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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 (Date of earliest event reported) July 31, 1997
TECHDYNE, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-14659 59-1709103
- ---------------------------- ------------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2230 West 77th Street, Hialeah, Florida 33016
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 556-9210
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Item 2. Acquisition or Disposition of Assets
On July 31, 1997, Techdyne, Inc., (the "Company") completed the acquisition
of Lytton Incorporated, a Delaware corporation with operations based in Ohio
("Lytton"), pursuant to a Stock Purchase Agreement whereby all the
outstanding shares of Lytton held by Patricia A. Crossley (the "Seller"),
wife of the President and CEO of Lytton, were acquired by the Company for
$2,500,000 and 300,000 shares of the Company's common stock, $.01 par value
("Techdyne Common Stock"). In addition, the Company has provided the Seller
with certain guarantees as to the amount of consideration to be received upon
her sale of the Techdyne Common Stock within the 12 months from the Closing
of the acquisition, to wit, up through July 30, 1998. Further consideration
was provided to the Seller through incentive consideration, which for a
period of three years, includes payment to the Seller of 4% of Lytton's sales
over $14,000,000 up to $20,000,000, and 5% of Lytton's sales over
$20,000,000. The principle followed in determining the amount of
consideration was the industry valuation (p/e ratio), the earnings and net
worth of Lytton.
The cash portion of the consideration was obtained from the Company's
revolving loan with Barnett Bank, N.A. (the "Bank") which was increased from
$2,000,000 to $2,500,000 on July 31, 1997, the Closing date of the acquisition.
Interest on the revolving loan is .75% above the prime rate, which interest rate
on loan at July 31, 1997 was 9.25%. The Company is in the process of
registering the Techdyne Common Stock for the Seller.
Lytton is engaged in the manufacture, assembly and distribution of printed
circuit boards and other electronic products for over 40 major commercial
customers. Lytton's net sales and net income before taxes were approximately
$16,730,000 and $827,000, respectively, for its fiscal year ended March 31,
1997. This would reflect in the Company's revenues for its last fiscal year on
a pro forma basis with its new subsidiary, Lytton, being in excess of
$40,000,000 and combined pre-tax income of approximately $1,837,000.
The Lytton acquisition continues the Company's business strategy of
expanding its customer base, broadening its product line, increasing its
manufacturing capabilities, and entering into new geographic areas.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of business acquired*
(b) Pro forma financial information*
(c) Exhibits
(2) Plan of acquisition, reorganization, arrangement, liquidation
or succession
(i) Stock Purchase Agreement between Patricia Crossley,
Lytton Incorporated and the Company dated July 31,
1997
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(99) Additional Exhibits
(i) First Amendment to Loan and Security Agreement, Loan
Agreement and Security Agreement between the Company
and Barnett Bank, N.A. dated July 31, 1997
(ii) Revolving Demand Promissory Note from the Company to
Barnett Bank, N.A. dated July 31, 1997
(iii) Unconditional and Continuing Guaranty of Payments and
Performance by Medicore, Inc. in favor of Barnett
Bank, N.A. dated July 31, 1997
(iv) Subordination Agreement among the Company, Barnett
Bank, N.A. and Medicore, Inc. dated July 31, 1997
* As of the date of the filing of this Current Report on Form 8-K it is
impracticable for the Company to provide the financial statements of the
acquired company, Lytton Incorporated, required by Item 7(a) and the pro forma
financial information required by Item 7(b) of this Current Report. In
accordance with Item 7(a)(4) and Item 7(b)(2) of this Current Report on Form
8-K, such financial statements and pro forma financial information shall be
filed by amendment to this Current Report no later than 60 days from the date of
this Current Report.
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.
TECHDYNE, INC.
By
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DANIEL R. OUZTS, Vice President
Dated: August 12, 1997
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Exhibit 2(i)
STOCK PURCHASE AGREEMENT
THIS AGREEMENT made between PATRICIA CROSSLEY residing at 61 Flamingo
Drive, Crossville, Tennessee (the "Seller"); LYTTON INCORPORATED, a Delaware
corporation with offices located at 1784 Stanley Avenue, Dayton, Ohio 45404
(the "Company"); and TECHDYNE, INC., a Florida corporation with its principal
offices located at 2230 West 77th Street, Hialeah, Florida 33016 (the
"Buyer");
WHEREAS, Seller has heretofore operated the Company engaged in the
manufacture and assembly of printed circuit boards and other electronic
products for commercial customers;
WHEREAS, Seller is the owner of 100% of the Company's shares of no par
value common stock (the "Common Stock") which Common Stock represents all of
the issued and outstanding shares of the Company; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase from
Seller all shares of the Common Stock (the "Shares") upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth and subject to the terms and conditions hereof, all based on
the representations, warranties and agreements of the parties hereto, the
Company, Seller and Buyer, intending to be legally bound, agree as follows:
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ARTICLE 1
SALE AND PURCHASE OF SHARES
1.1 Sale and Transfer of Shares. Subject to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined in Section 2.1
hereunder) the Seller shall sell, transfer, assign, convey and deliver all
the Shares of the Company to the Buyer free and clear of all liens,
mortgages, charges, pledges, encumbrances, agreements, claims, security
interests, taxes, conditions or restrictions of any nature whatsoever
(collectively "Liens or Encumbrances") for the consideration hereinafter
provided, and the Buyer shall purchase and acquire the Shares from the Seller
as set forth herein, free and clear of all Liens or Encumbrances.
1.2 Payment of Purchase Price of the Shares. As full payment and
complete consideration for the sale and transfer of all the Shares by the
Seller to the Buyer (the "Purchase Price") and subject to the terms of this
Agreement and in reliance upon the representations of the Seller, the Buyer
shall pay to the Seller and otherwise as provided in Section 3.13 hereof the
following consideration as the Purchase Price for the Shares:
(i) on the Closing Date, 300,000 shares of common stock, $.01 par
value of Techdyne, Inc. (the "Techdyne Common Stock") which Techdyne Common
Stock shall be restricted from further public transfer, sale or other
disposition; provided Buyer agrees prior to or immediately from the Closing
Date, to file the appropriate registration statement and related qualifying
documents with the federal and state securities commissions and agencies in
order to enable the Seller to offer and sell the Techdyne Common Stock
publicly and in those states the Seller reasonably requests, and the Buyer
agrees to use its best efforts to have such
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registration statement and related qualifying documents declared effective
by the federal and state securities omissions and agencies as soon as is
practicable but no later than 120 days from the Closing Date.
In the event the Buyer is unable to register the Techdyne Common Stock
within 120 days from the Closing Date, the Buyer shall, upon the Seller's
request, redeem any or all of the Techdyne Common Stock transferred to the
Seller pursuant to this Agreement, for the closing price of the Techdyne
Common Stock as reported by Nasdaq on the date redemption is so requested.
(ii) on the Closing Date, Two Million Five Hundred Thousand
($2,500,000) Dollars by check or wired funds;
(iii) Buyer Guarantee:
(a) Provided the Seller sells or has the Techdyne Common Stock
redeemed as per Section 1.2(i) within twelve (12) months from the
Closing Date, if the Seller realizes less than Four Million Nine
Hundred Thousand ($4,900,000) Dollars of the aggregate Purchase Price
as provided in Section 1.2(i) and (ii) hereinabove (Two Million Five
Hundred Thousand ($2,500,000) Dollars plus the proceeds from the sale
of the Techdyne Common Stock), then the Buyer will make up the
difference between such aggregate proceeds realized by the Seller and
the $4,900,000, in either or any combination of, at the discretion of
the Buyer, cash and/or Additional Techdyne Common Stock; provided such
Additional Techdyne Common Stock is registered by the Buyer as soon as
is practicable from but no later than 120 days from issuance, under
federal and state securities laws, and if not so registered said
guaranteed difference shall be paid in cash.
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Provided, however, that Buyer's Guarantee as set forth in this
Section 1.2 (iii) is only effective and valid if the Company for its
fiscal year ended March 31, 1998 reflects pre-tax earnings of no less
than One Million One Hundred Twenty-Two Thousand ($1,122,000) Dollars
calculated as a stand-alone entity with no imputed charges from the
Buyer added to the Company's expenses ("Pre-Tax Earnings Condition");
or alternatively
(b) Provided the Seller sells or has the Techdyne Common Stock
redeemed as per Section 1.2(i) within twelve (12) months from the
Closing Date, but the Company does not satisfy the Pre-Tax Earnings
Condition, then the Buyer's Guarantee shall be that the Seller shall
realize no less than Four Million Five Hundred Thousand ($4,500,000)
Dollars of the aggregate Purchase Price as provided in Sections 1.2(i)
and (ii) hereinabove (Two Million Five Hundred Thousand ($2,5000,000)
Dollars plus the proceeds from the sale or redemption of the Techdyne
Common Stock), and to that extent, then the Buyer will make up the
difference between the aggregate proceeds realized by the Seller and
the $4,500,000, in either or any combination of, at the discretion of
the Buyer, cash and/or Additional Techdyne Common Stock, provided such
Additional Techdyne Common Stock is registered by the Buyer as soon as
is practicable from but not later than 120 days from issuance, under
federal and state securities laws, and if not registered said
guaranteed difference shall be paid in cash.
In either of the Buyer's Guarantees as provided in Sections 1.2(iii)(a) or
(b) hereof, should the Seller realize a sum greater than the applicable
guaranteed amount, then the Seller shall keep any and all such excess sums.
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It is understood and agreed that the Buyer's Guarantee as provided in this
Section 1.2(iii) is only valid and effective if the Seller elects, at the
Seller's sole option and discretion, to sell the Techdyne Common Stock within
the twelve (12) month period from the Closing Date; and the failure of the
Seller to so timely sell the Techdyne Common Stock will render the Buyer's
Guarantee as provided in this Section 1.2(iii) null and void.
(iv) Incentive Consideration: For a period of three years from the
Closing Date, measured upon the three fiscal years or the same 12 month
periods of the Company, to wit, March 31, 1998, 1999 and 2000, the Buyer
shall pay to the Seller in cash on or prior to April 15 of each such year:
(a) Four percent (4%) of Company sales over $14,000,000 up to
$20,000,000; and
(b) Five percent (5%) of Company sales over $20,000,000.
Sales and Pre-Tax Earnings as contemplated herein shall be audited,
prepared in accordance with generally accepted auditing principles and in
accordance with Section 3.5 of this Agreement.
1.3 Directors and Officers of the Company. In further consideration
of this Agreement, the officers and directors of the Company on the Closing Date
shall be:
Name Officer Directorships
- ---- ------- -------------
Barry Pardon Chief Executive Officer Chairman of the Board
Lytton Crossley President Director
David Watts Vice President ------
Chief Financial Officer and
Secretary-Treasurer
Jeff Livingston Vice President and Chief ------
Operating Officer
Thomas K. Langbein ------ Director
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1.4 Further Assurances. If at any time after the Closing Date, the Buyer
shall consider or be advised that any deeds, bills of sale, assignments or
assurances or any other acts or things are necessary, desirable, or proper (i)
to vest, perfect or confirm, of record or otherwise, in the Buyer or in the
Company, the right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of the Company, or (ii)
otherwise to carry out the purposes of this Agreement, the Seller and the
Company and its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of either of the
Buyer or the Company, all such deeds, bills of sale, assignments and assurances
and do, in the name and on behalf of the Buyer and/or the Company all such other
acts and things necessary, desirable or proper to vest, perfect or confirm the
right, title or interest in, to or under any of the rights, privileges, powers,
franchises properties, assets or Shares of the Company in the Buyer or the
Company and otherwise to carry out the purposes of this Agreement.
ARTICLE II
CLOSING
2.1 Closing Date. The Closing of the transactions contemplated by this
Agreement shall take place at the offices of the Company a 1784 Stanley Avenue,
Dayton, Ohio 45404 on such date within sixty (60) days after the Buyer's receipt
of the Audited Financial Statements of the Company as referred to in Section 3.5
hereof, but in no event later than the close of business on August 31, 1997,
except as the parties shall mutually agree in writing or as otherwise designated
by the Buyer and the Seller if the conditions to the obligations of the Buyer or
the Seller hereunder have not been fulfilled or waived in writing
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at or prior to such time. The date of Closing so determined is herein
sometimes called the "Closing Date."
2.2 Supplemental Schedule. Five (5) days prior to the Closing Date, the
Seller and the Company shall provide the Buyer with Supplemental Schedule I
which shall provide an update of all the information as required in Exhibits
A, C through E and H through R, and in the representations and warranties of
the Seller and the Company as per Article III hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Seller and the Company, jointly and severally, make the following
representations and warranties to the Buyer, each of which shall be deemed to be
independently material and to have been relied upon by the Buyer.
3.1 Corporate Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all the requisite corporate power and authority and Licenses (as defined
in Section 3.21 hereof) to carry on its business as now conducted and to own its
property in the manner and in the place where such property is presently
located, and is qualified as a foreign corporation in such jurisdictions in
which the character of its business or the nature of its property requires such
qualification.
3.2 Subsidiaries. The Company has no subsidiaries and owns no interest or
securities in any other person or entity, nor does it control, directly or
indirectly, any corporate, association or other business organization.
3.3 Corporate Structure and Title to Shares. The Company has authorized
capital consisting of 1,000 shares of common stock, no par value, of which 51
shares of
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Common Stock are presently issued and outstanding, all of which are fully
paid, validly issued and non-assessable, free and clear of any Liens or
Encumbrances of any kind and nature other than restrictions on transfer
imposed by applicable state and federal securities laws; and all such capital
stock is owned, of record and beneficially, by and with all voting,
investment and disposition power and rights solely in the Seller.
No other class of capital stock of the Company is authorized or
outstanding. There are no outstanding options, subscriptions, rights, warrants
or contracts to issue, nor any securities convertible into or contracts, or any
other rights or commitments obligating the Seller or the Company to issue or
entitling anyone to acquire, make investment decisions for, vote or otherwise
deal with or have an interest in the Common Stock of the Company, whether
issued, unissued, held in treasury or otherwise.
The officers and directors of the Company are listed on Exhibit A, certain
of whom as indicated on Exhibit A, shall resign effective the Closing Date, such
resignations to be provided at the Closing as part of Exhibit A.
3.4 Seller's Authority. The Seller has the full and unrestricted legal
right, power and authority to enter into this Agreement and to carry out the
terms hereof and to sell, transfer and deliver the Shares to the Buyer in
accordance with the terms of this Agreement and upon the sale, transfer and
delivery of the Shares to the Buyer pursuant to this Agreement, the Buyer will
be vested with good and marketable title thereto, free and clear of all Liens or
Encumbrances of any kind, other than restrictions on transfer imposed by
applicable state and federal securities laws. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Seller, the sole record and beneficial security
holder of the Company, and do not and will not constitute a material breach or
default of or violate any provisions of the terms of any agreement or violate or
conflict with any other restrictions of any kind or
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character to which the Seller or the Company is a party or by which any of
them is bound. The execution of this Agreement shall constitute the legal,
valid and binding obligation of the Seller enforceable in accordance with its
terms. Neither the Seller nor the Company has made any other agreement with
any other party with respect to the sale or encumbrance of the Shares, the
Company or a substantial portion of its Assets (as defined on Section 3.8
hereof), or merger or consolidation of the Company.
