Bank under this Agreement.
2.9 Prepayment of Loans.
(a) Subject to the terms and conditions contained in this
Section 2.9 and elsewhere in this Agreement, the Debtors shall have the right to
prepay any Term Loan, at any time in whole or from time to time in part;
provided that (i) each optional partial prepayment, except for prepayments which
result in the prepayment of all outstanding principal of such Loan, shall be in
a principal amount of not less than One Hundred Thousand Dollars ($100,000.00)
and shall be applied to installments in inverse order of their maturities; (ii)
in the case of a Eurodollar Loan, payment or conversion may occur only on the
last day of an Interest Period for such Loan.
(b) If at any time the sum of (i) the Letter of Credit
Obligations plus (ii) the principal amount outstanding of the Revolving Credit
Loans exceeds the Borrowing Base, the Debtors shall forthwith (and in no event
later than two Business Days following such determination by the Bank upon
receipt of the Borrowing Base Certificate or otherwise), unless such requirement
shall be waived by the Bank upon written request therefor made by the Debtors,
prepay the Revolving Credit Loans as provided in (d) below in an amount which,
after giving effect to such prepayment, reduces the outstanding aggregate
principal balance of the Revolving Credit Loans to an amount which is equal to
or less than the difference between the Borrowing Base and the Letter of Credit
Obligations.
(c) The Debtors, prior to making a prepayment, whether
mandatory or otherwise, pursuant to paragraph (a) or (b) above, shall furnish to
the Bank, not later than 2:00 p.m. one Business Day prior to the date of such
prepayment, a written, facsimile or tested telex notice of prepayment which
shall specify the prepayment date and the principal amount of each Loan (or
portion thereof) to be prepaid, which shall be irrevocable and shall commit the
Debtors to prepay such Loan by the amount stated therein on the date stated
therein. All prepayments shall be accompanied by accrued interest on the
principal amount being prepaid to the date of prepayment. The amount of the Term
Loan prepaid may not be reborrowed.
(d) In the event that the Debtors prepay any Eurodollar Loan
in full or in part or convert a Eurodollar Loan to another type of Loan, whether
such prepayment or conversion be optional or mandatory, prior to the end of the
Interest Period applicable to such Loan, such prepayment or conversion shall be
accompanied by a payment to the Bank of any costs incurred by the Bank, which
payment shall include, without limitation, an amount equal to the excess, if
any, of (a) the aggregate amount of interest which otherwise would have accrued
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<PAGE>
on the principal amount so paid for the period from and including the date of
payment or conversion to but excluding the last day of such Interest Period at a
rate equal to the Eurodollar Rate plus the Eurodollar Margin over (b) the amount
of interest the Bank would pay (as determined by the Bank in good faith, such
determination to be conclusive) on a deposit placed with the Bank on the date of
such payment or conversion in an amount comparable to such principal amount and
with a maturity comparable to such period. The Bank, in its sole discretion, may
waive such Prepayment/Termination Fee in the event that the terminated portion
of the Term Loan is replaced with a new loan facility with the Bank.
2.10 Payments. All payments (including prepayments) to be made by the
Debtors on account of principal or interest with respect to any Loan or on
account of fees or any other obligations of the Debtors to the Bank hereunder
shall be made to the Bank at the office of the Bank set forth in this Agreement
or at such other place as the Bank may from time to time designate in writing in
lawful money of the United States of America in immediately available funds
without set-off or counterclaim. If any payment to be so made hereunder, or
under any of the Notes, becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day and,
with respect to payments of principal of any Loan, interest thereof shall be
payable at the then applicable rate during such extension.
2.11 Taxes.
(a) Any and all payments by the Debtors hereunder shall be
made, in accordance with Section 2.10, free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, in any such case imposed
by the United States or any political subdivision thereof (all such taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Debtors shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the Bank,
(x) the sum payable shall be increased by the amount necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.11), the Bank receives an amount equal to the
sum it would have received had no such deductions been made, (y) the Debtors
shall make such deductions, and (z) the Debtors shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Debtors, jointly and severally, agree to
pay any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement and related documents (hereinafter referred to as
"Other Taxes").
(c) The Debtors will, jointly and severally, indemnify the
Bank for the full amount of Taxes or Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed by any jurisdiction (except as specified in
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<PAGE>
clause (a)(i)) on amounts payable under this Section 2.11 paid by the Bank and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty days from the
date the Bank makes written demand therefor. If the Bank receives a refund in
respect of any Taxes or Other Taxes for which the Bank has received payment from
the Debtors hereunder, the Bank shall promptly notify the Debtors of such refund
and the Bank shall, within thirty days of receipt of a request by the Debtors,
repay such refund to the Debtors, provided that the Debtors, upon the request of
the Bank, agree to return such refund (plus any penalties, interest or other
charges) to the Bank in the event the Bank is required to repay such refund.
(d) Within thirty days after the date of any payment of Taxes
or Other Taxes withheld by the Debtors in respect of any payment to the Bank,
the Debtors will furnish to the Bank the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.11 shall
survive the payment in full of principal and interest hereunder.
2.12 Illegality. Notwithstanding any other provision in this Agreement,
if the adoption of any applicable law, rule or regulation, or any change therein
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for the Bank to (1) maintain its Revolving Credit Commitment, then
upon notice to the Debtors by the Bank the Revolving Credit Commitment of the
Bank shall terminate; or (2) maintain or fund its Loans, then upon notice to the
Debtors by the Bank the outstanding principal amount of the Loans, together with
interest accrued thereon, and any other amounts payable to the Bank under this
Agreement shall be repaid (a) immediately upon demand of the Bank if such change
or compliance with such request, in the judgment of the Bank, requires immediate
repayment; or (b) at the expiration of the last interest period to expire before
the effective date of any such change or request.
2.13 Increased Costs.
(a) The Debtors shall pay directly to the Bank from time to
time on demand such amounts as the Bank may determine to be necessary to
compensate it for any costs which the Bank determines are attributable to its
making or maintaining any Eurodollar Loans under this Agreement or its Note or
its obligation to make any such Loans hereunder, or any reduction in any amount
receivable by the Bank hereunder in respect of any such Loans or such obligation
(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change which: (i)
changes the basis of taxation of any amounts payable to the Bank under this
Agreement or the Note in respect of any of such Loans (other than taxes imposed
on the overall net income of the Bank or of its Lending Office for any of such
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<PAGE>
Loans by the jurisdiction in which the Bank has its principal office or such
Lending Office); or (ii) imposes or modifies any reserve, special deposit,
deposit insurance or assessment, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, the Bank (including any of such Loans or
any deposits referred to in the definition of "Eurodollar Rate" in Section 1.1);
or (iii) imposes any other condition affecting this Agreement or the Note (or
any of such extensions of credit or liabilities). The Bank will notify the
Debtors of any event occurring after the date of this Agreement which will
entitle the Bank to compensation pursuant to this Section 2.13(a) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. If the Bank requests compensation from the Debtors under this
Section 2.13(a), or under Section 2.13(c), the Debtors may, by notice to the
Bank, require that the Bank's Loans of the type with respect to which such
compensation is requested be converted in accordance with Section 2.16.
(b) Without limiting the effect of the foregoing provisions
of this Section 2.13, in the event that, by reason of any Regulatory Change, the
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of the Bank which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of the Bank which includes Eurodollar Loans
or (ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if the Bank so elects by notice
to the Debtors, the obligation of the Bank to make or renew, and to convert
Loans of any other type into, Loans of such type hereunder shall be suspended
until the date such Regulatory Change ceases to be in effect (and all Loans of
such type held by the Bank then outstanding shall be converted in accordance
with Section 2.16).
(c) Without limiting the effect of the foregoing provisions
of this Section 2.13 (but without duplication), the Debtors shall pay directly
to the Bank from time to time on request such amounts as the Bank may determine
to be necessary to compensate the Bank for any costs which it determines are
attributable to the maintenance by it or any of its affiliates pursuant to any
law or regulation of any jurisdiction or any interpretation, directive or
request (whether or not having the force of law and whether in effect on the
date of this Agreement or thereafter) of any court or governmental or monetary
authority of capital in respect of its Loans hereunder or its obligation to make
Loans hereunder (such compensation to include, without limitation, an amount
equal to any reduction in return on assets or equity of the Bank to a level
below that which it could have achieved but for such law, regulation,
interpretation, directive or request). The Bank will notify the Debtors if it is
entitled to compensation pursuant to this Section 2.13(c) as promptly as
practicable after it determines to request such compensation.
(d) The Debtors shall pay to the Bank, upon the request of
the Bank, such amount or amounts as shall be sufficient (in the reasonable
opinion of the Bank) to compensate it for any loss, cost or expense which the
Bank determines is attributable to any failure by the Debtors to borrow, convert
into or renew a Eurodollar Rate Loan to be made, converted into or renewed by
the Bank on the date specified therefor in the relevant notice under Section 2.4
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<PAGE>
or 2.15, as the case may be.
(e) Determinations and allocations by the Bank for purposes
of this Section 2.13 of the effect of any Regulatory Change pursuant to
subsections (a) or (b), or of the effect of capital maintained pursuant to
subsection (c), on its costs of making or maintaining Loans or its obligation to
make Loans, or on amounts receivable by, or the rate of return to, it in respect
of Loans or such obligation, and of the additional amounts required to
compensate the Bank under this Section 2.13, shall be conclusive, provided that
such determinations and allocations are made on a reasonable basis.
2.14 Letter of Credit.
2.14.1 Letter of Credit Facility. (a) During the Revolving
Credit Commitment Period, the Bank agrees, upon the terms and conditions set
forth in this Agreement, to issue at the request of the Debtors and for the
account of the Debtors, one or more Standby Letters of Credit and/or Sight
Letters of Credit which in the aggregate of the face amount thereof at any one
time outstanding shall not exceed the lesser of (a) the Borrowing Base less the
principal balance of all Revolving Credit Loans or (b) TWO MILLION AND 00/100
DOLLARS ($2,000,000.00) (the "Letter of Credit Facility"), provided that the
Bank shall not be under any obligation to issue, and shall not issue, any Letter
of Credit if (i) any order, judgment or decree of any government authority or
other regulatory body or arbitrator shall purport by its terms to enjoin or
restrain the Bank from issuing any such Letter of Credit, or any law or
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) from any governmental authority or other regulatory
body with jurisdiction over the Bank shall prohibit, or request that the Bank
refrain from the issuance of Letters of Credit generally or any such Letter of
Credit in particular or shall impose upon the Bank with respect to any such
Letter of Credit any restriction or reserve or capital requirement (for which
the Bank is not otherwise compensated) or any unreimbursed loss, cost or expense
which was not applicable, in effect or known to the Bank as of the date of this
Agreement and which the Bank in good faith deems material to it; or (ii) one or
more of the conditions to such issuance contained in Section 4.1 is not then
satisfied.
(b) In no event shall (i) the aggregate face amount of
Letter of Credit Obligations with respect to Letters of Credit at any time
exceed the lesser of (A) the Borrowing Base less the principal balance of all
Revolving Credit Loans or (B) $2,000,000; (ii) the expiration date of any Letter
of Credit, or the date for payment of any draft presented thereunder and
accepted by the Bank, be more than twelve months after the date of issuance
thereof or after the Revolving Credit Maturity Date; or (iii) the Bank issue any
Letter of Credit for the purpose of supporting the issuance of any Letter of
Credit by any other Person.
2.14.2 Procedure for Issuance. Prior to the issuance of each
Letter of Credit, and as a condition of such issuance, the Debtors shall deliver
to the Bank a Reimbursement Agreement, signed by the Debtors, and such other
documents or items as may be required pursuant to the terms hereof, and the
proposed form and content of such Letter of Credit shall be reasonably
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satisfactory to the Bank. Each Letter of Credit shall be issued no earlier than
two Business Days after delivery of the foregoing documents, which delivery may
be made by the Debtors to the Bank by telecopy, telex or other electronic means,
shall be in compliance with the requirements set forth in Section 2.14.1(b), and
shall specify therein (i) the stated amount of the Letter of Credit requested;
(ii) the effective date of issuance of such requested Letter of Credit, which
shall be a Business Day; (iii) the date on which such requested Letter of Credit
is to expire, which shall be a Business Day; and (iv) the Person for whose
benefit the requested Letter of Credit is to be issued. The delivery of the
foregoing documents and information shall constitute an "L/C Issuance Notice"
for purposes of this Agreement. Subject to the terms and conditions of this
Section 2.14 and provided that the applicable conditions set forth in Section
4.1 hereof have been satisfied, the Bank shall, on the requested date, issue a
Standby Letter of Credit or Sight Letter of Credit, as the case may be, on
behalf of the Debtors in accordance with the Bank's usual and customary business
practices.
2.14.3 Payment of Reimbursement Obligations. The Debtors agree
to pay to the Bank the amount of all Reimbursement Obligations owing under any
Letter of Credit immediately when due, under all circumstances, including,
without limitation, any of the following circumstances: (i) any lack of validity
or enforceability of this Agreement or any of the Credit Documents; (ii) the
existence of any claim, set-off, defense or other right which the Debtors may
have at any time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such transferee
may be acting), the Bank or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transaction between the Debtors
and the beneficiary named in any Letter of Credit); (iii) any draft, certificate
or any other document presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or (iv) the surrender or impairment
of any security for the performance or observance of any of the terms of any of
the Credit Documents. Notwithstanding any provisions to the contrary in any
Reimbursement Agreement, the Debtors agree to reimburse the Bank for amounts
which the Bank pays under any such Letter of Credit no later than the time
specified in such Reimbursement Agreement. If the Debtors do not pay any such
Reimbursement Obligation when due, the Debtors shall be deemed to have
immediately requested, and the Bank shall immediately be deemed to have made,
without necessity of further act or evidence, a Revolving Credit Loan under this
Agreement in a principal amount equal to such Reimbursement Obligation and
repayable upon demand, together with interest on the principal amount of such
Reimbursement Obligation remaining unpaid from time to time, payable on demand
and computed from the date on which such Reimbursement Obligation arose to the
date of repayment in full thereof at the rate per annum then applicable to
Revolving Credit Loans. Such Reimbursement Obligation shall thereupon be deemed
satisfied by the proceeds of, and replaced by, such Revolving Credit Loan.
2.14.4 Nature of the Bank's Obligations. (a) As between the
Debtors and the Bank, the Debtors assume all risks of the acts and omissions of,
or misuse of such Letters of Credit by, the respective beneficiaries of the
Letters of Credit. In furtherance and not in limitation of the foregoing, the
Bank shall not be responsible (i) for the form, validity, sufficiency, accuracy,
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genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of the Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of a Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any consequences arising
from causes beyond control of the Bank.
(b) In furtherance and extension and not in limitation
of the specific provisions hereinabove set forth, any action taken or omitted by
the Bank under or in connection with the Letters of Credit or any related
certificates, if taken or omitted in good faith, shall not put the Bank under
any resulting liability to the Debtors or relieve the Debtors of any of their
obligations hereunder to any such Person.
2.14.5 Standby Letter of Credit Fees. The Debtors hereby agree
to pay the Bank a standby letter of credit fee with respect to each outstanding
Standby Letter of Credit in an amount equal to one and one-half percent (1.5%)
per annum of the stated face amount of each such Standby Letter of Credit. Such
fees shall be calculated with respect to actual days elapsed and on the basis of
a 360-day year. The fees shall be payable quarterly in arrears during the
calendar year.
2.14.6 Sight Letter of Credit Fees. The Debtors hereby agree
to pay the Bank a sight letter of credit fee with respect to each Sight Letter
of Credit issued hereunder in an amount equal to one-quarter of one percent
(.25%) of the stated face amount of each such Sight Letter of Credit. Each such
fee shall be payable at the time of the drawdown on each such Sight Letter of
Credit.
2.15 Certain Notices. Notices by the Debtors to the Bank of each
borrowing, prepayment or conversion, and each renewal hereunder shall be
irrevocable and shall be effective only if received by the Bank not later than
2:00 p.m. (in the case of Variable Rate Loans) and 11:00 a.m. (in the case of
Eurodollar Loans), both New York City time, and in the case of borrowings and
prepayments of, conversions into and (in the case of Eurodollar Loans) renewals
of (i) Variable Rate Loans, given not later than 2:00 p.m. on the date of such
request; and (ii) Eurodollar Loans, given two Business Days prior thereto no
later than 11:00 a.m. on the date of such request, except that notice with
respect to Eurodollar Loans with Interest Periods of less than one month (when
made available by the Bank) shall be given three Business Days prior thereto.
Each such notice shall specify the Loans to be borrowed, prepaid, converted or
renewed and the amount and type of the Loans to be borrowed, or converted, or
prepaid or renewed (and, in the case of a conversion, the type of Loans to
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result from such conversion and, in the case of a Eurodollar Loan, the Interest
Period therefor) and the date of the borrowing or prepayment, or conversion or
renewal (which shall be a Business Day).
2.16 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if:
(a) the Bank determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the definition of "Eurodollar Rate" in Section 1.1 are not being provided
in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for any type of Eurodollar Loans as provided in
this Agreement; or
(b) the Bank shall determine (which determination shall be
conclusive) that the relevant rates of interest referred to in the definition of
"Eurodollar Rate" in Section 1.1 upon the basis of which the rate of interest
for any Eurodollar Loans is to be determined do not adequately cover the cost to
the Bank of making or maintaining such Loans;
then the Bank shall give the Debtors prompt notice thereof, and so long as such
condition remains in effect, the Bank shall be under no obligation to make or
renew Loans of such type or to convert Loans of any other type into Loans of
such type and the Debtors shall, on the last day(s) of the then current Interest
Period(s) for the outstanding Loans of the affected type, either prepay such
Loans or convert such Loans into another type of Loans in accordance with
Section 2.18.
2.17 Illegality-Eurodollar Loans. Notwithstanding any other provision
in this Agreement, in the event that it becomes unlawful for the Bank to (a)
honor its obligation to make or renew Eurodollar Loans hereunder or convert
Loans of any type into Eurodollar Loans, or (b) maintain Eurodollar Loans
hereunder, then the Bank shall promptly notify the Debtors thereof and the
Bank's obligation to make or renew Eurodollar Loans and to convert other types
of Loans into Eurodollar Loans hereunder shall be suspended until such time as
the Bank may again make, renew, or convert and maintain such affected Loans and
the Bank's outstanding Eurodollar Loans, as the case may be, shall be converted
in accordance with Section 2.18.
2.18 Certain Conversions Pursuant to Sections 2.13 and 2.17. If
Eurodollar Loans are to be converted pursuant to Section 2.13 or 2.17, the
Eurodollar Loans shall be automatically converted into Variable Rate Loans on
the last day(s) of the then current Interest Period(s) for such Eurodollar Loans
(or, in the case of a conversion required by Section 2.13(b) or 2.17, on such
earlier date as the Bank may specify to the Debtors and, unless and until the
Bank gives notice as provided below that the circumstances specified in Section
2.13 or 2.17 which gave rise to such conversion no longer exist:
(a) to the extent that the Bank's Eurodollar Loans have been
so converted, all payments and prepayments of principal which would otherwise be
applied to the Bank's Eurodollar Loans shall be applied instead to its Variable
Rate Loans; and
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(b) all Loans which would otherwise be made or renewed by the
Bank as Eurodollar Loans shall be made instead as Variable Rate Loans and all
Loans of the Bank which would otherwise be converted into Eurodollar Loans shall
be converted instead into (or shall remain as) Variable Rate Loans.
If the Bank gives notice to the Debtors that the circumstances
specified in Section 2.13 or 2.17 which gave rise to the conversion of the
Bank's Eurodollar Loans pursuant to this Section 2.18 no longer exist (which the
Bank agrees to do promptly upon such circumstances ceasing to exist) at a time
when Eurodollar Loans are still outstanding, the Bank's Variable Rate Loans
which had been converted from Eurodollar Loans pursuant to this Section 2.18
shall be automatically re-converted to Eurodollar Loans, on the first day(s) of
the next succeeding Interest Period(s) for such outstanding Eurodollar Loans.