3.5 Financial Statements. The Seller has furnished to the Buyer the
Company's audited balance sheet for the year ended March 31, 1997 and related
statements of revenues, expenses and retained earnings, stockholder's equity
and cash flows ("Audited Financial Statements"), Exhibit B hereto. The
Audited Financial Statements, together with the notes thereto, are and shall
(i) be initialed by the Seller; (ii) be in accordance with the Company's
books and records; (iii) present completely, fairly and accurately the
financial position of the Company as of such date and its results of
operations for the periods represented thereby; (iv) be prepared in
accordance with generally accepted accounting principles and practices
applied on a consistent basis; (v) contain and reflect all necessary
adjustments for a fair presentation of the results of operations and
financial condition for and as of the periods covered by said financial
statements; (vi) reflect that all sales are and were bona fide and made on
normal terms; (vii) reflect that allowances and adjustments for doubtful
accounts are adequate based on past experience and no circumstances exist at
year end or on the Closing Date which require the establishment of additional
allowances for doubtful accounts; (viii) reflect inventories that are
adequate for its operations and provide an adequate obsolence reserve for
slow moving and/or obsolete materials and inventory based on past experience
and no circumstances exist at year end or on the Closing Date that require
the establishment of additional allowances for slow moving inventory or
require the write-off of any material inventory; and (ix) be true, correct
and complete.
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The Seller shall be responsible for all the fees and expenses of its
independent auditors in connection with the preparation of any and all the
financial statements as provided for in this Agreement, audited or otherwise, as
well as its opinions, reports and comfort letters.
3.6 Absence of Undisclosed Liabilities. The Company shall have no debt,
obligation or liability not reflected in the Audited Financial Statements, which
Audited Financial Statements set forth all of the liabilities and obligations,
direct and indirect, contingent and accrued of any nature whatsoever, whether
arising out of contract, tort, statute or otherwise, except with respect to the
liabilities and obligations incurred in the ordinary course of business
subsequent to March 31, 1997 up through the Closing Date. The Seller does not
know of any potential liability of the Company not reflected in the Audited
Financial Statements required to be reflected therein in accordance with the
generally accepted accounting principles.
3.7 Approvals and Restrictions. The execution and delivery of this
Agreement and the performance of the covenants and agreements herein contained
and the consummation of the transactions provided hereunder do not require any
third party consent, approval or authorization and do not violate, conflict with
nor will result in the breach or default under or cause the acceleration of any
liability or debt or the creation of any Lien or Encumbrance upon any of the
assets or capital stock of the Company under the provision of (a) the
certificate of incorporation or by-laws of the Company, as the same may have
been amended from time to time, or (b) any obligation, lien, lease, agreement,
instrument, License, permit, statute, rule, regulation, law, order, arbitration
award, judgment, decree or any other restriction or instrument to which the
Seller or the Company are parties or by which any of them or the Company's
assets are subject or bound.
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3.8 Title to Assets. The Company has good, marketable and indefeasible
title to all of its personal and real property, tangible and intangible,
including without limitation, the properties and assets as reflected in its
Audited Financial Statements, and acquired after the date hereof up to the
Closing Date (the "Assets"), which Assets are to remain with the Company upon
purchase of the Shares by the Buyer and are sufficient for the Company to
continue to conduct its business in the same manner as it has been conducted in
the past, and which Assets are free and clear of all liabilities, conditional
sales agreements, security interests, leases, Liens or Encumbrances or other
imperfections of title whatsoever. Such Assets are in the possession and/or
control of the Company and such Assets have the value as represented in the
Audited Financial Statements, and are in good operating order and condition in
accordance with industry usage.
3.9 Leases. Exhibit C contains a true and complete listing of all
leases, whether for real or personal property, including equipment, machinery
and vehicles under and through which the Company's operations are conducted
and to which the Company is a party and with regard to each lease sets forth
the following: (i) the name and address of the lessor and lessee; (ii) the
expiration date of the lease; (iii) the monthly rent and any additional rent
called for under the lease; and (iv) any other material terms which affect
possession or occupancy thereunder. True, correct and complete copies of
such leases and amendments thereto are attached to Exhibit C. All of the
leases are valid and binding lease obligations, enforceable in accordance
with their terms and shall continue upon the Buyer's acquisition of the
Shares, and shall not be terminated, are not voidable or otherwise materially
adversely affected by the acquisition by the Buyer of the Shares or any of
the transactions contemplated by this Agreement and shall remain valid and
binding lease agreements enforceable in accordance with their terms. The
Company is in good standing under each lease and neither the Seller nor the
Company has received any official written notice of non-
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compliance with applicable federal, state or municipal regulations. The
Company has no material obligation as lessor or lessee which it has not fully
performed, nor is the Seller or the Company aware of any material
expenditures which are likely to be required under the provision of any such
lease for any purpose other than the payment of rent. Neither the Seller nor
the Company knows of any default by any lessor or lessee thereunder or have
any knowledge of a fact which might reflect interference with or materially
affect the use, enjoyment or operation of the property subject to the leases.
3.10 Contracts and Commitments. Exhibit D constitutes a full and complete
list as at the date hereof with respect to the Company of each contract or
agreement, including without limiting the generality of the foregoing: (a) the
new Manufacturer's Representative Agreement with E-MEK Technologies, Inc. (b)
all contracts and agreements for the purchase, sale or lease of capital assets
involving more than $25,000 and extending more than two months; (c) all
management (including all directors and officers), shareholders or employee
contracts or agreements or collective bargaining agreements; (d) all notes, loan
agreements, guarantees and other evidences of indebtedness together with
evidence of all forms of security given in connection therewith; and (e) all
pension, life insurance profit sharing, bonus, retirement or other employee
benefit plans and arrangements. As used herein, the terms "contract" and
"agreement" mean and include every contract, agreement, commitment,
understanding and promise, whether written or oral, executed or executory.
Neither the Seller nor the Company or its affiliates have violated any of
the material terms of any such agreements or contracts nor has any claim been
made by any party thereto nor is there any default thereunder nor has the Seller
or the Company or its affiliates received official written notice nor do they
have any belief that any such contract or agreement is in default or that there
is a claim accrued or accruing thereunder.
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The Company guaranteed Citywide Development Corporation's ("Citywide")
mortgage on the property located at 1784 Stanley Avenue, Dayton, Ohio
("Citywide Guaranty"), which mortgage was originally in the amount of
$200,000 and was assumed on September 14, 1996 by Stanley Avenue Properties
LTD., owned by the Seller and Lytton F. Crossley, President and director of
the Company, which Citywide mortgage at June 30, 1997 amounted to $164,650
with interest at 7.08% per annum. The Citywide Guaranty shall be removed
within 12 months of the Closing Date. If the Citywide Guaranty is not
removed and eliminated within 12 months of the Closing Date, then the Seller
agrees to pay-off the Citywide mortgage upon demand of the Buyer, or at the
option of the Buyer, to have any Buyer Guarantee or Incentive Consideration
as provided in Sections 1.2(iii) and (iv), respectively, paid to Citywide,
with the balance of the Citywide note and mortgage remaining, if any, to be
paid by the Seller.
The Seller shall cause Stanley Avenue Properties LTD. to issue a mortgage
to the Buyer on the Closing Date as security for removal of the Citywide
Guaranty; provided that said mortgage may only be foreclosed should prior demand
upon the Seller for repayment of the Citywide mortgage and payment to Citywide,
if any, of the Buyer Guarantee and/or Incentive Consideration as provided in
Sections 1.2(iii) and (iv), respectively, not fully and completely satisfy the
Citywide mortgage and removal of the Citywide Guaranty. Upon removal of the
Citywide Guaranty, the Buyer shall provide and file a satisfaction of mortgage
removing its security interest in the property.
Except as set forth herein or in the Audited Financial Statements:
(a) The Company has no contracts or commitments which are essential
to the business, operations or financial condition of the Company other
than those described in, or incurred in the ordinary course of business,
and not required to be described in this Agreement or any of the Exhibits
annexed hereto;
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(b) Neither the Seller nor the Company knows nor do either of them
have any reason to believe that there are any purchase commitments by the
Company in excess of the normal, ordinary and usual requirements of the
business of the Company or at any excessive price;
(c) Neither the Seller nor the Company knows nor has any reason to
believe that there are any outstanding contracts or commitments which in
the aggregate will result in any material loss to the Company upon
completion of performance thereof, after allowance for direct distribution
expenses. The Seller does not know nor has any reason to believe that
there are any outstanding contracts, bids or sales or service proposals
quoting prices which in the aggregate will not result in a normal profit to
the Company;
(d) Neither the Seller nor the Company does not know, nor does either
of them have any reason not to believe that all accounts receivable as set
forth in the Audited Financial Statements are current and collectible net
of any reserves set forth on such audited balance sheets;
(e) There are no product liability claims (other than fully insured)
of which the Company or the Seller has received notice, and neither the
Seller nor the Company knows or has any reason to believe that any such
claims are or may be threatened;
(f) Neither the Company nor the Seller has given any irrevocable
power of attorney to any person, firm or corporation for any purpose
whatsoever;
(g) The Company has no employment agreements, or any agreements that
contain any severance or termination pay liabilities or obligations;
(h) The Company is not presently paying any pension, deferred
compensation or retirement allowance to anyone except as set forth in
Exhibit E;
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(i) The Company is not restricted by agreement from carrying on its
business anywhere in the world;
(j) Neither the Company nor the Seller has received any notice of any
claim that the Company is under any liability or obligation with respect to
the return of inventory or merchandise in the possession of wholesalers,
retailers or other customers, other than returns of unsalable merchandise
or inventory in the aggregate not exceeding $25,000.
3.11 Inventory. The aggregate fair market value of the inventory of the
Company on March 31, 1997, and as of the date hereof, are not less than the
aggregate book value of the inventory of the Company on March 31, 1997 as
reflected in the Audited Financial Statements and on the books of the Company as
of the date hereof, respectively. In the Seller's and the Company's opinion,
such inventory consists of a quality and quantity usable and salable in the
ordinary course of business of the Company, except for items of obsolete
materials and materials of below standard quality, all of which have been
written down in such audited balance sheets of the Audited Financial Statements
and on such books to realizable market value, or for which adequate reserves
have been provided in such audited balance sheets and on such Company books.
3.12 Claims. As of the date hereof, neither the Seller nor the Company
knows of any claims to return in excess of an aggregate of $25,000 of
merchandise by reason of alleged overshipments, defective merchandise, or any
other reason, or of merchandise in the hands of customers of the Company under
an understanding that such merchandise would be returnable.
3.13 Litigation and Claims. There is no litigation, investigation,
proceeding, suit, action, judgment, controversy or claim, by or before any
court, governmental board, department, bureau, instrumentality or agency,
existing, pending or, to the best knowledge of
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the Seller, threatened against the Company which might adversely affect its
business or the conduct thereof, or which challenges the validity or
propriety of the transactions contemplated by this Agreement, or which affect
its condition, financially or otherwise; and there is no fact known to Seller
or the Company which could form the basis for any litigation, investigation,
proceeding, suit, action, judgment, controversy or claim. There are no
judgments, orders, laws or regulations existing against the Company, which
have or might affect its business, the Assets and/or the continuation of its
business as now conducted.
The two judgments for $255,404.94 obtained by Dayton Securities Associates
against the Company in the Court of Common Pleas, County of Montgomery, one
listed as Case No. 1996 CJ 88160 and the other listed as Case No. 1997 CJ 90186
are one and the same judgment which has been settled for $125,000 and included
and recorded in accrued expenses and explained in Note L to the Audited
Financial Statements and there is no further exposure to any claims, damages or
any other liability or charges whatsoever by or on behalf of the Company,
directly or indirectly, relating to this matter.
The Seller and the Company are contractually obligated pursuant to a stock
redemption agreement respecting shares of the Company formerly held by
Electrolert, Inc. ("Electrolert") to pay the balance of the proceeds due
pursuant to that agreement, as subsequently modified, to Electrolert upon the
sale of the Assets or Common Stock of the Company pursuant to Option 1 ("Option
1") of the Confirmation of the Plan of Reorganization of the sole shareholder of
Electrolert, Dale T. Smith, Case No. 96-31427 ("Confirmed Plan"). Pursuant to
Option 1 of the Confirmed Plan to settle and compromise the claims of
Fifth-Third Bank, Brent Black ("Black"), Porter, Wright, et al., and other
creditors (collectively "Creditors") the Seller and the Company are obligated to
pay Electrolert from the Purchase Price hereunder, a sum equal to fifty percent
(50%) of the net
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cash received by the Seller at Closing (reduced by expenses incurred in
negotiating and completing this Agreement and the transactions contemplated
herein) and one-half of the net cash received from the sale of the Techdyne
Common Stock up to the sum of $1,000,000. It is the intention of
Electrolert, the Company and the Seller, that Electrolert not participate in
the incentives provided pursuant to Buyer's Guarantee at Section 1.2(iii) or
Incentive Consideration provided pursuant to Section 1.2(iv) hereof.
Pursuant to Option 1, the Seller, the Company and Electrolert will enter into
a Motion and Agreed Order, Exhibit F to be delivered to the Buyer as soon as
possible but no later than five (5) days prior to Closing which shall be
agreed to and accepted by the Creditors of Electrolert and Dale T. Smith and
approved by the United States Bankruptcy Court for the Southern District of
Ohio, Western Division, relating to the Confirmed Plan. Such Motion and
Agreed Order shall be the complete release and satisfaction of any and all
obligations of the Company to any of the Creditors arising under the
Confirmed Plan and any related proceedings and will terminate with prejudice
any and all litigation against the Company relating to the stock redemption
agreement and any matters relating thereto and the Conformed Plan. Such
Motion and Agreed Order, Exhibit F will set forth the distribution described
herein and obligate the Seller to cause the distributions to Electrolert to
be made from the Purchase Price in accordance with this provision and the
terms of this Agreement, provided the purchase of the Shares as contemplated
herein is completed. Without limiting the other indemnities in favor of the
Buyer contained in this Agreement, the Seller hereby indemnifies, defends
(with counsel acceptable to the Buyer) and holds the Buyer harmless from and
against any loss, damage, costs and expenses, including without limitation,
attorneys' fees, sustained or incurred by the Buyer or the Company as result
of, or arising out of or in connection with any claims made by any Creditor,
or any issues under the Confirmed Plan, or any failure of satisfactory
conclusion of the stock redemption agreement.