2.19 Certain Compensation. The Debtors shall pay to the Bank, upon the
request of the Bank, such amount or amounts as shall be sufficient (in the
reasonable opinion of the Bank) to compensate it for any loss, cost or expense
which the Bank determines is attributable to any failure by the Debtors to
borrow, convert into or renew a Eurodollar Loan to be made, converted into or
renewed on the date specified therefor in the relevant notice pursuant to
Section 2.15. Without limiting the foregoing, such compensation shall include an
amount equal to the excess, if any, of: (i) the amount of interest which
otherwise would have accrued on the principal amount so paid, prepaid, converted
or renewed or not borrowed, converted or renewed for the period from and
including the date of such payment, prepayment or conversion or failure to
borrow, convert or renew to but excluding the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, convert
or renew, to but excluding the last day of the Interest Period for such Loan
which would have commenced on the date specified therefor in the relevant
notice) at the applicable rate of interest for such Loan provided for herein;
over (ii) the amount of interest (as reasonably determined by the Bank) the Bank
would have bid in the London interbank market for amounts comparable to such
principal amount and maturities comparable to such period. A determination of
the Bank as to the amounts payable pursuant to this Section 2.19 shall be
conclusive absent manifest error.
III. REPRESENTATIONS AND WARRANTIES
The Debtors, jointly and severally, represent and warrant to the Bank
that:
3.1 Organization, Corporate Power. Each of the Debtors is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has the requisite power and authority to own
its property and assets and to carry on its business as now conducted and is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not have a material
adverse effect on the business, assets, operations or financial condition of
such Debtor. Each of the Debtors has the corporate power to execute, deliver and
perform its obligations under this Agreement and the Security Documents, to
borrow hereunder and to execute and deliver the Notes.
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3.2 Authorization. The execution, delivery and performance by the
Debtors of this Agreement, the other Credit Documents, the Gendex Purchase
Agreement and the documents and transactions related thereto, the borrowings
hereunder by the Debtors, and the grant of security interests in Collateral
created by the Security Documents (collectively, the "Transactions") (a) have
been fully authorized by all requisite corporate and, if required, stockholder
action and (b) will not (i) violate (A) any provision of law, statute, rule or
regulation or the certificate or articles of incorporation or other constitutive
documents or the By-laws of any of the Debtors, (B) any order of any court, or
any rule, regulation or order of any other agency or government binding upon any
of the Debtors or (C) any provisions of any indenture, agreement or other
instrument to which any of the Debtors or their respective properties or assets
are or may be bound, (ii) be in conflict with, result in a breach of or
constitute (along or with notice or lapse of time or both) a default under any
indenture, agreement or other instrument referred to in (b)(i)(C) above or (iii)
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever (other than in favor of the Bank, as contemplated by this
Agreement and the Security Documents) upon any property or assets of the
Debtors.
3.3 Governmental Approvals. No registration or filing (other than the
filings necessary to perfect the liens and security interests created by the
Security Documents) with or consent or approval of, or other action by, any
Federal state or other governmental agency, authority or regulatory body is or
will be required in connection with the Transactions, other than any which have
been made or obtained.
3.4 Binding Effect. This Agreement and each of the other Credit
Documents constitutes legal, valid and binding obligations of the Debtors,
enforceable in accordance with their respective terms subject to the effect of
bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto and the application of equitable principles in any proceeding,
whether at law or in equity.
3.5 Litigation; Compliance with Laws; etc.
(a) There are not any actions, suits or proceedings at law or
in equity or by or before any governmental instrumentality or other agency or
regulatory authority now pending or, to the knowledge of any Responsible Officer
of the Debtors, threatened against or affecting any of the Debtors or the
businesses, assets or rights of any of the Debtors (i) which involve any of the
Transactions or (ii) as to which it is probable (within the meaning of Statement
of Financial Accounting Standards No. 5) that there will be an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, materially impair the ability of any of the Debtors to conduct
business substantially as now conducted, or materially and adversely affect the
businesses, assets, operations or financial condition of any of the Debtors, or
impair the validity or enforceability of or the ability of any of the Debtors to
perform their obligations under this Agreement or under any Credit Document.
(b) None of the Debtors is in violation of any law, or in
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default with respect to any judgment, writ, injunction, decree, rule or
regulations of any court or governmental agency or instrumentality, where such
violation or default would have a material adverse effect on the businesses,
assets, operations or financial condition of such Debtor.
3.6 Financial Statements.
(a) The Debtors have heretofore furnished to the Bank true
and accurate copies of (i) Del's Annual Reports on Form 10-K for the fiscal
years ended July 29, 1994 and July 28, 1995 containing balance sheets and
statements of income and cash flows for Del and its then Consolidated
Subsidiaries as of and for the fiscal years then ended, audited by and
accompanied by the opinion of independent public accountants; (ii) Del's
Quarterly Report on Form 10-Q for the fiscal quarter ended October 28, 1995
("Del Balance Sheet Date") containing an unaudited balance sheet and statement
of income and cash flow for Del and its then Consolidated Subsidiaries as of and
for the fiscal quarter then ended; (iii) the certified financial statements of
Gendex for the year ended December 31, 1994 and the year ended December 31,
1995. All of such balance sheets and statements of income and cash flow of Del
present fairly the financial condition and results of operations of the Debtors
as of the dates and for the periods indicated. Such balance sheets and the notes
thereto disclose all material liabilities, direct or contingent, of the Debtors
as of the dates thereof. The financial statements referred to in this Section
3.6 have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis.
(b) After giving effect to the Transactions, the present fair
saleable value of each Debtors' assets will exceed its liabilities.
(c) There has been no material adverse change in the
business, operations, assets or financial or other condition of business of Del
and its Consolidated Subsidiaries since the date of the Del Balance Sheet Date
and no material adverse change in the aggregate value of machinery, equipment
and real property used in the business of any of the Debtors. Except as
permitted by Section 6.5 and Section 6.7(a)(iv), no cash dividends or other
distributions have been declared, paid or made upon any shares of capital stock
of Del or any of its Consolidated Subsidiaries since the Del Balance Sheet Date,
nor have any shares of capital stock of Del or any of its Consolidated
Subsidiaries since the Del Balance Sheet Date, been redeemed, retired, purchased
or otherwise acquired for value by Del or any of its Consolidated Subsidiaries.
3.7 Federal Reserve Regulations.
(a) None of the Debtors is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to others
for the purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose, or (ii) for any purpose which entails a
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violation of, or which is inconsistent with, the provisions of the Regulations
of the Board, including, without limitations, Regulations G, T, U or X thereof.
If requested by the Bank, the Debtors shall furnish to the Bank a statement on
Federal Reserve Form U-1 referred to in said Regulation U.
3.8 Taxes. Each of the Debtors has filed or caused to be filed all
Federal, state, local and foreign tax returns which are required to be filed by
it, on or prior to the date hereof, other than tax returns in respect of taxes
that (i) are not franchises or income taxes, (ii) in the aggregate are not
material and (iii) would not, if unpaid, result in the imposition of any Lien on
any property or assets of such Debtor. Each Debtor has paid or caused to be paid
all taxes shown to be due and payable on such filed returns or on any
assessments received by it, other than (i) any taxes or assessments the validity
of which such Debtor is contesting in good faith by appropriate proceedings, and
with respect to which the Debtor shall to the extent required by generally
accepted accounting principles applied on a consistent basis, have set aside on
its books adequate reserves and (ii) taxes other than income or franchise taxes
that in the aggregate are not material and which would not, if unpaid, result in
the imposition of any Lien on any property or assets of such Debtor. No Debtor
has as of the date hereof requested or been granted any extension of time to
file and Federal, state, local or foreign tax return.
3.9 Employee Benefit Plans. Each of the Debtors is in compliance in all
material respects with those provisions of ERISA and the regulations and public
interpretations thereunder which are applicable to it. As of the date hereof, no
Reportable Event has occurred with respect to any plan, and no material unfunded
vested or unvested liabilities exist under the Plan. Each Debtor's potential
liability for withdrawal from all union plans to which it contributes does not
exceed $-0-. No Debtor has incurred any accumulated funding deficiencies with
respect to any Plan or any "withdrawal of liability" as defined under Part 1 of
Subtitle E of Title IV of ERISA to any Multiemployer Plan.
3.10 Accuracy and Completeness of Information. All information,
reports, financial statements, exhibits or schedules furnished by or on behalf
of the Debtors to the Bank in connection with any of the Transactions or this
Agreement or the other Credit Documents were, at the time so furnished, and are,
complete and correct in all material respects to the extent necessary to give
the Bank a complete and accurate knowledge of the subject matter, except to the
extent that any such information, report, financial statement, exhibit or
schedule has been superseded or corrected in any information, reports, financial
statements, exhibits or schedules furnished by or on behalf of the Debtors to
the Bank prior to the date of this Agreement. The representations and warranties
contained in this Agreement and in the other Credit Documents shall not be
affected or deemed waived by reason of the fact that the Bank knew or should
have known that any such representation or warranty is or might be inaccurate in
any respect.
3.11 Investment Company Act; Public Utility Holding Company Act. None
of the Debtors is an "investment company" as defined in, or is otherwise subject
to regulation under, the Investment Company Act of 1940. None of the Debtors is
a "holding company" as that term is defined in, or is otherwise subject to
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regulation under, the Public Utility Holding Company Act of 1935.
3.12 Security Interest. Each of the Security Documents creates and
grants to the Bank a legal, valid and perfected security interest in the
Collateral identified therein. Such Collateral or property is not subject to any
other lien or security interest whatsoever, except Liens permitted by Section
6.1.
3.13 Use of Proceeds. The proceeds of the Revolving Credit Loans shall
be used only for working capital; the proceeds of the Term Loan Increased Amount
shall be used only for costs associated with the Gendex Acquisition pursuant to
the terms of a contract which is in all material respects similar to the draft
submitted to and reviewed by the Bank prior to the Restatement Date.
3.14 Subsidiaries. As of the Restatement Date, no Debtor has any
subsidiaries, except that Del owns all of the outstanding capital stock of RFI,
Dynarad, Bertan High Voltage, Del Medical, and Gendex-DMI free and clear of all
Liens. All such shares of the capital stock of RFI, Dynarad, Bertan High
Voltage, Del Medical, and Gendex-DMI have been duly authorized and validly
issued and are fully paid and non-assessable.
3.15 Title to Properties; Possession Under Leases; Trademarks.
(a) Each Debtor has good and marketable title to, or a valid
leasehold interest in all of its properties and assets shown on the most recent
balance sheet referred to in Section 3.6(a), and each Debtor has good and
marketable title to, or a valid leasehold interest in all properties and assets
acquired since the date of such balance sheet except for such properties and
assets as are no longer used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of business and except for minor
defects in title that do not interfere with the ability of such Debtor to
conduct its business as now conducted. All such properties and assets are free
and clear of all Liens other than those permitted by Section 6.1.
(b) Each Debtor has complied with all obligations under all
leases to which it is a party and under which it is in occupancy, and all such
leases are in full force and effect. Each Debtor enjoys peaceful and undisturbed
possession under all such leases.
(c) Each Debtor owns or controls all trademarks, trademark
rights, trade names, trade name rights, copyrights, patents, patent rights and
licenses which are necessary for the conduct of its business. To the best
knowledge of each Debtor, it is not infringing upon or otherwise acting
adversely to any trademarks, trademark rights, trade names, trade name rights,
copyrights, patent rights or licenses owned by any other person or persons.
There is no claim or action by any such other person pending, or to the
knowledge of each Debtor threatened, against it with respect to any of the
rights of property referred to in this Section 3.15(c).
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3.16 Solvency.
(a) On the Restatement Date, the fair saleable value of the
assets of each of the Debtors will exceed the amount that will be required to be
paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of each such Debtor, as they mature.
(b) On the Restatement Date, the assets of each of the
Debtors will not constitute unreasonably small capital for each such Debtor to
carry out its business as now conducted and as proposed to be conducted
including the capital needs of each such Debtor, taking into account the
particular capital requirements of the businesses conducted by each such Debtor,
and projected capital requirements and capital availability thereof.
(c) No Debtor intends to incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be received by each such Debtor, and of amounts to be payable on or in
respect of the debt of each such Debtor). The cash flow of each of the Debtors,
after taking into account all anticipated uses of the cash of each such Debtor,
will at all times be sufficient to pay all such amounts on or in respect of debt
of each such Debtor when such amounts are required to be paid.
(d) No Debtor believes that final judgments against it in
actions for money damages presently pending will be rendered at a time when, or
in an amount such that, it will be unable to satisfy any such judgments promptly
in accordance with their terms (taking into account the maximum reasonable
amount of such judgments in any such actions and the earliest reasonable time at
which such judgments might be rendered). The cash flow of each of the Debtors,
after taking into account all other anticipated uses of its cash (including the
payments on or in respect of debt referred to in paragraph (c) of this Section),
will at all times be sufficient to pay all such judgments promptly in accordance
with their terms.
3.17 Affiliates; Other Names. Exhibit D hereto states the correct name
of each of the Affiliates of the Debtors, its jurisdiction of incorporation and
the nature of the affiliation. Exhibit D also sets forth a list of each name
under which each Debtor has conducted or intends to conduct its businesses.
3.18 Restrictions of Debtors. No Debtor is a party to or bound by any
contract or agreement, or is subject to any charter or other corporate
restrictions, which materially and adversely affects its business as now
conducted or to be conducted after the Restatement Date. No Debtor is a party to
or bound by any contract or agreement, other than this Agreement, which
restricts its right or ability to incur Indebtedness. No Debtor has agreed or
consented to cause or permit (upon the happening of any contingency or
otherwise) any of its property or assets, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 6.1 hereof.
3.19 Gendex Purchase Agreement. (i) The execution, delivery and
performance by Del and Gendex-DMI of the Gendex Purchase Agreement and the
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documents and instruments executed in connection therewith, have been authorized
by all necessary action on the part of Del and Gendex-DMI, (ii) the Gendex
Purchase Agreement constitutes the valid and binding obligation of Del and
Gendex-DMI enforceable in accordance with its terms and is in full force and
effect without default or waiver of any of the conditions thereunder, and (iii)
there are no governmental consents, filings, approvals, or notices required to
be made or obtained in connection with the execution, delivery and performance
of the Gendex Purchase Agreement by Del and Gendex-DMI except as such have been
duly obtained, made or delivered.
3.20 Labor Matters. None of the Debtors has experienced any strike,
labor dispute, slowdown or work stoppage due to labor disagreements and, to the
best of knowledge of the Debtors, no such strike, dispute, slowdown or work
stoppage against any Debtor has been threatened or is anticipated.
3.21 Dentsply/Gendex Representations. The Bank acknowledges that
simultanously with the execution of this Agreement, Gendex-DMI shall acquire
certain assets of Dentsply pursuant to the Gendex Purchase Agreement (and that
prior to the consummation of such agreement, Gendex-DMI shall have no assets or
liabilities of its own), and that the representations and warranties made in
this Agreement with respect to Dentsply or Dentsply's assets and liabilities and
Gendex and Gendex's assets and liabilities by Del and Gendex-DMI are not based
upon the personal knowledge of Del or of Gendex-DMI. The Bank further
acknowledges that should any such representations and warranties with respect to
Dentsply or Gendex be untrue or inaccurate as of the date hereof, such
representations and warranties were not made with the intention to mislead or
defraud the Bank. Del or Gendex-DMI shall immediately inform the Bank of any
untrue or inaccurate representations and warranties, if any, as soon as same
shall come to its attention.
IV. CONDITIONS OF CREDIT EVENTS
The obligation of the Bank to make a Loan on the occasion of each
Credit Event shall be subject to the satisfaction of the following conditions:
4.1 All Credit Events. On each date on which a Credit Event is to
occur:
(a) The Bank shall have received a notice of borrowing as
required by Section 2.5.
(b) The representations and warranties set forth in this
Agreement and in any documents delivered herewith, including, without
limitation, the Security Documents, shall be true and correct with the same
effect as though made on and as of such date (except insofar as such
representations and warranties relate expressly to an earlier date).
(c) Each of the Debtors shall be in compliance with all the
terms and provisions contained herein on its part to be observed or performed,
and at the time of and immediately after such borrowing no Event of Default or
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event which with notice or lapse of time or both would constitute an Event of
Default shall have occurred and be continuing.
(d) The Bank shall have received certificates signed by a
Responsible Officer of each Debtor as to the compliance with (b) and (c) above.
4.2 First Borrowing under this Agreement. The obligations of the Bank
to enter into this Agreement and to make or provide any Credit Facility to any
of the Debtors are subject to the satisfaction of the following additional
conditions on or before the Restatement Date:
(a) The Bank shall have received the favorable written
opinion of Tashlik, Kreutzer & Goldwyn P.C., counsel for the Debtors, with
respect to this Agreement, the Gendex Acquisition, and the Additional Warrants,
which opinion shall be substantially in the form of Exhibits L-1 and L-2 hereto,
dated the Restatement Date, addressed to and satisfactory to the Bank.
(b) The Bank shall have received (i) copies of the
certificate or articles of incorporation, as amended, of each of the Debtors,
certified as of a recent date by the Secretary of State or other appropriate
official of the state of its incorporation, and a certificate as to the good
standing of each of the Debtors from such Secretary of State or other official,
in each case dated as of a recent date; (ii) a certificate of the Secretary of
each of the Debtors, dated the Restatement Date and certifying (A) that attached
thereto is a true and complete copy of its Bylaws as in effect on the date of
such certificate and at all times since a date prior to the date of the
resolution described in item (B) below, (B) that attached thereto is a true and
complete copy of a resolution adopted by its Board of Directors authorizing the
execution, delivery and performance of this Agreement and the other Credit
Documents to which it is a party and the borrowings hereunder, and that such
resolution has not been modified, rescinded or amended and is in full force and
effect, (C) that its certificate or articles of incorporation has not been
amended since the date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to (i) above, and (D) as to the incumbency and
specimen signature of each of its officers executing this Agreement, the Notes
and the Security Documents or any other document delivered in connection
herewith or therewith; (iii) a certificate of another of its officers as to
incumbency and signature of its Secretary; and (iv) such other documents as the
Bank may reasonably request.
(c) The Bank shall have received certificates dated the
Restatement Date and signed by a Financial Officer of each of the Debtors,
confirming compliance with the conditions precedent set forth in paragraphs (b)
and (c) of Section 4.1 and the conditions set forth in this Section 4.2.
(d) The Bank shall have received the Replacement Term Note
and the Replacement Revolving Credit Note duly executed by the Debtors payable
to its order and otherwise complying with the provisions of Section 2.
(e) The Bank shall have received each Security Agreement duly
executed by its respective Grantor.
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(f) The Bank shall have received the Third Mortgage duly
executed for recording by RFI, along with all other documents required in order
to record the Third Mortgage.
(g) The Bank shall have received a title policy issued by a
title company acceptable to the Bank insuring the Third Mortgage as a third
mortgage on the RFI Property subordinate only to the Mortgage and the
Subordinate Mortgage and containing no exceptions other than those approved by
the Bank.
(h) The Bank shall have received the Modification and
Reaffirmation of Indemnification.
(i) The Bank shall have received the Affirmation of Modified
and Restated Non-Competition Undertaking duly executed by Leonard A. Trugman.
(j) The Bank shall have received the results of a search of
the Uniform Commercial Code filings made with respect to each Debtor in the
jurisdictions in which Uniform Commercial Code filings have been made against
the Debtors, satisfactory to the Bank, listing all effective financing
statements which name as debtor any of the Debtors, together with copies of such
financing statements, and accompanied by a certificate signed by a Responsible
Officer of each of the Debtors, satisfactory to the Bank, stating that each lien
indicated in any such financing statement is permitted under Section 6.1.
(k) Each document (including, without limitation, each
Uniform Commercial Code financing statement), required by law or reasonably
requested by the Bank to be filed, registered or recorded in order to create in
favor of the Bank a perfected first security interest in the Collateral shall
have been properly filed, registered or recorded in each jurisdiction in which
the filing, registration or recordation thereof is so required or requested (or,
if not so filed, registered or recorded, then properly executed and otherwise
ready for such filing, registration or recordation).
(l) The Bank shall have received in form and substance
satisfactory to it evidence of insurance required by the terms of Section 5.3
hereof.
(m) The Bank shall have had the opportunity, if it so
chooses, to examine the books of account and other records and files of the
Debtors and to make copies thereof, and the results of such examination shall
have been satisfactory to the Bank in all respects.
(n) The Bank shall have received evidence in form and
substance satisfactory to it that after giving effect to the Transactions and
consummation of the Gendex Purchase Agreement, the Consolidated Tangible Net
Worth of the Debtors is at least $15,400,000.
(o) The Bank shall have received a copy of the final executed
Gendex Purchase Agreement, which shall be, in all material respects, similar to
the draft submitted to and reviewed by the Bank prior to the Restatement Date.
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(p) The Bank shall have received the certified 1994 and 1995
financial statements for Gendex (within five Business Days following the closing
of the Gendex Acquisition).
(q) The Bank shall have received evidence, in form and
substance satisfactory to it, that the assets acquired in the Gendex Acquisition
are free and clear of all Liens (or become free and clear of all Liens upon
Gendex-DMI's acquisition of such assets).
(r) The Bank shall have received a certificate of a duly
authorized officer of each of Del and Gendex-DMI stating that the Gendex
Acquisition does not result in the assumption by any of the Debtors or any of
their Subsidiaries or the imputation to any of the Debtors or their Subsidiaries
of any liabilities or obligations of Dentsply or Gendex other than those
approved by the Bank in writing.
(s) The Bank shall have received the results of an inbound
audit at Gendex of accounts receivable, inventory and backlog, satisfactory to
the Bank and performed by independent third party auditors acceptable to the
Bank.
(t) The Bank shall have received appraisals satisfactory to
the Bank of all fixed assets being acquired in the Gendex Acquisition.
(u) The Bank shall have received a pro forma balance sheet of
the Debtors giving effect to the consummation of the Gendex Acquisition prepared
by Del.
(v) The Bank shall have received a copy of the Subordinated
Note and all agreements relating thereto to which any of the Debtors is a party.
(w) The Bank shall have received the Subordination Agreement,
duly executed by the holder of the Subordinated Note.
(x) The Bank shall have received such other documents as the
Bank and its counsel shall reasonably deem necessary.
(y) In the judgment of the Bank, no material adverse change
shall have occurred in the financial conditions of the Debtors and no other
material adverse change shall have occurred in the assets, properties,
businesses, operations, prospects or condition of the Debtors.
(z) The Debtors shall have paid (or, where applicable,
reimbursed the Bank for) all reasonable out of pocket costs and expenses,
including, without limitation, reasonable legal fees and expenses of the Bank's
counsel, McCarthy, Fingar, Donovan, Drazen & Smith, printing, reproduction,
document delivery, communication, account receivable, inventory and backlog
audit at Gendex, appraisal costs, costs of title insurance, mortgage recording
tax, and search, filing and recording fees, incurred in connection with the
preparation, review, negotiations, execution and delivery of this Agreement, the
documents in connection herewith, and the offer letter preliminary hereto.
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(aa) There shall be no default under any of the Credit
Documents executed prior to the Restatement Date.
V. AFFIRMATIVE COVENANTS
The Debtors, jointly and severally, covenant and agree with the Bank
that, so long as this Agreement shall remain in effect, or the principal of or
interest on any Note, any Commitment Fee or any other fee, expense or amount
payable hereunder shall be unpaid, unless the Bank shall otherwise consent in
writing:
5.1 Corporate Existence. Each Debtor will do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence.
5.2 Business and Properties. Each Debtor will at all times do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect the rights, licenses, permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business; maintain and
operate such business in the same general manner in which it is presently
conducted and operated; comply in all material respects with all laws, rules,
regulations and governmental orders (whether Federal, state or local) applicable
to the operation of such business whether now in effect or hereafter enacted and
with any and all other applicable laws, rules, regulations and governmental
orders the lack of compliance with which may have a material adverse effect on
its business, assets, operations or financial condition, or in its ability to
perform its obligations under this Agreement or on the ability of any Grantor to
perform its obligations under any of the Security Documents to which it is a
party; take all action which may be required to obtain, preserve, renew and
extend all licenses, permits, franchises and other authorizations which are
material to the operation of such business; and at all times maintain, preserve
and protect all property material to the conduct of such businesses and keep
such property in good repair, working order and condition and from time to time
make, or cause to be made, all needful and proper repairs, renovations,
additions, improvements, and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times.
5.3 Insurance.
Each Debtor will (a) keep its insurable properties adequately
insured at all times by financially sound and reputable insurers, (b) maintain
such other insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with companies
similarly situated and in the same or similar businesses, (c) maintain in full
force and effect public liability insurance against claims for personal injury
or death or property damage occurring upon, in, about or in connection with the
use of any properties owned, occupied or controlled by such Debtor, in such
amount as it shall reasonably deem necessary, and (d) maintain such other
insurance as may be required by law or as may be reasonably requested by the
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Bank for purposes of assuring compliance with this Section 5.3. All insurance
covering inventory subject to a Lien in favor of the Bank granted pursuant to
the Security Documents shall provide that, in the case of each separate loss of
inventory, the full amount of insurance proceeds payable with respect to such
lost inventory shall be payable to the Bank. The receipt by the Bank of such
insurance proceeds shall be deemed to be a prepayment by the Debtors of the
Revolving Credit Loans pursuant to the provisions of Section 2.9(b) hereof. The
Bank shall notify the Debtors of the receipt of such insurance proceeds.
In the event that the Debtors suffer any damage or loss to
tangible personal property (other than inventory) which is covered by the
insurance required herein, and said combined loss is equal to or less than SEVEN
HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($750,000.00), then if no default
shall have occurred and be continuing under the Credit Documents, the full
amount of such insurance proceeds shall be payable to the Debtors and the
Debtors shall utilize such insurance proceeds to restore, repair or replace said
damaged or lost tangible personal property.
In the event that the Debtors suffer any damage or loss to
tangible personal property (other than inventory) which is covered by the
insurance required herein, and said combined loss is in excess of SEVEN HUNDRED
FIFTY THOUSAND AND 00/100 DOLLARS ($750,000.00), then if no default shall have
occurred and be continuing under the Credit Documents, a portion of such
insurance proceeds equal to $750,000 shall be payable to the Debtors and the
Debtors shall utilize such insurance proceeds to restore, repair or replace said
damaged or lost tangible personal property.
The remaining insurance proceeds shall be payable to the
Bank, and the Debtors shall be permitted by the Bank to utilize such remaining
insurance proceeds to restore, repair or replace said damaged or lost tangible
personal property in accordance with the following procedures and conditions:
(i) prior to the commencement of the restoration, repair or replacement
(hereinafter referred to as the "Restoration"), the plans and specifications
submitted by the Debtors to the Bank with respect to the Restoration shall have
been approved by the Bank, such approval not to be unreasonably withheld; (ii)
at the time of any disbursement of insurance proceeds (hereinafter referred to
as the "Restoration Funds"), no default shall have occurred and be continuing
under any of the Credit Documents; (iii) disbursements shall be made from time
to time in an amount not exceeding the cost of the work completed since the last
disbursement upon receipt of satisfactory evidence of the stage of completion
and of performance of the work in a good and workmanlike manner in accordance
with the contracts, plans and specifications; (iv) the Bank shall, at all times,
be satisfied that the remaining insurance proceeds together with the aggregate
amount of all available credit lines of the Debtors are sufficient to complete
the Restoration as contemplated by the plans and specifications prepared
therefor; and (v) any Restoration Funds remaining after the application thereof
in accordance with the provisions hereof shall be retained by the Bank as a
prepayment of a portion of the Term Loan. Insurance proceeds disbursed to the
Debtors in accordance with this paragraph shall not be deemed to be a borrowing
of funds.
All such insurance shall further provide for at least 30
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days' prior written notice to the Bank of the cancellation or material
modification thereof.
5.4 Taxes. Each Debtor will pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to liens or charges
upon such properties or any part thereof.
5.5 Financial Statements, Reports, etc. The Debtors will furnish to the
Bank:
(a) as soon as practicable, and in any event within 90 days
(or 105 days if the Debtors shall have duly filed for appropriate extensions
with the Securities and Exchange Commission and shall have provided the Bank
with a copy thereof) after the end of each fiscal year of the Debtors
Consolidated and consolidating balance sheets and Consolidated and consolidating
income statements of the Debtors showing the financial condition of the Debtors
as of the close of such fiscal year and the results of operations during such
year, a Consolidated and consolidating statement of shareholders' equity and a
Consolidated and consolidating statement of cash flows (or its then equivalent),
as of the close of such fiscal year, all the foregoing financial statements to
be prepared in accordance with generally accepted accounting principles
consistently applied and audited by Deloitte and Touche or such other
independent public accountants acceptable to the Bank (which report shall not
contain any qualification) and to be in form reasonably acceptable to the Bank,
except that the consolidating financial statements of the Debtors may be
prepared by management in accordance with generally accepted accounting
principles consistently applied;
(b) as soon as practicable, and in any event within 45 days
(or 50 days if the Debtors shall have duly filed for appropriate extensions with
the Securities and Exchange Commission and shall have provided the Bank with a
copy thereof) after the end of each fiscal quarter, (i) Consolidated and
consolidating balance sheets and Consolidated and consolidating income
statements showing the financial condition at the end of such quarter and
results of operation of the Debtors for the period then ended certified by a
Financial Officer of each of the Debtors as presenting fairly the financial
position and results of operations of the Debtors and as having been prepared in
accordance with generally accepted accounting principles consistently applied,
in each case subject to normal year-end audit adjustments, and (ii) a report for
each of the Debtors listing, by account debtor, such Debtor's Accounts
Receivable (including the name, address, balance due and aging (30-day, 60-day
and 90-day, etc.) of all Accounts Receivable and the basis for the determination
of Eligible Accounts;
(c) as soon as practicable, and in any event within 20 days
after the end of each month, a borrowing base certificate ("Borrowing Base
Certificate") in the form annexed hereto as Exhibit E for the fiscal month of
the Debtors just ended, together with an aging summary of all Accounts
Receivable;
(d) promptly after the same become publicly available, copies
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of such registration statements, annual, periodic and other reports, and such
proxy statements and other information, if any, as shall be filed by the Debtors
with the Securities and Exchange Commission pursuant to the requirements of the
Securities Act of 1933 or the Securities Exchange Act of 1934;
(e) concurrently with any delivery under (a), (b) or (c)
above, certificates of a Financial Officer of each of the Debtors demonstrating
compliance, as of the dates of the financial statements being furnished at such
time, with the covenants set forth in Article VI hereof;
(f) concurrently with any delivery under (a) or (b) above,
certificates of a Financial Officer of each of the Debtors certifying that to
the best of his or her knowledge no Event of Default or event which with the
giving of notice or lapse of time or both would constitute such an Event of
Default has occurred and, if such an Event of Default or event has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto;
(g) such other information as the Bank may reasonably
request.
5.6 Litigation and Other Notices. Give the Bank prompt written notice
of the following:
(a) the issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of the Loans, or invalidating, or
having the effect of invalidating, any provision of this Agreement or the
Security Documents, or the initiation of any litigation or similar proceeding
seeking any such injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or
proceeding against any of the Debtors, whether at law or in equity or by or
before any court of any Federal, state, municipal or other governmental agency
or authority, (i) which is brought by or on behalf of any governmental agency or
authority, or in which injunctive or other equitable relief is sought or (ii) as
to which there is a reasonable possibility that there will be an adverse
determination and which, if adversely determined, would (A) reasonably be
expected to result in liability of any of the Debtors in an amount of $250,000
or more, not reimbursable by insurance, or (B) impair the right of any of the
Debtors to perform its obligations under this Agreement, or any of the other
Credit Documents to which it is a party;
(c) the rendering of a judgment or judgments against any of
the Debtors by a court or other tribunal for the payment of money exceeding,
either individually or in the aggregate, $250,000 (such notice to be delivered
to the Bank within 15 days following the rendering of any such judgment);
(d) any Event of Default or event or condition which, with
the giving of notice or lapse of time or both, would constitute an Event of
Default, specifying the nature and extent thereof and the action (if any) which
is proposed to be taken with respect thereto;
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(e) any default with respect to any contractual obligation or
any other development in the business or affairs of any of the Debtors, which
has resulted in or which there is a reasonable possibility to result in a
material adverse change in the business, assets, operations or financial
condition of any of the Debtors.
5.7 Compliance with Laws. Comply, except where failure so to comply
would not have a material adverse effect on the business, assets, operations, or
financial condition of any of the Debtors, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA).
5.8 ERISA. Furnish to the Bank, (i) promptly, and in any event within
ten days after any Responsible Officer of any of the Debtors knows or has reason
to know that there has occurred any Reportable Event with respect to any Plan, a
statement of a Responsible Officer of such Debtor, setting forth details as to
such Reportable Event and the action which such Debtor proposes to take with
respect thereto, together with a copy of the notice of such Reportable Event
given to the PBGC if any notice is required to be given to the PBGC, (ii)
promptly, and in any event within two Business Days after receipt thereof, a
copy of any notice any of the Debtors may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans, or to appoint a trustee to
administer any Plan or Plans, and (iii) promptly, and in any event within five
Business Days after receipt by any Debtor of a notice of complete or partial
withdrawal liability from the sponsor of a Multiemployer Plan, a copy of such
notice together with the statement of a Financial Officer setting forth details
of such withdrawal and the action proposed to be taken with respect thereto.
5.9 Maintaining Records; Access to Properties and Inspections. Maintain
financial records in accordance with accepted financial practices and, upon
reasonable notice (which may be telephonic), at all reasonable times and as
often as the Bank may request, permit any authorized representative designated
by the Bank to visit and inspect the properties and financial records of the
Debtors, and to make extracts from such financial records at the Bank's expense,
and permit any authorized representative designated by the Bank to discuss the
affairs, finances and condition of the Debtors with the chief financial officer
and such other officers as the Debtors shall deem appropriate and the Debtors'
independent public accountants, as applicable.
5.10 Use of Proceeds. Use the proceeds of the Loans only for the
purposes set forth in Section 3.13.
5.11 Further Assurances. Execute any and all further documents and take
all further actions which may be required under applicable law, or which the
Bank may reasonably request, to grant, preserve, protect and perfect the first
priority security interest in the Collateral created by the Security Documents.
5.12 Environmental Legislation. Except where failure so to comply would
not have a material adverse effect on the business, assets, operations or
financial condition of any of the Debtors, comply in all material respects with
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all Federal, state and local laws or regulations that have been enacted or
adopted regulating the discharge of substances into the environment or primarily
for the purpose of protecting the environment ("Environmental Legislation"), and
provide written notice to the Bank within five Business Days of the receipt of
any notice of any violation of any Environmental Legislation from any Federal,
state or local governmental authority charged with enforcing such Environmental
Legislation, which violation alone, or together with other such violations,
notice of which has been previously or concurrently received, is material to any
of the Debtors.
5.13 Interest Rate Protection. Within one hundred eighty (180) days of
the Restatement Date, the Debtors shall enter into an interest rate swap
agreement or an interest rate cap agreement covering a notional principal amount
equal to at least 75% of the outstanding principal amount of the Term Loan, as
such amount may change from time to time, with such counterparties and on such
terms and conditions as shall be reasonably satisfactory to the Bank. The
Debtors shall re-establish such interest rate protection prior to the expiration
of any interest rate agreement entered into pursuant to the foregoing.
5.14 RFI Capital Stock. Del will own all of the issued and outstanding
Capital Stock of RFI free and clear of all Liens.
5.15 Dynarad Capital Stock. Del will own all of the issued and
outstanding Capital Stock of Dynarad free and clear of all Liens.
5.16 Bertan High Voltage Capital Stock. Del will own all of the issued
and outstanding Capital Stock of Bertan High Voltage free and clear of all
Liens.
5.17 Del Medical Capital Stock. Del will own all of the issued and
outstanding Capital Stock of Del Medical free and clear of all Liens.
5.18 Gendex-DMI Capital Stock. Del will own all of the issued and
outstanding Capital Stock of Gendex-DMI free and clear of all Liens.
VI. NEGATIVE COVENANTS
Each of the Debtors, jointly and severally, covenants and agrees with
the Bank that, so long as this Agreement shall remain in effect or the principal
of or interest on any Note, any Commitment Fee or any other fee, expense or
amount payable hereunder shall be unpaid, unless the Bank shall have consented
thereto in writing, it will not, either directly or indirectly:
6.1 Liens. Incur, create, assume or permit to exist any Lien on any of
its property or assets, whether owned at the date hereof or hereafter acquired,
or assign or convey any rights to or security interests in any future revenue,
except:
(a) Liens incurred and pledges and deposits made in the
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ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security benefits;
(b) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialsmen's and vendors' liens, incurred in good faith in the
ordinary course of business and securing obligations which are not yet due or
which are being contested in good faith by appropriate proceedings as to which
such Debtors shall, to the extent required by generally accepted accounting
principles applied on a consistent basis, have set aside on its books adequate
reserves;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent and Liens for taxes,
assessments, governmental charges or levies or claims the non-payment of which
is being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on such Debtors' books, but only so
long as no foreclosure, distraint, sale or similar proceedings have been
commenced with respect thereto;
(d) Zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created, assumed
or permitted to exist and arising by, through or under a landlord or owner of
the leased property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
(e) Liens upon any property acquired by such Debtor which are
created or incurred contemporaneously with such acquisition to secure or provide
for the payment of any part of the purchase price of such property (but no other
amounts); provided that any such lien shall not apply to any other property of
the Debtors and shall not result, directly or indirectly, in the failure to
comply with the provisions of Section 6.4;
(f) Liens on property existing at the time such property is
acquired by such Debtors; provided that such Liens were not created in
contemplation of the acquisition by such Debtor of such property;
(g) Liens existing on the date of this Agreement and set
forth in Schedule 6.1 hereto (other than Liens securing Indebtedness being
refinanced through Loans under this facility);
(h) Liens created in favor of the Bank as contemplated by
this Agreement;
(i) Capitalized Lease Obligations permitted by Section 6.4;
(j) extensions, renewals and replacements of Liens referred
to in paragraphs (e) through (g) only of this Section 6.1; provided that any
such extension, renewal or replacement Lien shall be limited to the property or
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assets covered by the Lien extended, renewed or replaced, and that the
obligations secured by any such extension, renewal or replacement Lien shall be
in an amount not greater than the amount of the obligations secured by the Lien
extended, renewed or replaced.
6.2 Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby such Debtor shall sell or
transfer any property, real or personal, and used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property which such Debtor intends to use for substantially
the same purpose or purposes as the property being sold or transferred.
6.3 Indebtedness. Create, incur, assume or permit to exist any
Indebtedness other than (i) Indebtedness secured by Liens permitted under
Section 6.1 hereof, (ii) Indebtedness existing on the date hereof and listed on
Schedule 6.3 hereto, (iii) Indebtedness incurred hereunder, and (iv) interest
rate swap agreements and/or interest rate cap agreements required under Section
5.13 hereof, and (v) Indebtedness permitted under Section 6.17 hereof. The
Debtors shall make no payments on the Subordinated Note except as permitted
under the Subordination Agreement.
6.4 Capital Expenditures. Permit the aggregate amount of payments made
for Capital Expenditures by the Debtors in any period specified below to exceed
the amount specified below for such period:
Period Amount
--------------------------------- ----------
Fiscal year ending August 2, 1996 $1,500,000
Each fiscal year thereafter $1,500,000
6.5 Dividends and Distributions. Except as permitted in Section 6.7(b),
with respect to Del only, declare or pay, directly or indirectly, any dividends
or make any other distribution in excess in the aggregate of $25,000 in any
fiscal year (other than dividends or other distributions payable solely in stock
of the Debtors), whether in cash, property, securities or a combination thereof,
with respect to its capital stock or directly or indirectly redeem, purchase,
retire or otherwise acquire for value any share of any class of its capital
stock or set aside any amount for any such purpose.
6.6 Consolidations, Mergers and Sales of Assets. Consolidate with or
merge into any other person, or sell, lease, transfer or assign to any persons
or otherwise dispose of (whether in one transaction or a series of transactions)
all or a substantial part of its assets (whether now or hereafter acquired), or
sell any of its inventory other than in the normal course of business, or permit
another person to merge into it, or acquire all or substantially all the capital
stock or assets of any other person except that the Debtors may sell, lease or
transfer, in one transaction or any series of related transactions, capital
assets with a value aggregating in any one fiscal year no more than $400,000,
provided, that all such assets are sold for consideration equal to the
then-current market value of such assets.