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3.14 Governmental Compliance. The Company has complied in all material
respects with all applicable laws, rules, regulations and orders of all federal,
state or local authorities with respect to its business, the operation thereof,
and the use of its property and Assets. Neither the Seller nor the Company has
received any official written notice that the Company is claimed to be in
default with respect to any judgment, order, injunction, decree, rule or
regulation of any court, administrative agency or other governmental agency,
domestic or foreign, nor do any of them have any belief that the Company is in
default with respect to the same. All reports, returns and other documents
which have been filed by the Company with any administrative agency or
governmental authority are true, correct and complete in all material respects.
Neither the Seller nor the Company has received any official written notice that
any condemnation proceeding is contemplated or has been commenced against any of
the premises utilized by the Company or its business or that said premises, or
the use thereof or is in violation of any applicable building, zoning or other
law or regulation. The Company has all necessary occupancy certificates,
licenses and permits with respect to its use and occupancy of such premises, its
conduct of the business and its ownership and use of machinery and equipment
contained therein.
No notice has been received not heretofore complied with, from any federal,
state, county or municipal authority or agency having jurisdiction over the
property and Assets of the Company or its activities or any insurance or
inspection body, that the operations of the Company or its property, Assets,
facilities, equipment or business procedures or practices fail in any respect to
comply with any applicable law, ordinance, regulation or requirement of any
public or self-regulatory authority or body.
3.15 Hazardous Waste. The Buyer is willing to proceed with this
Agreement, the purchase of the Shares, and the transactions contemplated herein
provided that the Company is in compliance with applicable environmental laws,
including but not
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limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Resource Conservation and Recovery
Act ("RCRA"), and applicable state and local laws, and regulations and spill
and hazardous waste statutes, regulations and rules ("Environmental Laws").
The Company and the Seller represent that there are no violations of such
Environmental Laws, that the Company is in full compliance with all
Environmental Laws and has internal compliance programs governing such
compliance and the disposal of hazardous waste; and neither the Company nor
the Seller has received notice of any violation of the Environmental Laws nor
does either the Company or the Seller have any reasonable belief that any
such violations have occurred or are occurring or of any basis for threatened
litigation or a reporting problem with respect to the Company's compliance or
lack thereof with Environmental Laws or maintaining or disposing of hazardous
waste.
Notwithstanding the foregoing, the Company and Labinal Components and
Systems, Inc. ("Labinal"), the former owner of the real estate now owned by the
Stanley Avenue Properties LTD., of which limited liability company, Lytton F.
Crossley, President of the Company, is the general partner and controlling
person, and upon which property the Company conducts its operations, entered
into an environmental indemnification agreement, Exhibit G attached, relating to
Labinal's prior use of the facility. The Labinal environmental indemnification
agreement and its benefits shall continue unaffected by the sale of the Shares
to the Buyer, and the terms of this Agreement shall not otherwise alter, modify
or cancel the Labinal environmental indemnification agreement in favor of the
Company.
3.16 Labor Relations. The Company has complied with all applicable laws,
rules and regulations relating to the employment of labor, including those
related to wages, hours and payment of withholding taxes. The Company has
withheld all amounts required by law or agreement to be withheld from wages or
salaries of its employees and is not liable for any
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arrearage of wages or any taxes or penalties for failure to comply with any
of the foregoing. The Company has no labor troubles and there are no
strikes, work stoppages, slowdowns, threatened labor unrest or any unfair
labor practices, charges of unlawful employment practices under federal or
local equal employment opportunity laws and similar regulations, or other
material controversies pending or threatened between itself and any of its
employees; and no union represents, or in the past twelve (12) months has
demanded or requested, to represent or is currently attempting to represent,
any of its employees. The Company has not promulgated any policy or entered
into any agreement relating to the payment of severance pay, vacation pay or
sick leave to employees now employed by them or whose employment may be
terminated or suspended, voluntarily or otherwise. Neither the Company nor
the Buyer shall be responsible for continuing any employment, agency, sales
representative or similar contract or relationship with any Company employee
or any other person, except that the Company shall continue the employment of
those individuals set forth in Exhibit H at their present salaries as set
forth in Exhibit H and shall also continue the employment of the following:
(i) Lytton F. Crossley, President
(ii) David Watts, Chief Financial Officer
(iii) Jeff Livingston, Chief Operating Officer
(iv) Dianna Donnelly, Materials Manager
on terms mutually satisfactory pursuant to employment agreements (measured from
the Closing Date) as attached to H.
These persons agree not to compete with the Company as otherwise provided
in the non-compete provisions of their respective employment agreements which
are made a part hereof and which non-compete provisions are an inducement to the
Buyer to enter into this
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Agreement and proceed with the purchase of the Shares and the transactions
contemplated herein.
3.17 Taxes. The Company has filed returns for and paid in full all of
state and local taxes (including without limitation, income, excise,
unemployment, employees' and employers' withholding, social security,
occupation, franchise, property, sales and use taxes, interests, penalties,
deficiencies or assessments claimed or shown to be due) to the extent such
filings and payments are required as of the date of this Agreement and up
through the Closing Date. All such returns were true and correct when filed and
are presently true and correct. The Company has reserved adequately on its
Audited Financial Statements with respect to taxes accrued but not payable prior
to the date of such statements, and has reserved and will continue to reserve
adequately on its books and records with respect to taxes accrued since the date
of the Audited Financial Statements but not payable prior to the date of this
Agreement and up through the Closing Date. The Company has no and will have no
liability for taxes, interest or penalties in excess of the amounts so paid or
the reserves so established. The Company has not had any tax deficiencies
proposed against it nor has it executed any waiver of the statute of limitations
on the assessment or collection of any tax. There are no federal or state tax
returns of the Company or its financial statements being audited or to the best
knowledge of the Company and the Seller considered or contemplated to be audited
by the Internal Revenue Service or state taxing authorities. Exhibit I provided
to the Buyer consists of the Company's federal, state and local tax returns for
the fiscal year ended March 31, 1997.
Any transfer or other taxes of the State of Delaware and of Ohio or any
other jurisdiction upon the sale of the Shares by the Seller to the Buyer shall
be at the sole responsibility of the Seller.
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3.18 Absence of Specified Changes. With respect to the Company, since the
fiscal year ended March 31, 1997, there has not been and there shall not be to
the Closing Date:
(a) Any material adverse change in the financial condition, Assets,
liabilities, inventory or business;
(b) Any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Assets or business;
(c) Any transaction entered into or any liability or obligation
incurred, other than liabilities incurred in the ordinary course of
business and consistent with past practice, or any sale, transfer,
encumbrance or any contract to sell, transfer or encumber any of the
Assets, trade names, copyrights, Licenses, franchises or designs or to
waive any rights thereto;
(d) Any mortgage, pledge, grant, suffering to exist any recorded lien
or other recorded encumbrance or charge on any Assets or property, tangible
or intangible;
(e) Any payment or declaration of any bonus, salary increase or
adjustment or additional or extraordinary payment to any officer, employee
or agent beyond standard, normal payroll or review procedures and
guidelines;
(f) Any issuance, pledge or sale of any Shares or any option or right
to purchase the Shares;
(g) Any other event of any kind or character which would or could
adversely affect the business of the Company or the Assets;
(h) Any declaration, setting aside or payment of any dividend or
other distribution with respect to the Shares;
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(i) Any write-down of the value of any inventory or writing off as
uncollectible notes or accounts receivable or any portion thereof, except
for write-offs or write-downs of such items in the ordinary course of
business and at a rate no greater than during the fiscal year ended March
31, 1996;
(j) Any cancellation of debt or claims or any waived rights of
substantial value except in the ordinary course of business and consistent
with past practice;
(k) Any disposition of or permitted lapse of any material patents or
trademarks or any material patent or trademark application, or any
disposition or disclosure to any person of any trade secrets, formulas,
processes or know-how;
(l) Any capital expenditures or commitments in excess of an aggregate
of $50,000 for the Company for additions or modifications for or to
property, plant or equipment without first obtaining the Buyer's consent
which shall not be unreasonably withheld;
(m) Any material change or application in the method of accounting or
accounting practice;
(n) Payments of any amounts to or in respect of, or sell or transfer
any Assets to, any company or business organization, a substantial portion
of the capital stock or other ownership interest which is owned by the
Company , its officers or directors or their affiliates, or by the Seller
or her affiliates;
(o) Any experiencing of material labor difficulty;
(p) Any agreement or commitment to do any of the things described in
the preceding clauses (a) through (o).
3.19 Intellectual Property Except as set forth in Exhibit J hereto, the
Company does not own, license or use any patents, trademarks, tradenames or
copyrights or similar
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rights; nor does it have any applications pending with respect thereto, nor
does it utilize any assumed names, nor is it a party to any patent,
trademark, tradename, copyright, license or franchise agreement. Neither the
Seller nor the Company is a party to, nor does any of them have knowledge of,
any patent, trademark, tradename, license, copyright or franchise
infringement, litigation or claim materially affecting or which might
materially affect the business of the Company or its ability to carry on its
business or any basis for any such claim.
3.20 Insurance. The Company has in full force and effect several insurance
policies including but not limited to liability of the types and in the amounts
necessary for its business operations and as described in Exhibit K hereto.
True, correct and complete copies of said policies will be delivered to the
Buyer prior to the Closing Date. Such policies are in full force and effect
with all premiums due to the date hereto paid in full, are in types, amounts,
scope and coverage to protect the Company against loss of its properties or
Assets and to protect against claims and all are deemed adequate in the business
and industry in which the Company is involved.
3.21 Licenses and Permits. The Company has been granted all
certificates, licenses, permits, franchises, variances and similar
authorizations from all federal, state, local or other governmental agencies
(collectively referred to as "Licenses"), which may be necessary to lawfully
carry on its business, produce and sell its products and services, and develop
and market its products and services. Such Licenses are listed in Exhibit L,
are in full force and effect and have not been revoked or suspended nor are they
subject to cancellation, violation, termination, expiration, or notice thereof,
and no action, proceeding or investigation has been instituted or threatened
with reference to said Licenses pursuant to all of which such Licenses the
Company is in compliance. The purchase of the Shares by the Buyer and the
transactions contemplated by this Agreement now and when completed shall
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not in any way adversely affect the Licenses, whether singly or in
conjunction with others, which shall continue in full force and effect.
Attached to Exhibit L are all License applications, pending and granted, with
and by federal, state and local administrative agencies and governmental
authorities, corresponding to all Licenses essential to the Company, its
products, services and operations, and all such governmental and
administrative agency correspondence, including but not limited to inspection
reports and responses thereto. If necessary, the Seller shall use her best
efforts and cooperate fully with the Buyer to assure that the Company, by
virtue of the transactions contemplated by this Agreement, will be able to
continue operations under such Licenses.
3.22 Corporate Proceedings and Records. The Buyer shall be provided with
the certificate of incorporation, as amended, Exhibit M, and the by-laws of the
Company, Exhibit N, as are in effect as of the date hereof and which shall be in
effect on the Closing Date without amendments or modifications except as
required by the Buyer, and all the minutes and minute books of the Company,
together with transfer sheets, particularly the corporate minutes approving the
terms and provisions of this Agreement, and at the Closing the Company's
corporate seal.
The books of account and other records of the Company, including but not
limited to the records of directors' and shareholders' meetings of the Company,
are true and correct records of all corporate proceedings which comply in all
material respects with all statutes, laws, rules and regulations applicable to
them, and accurately present and reflect all of the transactions entered into by
the Company to which it has been a party or to which its property and Assets may
be subject.
3.23 Transition Cooperation. The Seller shall cooperate with the Buyer
and the Company in executing and filing any and all records, certificates,
documents and other memoranda and shall do and perform all necessary acts and
things necessary to maintain and
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continue uninterrupted the business of the Company after the Closing Date
based upon and relating to the purchase of the Shares by the Buyer and the
other transactions contemplated by this Agreement.
3.24 Banking. Exhibit O hereto contains a complete list of all bank
accounts and bank account numbers owned by the Company with the name of all
individuals authorized to make withdrawals on such accounts. Exhibit O also
contains a complete list of all safe deposit boxes owned or leased by the
Company and the names of all the persons with access thereto.
3.25 Loan and Financing Agreements. Exhibit P hereto contains a complete
list of all loans and financing agreements between the Company and all lenders,
whether shareholders, creditors or otherwise. True, correct and complete copies
of such agreements have been provided to the Buyer. The Company is in good
standing under such agreements and neither the Company nor the Seller has
received any notice of default under such agreements.
The Company has also made two loans to Lytton F. Crossley, President and
director of the Company, which loans at June 30, 1997 amounted to $139,181.00 at
an annual interest rate of 7%, and the second loan for $155,000 at an annual
interest rate of 9.25%. These loans and accrued interest thereon shall be paid
by the Seller to the Company on the Closing Date from the Purchase Price.
3.26 General Warranty. Each of the Company and the Seller has herein
disclosed to the Buyer all facts material to the Assets and business of the
Company other than facts they do not have reason to know; and each of the
Company and the Seller has no knowledge of any matter, event, development or
transaction that would adversely affect the condition, financial or otherwise,
of the Shares, the Assets, existing business or business prospects of the
Company which have not been disclosed in this Agreement or in any of the
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Exhibits provided to the Buyer in accordance with this Agreement nor does the
Seller have any knowledge of any fact, event or other circumstance that would
prevent the continued operation and business of the Company by virtue of the
purchase of the Shares by the Buyer and the other transactions as contemplated
in this Agreement. None of the information provided by the Seller or the
Company included in this Agreement, as well as in any of the Exhibits or
Supplemental Schedules or certificates provided to, or to be provided by them to
the Buyer pursuant to the terms hereof or in connection with the transactions
contemplated hereby, is false or misleading or contains or will contain any
untrue statement of material fact, or fails or will fail to state a material
fact necessary to make the statements contained or incorporated therein or
herein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer makes the following representations and warranties to the Seller
each of which shall be deemed to be independently material and to have been
relied on by the Seller.
4.1 Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. The Buyer
has full corporate power and authority to own its properties and to carry on its
business as currently conducted and is qualified and in good standing as a
foreign corporation in all jurisdictions where the nature of the business
transacted by the Buyer requires such qualification.
4.2 Corporate Authority. The Buyer has full corporate power and
authority to enter into this Agreement. The Buyer has taken all such
corporate action as may be necessary or advisable and proper to authorize
this Agreement, the execution and delivery thereof, the consummation of the
transactions contemplated hereby and to perform all of its obligations under
this Agreement.
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4.3 Consents. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby require the consent,
approval or authorization of any third party.
4.4 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated herein violates or
conflicts with or constitutes a default under any term or provision of Buyer's
certificate of incorporation or by-laws or of any contract, or indenture to
which it is a party.
4.5 Validity of Shares. The Techdyne Common Stock to be delivered to the
Seller hereunder, when issued in accordance with this Agreement, will be validly
issued and outstanding, fully paid and nonassessable and free and clear of all
Liens or Encumbrances, but shall be restricted from resale or other disposition
under federal and state securities laws until registered thereunder. Such
Techdyne Common Stock will be included in a registration statement to be
prepared and filed by the Buyer with the Securities and Exchange Commission as
soon as possible subsequent to the Closing Date and with the appropriate state
securities commissions to enable the Seller to publicly sell the Techdyne Common
Stock, and the Buyer will use its best efforts to obtain effectiveness of such
registration statement within 120 days of the Closing Date.
4.6 Subsidiaries. Each of the Buyer's Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdictions of its
incorporation where each of them is incorporated and each has the corporate
power and authority to carry on its business as presently conducted. As used
herein, the term "Subsidiaries" means all corporations, a majority of the
outstanding capital stock of which is owned by the Buyer, excluding corporations
which are inactive or in the process of dissolution.
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ARTICLE V
COVENANTS OF SELLER
The Seller further covenants and agrees as follows:
5.1 Conduct of Business. To cause the business of the Company during
the period from the date hereof to the Closing to be conducted in the normal and
usual manner and not to make without the prior written approval of Buyer any
change in the policies affecting the operation and conduct of the business of
the Company, nor to commence operations for, or enter into any contracts or
agreements out of the ordinary course of business or that would be material or
unusual and affect the business or the Assets of the Company or extend beyond
the Closing Date; and to use her best efforts to preserve the business
organization of the Company and maintain the services of such Company's officers
and the good will and patronage of suppliers, insurance carriers, customers and
others having a business relationship with the Company; and will maintain in
full force and effect insurance policies providing coverage and amounts of
coverage comprable with the policies of insurance now in effect; and to keep and
retain the Company as a going business with present personnel.
5.2 Normal Course. Neither the Seller nor the Company shall, unless
authorized in writing by the Buyer or except as specifically permitted by the
terms of this Agreement:
(a) Issue, sell, hypothecate, pledge or otherwise encumber any Shares
of the Company or any option to purchase the same, or enter into any
agreement with respect thereto;
(b) Declare, set aside or issue any dividend or other distribution
with respect to the Common Stock or redeem, exchange, purchase or acquire
any shares thereof or enter into any agreement in respect of the foregoing;
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(c) Other than in the ordinary course of business, sell, encumber by
pledge or grant of lien, assign, lease or transfer any of the Company's
Assets, Licenses, franchises, service agreements or agreements with
insurance carriers;
(d) Incur any obligation or liability except liabilities and
obligations incurred in the ordinary course of its business;
(e) Enter into any transaction other than in the ordinary course of
business and, in any event, any such transactions shall not involve an
amount in excess of $50,000 without first obtaining the Buyer's consent
which consent shall not be unreasonably withheld;
(f) Change, amend or otherwise modify the Company's certificate of
incorporation or by-laws; or
(g) Make any changes in compensation payable to officers, directors
or employees beyond standard normal payroll or review procedures and
guidelines; or enter into any employment agreements other than as provided
in Section 5.6 hereof without first obtaining the Buyer's consent which
consent shall not be unreasonably withheld.
5.3 Preservation of Assets, etc. The Assets and property of the Company
shall be kept in good repair, working order and condition (normal wear and tear
excepted) and the Seller and the Company shall use their best efforts to
preserve the business of the Company. The Seller and the Company shall keep
available to the Buyer the services of the Company's employees and the Company
shall comply with applicable laws material to its business.
5.4 Maintenance of Insurance Policies. All policies of fire, product
and service liability and other forms of insurance of the Company listed in
Exhibit K shall be maintained in full force and effect.
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5.5 Notice. The Seller and/or the Company shall inform the Buyer of any
material developments or any unusual changes or problems affecting the Company
and its business, properties, financial status, the status of its liabilities,
obligations and relationships with its creditors, customers, suppliers and
insurance carriers.
5.6 Employment Agreements. The individuals listed in Section 3.16 of
this Agreement agree to and shall enter into and execute on or prior to the
Closing Date employment agreements in the forms of Exhibit H attached hereto to
become effective on the Closing Date provided this Agreement is then completed
and then in effect.
5.7 Banking Authority. The Company and the Seller agree to enter into
any new banking arrangements as requested by the Buyer on the Closing Date,
including but not limited to new signature cards for depositing, withdrawing and
effecting other banking transactions.
5.8 Quarterly Financials. The Company and the Seller shall provide to
the Buyer no less than twenty (20) days prior to the Closing with the unaudited
quarterly financial statements of the Company for the three months ended June
30, 1997 ("June 1997 Quarterly Financials"), Exhibit Q, which shall be prepared
and presented in accordance with the requirements of Section 3.5 hereof and
which June 1997 Quarterly Financials shall not reflect any material adverse
financial condition or results of operations of the Company.
ARTICLE VI
ACCESS TO INFORMATION
6.1 Access to the Company. The Seller and the Company covenant that prior
to the Closing (i) the Buyer and its counsel, accountants and other
representatives shall have reasonable access during normal business hours to all
properties, books, accounts, records, contracts and documents of or relating to
the Company and its operations, and (ii) the Buyer
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and its representatives shall be furnished or caused to be furnished all data
and information concerning the business, Assets, finances and property of the
Company that may be reasonably necessary for the Buyer's appraisal of the
Company.
6.2 Confidentiality. All information provided by each party to the
other shall be governed by the Confidentiality Agreement, Exhibit R attached
hereto.
6.3 Effect of Investigation. Any investigation of the Company by the
Buyer shall not affect the representations and warranties hereunder and shall be
conducted in such manner as not to interfere unreasonably with the operation of
the business of the Company.
ARTICLE VII
CONDITIONS OF CLOSING
7.1 Buyer's Conditions. The obligation of the Buyer to close hereunder
shall be subject to the satisfaction of the following conditions or the written
waiver thereof by the Buyer, failure of which shall enable the Buyer to
terminate this Agreement:
(a) Each of the agreements and covenants of the Seller and the
Company to be performed under this Agreement at or prior to the Closing
shall have been performed and complied with in all material respects,
including but not limited to a new agreement with Manufacturer's
Representation Agreement with E-MEK Technologies, Inc. on terms no less
favorable to E-MEK Technologies, Inc. as currently exist;
(b) The representations and warranties of the Seller and the Company
in this Agreement and the statements contained in any Schedule or Exhibit
attached hereto or in any instrument, list, certificate or writing
delivered pursuant hereto shall be true and correct in all material
respects when made and true and correct at and as of the Closing Date with
the same force and effect as though such representations
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and warranties had been made on the Closing Date, and the Buyer shall
have received a certificate to that effect dated the Closing Date and
executed by the Seller and the Company by one of its officers;
(c) No injunction or restraining order shall be in effect to forbid
or enjoin the consummation of this Agreement;
(d) There shall not have occurred any adverse change in the financial
condition or business of the Company or of its Assets or Licenses from that
which existed at the end of the fiscal year March 31, 1997 or as set forth
in the Exhibits;
(e) The Buyer shall have received all such documents, certificates,
opinions and papers required of the Seller and the Company pursuant to the
terms of this Agreement, or which shall have been reasonably requested by
the Buyer, in form and substance as approved prior to or on the Closing
Date by the attorney for the Buyer, Lawrence E. Jaffe, including but not
limited to the following:
(i) The Company and the Seller shall have delivered to the
Buyer certificates issued by the Delaware Secretary of State
evidencing the good standing of the Company as of the date not more
than five (5) days prior to the Closing Date as a corporation of the
State of Delaware and the Company's tax status, and by all other
governmental authorities of the foreign jurisdictions in which the
ownership of property or the nature of its business or other
activities have made qualification as a foreign corporation necessary
and the confirming telegram or written representation from a search or
title company confirming such good standing as of the date not more
than one (1) day prior to the Closing Date;
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(ii) The Company and the Seller shall deliver the June 1997
Quarterly Financials as required under Section 5.8 no less than twenty
(20) days prior to the Closing Date;
(iii) The Company and the Seller shall deliver to the Buyer a
comfort letter from Kentner Sellers, the independent certified public
accountants for the Company, dated the Closing Date in form and
substance satisfactory to the Buyer, stating that on the basis of the
reading of the Audited Financial Statements and the June 1997
Quarterly Financials prepared by the Company, inquiries of the
Company's officers responsible for financial and accounting matters,
reading the minutes and other specified procedures, nothing has come
to their attention which caused them to believe that since the Audited
Financial Statements and as of the Closing Date there were any changes
in the capital stock, any increases in the bank borrowings or any
significant changes in the Assets or Asset valuation (which includes
the inventory), debt or liabilities of the Company, as compared with
the amounts shown in the Audited Financial Statements.
(iv) The Company and the Seller shall have delivered to the Buyer
the favorable written opinion of Messrs. Porter, Wright, Morris &
Arthur, attorneys for the Seller and the Company dated as of the
Closing Date, in form and substance satisfactory to the Buyer covering
the following matters, provided that with respect to factual matters
counsel may rely upon the representations and certificates of the
Seller and the Company and upon public officials;
(a) The Company is a corporation duly organized, validly
existing and in good standing under the corporation and
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franchise tax laws of the State of Delaware and has all the
requisite corporate power and authority and Licenses to carry on
its business as now conducted, and to own and to operate its
property and Assets in the manner and at the places where such
properties are presently located, and, to the best knowledge of
counsel, neither the nature of its business nor the character or
location of its respective properties requires it to be qualified
or licensed to do business in any other jurisdiction than in which
it is presently qualified;
(b) The authorized capital stock of the Company consists of
1,000 shares of common stock, no par value, of which there are 51
Shares presently issued and outstanding, all of which are validly
issued, fully paid and non-assessable, free and clear of any
Liens or Encumbrances or other security interests, which such
issued and outstanding Shares are owned of record and
beneficially solely by the Seller, to which such Shares there are
no options, warrants or other rights for their acquisition or
exchange or for the issuance or acquisition of additional
securities of the Company; and all rights of first refusal as
provided in the Company's Certificate of Incorporation have been
satisfied and there are no outstanding claims by any person or
entity relating to the right of first refusal and the acquisition
of any capital stock of the Company, nor to the best knowledge of
such counsel is there any basis for any claims under the right of
first refusal to acquire any capital stock of the Company nor is
there any threatened litigation to accomplish the same.
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(c) The appropriate action by the directors and
shareholders of the Company to authorize and approve the sale of
the Shares to the Buyer and this Agreement and the execution,
delivery and performance hereof have been duly and validly taken,
and each of the Seller and the Company has the full right, power
and authority to enter into this Agreement and to carry out the
terms hereof;
(d) The Agreement has been duly executed and delivered by
the Seller and the Company and constitutes the valid and binding
obligation of the Seller and the Company in accordance with its
terms, and the execution of this Agreement, the sale of the
Shares and the performance of the covenants and agreements herein
contained and the transactions contemplated hereby do not and
will not result in the breach or violation of any of the terms,
covenants and provisions of, or default under, or in either the
acceleration of any debt or liability or the creation of any Lien
or Encumbrance upon any of the Shares or the Assets of the
Company pursuant to its certificate of incorporation or by-laws,
or any judgment, statute, rule or regulation or, to the knowledge
of such counsel, any agreement, License or other instrument or
restriction of any kind to which the Company or the Seller is a
party or may be bound or to which any of the Company's Assets may
be subject, nor does any provision of any of the foregoing
instruments invalidate any such instrument upon the consummation
of the transactions contemplated hereby, give any party any right
to cancel or terminate any such instrument, or prevent the Buyer
from purchasing the Shares in the manner contemplated by and in
accordance with the terms of this Agreement;
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(e) To the best knowledge of such counsel there are no
claims, actions, suits or proceedings, pending or threatened
against the Seller or the Company, nor is the Company or the
Seller a party to or subject to any order, judgment, decree,
agreement, stipulation or consent of or with any court or
administrative agency, nor, to the best knowledge of counsel is
any investigation pending or threatened against the Company or
the Seller, that would materially adversely affect the business
of the Company or the consummation of the acquisition of the
Shares by the Buyer or any of the transactions contemplated
herein;
(f) To the best knowledge of such counsel no event has
occurred since the date of the certificate of good standing and
tax certificate furnished pursuant to Section 7.1(e)(i) which
would impair the good standing of the Company as set forth on
such certificates;
(g) The litigation initiated by Dayton Securities
Associates against the Company and others, reduced to a judgment
of $255,409.94, has been settled by the Company for $125,000,
pursuant to which litigation there is no further exposure for any
other claims, damages or judgments of any sort by or on behalf of
the Company, directly or indirectly;
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(h) The Motion to Enter Into Stipulation ("Motion") for an
Order to authorize Dale T. Smith ("Debtor") under the Confirmed
Plan has been approved and granted and the Order issued
authorizing the Debtor to complete Option 1 under the Confirmed
Plan, and there are no and there shall be no further claims,
actions, causes of action, suits, debts, and other reckonings,
controversies, damages, liabilities or demands whatsoever,
whether by Creditors or others, against or any other exposure of
the Company arising from or as a result of the stock redemption
agreement and Debtor's Confirmed Plan.
(i) The Labinal environmental indemnification agreement and
its benefits shall continue unaffected by the sale of the Shares
to the Buyer, and the terms of this Agreement shall not otherwise
alter, modify or cancel the Labinal environmental indemnification
agreement in favor of the Company.
(v) The Seller shall deliver to the Buyer prior to or at the
Closing all documents, Schedules and Exhibits required by this
Agreement to be provided to the Buyer, including the following:
(a) a certificate or certificates representing the Shares,
duly endorsed for transfer to the Buyer or accompanied by an
assignment of the Shares with appropriate stock powers and
signature guarantees (medallion program) duly executed;
(b) good standing and franchise tax certificates of the
Company and updating telegrams as to such good standing and
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franchise tax status as of the Closing Date as required by
Section 7.1(e)(i);
(c) the Audited Financial Statements and prior two years
(1995 and 1996) audited financial statements, accountant's
comfort letter, leases, corporate records, lists of officers and
directors, employees, salaries, employment agreements, transfer
sheets, minutes, resolutions, certificate of incorporation, as
amended, by-laws, contracts, Licenses, insurance, patents,
trademarks, franchises, tax returns, bank accounts and corporate
seal as required by this Agreement;
(d) the resignations of certain officers and directors of
the Company as per Exhibit A effective as of the Closing Date, as
required by Section 3.3;
(e) new bank authorizations and signature cards as required
by Section 3.24;
(f) the employment agreements for the following individuals
as required pursuant to Sections 3.16 and 5.6;
(g) the new E-MEK Technologies, Inc. Manufacturer's
Representative Agreement as required pursuant to Section 7.1 (a)
hereof;
(h) the Smith Motion and Agreed Order as required pursuant
to Section 3.13 hereof;
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(i) the assignment of the Labinal environmental
indemnification agreement, Exhibit G, as per Section 3.15 hereof;
and
(j) the mortgage on the property located at 1784 Stanley
Avenue, Dayton, Ohio as per Section 3.10 hereof.
(f) All actions, proceedings, certificates of officers, instruments
and documents required to carry out the transactions contemplated by this
Agreement and incidental hereto and all other related legal matters shall
have been satisfactory to and approved by Lawrence E. Jaffe, counsel for
the Buyer, and such counsel shall have been furnished with such counterpart
originals that were certified or other copies of such certificates,
instruments and documents as he shall have reasonably requested.