6.7 Investments. (a) Own, purchase or acquire any stock, obligations,
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assets or securities of, or any interest in, or make any capital contribution or
loan or advance to, any other person, or make any other investments with an
aggregate fair market value exceeding $250,000.00 (valued at the time of the
acquisition thereof), except that the Debtors may (i) own, purchase or acquire
certificates of deposit of the Bank or any FDIC-insured commercial bank
registered to do business in any state of the United States having capital and
surplus in excess of $500,000,000; (ii) own, purchase or acquire obligations of
the United States government or any agency thereof which are backed by the full
faith and credit of the United States; (iii) own, purchase or acquire commercial
paper of a domestic issuer rated at least A-1 by Standard and Poor's Corporation
or P-1 by Moody's Investors Service, Inc.; (iv) subject to the provisions of
Section 6.7(b) hereof, purchase or acquire during any fiscal year of Del (a
"Fiscal Year") shares of the common stock of Del ("Common Stock") with an
aggregate fair market value of not more than $750,000 (valued at the time of the
acquisition thereof), and thereafter own all such shares so purchased or
acquired; and (v) own, purchase, or acquire stock, obligations and/or securities
of any other person provided that such stock, obligations and/or securities are
held by the Debtors in the deferred compensation account(s) which are maintained
by Del for the benefit of Leonard A. Trugman.
(b) The right of the Debtors to repurchase shares of Common
Stock pursuant to Section 6.7(a)(iv) hereof is subject to the following:
(i) The Debtors may during any Fiscal Year repurchase
shares of the Common Stock with an aggregate fair market value of not more than
$375,000 (valued at the time of the acquisition thereof) if (A) no default under
Section 6.4, Section 6.8, Section 6.9 or Section 6.11 of this Agreement shall
have occurred and be continuing at the time of such repurchase and (B) after
giving effect to such repurchase of shares, no default shall exist under Section
6.9 hereof.
(ii) In addition to the shares of Common Stock which may
be repurchased pursuant to subsection (i) above, during any Fiscal Year the
Debtors may repurchase additional shares of the Common Stock with an aggregate
fair market value (valued at the time of the acquisition thereof) equal to (A)
the dollar amount of the increase in Consolidated Tangible Net Worth of the
Debtors for the Fiscal Year, minus (B) $1,250,000; provided, however, that (x)
in no event may the Debtors during any Fiscal Year repurchase additional shares
of Common Stock pursuant to the provisions of this subsection (ii) with an
aggregate fair market value in excess of $375,000 (valued at the time of the
acquisition thereof) and (y) in no event may the Debtors repurchase additional
shares of Common Stock pursuant to the provisions of this subsection (ii) if,
after giving effect to such repurchase of additional shares, a default shall
exist under Section 6.9 hereof.
6.8 Current Ratio. Permit the Consolidated Current Ratio of the Debtors
at any time to be less than 2.00:1.00.
6.9 Tangible Net Worth. Permit the Consolidated Tangible Net Worth of
the Debtors at any time during the periods specified below to be less than:
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Period Amount
-------------------------- -----------
Fiscal year ending 8/2/96 $16,250,000
Fiscal year ending 8/1/97 $17,500,000
Fiscal year ending 7/31/98 $18,750,000
Fiscal year ending 7/31/99 $20,000,000
Fiscal year ending 7/29/00 $21,250,000
Fiscal year ending 7/31/01 $22,500,000
6.10 Business. Alter the nature of its business in any material respect
without the prior written consent of the Bank, such consent not to be
unreasonably withheld.
6.11 Interest Expense Coverage Ratio. Permit the Consolidated Interest
Expense Coverage Ratio of the Debtors at any fiscal year end to be less than the
ratio specified below for such fiscal year end:
Fiscal Year End Ratio
---------------------------- -----
August 2, 1996 2.5
August 1, 1997 2.5
July 31, 1998 and thereafter 3.0
6.12 Transactions with Affiliates. Enter into any transaction, whether
or not in the ordinary course of business, with any Affiliate other than on
terms and conditions at least as favorable to such Debtor as those that would be
obtained through an arm's length negotiation with an unaffiliated third party.
6.13 Accounting Changes. Make any significant change in its accounting
treatment or financial reporting practices except as permitted or required by
generally accepted accounting principles in effect from time to time. Del will
not change its fiscal year or the calculation of its fiscal quarter ends.
6.14 Amendment and Modification of Gendex Purchase Agreement. Amend,
modify, supplement, waive compliance with, or assent to noncompliance with any
material term, provision or condition of the Gendex Purchase Agreement.
6.15 Consulting Fees. Pay, or become obligated to pay, to any one
person in any fiscal year, fees for the performance of consulting or similar
services which exceed $250,000; provided, however, that such restriction shall
not apply to consulting fees paid to Leonard A. Trugman pursuant to the terms
and provisions of that certain employment agreement dated as of August 1, 1990
by and between Del and Leonard A. Trugman as heretofore amended.
6.16 Leverage Ratio. Permit the Leverage Ratio of the Debtors in any
period specified below to exceed the ratio specified below for such period.
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Fiscal Year Ending Ratio
------------------ -----
8/2/96 1.75
8/1/97 1.75
7/31/98 and thereafter 1.50
6.17 Operating Leases. Create, incur, assume or suffer to exist any
obligation as lessee under a lease which is not a Capitalized Lease Obligation
for the rental or hire of any real or personal property, except any Leasing
Facility and except leases and/or conditional sales agreements that do not in
the aggregate require the Debtors to make payments (including taxes, insurance,
maintenance, and similar expenses which the Debtors are required to pay under
the terms of such leases or agreements) in any Fiscal Year in excess of One
Million Five Hundred Thousand Dollars ($1,500,000).
VII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein called
"Events of Default"):
(a) any representation or warranty made or deemed made in or in
connection with this Agreement, any of the other Credit Documents or the
borrowings hereunder or in any report, certificate, financial statement or other
instrument or agreement furnished in connection with this Agreement, any of the
Security Documents or the execution and delivery of the Notes or the borrowings
hereunder shall prove to have been false or misleading in any material respect
when made or deemed to be made;
(b) any default or event of default shall occur in the payment of any
principal of any Note when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) any default or event of default shall occur in the payment of any
interest on any Note, the Commitment Fee, or any other fee or any other amount
payable hereunder or under any of the other Credit Documents when and as the
same shall become due and payable;
(d) any default or event of default shall be made in the due observance
or performance of any covenant, condition or agreement to be observed or
performed on the part of any Debtor pursuant to the terms of this Agreement, or
any other Credit Documents (other than a covenant, condition or agreement a
default in the performance of which is elsewhere in this Article VII
specifically dealt with) and such default shall continue for a period of twenty
days (or ten days in the case of any provision contained in Article VI or
Section 5.5);
(e) any of the Debtors shall (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the Untied States Code or any
other Federal, state or foreign bankruptcy, insolvency, liquidation or similar
law, (ii) consent to the institution of, or fail to contravene in a timely and
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appropriate manner, any such proceeding or the filing of any such petition,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator or similar official for such Debtor or for a substantial part of
its property or assets, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in writing
its inability or fail generally to pay its debts as they become due, or (vii)
take corporate action for the purpose of effecting any of the foregoing;
(f) any involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of any of the Debtors, or of a substantial part of the property or
assets of any of the Debtors, under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or
similar official for any of the Debtors or for a substantial part of the
property of any of the Debtors, or (iii) the winding-up or liquidation of any of
the Debtors; and such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered against any of the Debtors;
(g) any default or event of default shall occur with respect to any
Indebtedness of any of the Debtors, if the effect of any such default shall be
to accelerate, or to permit the holder or obligee of any Indebtedness (or any
trustee on behalf of such holder or obligee) at its option to accelerate the
maturity of such Indebtedness; or any amount of principal or interest in respect
of such Indebtedness shall not be paid when and as due (after giving effect to
any period of grace specified for such payment in the instrument evidencing or
governing the same);
(h) a Reportable Event shall have occurred with respect to any Plan,
that alone or together with any other Reportable Event with respect to the same
or another Plan, has a reasonable possibility of resulting in liability of any
of the Debtors to the PBGC in an aggregate amount exceeding $20,000 and, within
30 days after the reporting of such Reportable Event to the Bank, the Bank shall
have notified one of the Debtors in writing that (i) the Bank has made a
determination that, on the basis of such Reportable Event, there are reasonable
grounds for the termination of such Plan or Plans by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan or Plans and (ii) as a result thereof an Event of Default
exists hereunder; or a trustee shall be appointed by a United States District
Court to administer any such Plan or Plans; or the PBGC shall institute
proceedings to terminate any Plan or Plans;
(i) any of the Debtors (i) shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred withdrawal liability to such
Multiemployer Plan, (ii) such Debtor does not have reasonable grounds for
contesting such withdrawal liability and is not in fact contesting such
withdrawal liability in a timely and appropriate manner, and (iii) the amount of
such withdrawal liability specified in such notice, when aggregated with all
other amounts required to be paid to Multiemployer Plans in connection with
withdrawal liabilities (determined as of the date of such notification),
requires payments exceeding $20,000 per annum;
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(j) a judgment or judgments for the payment of money exceeding, either
individually or in the aggregate, $500,000 (not reimbursed by insurance policies
of such Debtor) shall be rendered by a court or other tribunal against any of
the Debtors and (i) shall remain undischarged for a period of 150 consecutive
days during which the execution of such judgment shall not have been stayed
effectively or (ii) any judgment creditor shall legally commence actions to
collect on or enforce such judgment;
(k) this Agreement, or any other Credit Documents shall for any reason
cease to be, or be asserted by any of the Debtors not to be, a legal, valid and
binding obligation of such Debtors enforceable in accordance with its terms, or
the security interest or lien purported to be created by any of the Security
Documents shall for any reason cease to be, or be asserted by any of the Debtors
or any Grantor not to be, a valid perfected security interest in any Collateral
except as otherwise permitted by this Agreement;
(l) Leonard A. Trugman shall cease to serve as Chairman of the Board of
Del and shall cease to be active in the business conducted by the Debtors;
(m) if in the opinion of the Bank, there shall have occurred a material
adverse change in the condition, financial or otherwise, of any of the Debtors;
(n) any governmental authority shall condemn, seize or appropriate any
property of the Debtors if the fair market value of the property prior to being
condemned, seized or taken is equal to or greater than $1,000,000 and if such
governmental authority fails to compensate Debtors for such taking within one
year after such power is exercised in an amount at least equal to the fair
market value as a going concern of the property taken;
(o) any approval, consent, exemption or other action of any
governmental authority required under this Agreement is withdrawn or becomes
ineffective and the absence thereof would materially and adversely affect
Debtors, their operations or ability to repay the Bank;
(p) any default or Event of Default shall have occurred and be
continuing beyond any applicable notice and cure period under the Leasing
Facility;
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Bank may, by notice to the Debtors, take any or all of the following actions at
the same or different times: (i) terminate forthwith the Revolving Credit
Commitment; and (ii) declare the Notes to be immediately due and payable,
whereupon the principal of such Notes, together with accrued interest and fees
thereon and other liabilities of the Debtors accrued hereunder, shall become
immediately due and payable both as to principal and interest, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Debtors, anything contained herein or in the
Notes to the contrary notwithstanding; provided, however, that with respect to a
default described in paragraph (e) or (f) above, the Revolving Credit Commitment
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shall automatically terminate and the Notes, any unpaid accrued fees and any
other liabilities of the Debtors accrued hereunder shall automatically become
due and payable, both as to principal and interest, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Debtors, anything contained herein or in the Notes to the contrary
notwithstanding.
VIII. TERM OF AGREEMENT
This Agreement and the other Credit Documents shall continue in full
force and effect, and the duties, covenants and liabilities of the Debtors
hereunder and thereunder and all the terms and conditions and provisions hereof
and thereof relating thereto shall continue to be fully operative until all
Obligations and all duties and responsibilities of the Debtors to the Bank under
this Agreement and the other Credit Documents have been satisfied in full,
concluded and/or liquidated. The foregoing to the contrary notwithstanding, the
Indemnification Agreement shall continue in effect as provided therein. The term
of this Agreement with respect to all Revolving Credit Loans shall be to March
31, 2000 (the "Initial Term"). Notwithstanding the foregoing, the Debtors may,
in their sole discretion, on or after September 30, 1998, transmit to the Bank a
written notice requesting that the Bank inform the Debtors in writing of its
intentions as to whether or not it will extend or renew the Revolving Credit
Commitment upon the expiration thereof. Within sixty (60) days of the Bank's
receipt of such written notice from the Debtors, the Bank shall inform the
Debtors in writing as to whether or not it intends to extend or renew the
Revolving Credit Commitment upon the expiration thereof. If the Bank informs the
Debtors that it intends to extend or renew the Revolving Credit Commitment, in
accordance with the terms hereof and of an offer of commitment letter from the
Bank, the Bank and the Debtors shall negotiate in good faith for a period not to
exceed six (6) months as to the terms and conditions of such extension or
renewal of the Revolving Credit Commitment.
IX. DEBTORS' OBLIGATIONS
9.1 Mortgage Obligations. The Debtors, jointly and severally, covenant
and agree with the Bank that, so long as any of the principal of or interest on
the Term Note, any fee or expense in connection therewith, or any expense or
amount due under the Mortgage, the Subordinate Mortgage, or the Third Mortgage
shall remain unpaid, all obligations of the Mortgagor under the Mortgage and all
obligations of the Mortgagor under the Subordinate Mortgage and all the
obligations of the Mortgagor under the Third Mortgage shall be timely discharged
in accordance with the terms and conditions of such mortgages.
9.2 Unconditional Obligation. The obligations of each Debtor under this
Agreement shall be joint and several, unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) Any extension, renewal, settlement, compromise, waiver or
release in respect of any Obligation of the other Debtors or the Collateral
therefor under this Agreement or the other Credit Documents.
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(b) Any modification or amendment of or supplement to this
Agreement or the other Credit Documents.
(c) Any change in the corporate existence, structure of
ownership of the other Debtors, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the other Debtors or its Collateral or its
assets.
(d) The existence of any claim, set-off or other rights which
such Debtor may have at any time against the other Debtor, the Bank or any other
person, whether in connection herewith or any unrelated transactions, provided
that nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim.
(e) Any validity or unenforceability relating to or against
any Debtor, for any reason of any provision or all of this Agreement or the
other Credit Documents, or any provision of applicable law or regulation
purporting to prohibit the payment of any Debtor of the principal of or interest
on any Loan or any other amount payable by it under this Agreement or the other
Credit Documents.
(f) Any other act or omission to act or delay of any kind by
any Debtor, the Bank or any other person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of such Debtor's obligations under this Agreement or the
other Credit Documents.
9.3 Period in Force. Each Debtor's Obligations under this Agreement
shall remain in full force and effect until all Obligations shall have been paid
in full and this Agreement and the other Credit Documents shall have terminated
in accordance with their terms. If at any time any payment of the principal of
or interest on any Loan made to any Debtor or any other amount payable by any
Debtor under this Agreement or the other Credit Documents is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of such Debtor or otherwise, each of the other Debtors'
Obligations under this Agreement with respect to such payment shall have revived
and continued in full force and effect.
9.4 Waiver. Each Debtor waives acceptance hereof, presentment, demand,
protest and any notice not provided for herein, as well as any requirement that
at any time any action be taken by any person against the other Debtors or any
other person.
9.5 Effect of Stay. In the event that the demand for payment of any
amount payable by any Debtor under this Agreement or the other Credit Documents
is stayed upon the insolvency, bankruptcy or reorganization of a Debtor, all
such amounts otherwise subject to acceleration under the terms of this Agreement
or the other Credit Documents shall nonetheless be payable by the other Debtors
hereunder forthwith upon demand by the Bank.
9.6 Liability Under Notes. Each Debtor hereby acknowledges that such
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Debtor is a primary obligor under each of the Notes and that such obligation is
joint and several.
X. MISCELLANEOUS
10.1 Notices. Notices, consents and other communications provided for
herein shall be in writing and shall be delivered or mailed (or in the case of
telegraphic communication, delivered by tested telex, facsimile, graphic
scanning or other telegraphic communications equipment, with receipt confirmed)
addressed,
(a) If to any Debtor:
DEL GLOBAL TECHNOLOGIES CORP.
1 Commerce Park
Valhalla, New York 10595
Fax: (914) 686-5425
Attn: Leonard A. Trugman, Chairman, CEO, and President
With a copy to:
Tashlik, Kreutzer & Goldwyn P.C.
833 Northern Boulevard
Great Neck, New York 11021
Fax: (516) 829-6509
Attn: Martin M. Goldwyn, Esq.
(b) If to the Bank:
THE CHASE MANHATTAN BANK, N.A.
31 Mamaroneck Avenue
White Plains, New York 10601
Fax: (914) 328-8373
Attn: Michael D. Anthony, Vice President
With a copy to:
McCarthy, Fingar, Donovan, Drazen & Smith
11 Martine Avenue
White Plains, New York 10606
Fax: (914) 946-3700
Attn: Nicholas J. Chivily, Esq.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
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date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon receipt if by any telegraphic, facsimile or tested telex communications
equipment, in each case addressed to such party as provided in this Section 10.1
or in accordance with the latest unrevoked direction from such party.
10.2 Survival of Agreement. All covenants, agreements, representations
and warranties made by the Debtors or Grantors herein and in the certificates or
other instruments prepared or delivered in connection with this Agreement or in
connection with any of the other Credit Documents, shall be considered to have
been relied upon by the Bank and shall survive the making by the Bank of the
Loans and the execution and delivery to the Bank of the Notes and shall continue
in full force and effect as long as the principal of or any accrued interest on
the Notes or any other fee or amount payable under the Notes or this Agreement
is outstanding and unpaid and so long as the Revolving Credit Commitment has not
been terminated.
10.3 Successors and Assigns; Participations.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements by or on
behalf of the Debtors or the Bank that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and assigns. The
Debtors may not assign or transfer any of their rights or obligations hereunder
without the prior written consent of the Bank.
(b) The Bank, without the consent of the Debtors, may sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Revolving Credit Commitment and the Loans owing to it and
the Notes held by it), and shall give the Debtors notice of any such sale prior
to the consummation thereof.
(c) Notwithstanding any other provision therein, the Bank
may, in connection with any participation or proposed participation pursuant to
this Section 10.3, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Debtors furnished to the Bank by
or on behalf of the Debtors in connection with this Agreement; provided that
prior to any such disclosure, each such participant or proposed participant
shall agree to preserve the confidentiality of any confidential information
relating to the Debtors received from such Bank.
(d) The Bank may assign, to any one or more financial
institutions with the prior written consent of the Debtors (which shall not be
unreasonably withheld), all or a portion of its interests, rights and
obligations under this Agreement and the Security Documents (including, without
limitation, all or a portion of its Commitment and the same portion of the Loans
at the time owing to it and the Note or Notes held by it); provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all of the Bank's rights and obligations under this Agreement,
which shall include the same interest in the Loans and Notes, (ii) the parties
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to each such assignment shall execute and deliver to the Bank, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and a
processing and recordation fee. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof, (x) the assignee thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of the Bank hereby and under the Security Documents and (y) the
assignor Bank thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
the assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
(e) By executing and delivering an Assignment and Acceptance,
the Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, the Bank
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Agreement or the execution, legality, validity,
enforceability, perfection, genuineness, sufficiency or value of this Agreement,
the other Credit Documents or any Collateral with respect thereto or any other
instrument or document furnished pursuant hereto or thereto; (ii) the Bank
assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Debtors or the performance or
observance by the Debtors of any of their obligations under this Agreement or
any of the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee confirms that it has received a
copy of this Agreement and of the Security Documents, together with copies of
financial statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decision in taking
or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Bank to take such action as an agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Bank by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Bank.
(f) Upon its receipt of an Assignment and Acceptance executed
by the Bank and an assignee together with any Note or Notes subject to such
assignment and the written consent to such assignment, the Bank shall, if such
Assignment and Acceptance has been completed, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Debtors. Within five Business Days after
receipt of such notice, the Debtors, at their own expense, shall execute and
deliver to the Bank in exchange for the surrendered Note or Notes a new Note or
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Notes to the order of such assignee in an amount equal to its portion of the
Term Loan and the Revolving Credit Commitment, as the case may be, assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained any Commitment hereunder, a new Note or Notes to the order of the
assigning Bank in an amount equal to the Term Loan and the Revolving Credit
Commitment, as the case may be, retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment. Cancelled Notes shall be returned to the Debtors.
(g) Notwithstanding any other provision herein, the Bank may,
in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 10.3, disclose to the assignee or
participant or proposed assignee or participant, any information relating to the
Debtors furnished to the Bank by or on behalf of the Debtors in connection with
this Agreement; provided that prior to any such disclosure, each such assignee
or participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential information relating to the Debtors received
from such Bank.
10.4 Expenses; Indemnity.
(a) The Debtors, jointly and severally, agree to pay all
out-of-pocket expenses reasonably incurred by the Bank in connection with the
preparation of this Agreement, and the other Credit Documents or with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Bank in connection with the enforcement or protection of its
rights in connection with this Agreement or any of the other Credit Documents or
with the Loans made or the Notes issued hereunder, or in connection with any
pending or threatened action, proceeding, or investigation relating to the
foregoing, including but not limited to the reasonable fees and disbursements of
counsel of the Bank. The Debtors, jointly and severally, further agree that they
shall indemnify the Bank from and hold them harmless against any documentary
taxes, assessments or charges made by any governmental authority by reason of
the execution and delivery of this Agreement or the Notes.
(b) The Debtors, jointly and severally, agree to indemnify
the Bank and its directors, officers, employees and agents against, and to hold
the Bank and each such person harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against the Bank or any such person arising
out of, in any way connected with, or as a result of (i) the use of any of the
proceeds of the Loans, (ii) this Agreement, any of the other Credit Documents or
the other documents contemplated hereby or thereby, the performance by the
parties hereto and thereto of their respective obligations hereunder and
thereunder (including but not limited to the making of the Revolving Credit
Commitment) and consummation of the transactions contemplated hereby and
thereby; or (iii) any claim, litigation, investigation or proceedings relating
to any of the foregoing, whether or not the Bank or any such person is a party
thereto; provided that such indemnity shall not, as to the Bank, apply to any
such losses, claims, damages, liabilities or related expenses to the extent that
they result from (x) any unexcused breach by the Bank of any of its obligations
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under this Agreement or (y) the gross negligence or willful misconduct of the
Bank.
(c) The provisions of this Section 10.4 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby, or
the repayment of any of the Loans, the invalidity or unenforceability of any
term or provision of this Agreement or the other Credit Documents, or any
investigation made by or on behalf of the Bank. All amounts due under this
Section 10.4 shall be payable on written demand therefor.
10.5 Applicable Law. This Agreement and the Notes shall be construed in
accordance with and governed by the laws of the State of New York, without
giving effect to choice of law doctrine.
10.6 Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Bank is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Bank to or for the credit or the
account of the Debtors or any of them against any of and all the obligations of
the Debtors or any of them now or hereafter existing under this Agreement and
the Notes held by the Bank, irrespective of whether or not the Bank shall have
made any demand under this Agreement or the Notes and although such obligations
may be unmatured. The Bank agrees promptly to notify the Debtors or any of them
after any such setoff and application made by the Bank, but the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of the Bank under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the Bank
may have.
10.7 Payments on Business Days.
(a) Should the principal of or interest on the Notes or any
fee or other amount payable hereunder become due and payable on other than a
Business Day, payment in respect thereof may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in
computing interest, if any, in connection with such payment.
(b) All payments by the Debtors hereunder shall be made in
lawful money of the United States of America in immediately available funds at
the office of the Bank set forth in this Agreement.
10.8 Waivers; Amendments.
(a) No failure or delay of the Bank in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
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<PAGE>
and remedies of the Bank hereunder are cumulative and not exclusive of any
rights or remedies which it may otherwise have. No waiver of any provision of
this Agreement or the Notes nor consent to any departure by the Debtors
therefrom shall in any event be effective unless the same shall be authorized as
provided in paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the Debtors in any case shall entitle any such party to
any other or further notice of demand in similar or other circumstances. Each
holder of any of the Notes shall be bound by any amendment, modification, waiver
or consent authorized as provided herein, whether or not such Note shall have
been marked to indicate such amendment, modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Debtors and the Bank. The Bank and any holder of any
Note shall be bound by any modification or amendment authorized by this Section
regardless of whether its Note shall be marked to make reference thereto, and
any consent by the Bank or holder of a Note pursuant to this Section shall bind
any person subsequently acquiring a Note from it, whether or not such Note shall
be so marked.
10.9 Severability. In the event any one or more of the provisions
contained in this Agreement or in the Notes should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
10.10 Entire Agreement; Jurisdiction; etc.
(a) This Agreement and the other Credit Documents constitute
the entire contract between the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the Transactions is
superseded by this Agreement and the other Credit Documents. Except as expressly
provided herein or in the other Credit Documents, nothing in this Agreement or
in the other Credit Documents, expressed or implied, is intended to confer upon
any party, other than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Credit Documents.
(b) THE DEBTORS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION
OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY
OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE NOTES, AND THE DEBTORS HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE
OR FEDERAL COURT. THE DEBTORS IRREVOCABLY CONSENT TO THE SERVICE OF ANY AND ALL
PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
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PROCESS TO THE DEBTORS AT THEIR ADDRESS SPECIFIED IN SECTION 10.1. THE DEBTORS
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. THE DEBTORS FURTHER WAIVE ANY OBJECTION TO VENUE
IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE
BASIS OF FORUM NON CONVENIENS. THE DEBTOR WAIVES ANY RIGHT IT MAY HAVE TO JURY
TRIAL.
Nothing in this section shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect the right of
the Bank to bring any action or proceeding against the Debtors or their property
in the courts of any other jurisdictions.
(c) Except as prohibited by law, each party hereto hereby
waives any right it may have to claim or recover in any litigation referred to
in paragraph (b) of this Section 10.10 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that neither any
representative, agent or attorney of the Bank has represented, expressly or
otherwise, that such Bank would not, in the event of litigation, seek to enforce
the foregoing waivers and (ii) acknowledges that it has been induced to enter
into this Agreement or the Security Documents, as applicable, by, among other
things, the mutual waivers and certifications herein.
10.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute but one contract.
10.12 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.
10.13 Prior Agreements. This Agreement is a second modification and
restatement of a credit agreement originally entered into by and between the
Bank's predecessor-in-interest and Del and RFI, which credit agreement was
heretofore modified and assigned to the Bank by its predecessor-in-interest,
and, as assigned, was further modified and restated. This Agreement is a
modification and restatement of such credit agreement, as heretofore modified
and restated, and is not in addition thereto. The terms and provisions contained
in this Agreement supersede the terms and provisions contained in such credit
agreement and prior modification and restatement thereof.
64
<PAGE>
IN WITNESS WHEREOF, the Debtors and the Bank have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
(Corporate Seal) DEL GLOBAL TECHNOLOGIES CORP.
ATTEST: By:/s/David Engel
-------------------------------------
/s/Michael Taber David Engel, Executive Vice President
- ------------------------
Michael Taber, Secretary
(Corporate Seal) RFI CORPORATION
ATTEST: By:/s/David Engel
-------------------------------------
/s/Michael Taber David Engel, Executive Vice President
- ------------------------
Michael Taber, Secretary
(Corporate Seal) DYNARAD CORP.
ATTEST: By:/s/David Engel
-------------------------------------
/s/Michael Taber David Engel, Executive Vice President
- ------------------------
Michael Taber, Secretary
(Corporate Seal) BERTAN HIGH VOLTAGE CORP.
ATTEST: By:/s/David Engel
-------------------------------------
/s/Michael Taber David Engel, Executive Vice President
- ------------------------
Michael Taber, Secretary
(Corporate Seal) DEL MEDICAL SYSTEMS CORP.
ATTEST: By:/s/David Engel
-------------------------------------
/s/Michael Taber David Engel, Executive Vice President
- ------------------------
Michael Taber, Secretary
65
<PAGE>
(Corporate Seal) GENDEX-DEL MEDICAL IMAGING CORP.
ATTEST: By:/s/David Engel
-------------------------------------
/s/Michael Taber David Engel, Executive Vice President
- ------------------------
Michael Taber, Secretary
THE CHASE MANHATTAN BANK, N.A.
By:/s/Eileen Piker
-------------------------------------
Eileen W. Piker, Second Vice President
66
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the fifth day of March, 1996, before me personally came DAVID ENGEL,
to me known, who, being by me duly sworn, did depose and say that he has an
address of One Commerce Park, Valhalla, New York 10595, that he is Executive
Vice President of DEL GLOBAL TECHNOLOGIES CORP., the corporation described in
and which executed the foregoing instrument; that it was so executed by order of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
/s/Eugene Cauciella
-------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the fifth day of March 1996, before me personally came DAVID ENGEL,
to me known, who, being by me duly sworn, did depose and say that he has an
address of One Commerce Park, Valhalla, New York 10595, that he is Executive
Vice President of RFI CORPORATION, the corporation described in and which
executed the foregoing instrument; that it was so executed by order of the Board
of Directors of said corporation; and that he signed his name thereto by like
authority.
/s/Eugene Cauciella
-------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the fifth day of March 1996, before me personally came DAVID ENGEL,
to me known, who, being by me duly sworn, did depose and say that he has an
address of One Commerce Park, Valhalla, New York 10595, that he is Executive
Vice President of DYNARAD CORP., the corporation described in and which executed
the foregoing instrument; that it was so executed by order of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
/s/Eugene Cauciella
------------------------------
NOTARY PUBLIC
67
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the fifth day of March 1996, before me personally came DAVID ENGEL,
to me known, who, being by me duly sworn, did depose and say that he has an
address of One Commerce Park, Valhalla, New York 10595, that he is Executive
Vice President of BERTAN HIGH VOLTAGE CORP., the corporation described in and
which executed the foregoing instrument; that it was so executed by order of the
Board of Directors of said corporation; and that he signed his name thereto by
like authority.
/s/Eugene Cauciella
------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the fifth day of March 1996, before me personally came DAVID ENGEL,
to me known, who, being by me duly sworn, did depose and say that he has an
address of One Commerce Park, Valhalla, New York 10595, that he is Executive
Vice President of DEL MEDICAL SYSTEMS CORP., the corporation described in and
which executed the foregoing instrument; that it was so executed by order of the
Board of Directors of said corporation; and that he signed his name thereto by
like authority.
/s/Eugene Cauciella
------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the fifth day of March 1996, before me personally came DAVID ENGEL,
to me known, who, being by me duly sworn, did depose and say that he has an
address of One Commerce Park, Valhalla, New York 10595, that he is Executive
Vice President of GENDEX-DEL MEDICAL IMAGING CORP., the corporation described in
and which executed the foregoing instrument; that it was so executed by order of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
/s/Eugene Cauceilla
------------------------------
NOTARY PUBLIC
68
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the fifth day of March 1996, before me personally came Eileen W.
Piker, to me known, who, being by me duly sworn, did depose and say that she has
an address of 31 Mamaroneck Avenue, White Plains, NY, that she is a Second Vice
President of THE CHASE MANHATTAN BANK, N.A., the corporation described in and
which executed the foregoing instrument; that it was so executed by order of the
Board of Directors of said corporation; and that she signed her name thereto by
like authority.
/s/Eugene Cauciella
------------------------------
NOTARY PUBLIC
69
ADDITIONAL WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 5, 1996 between DEL GLOBAL
TECHNOLOGIES CORP., a New York corporation (the "Issuer"), and THE CHASE
MANHATTAN BANK, N.A., a Delaware corporation ( "Chase") . Chase and any other
Person who shall hereafter acquire Warrants or Warrant Stock (as defined below)
of the Issuer pursuant to the provisions of this Agreement, shall become a party
to this Agreement, and are sometimes hereinafter referred to as a "Holder" or,
collectively, as the "Holders".
WHEREAS, the Issuer and The Chase Manhattan Bank, N.A., a national
banking association and an affiliate of Chase (the "Bank"), are parties to a
certain Amended and Restated Credit Agreement dated as of March 5, 1996 (as the
same shall be modified, supplemented, or restated and in effect from time to
time, the "Credit Agreement");
WHEREAS, in order to induce the Bank to enter into the Credit
Agreement, and as compensation therefor, the Issuer has authorized the issuance
to the Bank or its designee of the Warrants substantially in the form of Exhibit
A hereto, which are exercisable, pursuant to the terms hereof and thereof, for
shares of Warrant Stock; and
WHEREAS, the Bank has designated Chase to be the party to this
Agreement and to receive the Warrants; and
WHEREAS, the parties hereto desire to set forth their agreement as to
certain matters regarding, among other things, certain rights and obligations in
respect of the Warrants and the Warrant Stock as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and of the terms and
conditions herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS.
Section 1.1. Definitions. As used herein, the following terms shall
have the following respective meanings:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with"
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or other ownership interests, by contract or otherwise). Notwithstanding the
foregoing, (i) no individual shall be deemed to be an Affiliate of a corporation
solely by reason of being an officer or director of such corporation and (ii)
neither Chase nor any Affiliate of Chase shall be deemed to be an Affiliate of
the Issuer.
"Business Day" shall mean any day except a Saturday, a Sunday or a day
on which commercial banks in the State of New York are permitted or required by
law to close.
"Chase" shall have the meaning specified in the introductory paragraph
to this Agreement.
"Commission" shall mean the U.S. Securities and Exchange Commission or
any similarly constituted regulatory agency having jurisdiction under and in
<PAGE>
accordance with the provisions of the Securities Act for a public offering of
the Warrant Stock.
"Common Stock" shall mean the Issuer's authorized Common Stock, par
value $0.10 per share, as constituted on the date hereof, and any other shares
of stock into which such Common Stock may hereafter be changed or which may be
issued to the holders of the Common Stock in respect of, in exchange for or in
substitution for such Common Stock by reason of any stock splits, stock
dividends, distributions, mergers, consolidations, reclassifications,
recapitalizations or other like events, unless such other shares do not
ordinarily have the right to vote in the election of directors of the Issuer.
"Credit Agreement" shall have the meaning ascribed to such term in the
first WHEREAS clause of this Agreement.
"Demand Registration" shall have the meaning ascribed to such term in
Section 7.1(a).
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
"Exercise Period" shall mean the period of time from March 5, 1996
until 5:00 P.M., New York time, on the Warrant Expiration Date.
"Exercise Price" shall mean the lesser of (i) the price of the last
reported sale of the Issuer's Common Stock on the American Stock Exchange or, if
the Issuer's Common Stock is not then traded on the American Stock Exchange,
such other principal market for such security on March 5, 1996 or, in the
absence of any sale, at the closing bid price on March 5, 1996 and (ii) $7.00,
and thereafter shall mean such Exercise Price as shall result from the
adjustments specified in Article 5 hereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America.
"Holder" or "Holders" shall have the meanings specified in the
introductory paragraph of this Agreement.
"Issuer" shall have the meaning specified in the introductory paragraph
of this Agreement.
"Majority Holders" means the Holders of Warrants and Warrant Stock
which, if all outstanding Warrants were fully exercised, would constitute at
least 51% of the outstanding Warrant Stock.
"Merger Notice" shall have the meaning specified in Section 4.6(a)
hereof.
"Notice of Transfer" shall have the meaning set forth in Section 4.2.
"Permitted Successor" means any Person with whom the Issuer is merged
or consolidated or to whom all or substantially all of the assets or equity
securities of the Issuer are sold, leased or otherwise disposed of, if and only
if, immediately prior to such merger, consolidation, sale or other disposition,
such Person was a Wholly-Owned Subsidiary of the Issuer.
"Permitted Transferee" shall have the meaning specified in Section 4.5
hereof.
"Person" means an individual, a corporation, a company, a voluntary
association, a partnership, a trust, an unincorporated organization or any
2
<PAGE>
government or agency, instrumentality or political subdivision thereof.
"Piggy-Back Registration" shall have the meaning ascribed to such term
in Section 7.2.
"Quarterly Financial Statements" shall have the meaning specified in
Section 10.1(b) hereof.
"Registrable Securities" shall mean any Warrant Interests until (i) a
registration statement covering such Warrant Interests has become effective
under the Securities Act and such Warrant Interests have been disposed of
pursuant to such effective registration statement, (ii) such Warrant Interests
are sold under circumstances in which all of the applicable conditions of Rule
144 (or any similar provisions then in force) under the Securities Act are met
or all conditions of Rule 144(k) are met, (iii) such Warrant Interests are
resold without subsequent registration under the Securities Act and the Issuer
has delivered a new certificate or other evidence of ownership for such Warrant
Interests not bearing any legend relating to restrictions on transfer or (iv)
such Warrant Interests are no longer outstanding or are held by the Issuer or
any Affiliate of the Issuer.
"Registration Expenses" shall have the meaning ascribed to such term in
Section 7.4.
"Regulation K" shall mean Regulation K promulgated by the Board of
Governors of the Federal Reserve System (12 C.F.R. Part 211) or any successor
regulation.
"Regulation Y" shall mean Regulation Y promulgated by the Board of
Governors of the Federal Reserve System (12 C.F.R. Part 225) or any successor
regulation.
"Rule 144" shall mean Rule 144 (or any similar rule then in effect)
promulgated by the Commission under the Securities Act.
"Rule 144A" shall mean Rule 144A (or any similar rule then in effect)
promulgated by the Commission under the Securities Act.
"Securities Act" means the U.S. Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, all as the same shall be
in effect from time to time.
"Selling Holder" shall mean a Holder which is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
"Stock Unit" means one share of Common Stock, as such stock was
constituted on the date of this Agreement, and thereafter shall mean such number
of shares (including any fractional shares) of Common Stock and other
securities, cash or property as shall result from the adjustments specified in
Article 5 hereof.
"Subscription Form" means a certificate substantially in the form
attached as Exhibit 1 to the form of Warrant which is attached hereto as Exhibit
A.
"Transferee" or ,"Transferees" shall have the meanings specified in
Section 4.3(a) hereof.
"U.S." shall mean the United States of America.
"Warrant Expiration Date" means the later of (i) July 31, 2001 and (ii)
any extension of that date effected pursuant to Section 11.2 hereof.
"Warrants" means the warrants originally issued by the Issuer in the
form of Exhibit A hereto, pursuant to this Agreement, evidencing rights to
purchase up to the number of Stock Units indicated thereon, and all Warrants
issued upon transfer, division or combination of, or in substitution for, any
3
<PAGE>
thereof. All Warrants shall at all times be identical as to terms and conditions
and date, except as to the number of Stock Units for which they may be
exercised.
"Warrant Interests" means any interests of any Person in or to any of
the Warrants or Warrant Stock as to which the Issuer has notice.
"Warrant Stock" means the shares of Common Stock or other securities
that comprise a Stock Unit purchasable by the Holders of the Warrants upon the
exercise thereof, and the shares of Common Stock (without duplication) issuable
on the conversion of such shares of Common Stock.
Section 1.2. Accounting Terms; Statement of Variation.
(a) All Quarterly Financial Statements shall (unless otherwise
disclosed to the Holders in writing at the time of delivery thereof in the
manner described in Subsection (b) below) be prepared in accordance with GAAP
applied on a basis consistent with the Quarterly Financial Statements for the
previous quarter, except for any inconsistency described in reasonable detail in
a statement delivered to the Holders at the same time or prior to the delivery
of such Quarterly Financial Statements.
(b) Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to accounting matters
hereunder shall be made, all calculations made for the purposes of all financial
statements and certificates and reports as to financial matters required to be
furnished to the Holders hereunder shall be prepared or made in accordance with
GAAP as in effect from time to time, applied on a basis consistent with the
Quarterly Financial Statements.
ARTICLE 2. TERMS AND CONDITIONS OF ISSUANCE OF WARRANTS.
Section 2.1 Issuance of Warrants. Subject to the terms and conditions
hereof and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Issuer hereby agrees to issue to Chase on the
date hereof Warrants exercisable for 17,000 Stock Units, each comprising, on the
date hereof, one share (subject to adjustment as provided in Article 5 hereof)
of Common Stock. Such Warrants shall be issued in the name of Chase or any
Person designated by Chase.
Section 2.2. Warrant Stock. The Warrants to be issued on the date
hereof shall entitle the Holders to exercise such Warrants for a number of Stock
Units comprising, as of the date hereof, less than 5% of the number of fully
diluted shares of Common Stock of the Issuer outstanding on the date hereof,
assuming the exercise in full of all warrants and rights to purchase, and the
conversion or exchange of all securities convertible into, or exchangeable for,
Common Stock.
Section 2.3. Representation of Holders. In connection with the
acquisition of each Warrant, each Holder represents to the Issuer, as of the
date of such Warrant, that it is acquiring the Warrants solely for its own
account for investment (subject to applicable laws and regulations), and that it
has no present intention to distribute the Warrants or any portion thereof
(except as may be required by applicable laws and regulations). The entire legal
and beneficial interest of the Warrants is being acquired for such Holder's
account only and neither in whole nor in part for any other Person.