7.2 Seller's Conditions. The obligation of the Seller to close hereunder
shall be subject to the satisfaction of the following conditions or the written
waiver thereof by the Seller, failure of which shall enable the Seller to
terminate this Agreement:
(a) Each of the agreements and covenants of the Buyer to be performed
under this Agreement at or prior to the Closing shall have been duly
performed in all material respects;
(b) The representations and warranties of the Buyer in this Agreement
and in any schedule, instrument, list, certificate or writing delivered by
the Buyer pursuant hereto shall be true and correct in all material
respects when made and true and correct at and as of the Closing Date with
the same force and effect as though
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such representations and warranties had been made on the Closing Date
and the Seller shall have received a certificate to that effect dated
the Closing Date and executed by an officer of the Buyer;
(c) The Buyer shall have furnished the Seller with an opinion dated
the Closing Date of Lawrence E. Jaffe, counsel for the Buyer in form and
substance satisfactory to the Seller covering the following matters,
provided that with respect to factual matters, counsel may rely upon the
representations and certificates of the Buyer and upon public officials:
(i) The Buyer is a corporation duly organized, validly existing
and in good standing under the corporation and franchise tax laws of
the State of Florida and has the requisite corporate power and
authority to carry in its business as now conducted;
(ii) All corporate proceedings required by law to be taken by the
Buyer to authorize and approve this Agreement and the execution,
delivery and performance of this Agreement have been duly and validly
taken and the Buyer has the full right, power and authority to enter
into this Agreement and to carry out the terms hereof;
(iii) The Agreement has been duly executed and delivered by
the Buyer and constitutes the valid and binding obligation of the
Buyer in accordance with its terms, and the execution of this
Agreement and the performance of the covenants and agreements herein
contained and the transactions contemplated hereby do not and will not
result in the breach or violation of any of the terms, covenants and
provisions of, or default under,
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or in either the acceleration of any debt or liability or the creation
of any Lien or Encumbrance upon any of the Techdyne Common Stock to be
issued to the Seller, or pursuant to its certificate of incorporation
or by-laws or any judgment, statute, rule or regulation or, to the
knowledge of such counsel, any agreement or other instrument or
restriction of any kind to which the Buyer is a party or may be bound,
nor does any provision of any of the foregoing instruments give any
party any right to cancel or terminate any such instrument, or prevent
the Buyer from purchasing the Shares in the manner contemplated by and
in accordance with the terms of this Agreement; and
(iv) To the best knowledge of such counsel there are no claims,
actions, suits or proceedings, pending or threatened against the Buyer
nor is the Buyer a party to or subject to any order, judgment, decree,
agreement, stipulation or consent of or with any court or
administrative agency, nor, to the best knowledge of counsel is any
investigation pending or threatened against the Buyer that would
materially adversely affect the consummation of the acquisition of the
Shares by the Buyer or any of the transactions contemplated herein.
(d) The Buyer shall have furnished the Seller and the Company at the
Closing with the consideration as per Section 1.2(i) and (ii), except for
the Buyer's Guarantee required by Section 1.2 (iii) and the Incentive
Consideration as per Section 1.2(iv) which shall be paid, if applicable, at
such time and pursuant to the conditions as set forth therein.
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ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION
8.1 Survival of Representations and Warranties. All representations,
warranties and agreements contained herein or in any writing delivered pursuant
hereto by all parties hereto shall survive the execution and delivery of this
Agreement, the Closing, any investigation made at any time, the sale of the
Shares to the Buyer, and the consummation of all transactions herein
contemplated ; provided, however, notwithstanding anything herein to the
contrary, no claim shall be initiated or raised after the passage of two years
from the Closing Date.
8.2 Indemnification.
(a) The Seller hereby agrees to fully indemnify and hold harmless the
Buyer (the Buyer as used in this Article VIII refers to all of its
subsidiaries and affiliated companies), its directors, officers and
employees, from and against and in respect to:
(i) Any liabilities, claims, encumbrances, deficiencies,
demands, actions suits, proceedings, obligations, damages, losses,
judgments, costs and expenses, including claims of every kind and
nature, whether accrued, absolute, contingent or otherwise, and
including attorneys' and accountants' fees in the course of defense,
or incidental to any suit, action, investigation, claim or proceeding,
incurred by any of them as the result, incidental to or by reason of
the breach, falsity or failure of any of the Seller's or the Company's
representations, warranties, covenants, agreements or omissions
thereof contained in this Agreement or any of the Exhibits,
certificates,
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supplemental schedules or other documents required hereunder, or
failure to perform as required by or delivery of any and all
Schedules, reports, Exhibits, documents, certificates and other
material information required hereunder, it being understood and
agreed to by all the parties hereto that the provisions of this
indemnification shall survive the Closing and may be enforced first by
the Buyer's offset against and reductions from the consideration to be
provided to the Seller pursuant to the provisions of this Agreement
without limiting in any respect any and all other rights which the
Buyer may have against the Seller and the Company, to enforce the
provisions of this Agreement and without any priority or order of
exercising such rights by the Buyer which the Buyer may, at its sole
discretion, determine to do and in whatever priority in its discretion
it feels appropriate and the exercise of one not being a waiver of any
other rights or remedies which the Buyer may have in the aggregate.
(ii) In the event the Seller or the Company breaches any of the
terms, representations, covenants, warranties or conditions of this
Agreement, or any of the certificates, documents, lists, Exhibits,
Schedules or other memoranda filed hereunder, or in the event that any
breach, suit, action, investigation, claim or proceeding ("Claim") is
begun, made or instituted as a result of which the Seller or the
Company may become obligated to the Buyer hereunder, then the Buyer
shall give written notice in sufficient detail to the Seller of said
Claim. The Seller shall have the right to defend any such Claim in
the Seller's or the Company's name, solely at the Seller's expense.
In the event the Seller, within a reasonable time after
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written notice of any Claim, fails to defend, the Buyer shall have the
right to undertake the defense, compromise or settle the Claim on
behalf of and for the Seller, and the Seller will cooperate with the
Buyer in the defense thereof.
(iii) The Buyer shall have the right, but not the obligation to
defend, contest or otherwise protect against the same and recover the
entire costs thereof from the Seller and/or the Company including
without limitation, reasonable attorneys fees, disbursements and all
amounts paid a as result of such suit, action, investigation, claim or
proceeding.
(iv) Notwithstanding anything to the contrary set forth herein,
the Buyer at any time hereafter may institute a suit, action,
investigation, claim or proceeding against the Seller and the Company
or interplead the Seller and the Company in any proceeding or
litigation which may arise under this Agreement or as a result of any
breach on the part of the Seller or the Company under this Agreement.
(v) The Company or the Seller shall notify the Buyer, within 10
business days after receiving same, of each third-party claim received
by the Seller or the Company against the Company. The Buyer shall
have the option of either contesting the Claim or claiming indemnity
under this Agreement.
(vi) Notwithstanding anything to the contrary set forth herein,
the Seller shall only be obligated pursuant to this Section 8.2 for
indemnification of matters which exceed in the aggregate the sum of
$50,000 which such
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sum shall include obligations, damages, losses, judgments, costs and
expenses including attorney's and accountant's fees in the course of
any defense or incidental to any suit, action, investigation, claim or
proceeding for which indemnification is sought hereunder.
ARTICLE IX
GENERAL PROVISIONS
9.1 Tax Status and Effect. It is understood and agreed that no party
hereto has made any representation to the other as to the tax status or tax
effect of the transactions contemplated by this Agreement, and each of the
parties hereto is therefore responsible for separately consulting counsel if it
so desires as to such matters and each is assuming as to herself or itself,
subject only to the express and specific provisions of this Agreement, foreign
or domestic, federal, state or local taxes, if any, which may be incurred by
such person by reason of the carrying out of the terms and provisions hereof.
9.2 Brokerage Commissions and Finders Fees. The Seller and the Company
represent that GWENT, INC. was the sole finder involved in this transaction and
any finder fees shall be the sole responsibility of the Seller. The Seller
hereby indemnifies the Buyer from and against any finder fees whatsoever.
9.3 Expenses of Parties. All expenses involved in the negotiation of the
transactions contemplated by this Agreement, and in the preparation,
authorization and consummation of this Agreement, including, without limitation,
all fees and expenses of agents, representatives, counsel and accountants, shall
be borne solely by parties retaining such agent, representative, counsel and
accountant, and the other party or parties shall bear
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her, its (their) own expenses in preparing, authorizing and consummating this
Agreement except as otherwise specifically provided in this Agreement.
9.4 Notices. Any and all notices or communications required or desired
to be given in connection with this Agreement shall be made in writing, sent by
registered or certified mail, postage prepaid, return receipt requested, to the
respective parties as follows, or to such other address as any party hereto may
from time to time designate in writing to the other parties hereto:
If to Seller: Patricia Ann Crossley
61 Flamingo Drive
Crossville, TN 38555
If to the Company: Lytton Incorporated
1784 Stanley Avenue
Dayton, Ohio 45407
With a copy to: Philip E. Langer, Esq.
Porter, Wright, Morris & Arthur
1600 One Dayton Centre
Dayton, Ohio 45401
If to Buyer: Techdyne, Inc.
2230 West 77th Street
Hialeah, FL 33016
ATTN: Barry Pardon, President
With a copy to: Lawrence E. Jaffe, Esq.
777 Terrace Avenue
Hasbrouck Heights, New Jersey 07604
9.5 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof. The
representations, warranties covenants and agreements set forth in this Agreement
and in any financial statements, disclosure statements, Schedules or Exhibits
delivered pursuant hereto, constitute all of the representations, warranties,
covenants and agreements among the parties hereto upon which
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the parties have relied, and except as may be specifically provided herein,
no change, modification, addition or termination of the Agreement or any part
thereof shall be valid unless in writing and signed by all parties hereto.
9.6 Waiver. No waiver of the provisions hereof shall be effective
unless in writing and signed by the party waiving such rights denominating it
as a waiver. No waiver shall be deemed a continuing waiver or waiver in
respect of any subsequent breach or default, either of a similar or different
nature unless expressly so stated in writing. Except as otherwise
specifically provided for hereunder no delay or omission by any party in
exercising any right with respect to this Agreement shall operate as a waiver
of such right or of any other right. Inspection of documents or the receipt
of information pursuant to this Agreement shall not constitute a waiver of
any representation, warranty, covenant or condition hereunder. All rights
and remedies, whether evidenced hereby will be cumulative, and may be
exercised separately or concurrently.
9.7 Binding Nature. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective heirs, legal representatives
and successors; provided however, except as specifically set forth herein, this
Agreement may not be assigned by any party hereto. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement to any persons other than the parties hereto,
their respective heirs, legal representatives and successors, nor is anything in
this Agreement intended to relieve or discharge the obligations or liability of
any third persons to any party of this Agreement, nor shall any provision give
any third persons any right of subrogation or any other right against any party
to this Agreement.
9.8 Captions. The headings or captions under Sections of this Agreement
are for convenience and reference only, and do not in any way modify, interpret
or construe the intent of the parties or affect any of the provisions of this
Agreement.
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9.9 Finality. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the other provisions, and the
Agreement shall be construed in all respects as if any invalid or unenforceable
provision were omitted.
9.10 Counterparts. This Agreement may be executed in counterparts, and
when so executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.
9.11 Interpretation. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Throughout this Agreement the
masculine gender shall be deemed to include the feminine and neuter, and the
singular shall be deemed to include the plural, and vice versa.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
July 31, 1997.
SELLER
PATRICIA ANN CROSSLEY
By: /s/ PATRICIA ANN CROSSLEY
------------------------------
PATRICIA ANN CROSSLEY
TECHDYNE, INC.
By: /s/ THOMAS K. LANGBEIN
------------------------------
THOMAS K. LANGBEIN,
Chief Executive Officer
LYTTON INCORPORATED
By: /s/ LYTTON F. CROSSLEY
-------------------------------
LYTTON F. CROSSLEY, President
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EXHIBITS
STOCK PURCHASE AGREEMENT
A Officers and directors and resignations Section 3.3; 7.1(e)(v)(d)
B Audited Financial Statements Section 3.5
C Leases Section 3.9
D Contracts and commitments Section 3.10
E Payment of pension or retirement allowance Section 3.10(h)
F Smith Motion and Agreed Order Section 3.13
G Labinal Environmental Agreement Section 3.15; 7.1(e)(xi)
H Employees, salaries & employment agreement Section 3.16; 5.6
I Federal, state and local tax returns Section 3.17
J Patents and trademarks Section 3.19
K Insurance Section 3.20; 5.4
L Licenses Section 3.21
M Certificate of Incorporation Section 3.22
N By-laws Section 3.22
O Bank accounts and safe deposit Section 3.24; 7.1(e)(v)(e)
P Loans and financing agreements Section 3.25
Q June 1997 Quarterly Financials Section 5.8; 7.1(e)(ii)
R Confidentiality Agreement Section 6.2
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FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT, LOAN
AGREEMENT, AND SECURITY AGREEMENT
This First Amendment (this "Amendment") is made this ____ day of July,
1997, by TECHDYNE, INC., a Florida corporation ("Borrower") and BARNETT BANK,
N.A., a national banking association ("Lender") successor by merger and name
change to BARNETT BANK OF SOUTH FLORIDA, N.A. ("BBSF").
W I T N E S S E T H:
RECITALS:
A. BBSF and Borrower executed a Loan and Security Agreement (the "Loan
and Security Agreement"), a Loan Agreement (the "Loan Agreement"), and a
Security Agreement (the "Security Agreement")(collectively, the "Agreements"),
all dated February 8, 1996.
B. Borrower has requested Lender to modify and amend the Agreements, and
Lender is willing to modify the Agreements as more particularly provided herein.
C. Contemporaneously herewith, the Borrower is executing to the order of
Lender a Revolving Demand Promissory Note in the principal sum of $2,500,000.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth herein, the parties do hereby agree as follows:
1. Recitals. Borrower hereby represents and warrants to Lender that the
foregoing recitals are true and correct, and such recitals are incorporated
herein by reference and made a part hereof for all purposes.
2. Definitions.
(a) Except as otherwise expressly provided herein, all capitalized
terms used in this Amendment shall have the meanings set forth in the
Agreements, as modified hereby.
(b) The definitions of the following terms contained in Section 1.1
of the Loan and Security Agreement are hereby modified and amended, in their
entirety, to read respectively as set forth below:
"Borrowing Base" on any date shall mean the principal sum of
$2,500,000 less any moneys borrowed by Borrower for the purpose
financing the acquisition of Lytton Incorporated.
"Commitment Termination Date" shall mean the date upon which
Lender shall have no further obligation to make Loans under this
Agreement, which shall be the earliest to occur of (i) the date upon
which demand for payment is made under the Note, (ii) the date upon
which the Lender in its sole discretion elects to terminate the
Revolving Credit Commitment, regardless of whether any Event of
Default shall then exist, (iii) the date upon which Lender terminates
its obligation to make any further Loans pursuant to Section 11.2 of
the Agreement, or (iv) October 31, 1997.