ARTICLE 3. EXERCISE OF WARRANTS.
Section 3.1. Manner of Exercise.
(a) The Warrants may be exercised at any time, from time to time,
during the Exercise Period for all or any part of the number of Stock Units
purchasable upon their exercise; provided, that no Holder of the Warrants shall
be entitled to exercise any Warrant to the extent that upon such exercise, such
4
<PAGE>
Holder and its Affiliates, directly or indirectly, would own, control or have
power to vote a greater quantity of securities of any kind issued by the Issuer
than such Holder and its Affiliates shall be permitted to own, control, or have
power to vote under any law or under any regulation, rule or other requirement
of any government authority at the time applicable to such Holder and its
Affiliates (including without limitation any applicable provision of Regulation
K or Regulation Y).
(b) In order to exercise any Warrant, the Holder hereof shall deliver
to the Issuer at its office specified in Section 12.8 hereof (i) a duly
completed and executed Subscription Form, notifying the Issuer of such Holder's
election to exercise such Warrant, which notice shall specify the number of
Stock Units to be purchased, (ii) a certified or official bank check or checks
drawn on a New York Clearing House bank payable to the order of the Issuer, or a
wire transfer to the Issuer's account, in an aggregate amount equal to the
Exercise Price per Stock Unit times the number of Stock Units as to which such
Warrant is exercised, and (iii) the Warrants being exercised. Upon receipt of
such items the Issuer shall, no later than 3 Business Days thereafter, execute
or cause to be executed, and deliver to such Holder, a certificate or
certificates representing the Warrant Stock issuable upon such exercise, which
shall be validly issued, fully paid and non-assessable, and shall deliver to the
Holder any other cash or property included in the Stock Units represented by
such Warrants. The stock certificates so delivered shall be registered in the
name of such Holder or, subject to Article 4 hereof, such other name as shall be
designated in the Subscription Form, and shall, except as provided in Section
4.3(a) hereof, bear the restrictive legend set forth in Article 9 hereof.
(c) The Warrants shall be deemed to have been exercised and such
certificates shall be deemed to have been issued, and such Holder or any other
Person so designated to be named therein shall be deemed to have become a holder
of record of such Warrant Stock and such cash and other property for all
purposes, as of the date when the items referred to in Subsection (b) above are
received by the Issuer, notwithstanding that the transfer books of the Issuer
shall then be closed or that the certificates representing the Warrant Stock
shall not then be actually delivered to the Holder.
Section 3.2. Payment of Taxes, Etc. The Issuer shall pay all expenses
in connection with, and all taxes (other than income, franchise or transfer
taxes of the Holder of any Warrant) and other governmental charges that may be
imposed in respect of, the issuance or delivery thereof, including the
reasonable fees and disbursements of counsel for the Holder (if any). The Issuer
shall not be required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any certificate for shares
of Warrant Stock in any name other than that of the registered Holder of any
Warrant, and in such case the Issuer shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the Issuer's reasonable satisfaction that no such tax or
other charge is due.
Section 3.3. Fractional Shares. The Issuer shall not issue any
certificates for fractional shares of stock upon any exercise of the Warrants.
In lieu of issuing any fractional shares that would otherwise be issuable, the
Issuer shall pay cash equal to the product of such fraction multiplied by the
then Market Price, as hereinafter defined in Section 6.1(d), of a share of
stock.
ARTICLE 4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANTS
Section 4.1. Exchange. The Warrants shall be exchangeable, without
expense, at the option of the Holders, upon presentation and surrender thereof
to the Issuer, for other Warrants of different denominations, each dated the
date of the original Warrant, entitling the Holder or Holders thereof to
purchase in the aggregate the same number of Stock Units as the number subject
to the original Warrants so exchanged. Each new Warrant shall in all other
respects be identical to the original Warrants so exchanged.
Section 4.2. Transfer and Assignment. Each Holder of the Warrants shall
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be entitled, without obtaining the consent of the Issuer, to transfer or assign
its interest in the Warrants, in whole or in part, to any Person or Persons,
subject to the provisions of Section 4.3(a) hereof. Upon surrender of the
Warrants to the Issuer, with the Assignment Form annexed thereto as Exhibit 2
duly completed, the Issuer shall, without charge, execute, issue and deliver a
new Warrant or Warrants, dated the date of issue, in the name of the assignee
named in such instrument of assignment and, if the Holder's entire interest is
not being assigned, in the name of the Holder, and the original Warrants being
assigned or transferred shall be promptly canceled. A Warrant, if properly
assigned in compliance with Section 4.3(a) hereof, may be exercised by a new
Holder for the purchase of Warrant Stock as the new Holder shall designate,
without having a new Warrant issued. The Warrants may be divided or combined
with other Warrants that carry the same rights upon presentation of the Warrants
at the office of the Issuer, together with a written notice (a "Notice of
Transfer") specifying the names and denominations in which new Warrants are to
be issued and signed by the Holder of the Warrants so presented. Subject to
Section 4.3(a) hereof, as to any transfer that may be involved in such division
or combination, the Issuer shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
Section 4.3. Transfer Restrictions.
(a) Unless otherwise explicitly provided herein, except in connection
with a sale of Warrants or Warrant Stock pursuant to (i) a registered public
offering or (ii) one or more sales under Rule 144, no Holder shall sell, assign,
pledge, encumber or otherwise transfer any Warrants or shares of Warrant Stock
to any Person (all Persons other than a Holder acquiring any Warrants or shares
of Warrant Stock from a Holder or from the Issuer in accordance with this
Agreement, regardless of the method of transfer, shall be referred to
collectively as "Transferees" and individually as a "Transferee"), unless such
Warrants or Warrant Stock bear legends as provided in Article 9 hereof.
(b) No Holder shall sell, assign, pledge, encumber or otherwise
transfer any Warrants or shares of Warrant Stock to any Person unless:
(i) such Transferee shall have executed and delivered to the
Issuer, as a condition to its acquisition of Warrants or Warrant Stock,
a Joinder Agreement substantially in the form of Exhibit B hereto (a
"Joinder Agreement"') confirming that such Transferee takes such
Warrants or Warrant Stock subject to all the terms and conditions of
this Agreement; and
(ii) such Transferee has represented to the Issuer that (1) the
transfer of the Warrants or Warrant Stock is being made under an
effective registration pursuant to the Securities Act or pursuant to an
exemption therefrom and (2) such Transferee is (a) an "accredited
investor" within the meaning of Rule 501(a) of the Commission or (b) if
such transfer is effected under and in compliance with Rule 144A, a
"qualified institutional buyer" within the meaning of Rule 144A and, if
requested in writing by the Issuer, has delivered to the Issuer (x) a
written representation (supported by such background information as the
Issuer may reasonably request) to such effect, and (y) an opinion of
counsel that the proposed transfer is permitted by the terms of this
Agreement.
Section 4.4. Certain Restrictions.
(a) Notwithstanding anything to the contrary set forth herein, no
Holder which is an Affiliate of Chase and is subject to the provisions of
Regulation K or Regulation Y may sell, pledge, assign or otherwise transfer any
Warrants or any Warrant Stock except in accordance with applicable laws and
regulations (including any applicable provisions of Regulation K or Regulation
Y). Without limiting any other rights such Holder may have to dispose of its
Warrants or Warrant Stock, it is understood that any Holder which is subject to
the provisions of Regulation K or Regulation Y may dispose of its Warrants and
Warrant Stock (i) in any private sale in which no single purchaser receives more
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than 2% of any securities which constitute voting securities pursuant to
Regulation K or Regulation Y, (ii) to any Person who was in control of the
Issuer prior to consummation of such disposition and (iii) in any public
offering of the securities of the Issuer.
(b) No Holder shall sell, assign, pledge, encumber of otherwise
transfer any Warrants or Warrant Stock at any time if such action would
constitute a violation of the Securities Act or any other securities or blue sky
laws or a breach of the conditions to any exemption from registration of the
Warrants or Warrant Stock under the Securities Act or any such laws upon which
exemption the Holder is relying or a breach of any undertaking or agreement of
such Holder entered into pursuant to the Securities Act or such laws or in
connection with obtaining an exemption thereunder.
Section 4.5. Permitted Transferees. The provisions of Section
4.3(b)(ii) shall not apply with respect to any transfer or assignment by a
Holder (a) to any of its Affiliates or (b) to another Holder (each a "Permitted
Transferee") . None of the restrictions or provisions contained in this
Agreement with respect to transfers of Warrants or Warrant Stock (other than the
restrictions contained in Section 4.4(b) hereof and, in the case of any
Affiliate of Chase subject to Regulation Y, Section 4.4(a) hereof) shall apply
to transfers or assignments by a Holder pursuant to Section 4.6.
Section 4.6. Merger Transactions.
(a) If the Issuer shall have entered into any agreement to merge with
or into or to be consolidated with any other entity, then Section 4.3(a) through
4.5 of this Agreement shall not be applicable to such merger. The Issuer shall
give the Holders not less than 20 Business Days prior written notice (a "Merger
Notice") of the consummation of such merger (specifying the anticipated date for
consummation of such merger and the consideration therefor and whether such
transaction involves any Affiliate of the Issuer or any Stockholder of the
Issuer and enclosing a copy of the related agreement of merger).
(b) If such transaction does not involve a Permitted Successor of the
Issuer, each Holder shall be entitled, at its sole option, either to retain its
Warrants and receive the benefits provided for in Section 5.2(a), or to exercise
its Warrants and receive in exchange therefor, in addition to any cash or other
property included in the Stock Units, the same consideration per share of Common
Stock then included in each Stock Unit, in cash or such securities or other
assets as provided for in such agreement of merger as the consideration per
share of Common Stock being paid or provided pursuant to such agreement of
merger (less, in connection with any such payment to a Holder of Warrants, the
exercise price therefor).
(c) As a condition to any such merger, the Issuer or the successor
corporation, as the case may be, shall assume the obligations of the Issuer
hereunder and shall execute an agreement providing the Holders with the benefit
of this Section 4.6.
Section 4.7. Taxes and Expenses. The Issuer shall pay all expenses,
taxes (excluding transfer taxes or any subsequent transfer, franchise or income
taxes of the Holder of the Warrant) and other charges payable in connection with
the preparation, issue and delivery of Warrants under this Article 4, other than
the reasonable fees and disbursements of counsel for the Holder (if any).
Section 4.8. Loss of Warrant. Upon receipt by the Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Warrant (which shall include an affidavit setting forth the circumstances of
such loss, theft, destruction or mutilation), and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender or
cancellation of the Warrant, if mutilated, the Issuer shall execute and deliver
a new Warrant of like tenor and date.
Section 4.9. Issuer Cooperation With Transfers. The Issuer shall upon
request provide the Holders with information required in connection with
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transfers of securities under Rule 144 or Rule 144A. In addition, if any Holder
subject to Regulation K or Regulation Y determines that it is illegal or unduly
burdensome, by reason of regulatory restriction, for such Holder to continue to
hold some or all of its Warrants or Warrant Stock, the Issuer shall cooperate
with and assist such Holder in disposing of that portion of Warrants or Warrant
Stock which such Holder determines to be appropriate in light of such regulatory
restrictions (such cooperation to include, without limitation, the Issuer's
providing promptly to potential purchasers of such Holder's Warrants and Warrant
Stock such information as the potential purchasers may reasonably request).
ARTICLE 5. ADJUSTMENTS TO STOCK UNITS.
Section 5.1. Stock Dividends, Splits and Combinations.
(a) Adjustment to Stock Units and Exercise Price. In case at any time
or time to time the Issuer shall:
(I) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, additional shares of Common Stock; or
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the number of shares of Common Stock comprising a Stock Unit immediately
after the happening of any such event shall be adjusted so as to consist of the
number of shares of Common Stock that a record holder of the number of shares of
Common Stock, comprising a Stock Unit immediately prior to the happening of such
event would own or be entitled to receive after the happening of such event and
the Exercise Price thereof shall be proportionately adjusted.
(b) When Adjustments to be Made. The adjustments required by the
preceding sections of this Article 5 shall be made whenever and as often as any
specified event requiring an adjustment shall have occurred, except that no
adjustment of the number of shares of Common Stock comprising a Stock Unit that
would otherwise be required shall be made (except in the case of a subdivision
or combination of shares of the Common Stock, as provided for in Section 5.1(a))
unless and until such adjustment either by itself or with other adjustments not
previously made would require an increase or decrease of at least $0.05 in the
Exercise Price per Stock Unit immediately prior to making such adjustment. Any
adjustment representing a change of less than such minimum amount shall be
carried forward and made as soon as such adjustments together with other
adjustments required by this Article 5 and not previously made would result in
an adjustment of at least $0.05 as aforesaid. For the purpose of any adjustment,
any specified event shall be deemed to have occurred at the close of business on
the date of its occurrence.
(c) When Adjustment Not Required. If the Issuer shall take a record of
the holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution thereof to shareholders, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of the record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
Section 5.2. Merger, Consolidation or Disposition of Assets.
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(a) Subject to the provisions of Section 4.6, if any consolidation or
merger of the Issuer with another Person (other than a Permitted Successor), or
the sale, transfer or other disposition of all or substantially all of its
assets to another Person (other than a Permitted Successor), shall be effected
in such a way that the holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such consolidation, merger or sale, the Issuer or such
successor or purchasing corporation, as the case may be, shall assume the
obligations of the Issuer under this Agreement and the Warrants and execute an
agreement providing that the Holders of the Warrants shall have the right
thereafter and until the expiration of the Warrants to exercise the Warrants for
the kind and amount of stock, securities or other assets receivable upon such
consolidation, merger or sale by a stockholder of the number of shares of Common
Stock for which the Warrant might have been exercised immediately prior to such
consolidation, merger or sale, subject to adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
5.
(b) Subject to the provisions of Section 4.6, in any consolidation or
merger of the Issuer with a Permitted Successor, or the sale, transfer or other
disposition of all or substantially all of its assets to a Permitted Successor,
each Holder shall be entitled, in cancellation of its Warrants, to receive
replacement warrants from the Permitted Successor, representing, in the case of
the replacement warrants, the right to purchase the same proportion of the
equity securities of the Permitted Successor as are purchasable in the Issuer
pursuant to the canceled Warrants prior to giving effect to such transaction,
and containing provisions and rights identical to those of the canceled
Warrants, except for such changes as may be necessary to reflect the
organizational form and name of the Permitted Successor. In the event of any
transaction with a Permitted Successor referred to in this Section 5.2(b), all
references to the "Issuer" in this Agreement and in the Warrants shall be deemed
to refer to such Permitted Successor; and all references to the Warrants and
Warrant Stock in this Agreement shall be deemed to refer to the warrants and
warrant stock issued in replacement therefor by the Permitted Successor as
contemplated by this Section 5.2(b).
Section 5.3. Notice of Adjustment. Whenever the composition of a Stock
Unit shall be required to be adjusted pursuant to this Article 5, the Issuer
shall forthwith notify each Holder of such adjustment, and shall promptly (but
no later than ten days) after a request from such Holder obtain a certificate
signed by the Issuer's chief financial officer setting forth, in reasonable
detail, the event requiring the adjustment and the method by which such
adjustment was calculated and specifying the number of shares of Common Stock
comprising a Stock Unit and (if such adjustment is made pursuant to Section 5.2)
describing the number and kind of any other indebtedness, shares of stock or
other securities or property or warrants or other subscription or purchase
rights comprising a Stock Unit, and any change in the purchase price or prices
thereof, after giving effect to such adjustment or change. The Issuer shall
promptly, and in any case within 10 days after the date such certificate is
requested, cause a signed copy of such certificate to be delivered to each
Holder of the Warrants in accordance with Section 12.8. In addition, if any
event occurs which would require an adjustment under this Article 5 but for the
minimum threshold established in Section 5.1(b) hereof, the Issuer shall
promptly (and in any event within 10 days following such event) provide written
notice to each Holder describing such event in reasonable detail and specifying
the date on which it occurred. The Issuer shall keep at its office or agency
specified in Section 12.8 copies of all such certificates and shall cause the
same to be available for inspection at said office during normal business hours
by any Holder of a Warrant or any prospective purchaser of a Warrant designated
by a Holder.
ARTICLE 6. PAYOUT OBLIGATION
Section 6.1. Holders' Payout Rights. At any time after December 30,
1996 until 5:00 P.M., New York City time, on the Warrant Expiration Date
(subject to extension as provided below), upon the Holder's exercise of the
Warrants during one of the periods set forth below, the Issuer shall pay to the
Holder a payout amount, expressed as the amount equal to the difference between
(i) the applicable target amount as set forth in the table below ("Target
Amount") and (ii) the amount determined by subtracting (x) the product of
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multiplying the Exercise Price times the number of Warrants being exercised from
(y) the product of multiplying the Market Price, as hereinafter defined, of the
Common Stock times the number of Warrants being exercised ("Payout Amount") .
Period Target Amount
- --------------------------------------- ---------------
December 31, 1996 through July 30, 1997 $54,000
July 31, 1997 through July 30, 1998 $58,000
July 31, 1998 through July 30, 1999 $62,000
July 31, 1999 through July 30, 2000 $66,000
July 31, 2000 through July 31, 2001 $70,000
(b) In the event that a portion of the Warrants are exercised prior to
the Expiration Date, during one or more of the periods set forth above, then the
Issuer shall pay to the Holder the Payout Amount for such period or periods, as
the case may be, multiplied by a fraction the numerator of which is the number
of Warrants exercised during such period and the denominator of which is the
total Warrants granted hereunder.
(c) Notwithstanding the provisions of Sections 6.1(a) and (b) hereof,
the Company shall not be obligated to pay the Holder an aggregate Payout Amount
in excess of $70,000.
(d) For purposed of this Section 6.1, the term "Market Price" shall be
the price of the last reported sale of the Common Stock reported on the American
Stock Exchange (or closing sale price, or if no sale, final bid price, on the
NASDAQ National Market) on the last business day prior to the date of exercise
of the Warrant.
ARTICLE 7. REGISTRATION RIGHTS.
Section 7.1. Demand Registration Rights.
(a) Demand Registration. At any time after November 5, 1996, the
Majority Holders shall have the right to make one written request to the Issuer
with respect to a registration on Form S-3 (or other appropriate form) under the
Securities Act of all or any part of their Registrable Securities (a "Demand
Registration").
(b) Notice of Request for Registrations. Within 10 days after delivery
of a request for a Demand Registration (a "Required Registration"), the Issuer
will serve notice of such registration request to all Holders of Warrants and
shares of Warrant Stock and the Issuer will include in such registration all
Registrable Securities with respect to which the Issuer has received written
requests for inclusion within 15 Business Days after such notice is given. All
requests made pursuant to this Section 7.1(b) shall specify the aggregate number
of the Registrable Securities of the Holders to be registered and will also
specify the intended methods of disposition thereof.
(c) Incomplete Public Offerings, Etc. The Issuer shall have the right
to postpone the filing of any Required Registration for a reasonable time, but
not in excess of three months, if the Issuer is conducting or about to conduct a
public offering or, if in the Issuer's reasonable opinion, the disclosures
required to be made therein would prejudice any transaction then pending or
planned by the Issuer material to the financial condition of the Issuer and its
subsidiaries taken as a whole. A registration initiated as a Required
Registration shall not be deemed a Required Registration until such registration
has become effective and (except in the case of a shelf registration) until the
Registrable Securities included in such registration have actually been sold,
unless as to any Holder, such Holder withdraws Registrable Securities it had
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sought to register after the Issuer filed a registration statement with the
Commission with respect thereto, in which case such demand will count as a
Required Registration as to that Holder, and such Holder will not be entitled to
another Required Registration hereunder.
(d) Effective Registration Expenses. In any registration initiated as a
Required Registration, the Issuer will pay all Registration Expenses whether or
not the registration has become effective.