"Note" shall mean the Revolving Demand Promissory Note dated
July ___,
<PAGE>
1997 in the principal sum of $2,500,000 executed by Borrower
to the order of Lender, as the same may be amended from time to time
hereafter.
(c) Sections 1.1 of the Loan and Security Agreement and of the Loan
Agreement are hereby modified and amended to add the following definition
thereto:
"Tangible Capital Funds" shall mean the sum of Net Worth (as
defined in accordance with GAAP), plus Subordinated Debt, minus
intangibles, minus loans or advances to Guarantor or majority-owned
Affiliates. The Tangible Capital Funds of the Borrower shall be
calculated on the basis of the Borrower's consolidated financial
condition
3. Revolving Credit Facility.
(a) Clause (ii) of Section 2.1(a) of the Loan and Security Agreement
is hereby modified and amended in its entirety to read as follows:
(ii) Two Million Five Hundred Thousand and no/100 Dollars ($2,500,000).
(b) Section 2.3 of the Loan and Security Agreement is hereby modified
and amended, in its entirety, to read as follows:
2.3 Maximum Credit Facility. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Loan
Documents, the aggregate amount of the Loans and Banker's Acceptances
shall not exceed Two Million Five Hundred Thousand No/100 Dollars
($2,500,000) at any time outstanding.
4. Security for the Obligations. Sections 4.3 of the Loan and Security
Agreement is hereby deleted in its entirety.
5. Affirmative Covenants.
(a) Sections 7.3(a) and 7.3(b) of the Loan and Security Agreement and
Sections 5.3(a) and 5.3(b) of the Loan Agreement are deleted in their entirety.
(b) Section 7.3(c) of the Loan and Security Agreement and Section
5.3(c) of the Loan Agreement are hereby modified and amended, in their entirety,
to read as follows:
Within one hundred five (105) days after the close of the
calendar year, beginning with the year ending December 31, 1995,
audited consolidated financial statements of the Borrower and its
Subsidiaries as of the fiscal year then ended, prepared in accordance
with GAAP, applied on a basis consistent with the preceding year or
containing disclosure of the effect on financial position or results
of operation of any change in the application of accounting principles
and practices during the year, and accompanied by (i) a report
thereon, containing an unqualified opinion, without scope limitations
imposed by the Borrower, from a firm of independent certified public
accountants selected by the Borrower and acceptable to the Lender,
(ii) a copy of each "management letter", if any, from such accountants
to the Borrower in connection with such accountants' audit; and (iii)
internally prepared, non-audited financial statements, including
balance sheets and profit and loss statements, for each company
included in
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the audited consolidated financial statements as of the fiscal year then
ended, prepared in accordance with GAAP, applied on a basis consistent with
the preceding year or containing disclosure of the effect on financial
position or results of operation of any change in the application of
accounting principles and practices during the year.
(c) Section 7.3 (f) of the Loan and Security Agreement is hereby
deleted in its entirety.
(d) Sections 7.3 (g) of the Loan and Security Agreement is hereby
modified and amended in its entirety to read as follows:
(g) On or before the fifteenth (15th) day of each quarter and at
such other times as requested by Lender, an accounts receivable aging
report, prepared by invoice date, and an accounts payable listing and
aging report, all as of the end of the immediately preceding quarter.
(e) Section 7.13 of the Loan and Security Agreement and Section 5.11
of the Loan Agreement are hereby modified and amended in their entirety to read
as follows:
Debt Service Coverage Ratio. Borrower shall maintain a Debt
Service Coverage Ratio of at least 1.25:1.00 as of the end of each
quarter, which ratio shall be calculated using Borrower's financial
statements, excluding the financial figures of Litton Industries. For
purposes hereof, the "Debt Service Coverage Ratio" shall be calculated
at the end of quarter utilizing the immediately preceding four
calendar quarters, on a rolling basis, and shall mean the ratio of (1)
the sum of (a) the net income (or loss) of Borrower, less dividends,
plus (b) interest expense on Indebtedness (including the Obligations),
plus (c) depreciation expenses, plus (d) amortization expense, to (2)
the sum of (a) current maturities of long term debt, plus (b) interest
expense, all determined in accordance with GAAP.
(e) Sections 7.14 and 7.15 of the Loan and Security Agreement and
Sections 5.12 and 5.13 of the Loan Agreement are hereby modified and amended, in
their entirety, to read as follows:
Current Ratio. The Borrower shall maintain a Current Ratio of
at least 1.5:1 at all times, which ratio shall be calculated exclusive
of the financial effects of the Lytton acquisition. For purposes
hereof, the term "Current Ratio" shall be defined as the ratio of
Current Assets to Current Liabilities, as such terms are defined in
accordance with GAAP. Although the Borrower shall be required at all
times to comply with Section 7.14 of the Loan and Security Agreement
and Section 5.12 of the Loan Agreement, the Lender shall test the
Borrower's compliance on a quarterly basis using the consolidated
financial statements and other information provided by Borrower.
Tangible Capital Funds Ratio. The Borrower shall maintain a
ratio of Total Debt to Tangible Capital Funds of at least 1.25:1 at
all times, which ratio shall be calculated exclusive of the financial
effects of the Lytton acquisition. Although the Borrower shall be
required at all times to comply with Section 7.15 of the Loan and
Security Agreement and Section 5.13 of the Loan Agreement, the Lender
shall test the Borrower's compliance on a quarterly basis using the
consolidated financial statements and other information provided by
Borrower.
3
<PAGE>
(f) Section 6. of the Security Agreement, Covenants of Borrower, is
hereby modified and amended to incorporate all applicable modifications made to
Section 5. of the Loan Agreement pursuant to this Amendment.
6. Negative Covenants.
(a) Sections 8.2 and 8.3 of the Loan and Security Agreement and
Section 6.2 and 6.3 of the Loan Agreement are hereby deleted in their entirety.
(b) Section 8.6 of the Loan and Security Agreement and Section 6.6 of
the Loan Agreement are hereby modified and amended in their entirety to read as
follows:
Transactions With Related Persons. Directly or indirectly,
make or repay any loan or advance to, or purchase, assume or guarantee
any obligation of, any of the Borrower's officers or directors, or any
members of their immediate families except that (a) the Borrower may
make travel or other reasonable expense advances to employees in the
ordinary course of business; and (b) the Borrower may allow directors
and officers to exercise warrants and options to purchase Stock of the
Borrower with the execution of purchase money notes in favor of the
Borrower provided that such notes must be secured by a first lien
priority pledge of the Stock so purchased.
(c) Section 8.7 of the Loan and Security Agreement and Section 6.7 of
the Loan Agreement are hereby deleted in their entirety.
7. Asset Based Lending Audits. Notwithstanding anything to the contrary
set forth in the Loan and Security Agreement, asset based collateral audits will
no longer be required to be performed under the Loan and Security Agreement.
8. Amendment of Loan Documents. All references in the Loan Documents to
the Agreements are hereby modified and amended to refer to and mean the
Agreements, as modified hereby.
9. Extent of Amendments; Ratification. Except as expressly modified by
this Amendment, all of the terms and provisions of the Loan Documents shall
remain in full force and effect. Borrower hereby acknowledges and confirms that
the Agreements, as modified hereby, constitute valid and binding agreements,
enforceable in accordance with their respective terms. The Loan and Security
Agreement shall continue to secure all obligations under or in connection with
the Note, and nothing in this Amendment shall affect the priority of the liens
and security interests created by the Loan Documents over other liens or
encumbrances. This Amendment is not intended by the parties to be a novation of
the Loan Documents. The parties hereby ratify and confirm the Loan Documents,
as modified hereby.
10. Representations and Warranties. Borrower hereby represents and
warrants to Lender and agrees as follows:
(a) There are no suits, actions or proceedings pending (nor, to the
knowledge of Borrower are there any actions, suits or proceedings threatened)
against the Borrower or any of its assets;
4
<PAGE>
(b) The Borrower is in full compliance with the terms of the
Agreements and the Loan Documents (with the exception of the technical defaults
waived by Lender pursuant to its letter to Borrower dated March 14, 1997), all
representations and warranties contained in the Agreements and the Loan
Documents are true and correct as of the date hereof, and no default or event of
default currently exists under any of the Agreements or the Loan Documents, as
amended and modified hereby.
Borrower acknowledges and agrees that the Lender has relied on each of the
foregoing representations and warranties in entering into this Amendment.
11. Costs and Expenses. As a condition precedent to the execution of this
Amendment by Lender, Borrower shall pay all fees, costs, expenses and
disbursements of Lender incurred in connection with the preparation, execution,
delivery and performance of this Amendment and the Loan Documents, as modified
by this Amendment, including, without limitation, all UCC search fees, and fees
and disbursements of Lender's counsel.
12. Release of Claims. Borrower hereby acknowledges, confirms and agrees
that as of the date of this Amendment, Borrower has no defenses, rights of
set-off, claims or counterclaims to the enforcement of the Loan Documents, as
modified by this Amendment. Borrower hereby releases, remises, acquits,
satisfies and forever discharges Lender and its affiliates (including, without
limitation, parent corporations and subsidiaries) and their respective
shareholders, directors, employees, officers, agents, attorneys, insurers,
reinsurers, sureties, successors and assigns (collectively, the "Released
Parties") from any and all actions, causes of actions, suits, debts, costs,
attorneys' fees, obligations, liabilities, promises, damages, matters, claims
and demands whatsoever (whether at law, in equity or under federal, state or
foreign statute) which Borrower ever had, now has or hereafter may have against
the Released Parties for, upon or by reason of any matter, cause or thing
whatsoever, from the beginning of the world through and including the date of
this Amendment, including, without limitation, any of the foregoing which
directly or indirectly arise out of or in any manner in connection with the Loan
Documents, as modified by this Amendment.
13. Governing Law; Construction. This Amendment shall be construed,
interpreted, enforced and governed by and in accordance with the laws of the
State of Florida and the laws of the United States, as applicable. Time is of
the essence with respect to all provisions of this Amendment. Whenever used,
the singular number shall include the plural, the plural shall include the
singular, and the use of any gender shall include all others. Use of the words
"herein", "hereof", "hereunder", and any other words of similar import refer to
this Amendment as a whole and not to any particular section or sub-section of
this Amendment unless otherwise specifically noted in this Amendment. The
headings of the sections and subsections of this Amendment are for convenience
of reference only and shall not be considered a part hereof nor shall they be
deemed to limit or otherwise affect any of the terms or provisions of this
Amendment. If any portion of this Amendment shall be unenforceable for any
reason whatsoever, the balance of this Amendment shall not in any way be
affected thereby and shall be remain enforceable to the fullest extent allowed
by law.
14. Entire Agreement. This Amendment and certain other documents of event
date herewith contain the entire agreement between the parties concerning the
modification of the Loan Documents, and all prior agreements relating to the
modification of the Loan Documents are superseded in their entirety by the
provisions thereof. No promise, representation or warranty not contained herein
has been made by Lender to induce Borrower to execute this Amendment.
5
<PAGE>
15. Binding Upon Successors and Assigns. This Amendment shall inure to
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and assigns.
16. WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY, IRREVOCABLY, UNCONDITIONALLY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS AMENDMENT, THE LOAN
DOCUMENTS, AS MODIFIED HEREBY, OR ANY OTHER DOCUMENTS NOW EXISTING OR HEREAFTER
EXECUTED IN CONNECTION WITH THE FACILITY ESTABLISHED UNDER THE AGREEMENT, AS
MODIFIED HEREBY, OR OTHERWISE ARISING OUT OF, UNDER OR IN CONNECTION WITH THE
LOAN, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ACTIONS OF BORROWER OR LENDER. THIS IRREVOCABLE WAIVER OF THE
RIGHT TO A JURY TRIAL IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS
AMENDMENT.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
Signed, sealed and delivered TECHDYNE, INC., a Florida corporation
in the presence of:
_________________________ By_____________________________________
First Witness Name:
Title:
_________________________
Second Witness
BARNETT BANK, N.A., a national banking
association, successor by merger to Barnett Bank
of South Florida, N.A.
_________________________ By_____________________________________
First Witness Name:
Title:
_________________________
Second Witness
)
)SS
)
6
<PAGE>
The foregoing instrument was acknowledged before me this __________ day of
July, 1997, by ___________________ the ______________________ of TECHDYNE, INC.,
a Florida corporation, on behalf of the corporation. He/she is personally known
to me or has produced ____________________ as identification.
_____________________________
Seal: Notary Public
Printed Name of Notary:
_________________________
My commission expires:
)
)SS
)
The foregoing instrument was acknowledged before me this __________ day of
July, 1997, by ___________________ the ______________________ of BARNETT BANK,
N.A., a national banking association, on behalf of that national banking
association. He/she is personally known to me or has produced
____________________ as identification.
_____________________________
Seal: Notary Public
Printed Name of Notary:
_________________________
My commission expires:
7
<PAGE>
REVOLVING DEMAND PROMISSORY NOTE
$2,500,000.00 July___, 1997
FOR VALUE RECEIVED, TECHDYNE, INC., a Florida corporation (the
"Borrower" or the "undersigned") hereby promises to pay to the order of
BARNETT BANK, N.A., a national banking association (together with its
successors and assigns, "Lender") (Lender, together with any subsequent
holder hereof, being sometimes referred to as the "Holder") at the office of
Lender, at 101 Hialeah Drive, Second Floor, Hialeah, Florida 33010, or at
such other place as Holder may designate to Borrower in writing from time to
time, the principal sum of TWO MILLION FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($2,500,000.00), or so much thereof as may be outstanding hereunder,
with interest on the principal balance of this Note outstanding from time to
time (which amount is hereinafter defined as the "Principal Sum") at the rate
set forth below, together with all other fees and charges hereinafter
provided for, in same day funds and lawful money of the United States of
America that shall at the time of payment be legal tender for the payment of
all debts and dues, public and private. Said principal and interest shall be
due and payable as provided below. THE BORROWER ACKNOWLEDGES AND AGREES THAT
THIS IS A DEMAND NOTE. ACCORDINGLY, NOTWITHSTANDING ANYTHING TO THE CONTRARY
PROVIDED IN THIS NOTE OR ANY OF THE LOAN DOCUMENTS, ALL PRINCIPAL, INTEREST
AND OTHER SUMS OUTSTANDING OR PAYABLE UNDER THIS NOTE SHALL MATURE AND BE DUE
AND PAYABLE ON DEMAND.
---------
Section 1. CERTAIN DEFINITIONS. In addition to the terms defined
elsewhere in this Note, as used herein, the following terms shall have the
indicated definitions:
Section 1.01 "Advance" shall mean any advance of principal made
by Holder under this Note.
Section 1.02 "Applicable Rate" shall mean an interest rate equal
to three-quarters of one percent (0.75%) per annum above the Prime Rate,
changing when and as the Prime Rate changes.
Section 1.03 "Business Day" shall mean any day that is not a
Saturday or Sunday or a day on which banks are required or permitted to be
closed in the State of Florida.
Section 1.04 "Lender" shall mean Barnett Bank, N.A., a national
banking association, and its successors and assigns.
Section 1.05 "Loans" shall mean all loans and advances made by
the Lender to Borrower pursuant to the Loan Agreement.
Section 1.06 "Loan Agreement" shall mean the Loan and Security
Agreement dated February 8, 1996 by and between Borrower and Barnett Bank of
South Florida, N.A., as amended by a First Amendment to Loan and Security
Agreement between Borrower and Lender of even date herewith, and all other
amendments, modifications and supplements thereto.
<PAGE>
Section 1.07 "Loan Documents" shall have the meaning therefor set
forth in the Loan Agreement.
Section 1.08 "Note" shall mean this Revolving Demand Promissory
Note, which evidences the Loans, as it may be amended from time to time
hereafter.
Section 1.09 "Post-Default Rate" shall mean an annual rate of
interest equal to five percent (5%) per annum above the Applicable Rate,
changing when and as the Applicable Rate changes; provided, however, that in
no event shall the Post-Default Rate exceed the highest rate per annum
allowable by applicable law, rule, or regulation in effect from time to time.
Section 1.10 "Prime Rate" shall mean the annual rate of interest
announced from time to time by Barnett Banks, Inc. or its successor. The
Prime Rate is a reference rate for the information and use of Lender in
establishing the actual rates to be charged its borrowers.
Section 1.11 "Principal Sum" shall mean the entire outstanding
principal balance of this Note as of the date upon which such calculation or
determination shall be made.
Section 2. PAYMENT OF PRINCIPAL AND INTEREST, REVOLVING LOAN.
Section 2.01 This Note evidences all loans made by the Holder to
Borrower pursuant to the terms of the Loan Agreement, and all such Loans
shall be deemed Advances hereunder. Subject to the terms and conditions of
the Loan Agreement, Borrower may borrow, repay and reborrow principal sums
under this Note from time to time and this Note shall remain in effect and
evidence all such advances and re-advances hereunder; provided, however, that
the aggregate principal amount outstanding hereunder at any one time shall
not exceed $2,500,000. Reference should be made to the Loan Agreement for
the term, conditions and provisions applicable the loans evidenced hereby and
the making and repayment thereof.
Section 2.02 This Note shall bear, and Borrower shall pay to
Holder, interest on the Principal Sum at a rate per annum equal to the
Applicable Rate; provided, however, that upon the occurrence any default
under this Note or any of the other Loan Documents, the interest rate payable
on the entire Principal Sum from the date of default (regardless of whether
or not this Note is accelerated by the Holder) shall be the Post-Default
Rate.
Section 2.03 Interest only on the Principal Sum shall be payable
on the fourth day of each month in arrears commencing on the fourth day of
the first month subsequent to the initial Advance hereunder and continuing
thereafter through and until the date upon which demand for payment is made
by Holder under this Note, at which time the Principal Sum, together with all
accrued interest thereon shall become immediately due and payable.
Section 2.04 NOTWITHSTANDING ANYTHING TO THE CONTRARY PROVIDED IN
THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, THE ENTIRE PRINCIPAL SUM AND
ALL ACCRUED BUT UNPAID INTEREST UNDER THIS NOTE SHALL BE DUE AND PAYABLE
ON DEMAND.
- ---------
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<PAGE>
Section 3. PAYMENTS AND COMPUTATIONS. All payments on account of
the Loan shall be made not later than 1:00 p.m. (Miami time) on the day when
due, in lawful money of the United States in same day funds and shall be
first applied to fees and other charges when due and payable under the
applicable provisions of this Note and the other Loan Documents, then to
interest on the unpaid Principal Sum and the remainder to the reduction of
the Principal Sum. All computations of interest under this Note shall be
calculated on the basis of a 360-day year, but charged on the basis of the
actual number of days elapsed in any calendar year or part thereof (i.e., the
interest for each day on which any principal is outstanding shall be
calculated at the annual interest rate divided by 360), provided, however,
interest at the Post-Default Rate shall be calculated on the basis of a 365
or 366 day year (whichever is applicable) for the actual number of days
elapsed in the period for which such Post-Default Rate shall be applicable.
Section 4. NO USURY. It is hereby expressly agreed that if under
any circumstances whatsoever fulfillment of any provision of this Note, at
the time performance of such provision shall be due, shall involve
transcending the limit validly prescribed by applicable usury statutes or any
other laws with regard to obligations of like character and amount, then ipso
facto the obligations to be fulfilled shall be reduced to the limit of such
statutes or laws, so that in no event shall any exaction be possible under
this Note that is in excess of the limit, but such obligation shall be
fulfilled to the maximum limit. All agreements herein are expressly limited
so that in no contingency or event whatsoever, whether by reason of
advancement of the proceeds hereof, acceleration of maturity of the unpaid
Principal Sum hereof, or otherwise shall the amount paid or agreed to be paid
to Lender hereof for the use, forbearance or detention of the money to be
advanced hereunder exceed the highest lawful rate. In the event the maximum
rate permitted to be paid on promissory notes and agreements of the type
contemplated hereunder is ever increased, the maximum rate of interest
hereunder shall be adjusted simultaneously with the effective date of such
increase to coincide with the rate established by such law. In the event
such maximum rate is eliminated, the maximum rate of interest hereunder shall
be adjusted simultaneously with the effective date of the amendment
eliminating the maximum usury rate which, however, shall never exceed any
criminal usury rate then in effect. In the event the total liability for
payments of interest and payments in the nature of interest including,
without limitation, all charges, fees, exactions or other sums which may at
any time be deemed to be interest shall, for any reason whatsoever, result in
an effective rate of interest, which for any month or other interest payment
period exceeds the limit imposed by any applicable usury laws, all sums in
excess of those lawfully collectible as interest for the period in question
shall, without further agreement or notice by, between or to any party
hereto, be applied to reduce the accrued interest hereunder, if any, and then
to a reduction of the Principal Sum immediately upon receipt of such sums by
the Holder hereof, or shall be refunded to Borrower, with the same force and
effect as though the undersigned had specifically designated such excess sums
to be so applied provided, however, that the Holder of this Note may, at any
time and from time to time, elect, by notice in writing to the undersigned,
to waive, reduce or limit the collection of any sums in excess of those
lawfully collectible as interest rather than accept such sums and apply them
as set forth above. It is the intention of the parties that the Borrower
does not intend or expect to pay nor does the Holder intend or expect to
charge, accept or collect any interest under this Note, the Loan Agreement or
any of the other Loan Documents greater than the highest rate of interest
which may be charged under applicable law.
Section 5. PREPAYMENT. The Principal Sum may be prepaid in whole or
in part at any time without penalty in accordance with the terms of the Loan
Agreement.
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<PAGE>
Section 6. DEFAULT. Should any "Event of Default" as defined in the
Loan Agreement occur, or should any default occur in the payment or
performance of any of the covenants or conditions contained in this Note or
in any other Loan Document, then upon the occurrence of any such event, the
Principal Sum, all interest accrued thereon, all charges and fees which are
part of the Loan, and any other sums advanced by Holder under this Note, the
Loan Agreement and the other Loan Documents shall, at the option of Holder,
and without notice, demand or presentment for payment to Borrower or any
other person or entity, at once become due and payable and may be collected
forthwith, regardless of the stipulated date of maturity, anything herein or
in the other Loan Documents to the contrary notwithstanding, all without any
relief whatever from any valuation or appraisement laws, and payment thereof
may be enforced and recovered in whole or in part at any time by one or more
of the remedies provided to Holder in this Note, in the Loan Agreement, or in
any of the other Loan Documents or otherwise available at law or in equity.
Interest shall accrue on the Principal Sum from the date of any default under
this Note, the Loan Agreement or any of the other Loan Documents, regardless
of whether or not there shall have been an acceleration of the payment of
principal as set forth herein, at the Post-Default Rate.
Section 7. COLLATERAL SECURITY. The payment of this Note is secured
by the Loan Agreement and the other Loan Documents.
Section 8. LATE CHARGES. In order to compensate Holder for the loss
and expense occasioned by delinquencies in the payment provisions hereof,
Borrower shall pay to Holder on demand, in addition to any interest or other
charges under the Loan, a service charge for the collection of late payments
equal to $.05 for each $1.00 or any part thereof of any delinquent payment
due under this Note, the Loan Agreement or any of the other Loan Documents
more than ten (10) days past due. Such late charge shall automatically
accrue and be due and payable on that date which is ten (10) days after the
due date of any payment. Failure to pay such late charges within ten (10)
days after demand shall constitute a default under this Note.
Section 9. TIME OF ESSENCE. Time is of the essence hereof with
regard to the performance of all of the terms, provisions and conditions
hereof on the part of Borrower.
Section 10. WAIVERS AND MISCELLANEOUS.
Section 10.01 The remedies of Holder, as provided herein and in
the other Loan Documents, shall be cumulative and concurrent and may be
pursued singly, successively or together, at the sole discretion of Holder,
and may be exercised as often as occasion therefor shall occur; and the
failure to exercise any such right or remedy shall in no event be construed
as a waiver or release thereof.
Section 10.02 The undersigned and any endorsers, sureties,
guarantors and all others who are or may become liable for the payment hereof
(a) severally waive presentment for payment, demand, notice of demand, notice
of nonpayment or dishonor, protest and notice of protest of this Note, and
all other notices in connection with the delivery, acceptance, performance or
enforcement of the payment of this Note, (b) expressly consent to all
extensions of time, renewals, postponements of time of payment of this Note
or other modifications hereof from time to time prior to
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<PAGE>
or after its maturity date without notice, consent or consideration to any of
the foregoing, (c) expressly agree to any substitution, exchange, addition or
release of any of the other Loan Documents, any addition or release of
collateral for the payment hereof, or the addition or release of any party or
person primarily or secondarily liable hereon, (d) expressly agree that
Holder shall not be required first to institute any suit or to exhaust its
remedies against the undersigned or any other person or party liable
hereunder or under the other Loan Documents or against any collateral in
order to enforce the payment of this Note, and (e) expressly agree that,
notwithstanding the occurrence of any of the foregoing (except the express
written release by Holder of any such person, which release shall not
release, limit or otherwise affect the liability of any person not
specifically released), the undersigned and all endorsers, sureties,
guarantors and all others who are or may become liable for the payment hereof
shall be and remain, jointly and severally, directly and primarily liable for
all sums due under this Note and the other Loan Documents subject to the
terms and conditions hereof.
Section 10.03 Holder shall not be deemed, by any act or omission,
to have waived any of its rights or remedies hereunder unless such waiver is
in writing and signed by Holder and, then, only to the extent specifically
set forth in the writing. A waiver with reference to one event shall not be
construed as continuing or as a bar to, or waiver of, any right or remedy as
to a subsequent event.
Section 10.04 Neither this Note nor any provision hereof may be
changed or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change or termination is sought.
Section 10.05 Failure to accelerate the Loan by reason of the
default in any payment, or the acceptance of a past due payment, shall not be
construed as a novation of the contract or a waiver of the right of Lender to
thereafter insist upon strict compliance with the terms of this Note without
previous notice of such intention being given to Borrower.
Section 10.06 Borrower hereby waives and renounces all rights to
the benefits of any appraisement, exemption and homestead now provided, or
which may hereafter be provided, by the Constitution and laws of the United
States of America and of any state thereof to and in all its property, real
and personal, against the enforcement and collection of this obligation.
Section 10.07 The section headings of this Note are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Note.
Section 10.08 The words "herein", "hereof", hereunder" and other
words of similar import refer to this Note as a whole and not to any
particular section of this Note unless specifically stated otherwise in this
Note.
Section 10.09 All initially capitalized terms used herein, unless
otherwise expressly defined herein, shall have the respective meanings
assigned in the Loan Agreement.
Section 11. GOVERNING LAW. This instrument shall be governed by and
construed according to the laws of the State of Florida.
Section 12. SUCCESSORS AND ASSIGNS. Whenever used, the singular
shall include the plural,
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<PAGE>
the plural the singular, and the words "Holder", "undersigned" and "Borrower"
shall be deemed to include their respective successors, heirs,
representatives and assigns. The masculine, feminine or neuter gender shall
include all others.
Section 13. NO JOINT VENTURE. It is expressly understood and agreed
that Holder shall never be construed for any purpose as a partner, joint
venturer, co-principal or associate of the undersigned or of any person or
party claiming by, through or under the undersigned in the conduct of their
respective businesses.
Section 14. COSTS OF COLLECTION. Borrower shall pay all reasonable
out-of-pocket costs and expenses which may now or hereafter be incurred by
Lender, its successors and assigns, in the enforcement and collection of this
Note or otherwise relating in any manner to this Note, including, but not
limited to, reasonable attorneys' and paralegal fees and costs through and
including any appellate proceedings and regardless of whether or not any
specific legal proceedings shall be initiated or commenced in connection
therewith. All such expenses shall be secured by the Loan Documents and
other collateral at any time held by Holder as security for Borrower's
obligations to Holder.
Section 15. EFFECT OF LOAN DOCUMENTS. Reference is hereby made to
the provisions of the other Loan Documents for a description of the further
rights of Holder. The Loan Agreement and other Loan Documents, among other
things, contain provisions for the acceleration of the maturity hereof upon
the happening of certain stated events.
Section 16. SEVERABILITY. The parties hereto intend and believe that
each provision in this Note comports with all applicable local, state and
federal laws and judicial decisions. However, if any provision or
provisions, or if any portion of any provision or provisions, in this Note
shall be found by a court of law to be in violation of any applicable local,
state or federal ordinance, statute, law, administrative or judicial
decision, or public policy, and if such court should declare such portion,
provision or provisions of this Note to be illegal, invalid, lawful, void or
unenforceable as written, then it is the intent of all parties hereto that
such portion, provision or provisions shall be given force to the fullest
possible extent that they are legal, valid and enforceable, that the
remainder of this Note shall be construed as if such illegal, invalid,
unlawful, void or unenforceable portion, provision or provisions were not
contained therein, and that the rights, obligations and interest of Borrower
and Holder hereof under the remainder of this Note shall continue in full
force and effect.
Section 17. JOINT AND SEVERAL LIABILITY. It is understood and agreed
that Holder, by accepting this Note, is relying upon the joint and several
liability of the undersigned and all endorsers hereof in addition to any
collateral securing this Note, notwithstanding that the Borrower or the
undersigned is referred to in this Note in the singular tense.
Section 18. TAXES. Borrower shall pay all documentary stamps and
intangible taxes which shall become payable with respect to this Note and any
Advance hereunder, and Borrower shall indemnify and hold Lender harmless from
and against any and all costs, losses, liability and expenses arising in
connection with the foregoing. Without limiting the generality of the
foregoing, at such time as the cumulative amount of the Advances equal
$2,500,000, the Borrower shall, as a condition to any further Advance under
this Note, pay all intangible personal property tax that may be due in
connection with such Advance.