(e) Right of Issuer or Other Person to Piggyback on Required
Registrations. Neither the Issuer nor any Person owning any of its securities
(other than the Holders of Warrants and Warrant Stock) shall have the right to
include any of the Issuer's securities in a registration statement initiated as
a Required Registration under this Section 7.1, unless (I) such securities are
of the same class as the Registrable Securities being registered and (ii) the
Issuer or such Persons, as applicable, agree in writing to sell their securities
on the same terms and conditions as apply to the Registrable Securities being
sold. If any Persons owning securities of the Issuer (other than the Holders of
Registrable Securities in such capacity) register securities of the Issuer in a
Required Registration, such Persons shall pay the fees and expenses of counsel
to such Persons and their pro rata share of the Registration Expenses if the
Registration Expenses are not paid by the Issuer for any reason. In the event of
a conflict or inconsistency between the provisions of this Section 7.1(e) and
the provisions of any other agreement into which the Issuer may enter after the
date hereof addressing the matters set forth in this Section 7.1(e), the
provisions of this Section 7.1(e) shall prevail.
Section 7.2. Piggy-Back Registration. If the Issuer proposes or is
required to file a registration statement under the Securities Act with respect
to an offering by the Issuer for its own account and/or for the account of
others of any class of equity security (other than a registration statement on
Form S-8 or filed in connection with any exchange offer or an offering of
securities solely to the Issuer's existing stockholders or a registration
statement pursuant to Section 7.1 hereof), then the Issuer shall in each case
give notice of such proposed filing to all Holders at least 15 days before the
anticipated filing date, and such notice shall offer such Holders the
opportunity to register such number of shares of Registrable Securities as such
Holder may request; provided that the Issuer may at any time withdraw or cease
proceeding with any registration of Registrable Securities described in this
Section 7.2 if it shall at the same time withdraw or cease proceeding with the
registration of such other securities originally proposed to be registered. The
Issuer shall use its best efforts to cause the underwriter of a proposed
underwritten offering to permit such Holders to include such securities in such
offering on the same terms and conditions as any similar securities of the
Issuer included therein. Notwithstanding the foregoing, if the underwriter of
such offering informs the Holders that the total amount or kind of securities
which such Holders, the Issuer and any other Persons intend to include in such
offering is sufficiently large to materially and adversely affect the success of
such offering, then the amount to be offered shall be reduced pro rata among the
Holders and any other Persons proposing to register securities (other than a
Person for whom the Issuer is making a Required Registration) on the basis of
the number of shares proposed to be registered by them, to the extent necessary
to reduce the total amount of securities to be included in such offering to the
amount recommended by such managing underwriter. In connection with a piggy-back
registration, the Issuer will bear all Registration Expenses (other than
underwriting discounts for the Registrable Securities and counsel fees of the
Holders, which shall be borne by the selling Holders.)
Section 7.3. Registration Procedures. If and whenever the Issuer is
required by the provisions of this Article 7 to effect or cause the registration
of any Registrable Securities under the Securities Act, the Issuer will use its
best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable; provided, that the Issuer shall not be required to honor
any request for registration under Section 7.2 hereof if such request is
received by the Issuer later than 30 Business Days after the date the Issuer
first notifies the Holders of such registration. In connection with any such
registration the Issuer will:
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(a) not later than 90 days (or 120 days in the case of a Public
Offering) after receipt of a request to file a registration statement with
respect to such Registrable Securities, prepare and file with the Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective; and
prepare and file with the Commission such amendments and supplements to such
registration statement and prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 90 days, or such shorter period as may be required if all Registrable
Securities covered by such registration statement are sold prior to the
expiration of said 90-day period; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(b) prior to filing a registration statement, furnish to each seller of
Warrants and Registrable Securities, copies of such registration statement as
proposed to be filed, and thereafter such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in the registration statement
(including each preliminary prospectus) and such other documents as such seller,
managing underwriter or agent may reasonably request, including without
limitation, signed copies of all consents and certificates of experts, and will
furnish one conformed copy of such registration statement as originally filed
and each amendment thereto (including documents incorporated by reference into
the related prospectus);
(c) deliver to each seller of Registrable Securities, without charge,
as many copies of each preliminary prospectus as such seller may reasonably
request, and consent to the use of such copies for purposes permitted by the
Securities Act; deliver to each such seller participating in such offering,
without charge, from time to time during the period when a prospectus is
required to be delivered under the Securities Act, such number of copies of the
prospectus (as supplemented or amended) as such sellers may reasonably request;
(d) use its best efforts promptly to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests (provided that the seller shall
be responsible for blue sky fees for any states in which the Issuer would not
otherwise have registered the Registrable Securities), and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, that for any such purpose the Issuer
will not be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 7.3(d),
(ii) subject itself to taxation in any such jurisdiction or (iii) consent to
general service of process in any such jurisdiction;
(e) use its best efforts promptly to cause the Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Issuer to enable the sellers thereof to
consummate the disposition of such Registrable Securities;
(f) immediately notify the sellers of Registrable Securities, and
confirm the notice in writing, (i) when a registration statement, or any
post-effective amendment to such registration statement shall have become
effective, or any supplement to the related prospectus or any amended prospectus
shall have been filed, (ii) of the receipt of any comments from the Commission,
(iii) of any request by the Commission to amend the registration statement or
amend or supplement the prospectus or for additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
registration statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
registered securities for offering or sale in any jurisdiction, or of the
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institution or threatening of any proceedings for any of such purposes and (v)
if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the registered securities any
representation and warranty of the Issuer contemplated by Section 7.3(j) hereof
ceases to be true and correct;
(g) if at any time when a prospectus is required by the Securities Act
to be delivered in connection with sales of the Warrants and Registrable
Securities any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the sellers of such Registrable
Securities, or counsel for the Issuer, to amend the registration statement
covering such Registrable Securities or amend or supplement the related
prospectus in order that such prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of any of such counsel, at any such time to amend such registration
statement or amend or supplement the related prospectus in order to comply with
the requirements of the Securities Act, promptly prepare and file such amendment
or supplement as may be necessary to correct such untrue statement or omission
or to make such registration statement or the related prospectus comply with
such requirements;
(h) use every reasonable effort to prevent the issuance of any stop
order suspending the effectiveness of a registration statement or of any order
preventing or suspending the use of any preliminary prospectus and, if any such
order is issued, to obtain the lifting thereof at the earliest possible time;
(i) not at any time file or make any amendment to a registration
statement, or any amendment of or supplement to a related prospectus (including
amendments of the documents incorporated by reference into such prospectus), of
which the sellers of Registrable Securities or any managing underwriter or agent
shall not have been previously advised and furnished a copy, or to which such
sellers, any managing underwriter or agent or counsel for any of the foregoing
shall reasonably object;
(j) in the case of an underwritten offering by the Issuer, enter into
customary agreements (including an underwriting agreement in customary form) and
take such other actions (including without limitation making such
representations and warranties to the sellers of Registrable Securities, the
underwriters and agents, if any, in form, substance and scope as are customarily
made by issuers to underwriters and agents in primary underwritten public
offerings) as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities, and shall use its best efforts to
cause such underwriters to agree in such customary agreements to purchase from
any Holder who so requests its Warrants in connection with such underwritten
public offering (without requiring such Holders to exercise its Warrant for
Warrant Stock);
(k) make available for inspection by any seller of Registrable
Securities, any managing underwriter or agent participating in any disposition
pursuant to such registration statement, and any representative of such seller,
underwriter or agent (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Issuer
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Issuer's officers,
directors and employees to supply all information reasonably requested by any
such Inspectors in connection with such registration statement. Records that the
Issuer determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the registration statement, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court or administrative
agency of competent jurisdiction or (iii) the information in such Records has
been made generally available to the public. The seller of Warrants or
Registrable Securities agrees that it will, upon learning that disclosure of
such Records is sought in a court or administrative agency of competent
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jurisdiction, give notice to the Issuer and allow the Issuer, at the Issuer's
expense, to undertake appropriate action to prevent disclosure of Records deemed
confidential;
(l) on the effective day of a registration statement, cause to be
delivered to the selling Holders opinions of counsel for the Issuer, which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to counsel for the selling Holders, covering the matters
customarily covered in opinions given to underwriters in primary underwritten
public offerings; immediately prior to the effectiveness of a registration
statement, cause to be delivered to the selling Holders letters from the
Issuer's independent public accountants stating that such accountants are
independent public accountants with respect to the Issuer within the meaning of
the Securities Act, and otherwise in customary form and covering such financial
and accounting matters as are customarily covered by letters of the independent
public accountants delivered in connection with primary underwritten public
offerings;
(m) comply with all applicable rules and regulations of the Commission,
and make available to the Holders, as soon as reasonably practicable, but no
later than 45 days (or such later date, if an appropriate extension of such time
shall have been granted) after the close of the period covered thereby or 90
days (or such later date, if an appropriate extension of such time shall have
been granted) if such period is a fiscal year) an earnings statement covering
the period of 12 months, beginning within three months after the effective date
of the registration statement, which earnings statement shall satisfy the
provisions of Section ll(a) of the Securities Act (and in form complying with
Rule 158 under the Securities Act);
(n) promptly after the registration and sale thereof, use its best
efforts to cause any Registrable Securities to be listed on a national
securities exchange and on each additional national securities exchange on which
similar securities issued by the Issuer are then listed, if the listing is then
permitted under the rules of such exchange, or, if such listing is not possible,
to secure designation of all Registrable Securities as NASDAQ "national market
system securities" within the meaning of Rule 11Aa2-1 of the Commission or,
failing that, to secure NASDAQ authorization for the Registrable Securities; and
(o) file the reports required to be filed by it under the Securities
Act and the Exchange Act and take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Warrants and Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144; and upon the request of any such Holder,
deliver to such Holder a written statement as to whether it has complied with
such information and requirements.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Issuer of the happening of any event of the kind described in
Section 7.3(g) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 7.3(g) hereof, and,
if so directed by the Issuer, such Holder will deliver to the Issuer (at the
Issuer's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Issuer shall
give any such notice, the Issuer shall extend the period during which such
registration statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 7.3(f) hereof to and including the
date when each seller of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 7.3(g) hereof.
Section 7.4. Registration Expenses. All reasonable expenses incident to
the Issuer's performance of or compliance with Sections 7.1 through 7.7 hereof,
including without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
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fees and disbursements of counsel in connection with blue sky qualifications of
the Warrants and Registrable Securities), rating agency fees, printing expenses
(including without limitation, expenses of printing prospectuses), messenger and
delivery expenses, the fees and expenses incurred in connection with the listing
of the securities to be registered on each securities exchange on which this
Agreement requires such securities to be listed, and fees and disbursements of
counsel for the Issuer and its independent certified public accountants,
securities acts liability insurance (in the event the Issuer elects to obtain
such insurance), the reasonable fees and expenses of any special experts
retained by the Issuer in connection with such registration, reasonable fees and
expenses of other Persons retained by the Issuer, incurred in connection with
each registration hereunder (but not including any underwriting discounts or
commissions attributable to the sale of Registrable Securities) (all such
expenses collectively the "Registration Expenses") will be borne by the Issuer.
Section 7.5. Indemnification; Contribution.
(a) Indemnification by the Issuer. The Issuer agrees to indemnify, to
the full extent permitted by law, each Holder of Registrable Securities, its
officers, directors and agents and each Person who controls such Holder (within
the meaning of the Securities Act), and any investment advisor thereof or agent
therefor, against all losses, claims, damages, liabilities and expenses
(collectively, "Damages") caused by any untrue or alleged untrue statement of a
material fact contained in any registration statement, prospectus or preliminary
prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein
(in the case of a prospectus, in the light of the circumstances under which they
were made) not misleading, except insofar as the same are caused by or contained
in any information with respect to such Holder furnished in writing to the
Issuer by such Holder expressly for use therein or by such Holder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Issuer has furnished or made available to such
Holder a sufficient number of copies of the same. The Issuer will also indemnify
any underwriters of the Warrants and Registrable Securities, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Holders of Warrants and Registrable Securities. The
Issuer's indemnity set forth in the preceding sentences of this section 7.5(a)
is subject to the condition that, insofar as such indemnity relates to any
untrue statement or omission or any statement or omission made in a preliminary
prospectus but eliminated or remedied in a final prospectus, it shall not inure
to the benefit of any selling Holder, its officers, directors and agents or any
Person who controls such Holder, if a copy of the final prospectus was not
delivered by the selling Holder to a Person purchasing from such Holder and
asserting the claim at or prior to the time required by the Securities Act,
sufficient copies of such final prospectus were furnished or made available to
such Holder and the delivery thereof to such Person would have constituted a
defense to the claim asserted by such Person.
(b) Indemnification by Holders of Registrable Securities. In connection
with any registration statement in which a Holder is participating, each such
Person hereby indemnifies, to the full extent permitted by law, the Issuer, its
directors, officers and agents and each Person who controls the Issuer (within
the meaning of the Securities Act) against any Damages resulting from any untrue
or alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the registration statement
or prospectus or any amendment thereof or supplement thereto or necessary to
make the statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information or affidavit with respect to such Holder furnished in writing by
such Holder expressly for inclusion in such registration statement or
prospectus.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification under this Section 7.5 agrees to give prompt written notice to
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the indemnifying party after the receipt by such Person of any notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such Person will claim indemnification or contribution
pursuant to this Section 7.5 and, unless in the reasonable judgment of the
indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, that the failure to so notify
such indemnifying party shall not relieve such party from any liability which it
may have to such indemnified party except to the extent that the failure to give
notice is prejudicial to such indemnifying party. If the indemnifying party is
not entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with respect to
such claim, unless in the reasonable judgment of such indemnified party a
conflict of interest may exist between such indemnified party and any other
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and disbursements of such additional
counsel or counsels. The indemnifying party will not be subject to any liability
for any settlement made without its consent, which consent shall not be
unreasonably withheld.
(d) Contribution. If the indemnification provided for in this Section
7.5 from the indemnifying party is unavailable to an indemnified party hereunder
(other than by reason of the exceptions provided in Section 7.5(a) or (b)
hereof) in respect of any Damages referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Damages in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in such Damages, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the Damages referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.5 hereof, any legal or other fees and expenses reasonably incurred by
such party in connection with any investigation or proceeding. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 7.5(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the preceding sentences of this paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. If indemnification is available
under this Section 7.5, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in Section 7.5(a) and (b) hereof
without regard to the relative fault of said indemnifying party or indemnified
party or any other equitable consideration provided for in this Section 7.5(d).
Section 7.6. Participation in Underwritten Registrations. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities or. the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all powers of attorney,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements. Each Holder participating in any registration
under this Article 7 agrees not to use any materials in connection with the sale
of Registrable Securities pursuant to such registration other than materials
filed by the Issuer with the Commission or, after such registration becomes
effective, otherwise publicly available.
Section 7.7. Rule 144. The Issuer covenants that it will file all
reports required to be filed by it under the Securities Act and the Securities
Exchange Act of 1934, as amended, and it will take such further action as a
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell Warrants and Warrant Stock without registration under
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the Securities Act. Upon the request of the Holder, the Issuer will deliver to
such Holder a notice stating whether it has complied with such requirements.
ARTICLE 8. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.
The Issuer represents and warrants to each of the Holders on the date
hereof that:
Section 8.1. Due Incorporation. The Issuer (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has all requisite corporate power, and
has all governmental licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted, and (c) is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification necessary and
where failure so to qualify would have a material adverse effect on the
consolidated financial condition, business, operations or prospects of the
Issuer.
Section 8.2. Authority to Execute and Perform Agreement. The Issuer has
all necessary corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Warrants and issue and deliver the
Warrants and Warrant Stock; the execution, delivery and performance by the
Issuer of this Agreement and the Warrants have been duly authorized by all
necessary corporate action on its part; and this Agreement and the Warrants have
been duly executed and delivered by and are the legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance with
their respective terms, except as such enforceability may be limited by (a)
bankruptcy, reorganization, insolvency and similar laws of general application
relating to or affecting the enforcement of creditors' rights generally or (b)
the principles governing the availability of equitable remedies. The Issuer has
delivered to Chase resolutions of its Board of Directors authorizing the
execution and delivery of this Agreement and the issuance of the Warrants as
contemplated hereby, together with a certificate of the Secretary of the Issuer
certifying that such resolutions were duly adopted and remain in full force and
effect.
Section 8.3. Authorized Capital Stock. The authorized capital stock of
the Issuer on the date hereof consists of 10,000,000 shares of Common Stock, of
which, as of February 21, 1996, there were 4,302,164 shares of Common Stock
issued and outstanding. The Common Stock has the rights and preferences set
forth in the Certificate of Incorporation of the Issuer, a true, correct and
complete copy of which, together with the Bylaws of the Issuer, has heretofore
been delivered to Chase.
Section 8.4. Valid Issuance. The Issuer has duly reserved by all
appropriate corporate action, and will keep available for issue upon the
exercise of the Warrants, such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants. The Warrants, and the Warrant Stock issuable upon exercise
thereof, when issued and delivered, will be validly issued, fully paid and
nonassessable.
Section 8.5. No Breach. None of the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, including
without limitation the issuance of the Warrants, and compliance with the terms
and provisions hereof and thereof will (a) conflict with or result in a breach
of, or require any consent under, (i) the certificate of incorporation or bylaws
of the Issuer, or (ii) any applicable law or regulation, or (iii) any order,
writ, injunction or decree of any court or governmental authority or agency, or
any agreement or instrument to which the Issuer is a party or by which the
Issuer is bound or to which the Issuer is subject, or (b) constitute a default
under any such agreement or instrument, or result in the creation or imposition
of any lien upon any of the revenues or assets of the Issuer pursuant to the
terms of any such agreement or instrument.
Section 8.6. Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
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or agency, which have not already been made or obtained are necessary for the
execution, delivery or performance by the Issuer of this Agreement and the
Warrants, the consummation of the transactions herein and therein contemplated
or for the validity or enforceability thereof, other than any applications to
list the securities issuable hereunder on any national securities exchange
(which applications will be made in timely fashion).
Section 8.7. Accuracy of Information. The factual information furnished
by or on behalf of the Issuer or any of its subsidiaries to Chase in connection
with this Agreement or any transaction contemplated hereby does not contain
untrue statements of material fact or omit to state a material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading and, without limiting the foregoing,
the Issuer has disclosed to Chase (a) all arrangements regarding the ownership
of the Issuer, (b) all litigation, whether pending or threatened which, if
resolved adversely to the Issuer or its subsidiaries, could have a material
adverse effect on the Issuer's or any of its subsidiaries' business, financial
condition, operations, results of operations, assets or prospects and (c) all
material liabilities of the Issuer and its subsidiaries.
ARTICLE 9. LEGEND ON CERTIFICATES.
Section 9.1. Legend on Warrants. A copy of this Agreement shall be
filed with the Secretary of the Issuer and kept with the records of the Issuer.
Each of the Holders hereby agrees that, in addition to any other legend that may
be required under applicable law, so long as this Agreement is in effect, each
Warrant shall bear a legend reading substantially as follows:
This Warrant is subject to and is transferable only upon compliance
with the provisions specified in the Warrant Agreement dated as of
March 5, 1996, between Del Global Technologies Corp. and The Chase
Manhattan Bank, N.A., a copy of which may be obtained from Del Global
Technologies Corp. or from the holder of this Warrant.
Section 9.2. Legend on Warrant Stock. Each of the Holders hereby agrees
that, in addition to any other legend that may be required under applicable law,
so long as this Agreement is in effect, each outstanding certificate
representing Warrant Stock subject to this Agreement shall bear a legend reading
substantially as follows:
The shares represented by this Certificate are subject to and are
transferable only upon compliance with the provisions specified in the
Warrant Agreement dated as of March 5, 1996, between Del Global
Technologies Corp. and The Chase Manhattan Bank, N.A., a copy of which
may be obtained from Del Global Technologies Corp. or from the holder
of this Certificate.
Section 9.3. Legend on Registered Securities. Notwithstanding the
foregoing, the Issuer shall cause to be stamped or otherwise imprinted upon any
Warrants or Certificates representing Warrant Stock that have been distributed
in a registered public offering pursuant to the Securities Act, or pursuant to
Rule 144, at the request of the Holder thereof and without expense to such
Holder, a legend in substantially the following form:
The restrictions on transferability of [this Warrant] [the securities
represented by this certificate], as specified in the Warrant Agreement, dated
as of March 5, 1996, between Del Global Technologies Corp. and The Chase
Manhattan Bank, N.A., terminated on ____________, 199_ and are of no further
force or effect.
ARTICLE 10. COVENANTS OF THE ISSUER
Section 10.1. Information, Etc. The Issuer covenants and agrees that it
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will deliver the information specified below to each Holder:
(a) as soon as available and in any event within 90 days (or such later
date, if an appropriate extension of such time shall have been granted) after
the end of each fiscal year of the Issuer, consolidated statements of income,
retained earnings and cash flows and changes in financial position of the Issuer
and its consolidated Subsidiaries for such year and the related balance sheet as
at the end of such year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, and accompanied by an
opinion thereon of a firm of independent certified public accountants of
recognized national standing, which opinion shall state that said financial
statements fairly present the financial condition and results of operations of
the Issuer at the end of, and for, such fiscal year;
(b) as soon as available, and in any event within 45 days (or such
later date, if an appropriate extension of such time shall have been granted)
after the end of each fiscal quarter of the Issuer other than the last fiscal
quarter in each fiscal year, the unaudited consolidated balance sheet of the
Issuer and its consolidated subsidiaries as at the end of such fiscal quarter,
and the related unaudited consolidated statements of income and cash flows of
the Issuer and its consolidated subsidiaries for such fiscal quarter and for the
portion of the fiscal year then ended, setting forth in each case in comparative
form the figures for the corresponding periods of the previous year (such
financial statements, together with the financial statements referred to in
paragraph (a) above, being referred to herein as the "Quarterly Financial
Statements"), accompanied, in each case, by a certificate of a senior officer of
the Issuer, which certificate shall state that said financial statements fairly
present the financial condition and results of operations of the Issuer and its
subsidiaries in accordance with GAAP, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit adjustments);
(c) promptly upon their becoming available, copies of all registration
statements and regular periodic reports, if any, which the Issuer, or any of its
subsidiaries shall have filed with the Commission or any national securities
exchange; and
(d) promptly upon the mailing thereof to any shareholders or creditors
of the Issuer or any of its subsidiaries, copies of all information, financial
statements, compliance certificates, reports and proxy statements so mailed.
Section 10.2. Other Covenants. The Issuer covenants and agrees that, at
all times when any Warrant is outstanding, it shall undertake the following:
(a) Books and Records. The Issuer will maintain, and will cause each of
its Subsidiaries to maintain, books and records in accordance with GAAP.
(b) Corporate Existence. Except as permitted by and pursuant to this
Agreement, the Issuer will, and will cause each of its subsidiaries to: preserve
and maintain its corporate existence and comply with the requirements of all
applicable laws, rules, regulations and orders of governmental or regulatory
authorities if failure to comply with such requirements could reasonably be
expected to have a material adverse effect on the business, operations, assets,
financial condition, prospects or results of operations of the Issuer or any of
its subsidiaries.
Section 10.3. Restriction on Controlling Stock. The Issuer covenants
and agrees that it will not, without the prior written consent of each Holder
subject to Regulation Y or Regulation K, directly or indirectly (i) purchase,
redeem, retire or otherwise acquire or (ii) pay any dividend in, or otherwise
distribute to the Holders of the Common Stock, any shares of the capital stock
of the Issuer if, as a result of such purchase, redemption, retirement or other
acquisition, any such Holder, together with its Affiliates, would own, or be
deemed to own, in the aggregate 25% or more of the total number of shares of
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Common Stock of the Issuer then outstanding or 5% or more of the total number of
shares of Common Stock then outstanding (assuming the exercise of all Warrants
then held by such Holder). Each Holder subject to Regulation Y or Regulation K
will, promptly upon written request of the Issuer, confirm to the Issuer whether
any Person specified by the Issuer as a holder of Common Stock is an Affiliate
of such Holder and whether, after giving effect to any proposed purchase,
redemption, retirement or other acquisition by the Issuer of Common Stock, such
Holder together with its Affiliates, would own or be deemed to own Common Stock
or Common Stock, as the case may be, in excess of the above percentages.
Section 10.4. Reservation and Authorization of Common Stock;
Registration With or Approval of Any Governmental Authority. The Issuer shall at
all times reserve and keep available for issue upon the exercise of Warrants
such number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. The
Issuer will not amend its articles of incorporation in any respect relating to
the Common Stock in any way which would materially adversely affect the Holders,
other than to increase the authorized amount of Common Stock. All shares of
Common Stock which shall be so issuable, when issued upon exercise of any
warrant, or upon conversion, as the case may be, shall be duly and validly
issued, fully paid and nonassessable, and free and clear of all liens, security
interests, charges and other encumbrances or restrictions (other than
encumbrances or restrictions imposed by this Agreement).
ARTICLE 11. NOTICES TO HOLDERS.
Section 11.1. Notice of Certain Corporation Action. In case the Issuer
shall propose after the date hereof (a) to effect any reclassification of its
Common Stock (other than a reclassification involving only the subdivision, or
combination, of outstanding shares of Common Stock), or (b) to effect any
capital reorganization, or (c) to effect any consolidation, merger or sale,
transfer or other disposition of all or substantially all of its property,
assets or business, or (d) to effect the liquidation, dissolution or winding up
of the Issuer, then, in each such case, the Issuer shall give to each Holder, in
accordance with Section 12.8, a notice of such proposed action, which shall
specify the date on which a record is to be taken for the purposes of such stock
dividend, distribution or rights, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, disposition, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of Common Stock, if any such date is to be fixed, and shall also
set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the Common Stock and the number and kind
of any other property which will comprise a Stock Unit, and the purchase price
or prices thereof, after giving effect to any adjustment which will be required
as a result of such action. Such notice shall be so given at least 20 days prior
to the taking of such proposed action or the date of participation therein by
the holder of Common Stock, whichever is earlier.
Section 11.2. Notice of Warrant Expiration Date. The Issuer shall give
to each Holder, in accordance with Section 12.8, notice of the Warrant
Expiration Date. Such notice shall be given by the Issuer not less than 90 days
but not more than 120 days prior to the then scheduled Warrant Expiration Date.
In the event the Issuer fails to timely give the notice required by this Section
11.2, the Warrant Expiration Date shall be extended automatically to the date
which is 90 days following delivery by the Issuer to the Holder of such notice.
ARTICLE 12. MISCELLANEOUS
Section 12.1. Term. Except as provided below, this Agreement shall
terminate on the earlier of the date when there are no more Warrants of the
Holders outstanding and the Warrant Expiration Date; provided, that the
provisions of Articles 7 and 9 shall survive any such termination.
Section 12.2. Successors and Assigns. Subject to the provisions of
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Article 4 hereof, this Agreement shall be binding on and inure to the benefit of
the parties and their respective successors and assigns.
Section 12.3. Governing Law; Submission to Jurisdiction; Waivers. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.
THE ISSUER HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY NEW
YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND THE
ISSUER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION
OR PROCEEDING MAY BE HEARD IN SUCH NEW YORK STATE OR FEDERAL COURT. THE ISSUER
FURTHER WAIVES ANY OBJECTION TO VENUE IN THE STATE OF NEW YORK AND ANY OBJECTION
TO ANY ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS
AND THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST CHASE OR ANY OF ITS AFFILIATES
HEREUNDER SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT
SITTING IN NEW YORK COUNTY.
THE ISSUER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO IT
AT ITS ADDRESS SET FORTH IN SECTION 12.8 HEREOF.
THE ISSUER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM FOR
INDEMNIFICATION OR CONTRIBUTION HEREUNDER OR IN RESPECT OF ANY CLAIM, ACTION OR
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE MATTERS WHICH ARE THE SUBJECT
OF THIS AGREEMENT AND THE WARRANTS OR IN ANY OTHER MANNER IS HEREBY WAIVED OR
DEEMED WAIVED BY EACH PARTY TO THIS AGREEMENT AND EACH PARTY WHO MAY NOW OR
HEREAFTER BE ENTITLED TO INDEMNIFICATION HEREUNDER.
Section 12.4. Headings. Paragraph headings are inserted herein for
convenience only and do not form a part of this Agreement.
Section 12.5. Entire Agreement; Amendment. This Agreement and the
Warrants contain the entire agreement among the parties hereto with respect to
the transactions contemplated hereby, supersede all prior written agreements and
negotiations and oral understandings, if any, and may not be amended or
supplemented except by an instrument in writing signed by the Issuer and the
Majority Holders (except only for supplements contemplated by any executed
Joinder Agreement). In the event that any Holder or the Issuer shall be
required, as a result of the enactment, amendment or modification, subsequent to
the date hereof, of any applicable law or regulation, or by the order of any
governmental authority, to take any action that is inconsistent with or that
would constitute a violation or a breach of any terms of this Agreement, then
the Holders and the Issuer shall use their best efforts to negotiate an
appropriate amendment or modification of, or waiver of compliance with, such
terms.
Section 12.6. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 12.7. Injunctive Relief. It is acknowledged that it will be
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impossible to measure in money the damages that would be suffered if the parties
fail to comply with any of the obligations herein imposed on them and that in
the event of any such failure, an aggrieved Person will be irreparably damaged
and will not have an adequate remedy at law. Any such Person shall, therefore,
be entitled to injunctive relief, including specific performance, to enforce
such obligations, and if any action should be brought in equity to enforce any
provisions of this Agreement, none of the parties hereto shall raise the defense
that there is an adequate remedy at law.
Section 12.8. Notices. All notices, statements, instructions or other
documents required to be given hereunder, shall be in writing and shall be given
personally by courier, by mailing the same, first class mail, postage prepaid
and either certified or registered, return receipt requested, or by confirmed
telecopy, in each case addressed as follows:
if to the Issuer, at:
1 Commerce Park
Valhalla, NY 10595
Attn: Leonard A. Trugman
Telephone: (914) 686-3600
Telecopy: (914) 686-5425
with a copy to:
Martin Goldwyn, Esq.
Tashlik, Kreutzer & Goldwyn, P.C.
833 Northern Boulevard
Great Neck, NY 11021
Telephone: (516) 466-8005
Telecopy: (516) 829-6537
or at such other address as the Issuer may specify by written notice to each
Holder in accordance with this Section 13.8;
if to Chase, at:
Chase Manhattan Plaza 15
New York, NY 10081
Attn: Anthony Garvin
Telephone: (212) 552-9845
Telecopy: (212) 552-9542
with a copy to:
The Chase Manhattan Bank, N.A.
31 Mamaroneck Avenue
White Plains, NY 10601
Attn: Michael Anthony
Telephone: (914) 328-8228
Telecopy: (914) 328-8373
or at such other address as Chase may specify by written notice to the Issuer;
and if to the Holders, at their addresses reflected in the stock records of the
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<PAGE>
Issuer. Each Holder, by written notice given to the Issuer in accordance with
this Section 12.8, may change the address to which notices, statements,
instructions or other documents are to be sent to such Holder. All notices,
statements, instructions and other documents hereunder that are mailed shall be
deemed to have been given five days after having been deposited in the mail with
the proper address and postage.
Section 12.9. Brokers; Information. No party hereto has dealt with any
broker, finder, commission agent or other Person in connection with the
Warrants, the Warrant Stock or any other securities or aspects of the
transactions contemplated by this Agreement, and no party hereto is under any
obligation to pay any broker's fees or other commission in connection therewith.
Section 12.10. Recapitalizations, Exchanges, Etc. The provisions of
this Agreement shall apply, to the full extent set forth herein with respect to
Common Stock, to any and all shares of capital stock of the Issuer or any
successor or assign of the Issuer (whether by merger, consolidation, sale of
assets or otherwise) that may be issued in respect of, in exchange for, or in
substitution of, Common Stock (and without duplication of the terms of any
Warrant), which shall be appropriately adjusted for any stock dividends, splits,
reverse splits, combinations, recapitalizations and the like occurring after the
date hereof.
Section 12.11. Expenses. The Issuer agrees to pay all fees and
disbursements of each Holder (excluding fees and expenses of counsel) in
connection with the issuance of the Warrants as contemplated by this Agreement
or any amendments hereto or thereto and the fees and disbursements of each
Holder (excluding fees and expenses of counsel) in connection with the
preparation, negotiation, review, execution, delivery and enforcement of this
Agreement, the Warrants and the other documents contemplated hereby and thereby
and any waiver or consent hereunder or thereunder and any amendment hereof or
thereof. In addition, the Issuer agrees to pay any and all stamp, transfer and
other similar taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement and the issuance of the Warrants.
Section 12.12. Taking of Record; Stock and Warrant Transfer Books. In
the case of all dividends or other distributions by the Issuer to the holders of
its Common Stock with respect to which any provision of Article 5 refers to the
taking of a record of such holders, the Issuer will in each such case take such
a record as of the close of business on a Business Day. The Issuer will not at
any time, except upon dissolution, liquidation or winding up of the Issuer,
close its stock transfer books or warrant transfer books so as to result in the
preventing or delaying the exercise or transfer of any Warrants or Warrant
Stock.
Section 12.13. Indemnification. The Issuer shall indemnify and hold
harmless Chase, the Holders and each of their respective directors, officers,
employees, controlling persons and agents (each an "Indemnified Person") on
demand from and against any and all losses, claims, damages, liabilities (or
actions or other proceedings commenced or threatened in respect thereof) and
expenses that arise out of, result from, or in any way relate to, this Agreement
or the Warrants, or in any connection with the other transactions contemplated
hereby or thereby, and shall reimburse each Indemnified Person, upon its demand,
for any reasonable legal or other expenses incurred in connection with
investigating, defending or participating in the defense of any such loss,
claim, damage, liability, action or other proceeding (whether or not such
Indemnified Person is a party to any action or proceeding out of which any such
expenses arise), other than any of the foregoing claimed by any Indemnified
Person to the extent incurred by reason of the gross negligence or wilful
misconduct of such Indemnified Person.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first written above.
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<PAGE>
DEL GLOBAL TECHNOLOGIES CORP.
By: /s/David Engel
------------------------------
David Engel
Executive Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/Eileen Piker
-----------------------------
Eileen Piker
Second Vice President
24
<PAGE>
EXHIBIT A
FORM OF WARRANT
This Warrant is subject to and is transferable only upon compliance with the
provisions specified in the Warrant Agreement dated as of March 5, 1996 (the
"Warrant Agreement", between Del Global Technologies Corp. and The Chase
Manhattan Bank, N.A., a copy of which may be obtained from Del Global
Technologies Corp. or from the holder of this Warrant.
No. of Stock Units: ____________ Certificate No.______
WARRANT
to Purchase
Common Stock
of
DEL GLOBAL TECHNOLOGIES CORP.
THIS IS TO CERTIFY THAT The Chase Manhattan Bank, N.A., a Delaware
corporation ("Chase"), or registered assigns, is entitled, at any time, to
purchase an aggregate of _____ Stock Units, in whole or in part, from the
Issuer. This Warrant may be exercised, in the manner provided in Article 3 of
the Warrant Agreement, at any time until 5:00 P.M., New York City time, on the
Warrant Expiration Date, at a purchase price equal to the Exercise Price per
Stock Unit (as such Stock Unit is adjusted in accordance with the provisions of
the Warrant Agreement), all on the terms and conditions and pursuant to the
provisions provided herein and in the Warrant Agreement. Capitalized terms used
herein without definition have the meanings assigned to them in the Warrant
Agreement.
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAW.
IN WITNESS WHEREOF, the Issuer has caused this Warrant to be duly
executed and its corporate seal to be impressed hereof and attested by its
Secretary or an Assistant Secretary.
Dated as of _________________, 19___
[CORPORATE SEAL] DEL GLOBAL TECHNOLOGIES CORP.
Attest:
________________________________ By: ___________________________
Michael Taber David Engel
Secretary Executive Vice President
25
<PAGE>
Exhibit 1 to Exhibit A
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases _______ Stock Units of Del Global Technologies
Corp. purchasable with this Warrant, and herewith makes payment therefor [by
check or wire transfer, in the amount of $___________ ], all at the price and on
the terms and conditions specified in this Warrant and in the Warrant Agreement
dated as of March 5, 1996, between Del Global Technologies Corp. and The Chase
Manhattan Bank, N.A. The undersigned requests that certificates for the shares
of Common Stock hereby purchased (and any securities or other property issuable
upon such exercise) be issued in the name of and delivered to
___________________________________________________________, whose address is
__________________________________________________________________.
Dated: _______________, 19____
[Name of Registered Owner]
By: _______________________________
Name:
Title:
____________________________________
Street Address
____________________________________
City State Zip Code
OR
____________________________________
(Signature of Transferee)
____________________________________
Street Address
____________________________________
City State Zip Code
26
<PAGE>
Exhibit 2 to Exhibit A
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
all the rights of the undersigned under the within Warrant Certificate with
respect to the number of Warrants evidenced thereby set forth below to:
Name of Assignee Address Number of Warrants
Dated: _______________________
[Name of Holder]
By: ________________________________
Name:
Title:
27
<PAGE>
EXHIBIT B
[FORM OF JOINDER AGREEMENT]
JOINDER IN
DEL GLOBAL TECHNOLOGIES CORP.
WARRANT AGREEMENT
In consideration of the issuance or transfer to (him) (her) (it) of
Warrants of Del Global Technologies Corp. (the "Issuer"),
______________________________________ (the "Additional Warrantholder") agrees
that, as of the date written below, the Additional Warrantholder shall become a
party as a Holder to the Warrant Agreement dated as of March 5, 1996 between the
Issuer and The Chase Manhattan Bank, N.A. (as at any time amended or otherwise
modified, the "Warrant Agreement"); terms defined therein having their
respective defined meanings when used herein). The Additional Warrantholder
agrees to be bound by all of the terms and provisions of the Warrant Agreement
as though (he) (she) (it) were any original party thereto and were included in
the definition of "Holder" as used therein.
[Name of Additional Warrantholder]
Dated: _________________ By: _________________________________
Name:
Title:
28
<PAGE>
WARRANT
This Warrant is subject to and is transferable only upon compliance with the
provisions specified in the Warrant Agreement dated as of March 5, 1996 (the
"Warrant Agreement"), between Del Global Technologies Corp. and The Chase
Manhattan Bank, N.A., a copy of which may be obtained from Del Global
Technologies Corp. or from the holder of this Warrant.
No. of Stock Units: 17,000 Certificate No. AW-1
WARRANT
to Purchase
Common Stock
of
DEL GLOBAL TECHNOLOGIES CORP.
THIS IS TO CERTIFY THAT The Chase Manhattan Bank, N.A., a Delaware
corporation ("Chase"), or registered assigns, is entitled, at any time, to
purchase an aggregate of Seventeen Thousand (17,000) Stock Units, in whole or in
part, from the Issuer. This Warrant may be exercised, in the manner provided in
Article 3 of the Warrant Agreement, at any time until 5:00 P.M., New York City
time, on the Warrant Expiration Date, at a purchase price equal to the Exercise
Price per Stock Unit (as such Stock Unit is adjusted in accordance with the
provisions of the Warrant Agreement), all on the terms and conditions and
pursuant to the provisions provided herein and in the Warrant Agreement.
Capitalized terms used herein without definition have the meanings assigned to
them in the Warrant Agreement.
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAW.
IN WITNESS WHEREOF, the Issuer has caused this Warrant to be duly
executed and its corporate seal to be impressed hereof and attested by its
Secretary or an Assistant Secretary.
Dated as of March 5, 1996
[CORPORATE SEAL] DEL GLOBAL TECHNOLOGIES CORP.
Attest:
/s/ Michael Taber By: /s/David Engel
- ------------------------ -------------------------------------
Michael Taber, Secretary David Engel, Executive Vice President
29
<PAGE>
Exhibit 1 to Warrant
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases ________ Stock Units of Del Global Technologies
Corp. purchasable with this Warrant, and herewith makes payment therefor [by
check or wire transfer, in the amount of $___________ ], all at the price and on
the terms and conditions specified in this Warrant and in the Warrant Agreement
dated as of March 5, 1996, between Del Global Technologies Corp. and The Chase
Manhattan Bank, N.A. The undersigned requests that certificates for the shares
of Common Stock hereby purchased (and any securities or other property issuable
upon such exercise) be issued in the name of and delivered to
__________________________________________________________, whose address is
_________________________________________________________________.
Dated: _______________, 19____
[Name of Registered Owner]
By: _______________________________
Name:
Title:
____________________________________
Street Address
____________________________________
City State Zip Code
OR
____________________________________
(Signature of Transferee)
____________________________________
Street Address
____________________________________
City State Zip Code
30
<PAGE>
Exhibit 2 to Warrant
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
all the rights of the undersigned under the within Warrant Certificate with
respect to the number of Warrants evidenced thereby set forth below to:
Name of Assignee Address Number of Warrants
Dated: _______________________
[Name of Holder]
By: ________________________________
Name:
Title:
31