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<PAGE>
Section 19. JURY WAIVER. LENDER AND BORROWER DO HEREBY KNOWINGLY,
VOLUNTARILY, IRREVOCABLY, UNCONDITIONALLY AND INTENTIONALLY WAIVE THE RIGHT
TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE LOAN AGREEMENT, AND ALL OTHER
LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON IN CONNECTION WITH THE
LOANS OR THE LOAN DOCUMENTS. THIS IRREVOCABLE WAIVER OF THE RIGHT TO A JURY
TRIAL IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN EVIDENCED HEREBY.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, has fully executed this Note as of the day and year first above
written.
TECHDYNE, INC., a Florida corporation
By_________________________________________
Name:
Title:
)
) ss:
)
The foregoing instrument was acknowledged before me this ___ day of
July, 1997, by ________________, as __________________ of TECHDYNE, INC., a
Florida corporation, on behalf of that corporation. He is personally known
to me or produced ________________ as identification.
_________________________________________
NOTARY PUBLIC
My Commission expires: (SEAL)
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<PAGE>
Exhibit 99(iii)
UNCONDITIONAL AND CONTINUING GUARANTY
OF PAYMENT AND PERFORMANCE
THIS GUARANTY ("Guaranty") is made as of this ____ day of July, 1997, by
MEDICORE, INC., a Florida corporation (the "Guarantor") in favor of BARNETT
BANK, N.A., a national banking association ("Lender").
R E C I T A L S :
A. Lender has agreed to make a revolving credit loan facility available
to Techdyne, Inc., a Florida corporation ("Borrower"), in the aggregate
principal amount at any one time outstanding of $2,500,000 (all loans now or
hereafter made under such facility are collectively called the "Loans").
B. The Loans shall be evidenced by a Revolving Demand Promissory Note of
even date herewith executed by Borrower to the order of Lender (as same may be
amended, modified, extended or renewed from time to time, without the necessity
of notice to or the consent of the Guarantor, the "Note").
C. The Loans are to be made pursuant to, and are secured by, among other
documents, a Loan and Security Agreement dated February 8, 1996 between Borrower
and Barnett Bank of South Florida, N.A., as amended by a First Amendment to Loan
and Security Agreement of even date herewith between Borrower and Lender (as so
amended and as the same may be amended, modified, extended or renewed from time
to time, without the necessity of notice to or the consent of the Guarantor, the
"Loan Agreement").
D. Lender may from time to time issue and renew banker's acceptances at
the request of the Borrower under or in connection with the Loan Agreement (all
such banker's acceptances, as the same may be amended, modified, extended or
renewed from time to time, without the necessity of notice to or the consent of
the Guarantor, are collectively called the "Banker's Acceptances"). All
agreements and other documents from time to time executed in connection with the
Banker's Acceptances or any of them, as such agreements and other documents may
be amended, modified, extended or renewed from time to time, without the
necessity of notice to or the consent of the Guarantor, are collectively called
the "Acceptance Agreements".
E. The Borrower is a subsidiary of Guarantor, and accordingly, the
Guarantor will benefit from the Loans, the issuance of the Banker's Acceptances
and all transactions relating thereto.
F. Lender would not make the Loans or issue any Banker's Acceptances
solely upon the covenants of the Borrower under the Note, Loan Agreement,
Acceptance Agreements and other loan documents, but requires, as further
security therefor, an unconditional and irrevocable guaranty of payment and
performance respecting the Loans and the Acceptance Agreements from Guarantor.
NOW, THEREFORE, in consideration of the premises, and to induce Lender to
make the Loans and to issue the Banker's Acceptances, and in consideration
thereof, Guarantor guarantees and agrees as follows:
1. Recitations. Each and all of the foregoing recitals are true and
correct and are incorporated herein by reference.
2. Capitalized Terms. All capitalized terms utilized in this Guaranty,
unless specifically
<PAGE>
otherwise defined herein, shall have the meanings assigned to such terms in
the Loan Agreement.
3. Guaranty. Guarantor hereby absolutely, irrevocably and
unconditionally guarantees (as primary obligor and not merely as sureties) to
Lender and its successors and assigns the full and prompt payment (whether at
stated maturity, by acceleration, or otherwise) and performance of the
"Obligations" as hereinafter defined. "Obligations" shall mean:
(a) All "Obligations" as such term is defined in the Loan Agreement;
(b) All principal, interest, attorneys' fees, loan fees, liabilities
for costs and expenses and all other indebtedness, obligations and
liabilities of Borrower to Lender at any time created or arising under or
in connection with the Loans, the Banker's Acceptances, the Note, Loan
Agreement, Acceptance Agreements, or any other document now or hereafter
executed in connection with the Loans or the Banker's Acceptances (or any
of them) or as security for the Loans or any of the Banker's Acceptances or
any amendment, extension, renewal, or modification thereto or substitution
therefor (which may be made without notice to or the consent of the
Guarantor). The Loan Agreement, Note, Acceptance Agreements and all other
documents evidencing, securing or otherwise relating to the Loans, the
Banker's Acceptances or any of them, whether now or hereafter existing, as
the same may be amended, modified, extended or renewed from time to time,
without the necessity of notice to or the consent of the Guarantor, are
sometimes collectively called the "Loan Documents";
(c) All agreements, covenants, indemnities, terms, conditions, and
other obligations to be performed by, or on behalf of, Borrower under the
Loan Documents; and
(d) All costs, expenses and fees, including but not limited to court
costs and attorneys' fees, arising in connection with, or as a consequence
of the non-payment, non-performance or non-observance of all amounts,
indebtedness, obligations and liabilities of Borrower to Lender described
in items (a), (b) and (c) of this Section 3.
Upon payment and performance in full of the Obligations and the termination of
any further liability of Lender under the Loan Documents and the Banker's
Acceptances, this Guaranty shall terminate, subject, however, to reinstatement
pursuant to Section 10 below if any payment made with respect to the Obligations
is rescinded or must otherwise be restored or returned by Lender.
4. Guaranty of Payment. This is an irrevocable, absolute, continuing
guaranty of payment (inter alia) and not a guaranty of collection and is in
no way conditioned or contingent upon any attempt to collect from or enforce
performance or compliance by the Borrower or upon any other event,
contingency or circumstance whatsoever. If for any reason the Borrower shall
fail or be unable duly, punctually and fully to pay and perform the
Obligations as and when the same shall become due, the Guarantor, without
demand, presentment, protest or notice of any kind, will forthwith pay or
perform the Obligations in accordance with the terms of such Loan Documents.
All such payments shall be made in lawful money of the United States and at
the place specified in the Note, with interest thereon until paid at the rate
set forth in the Loan Documents. The Guarantor, promptly after demand, will
pay to the Lender the reasonable costs and expenses of collecting such
amounts or otherwise enforcing this Guaranty, including, without limitation,
the reasonable fees and expenses of counsel (before trial, at trial, at all
appellate levels, in bankruptcy, and otherwise). Guarantor waives any right
to require that any action be brought against Borrower or any other person or
to require that resort be made to any security and Lender may, at its option,
proceed against the Guarantor in the first instance
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to collect any monies the payment of which is guaranteed hereby, without
first proceeding against Borrower or any other person and without first
resorting to any security held by it as collateral or to any other remedies.
The liability of the Guarantor hereunder shall be in no way affected or
impaired by an acceptance by Lender of any security for, or other guarantors
upon, any indebtedness, liability or obligation of Borrower to the Lender, or
by any failure, delay, neglect or omission by Lender to realize upon or
protect any such indebtedness, liability or obligation or any notes or other
instruments evidencing same or any collateral or security therefor.
5. Obligations of Guarantor Unconditional. The obligations of the
Guarantor under this Guaranty shall be primary, absolute and unconditional
obligations of the Guarantor, shall not be subject to any counterclaim, set-off,
deduction, diminution, abatement, recoupment, suspension, deferment, reduction
or defense based upon any claim the Guarantor or any other person may have
against the Borrower, the Lender or any other person, and shall remain in full
force and effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance, contingency or condition whatsoever
(whether or not the Guarantor, the Borrower or the Lender shall have any
knowledge or notice thereof and whether occurring prior to or after the date of
this Guaranty), including, without limitation:
(a) Any termination (other than by payment in full, subject to the
provisions of Section 10 below), amendment or modification of or deletion
from or addition or supplement to or other change, modification, extension,
substitution or renewal of any of the Loan Documents or any other
instrument or agreement applicable to any of the parties to any of the Loan
Documents;
(b) Any furnishing or acceptance of any security, or any release of
any security, for the Obligations, or the failure of any security or the
failure of any person to perfect any interest in any collateral;
(c) Any failure, omission or delay on the part of the Borrower to
conform or comply with any term of any of the Loan Documents or any other
instrument or agreement referred to in subsection (a) above, including,
without limitation, failure to give notice to the Guarantor of the
occurrence of a default under any Loan Document;
(d) Any waiver of the payment, performance or observance of any of
the obligations, conditions, covenants or agreements contained in any Loan
Document or any other waiver, consent, extension, indulgence, compromise,
settlement, release or other action or inaction under or in respect of any
of the Loan Documents or any other instrument or agreement referred to in
subsection (a) above, or any obligation or liability of the Borrower, or
any exercise or non-exercise of any right, remedy, power or privilege under
or in respect of any such instrument or agreement or any such obligation or
liability;
(e) Any failure, omission or delay on the part of the Lender to
enforce, assert or exercise any right, power or remedy conferred on it in
this Guaranty, or any such failure, omission or delay on the part of the
Lender in connection with any Loan Document or any other action or inaction
on the part of the Lender;
(f) Any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshalling of assets and liabilities or similar proceedings
with respect to the Borrower, the Guarantor or any other person or any of
their
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<PAGE>
respective properties or creditors, or any action taken by any trustee or
receiver or by any court in any such proceeding;
(g) Any limitation on the liability or obligations of the Borrower or
any other person under any of the Loan Documents or any discharge,
termination or cancellation (other than by payment in full), frustration,
irregularity, invalidity or unenforceability, in whole or in part, of any
of the Loan Documents or any other agreement or instrument referred to in
subsection (a) above or any term hereof;
(h) Any merger or consolidation of the Borrower or the Guarantor into
or with any other corporation, or any sale, lease or transfer or any of the
assets of the Borrower or the Guarantor to any other person;
(i) Any change in the relationship between the Borrower and the
Guarantor or any termination of such relationship;
(j) Any law, regulation, or decree now or hereafter in effect in any
jurisdiction which might in any manner affect any of the Obligations or the
rights of Lender with respect thereto;
(k) Any release or discharge, by operation of law, of the Guarantor
from the performance or observance of any particular obligation, covenant
or agreement contained in this Guaranty;
(l) Any counterclaim, defense, reduction or set-off the Borrower may
have with respect to any of the Obligations; or
(m) Any other occurrence, circumstance, happening or event
whatsoever, whether similar or dissimilar to the foregoing, whether
foreseen or unforeseen, and any other circumstance which might otherwise
constitute a legal or equitable defense or discharge of the liabilities of
a guarantor or surety or which might otherwise limit recourse against the
Guarantor.
6. Full Recourse Obligations. The obligations and liabilities of the
Guarantor set forth herein constitute the full recourse obligations of the
Guarantor enforceable against the Guarantor to the full extent of all its assets
and properties.
7. Waiver. The Guarantor unconditionally waives, to the fullest extent
permitted by applicable law:
(a) Notice of acceptance of this Guaranty by Lender, or of the
creation, renewal or accrual of any liability of Borrower, present or
future, or of the reliance of Lender upon this Guaranty (it being
understood that every indebtedness, liability and obligation of Borrower to
Lender shall conclusively be presumed to have been created, contracted or
incurred in reliance upon this Guaranty);
(b) Notice of any of the matters referred to in Section 5;
(c) Notice to the Guarantor of the incurrence of any of the
Obligations, notice to the Guarantor or the Borrower of any breach or
default by the Borrower with respect to any of the Obligations, notice of
acceleration or intent to accelerate, or any other notice that may be
4
<PAGE>
required, by statute, rule of law or otherwise, to preserve any rights of
the Lender against the Borrower or the Guarantor;
(d) Presentment to or demand of payment from the Borrower, the
Guarantor or any other person with respect to the Note or protest for
nonpayment or dishonor;
(e) Any right to require Lender to enforce, assert or exercise any
right, power, privilege or remedy conferred in any Loan Document or
otherwise and notice of Lender's exercise of any such right, privilege or
remedy;
(f) Any requirement of diligence on the part of the Lender;
(g) Any requirement to exhaust any remedies or to mitigate the
damages resulting from any default under any Loan Document;
(h) Defense of the statute of limitations in any action hereunder or
for the collection of any indebtedness or the performance of any
Obligations hereby guaranteed; and any defense arising by virtue of (i) the
lack of authority of the Borrower or any other person, or (ii) the failure
of Lender to file or enforce a claim of any kind;
(i) Any notice of sale, transfer or other disposition of any right,
title to or interest in the Loan Documents by the Lender;
(j) Any duty on the part of Lender to disclose to Guarantor any
facts which Lender may now or hereafter know about Borrower, regardless of
whether Lender has reason to believe that any such facts materially
increase the risk beyond that which the Guarantor intends to assume, has
reason to believe that such facts are unknown to Guarantor or has a
reasonable opportunity to communicate such facts to Guarantor, it being
understood and agreed the Guarantor is fully responsible for being and
keeping informed of the financial condition of Borrower and of all
circumstances bearing on the risk of non-payment of all Obligations hereby
guaranteed; and
(k) Any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge, release or defense of a
guarantor or surety or which might otherwise limit recourse against the
Guarantor.
8. Waiver of Subrogation. The Guarantor hereby irrevocably and forever
waives any claim, remedy or right which the Guarantor may now have or hereafter
acquire against the Borrower that arises hereunder and/or as a result of the
payment or performance by the Guarantor under this Guaranty, including, without
limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, indemnification, or participation in any claim, remedy or right of
Lender against the Borrower or any security which Lender now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, under
contract, by statute, under common law or otherwise.
9. Consent to Extensions, Renewals and Releases. Guarantor hereby agrees
that Lender may, from time to time, before or after any default by Borrower,
with or without further notice to or assent from the Guarantor, without in any
manner affecting the liability of Guarantor, and upon such terms and conditions
as it may deem advisable: (a) extend in whole or in part (by renewal or
otherwise), modify, accelerate, change or release any indebtedness, liability or
obligation of Borrower or of any other person liable for any indebtedness,
liability or obligation of Borrower, or waive any
5
<PAGE>
default with respect thereto; (b) sell, release, surrender, modify, impair,
exchange, substitute or (if a chose or choses in action) extend the duration
or the time for performance or payment of any and all property, of any nature
and from whomsoever received, held by Lender as security for the payment or
performance of any indebtedness, liability or obligation of Borrower to
Lender; and (c) settle, adjust or compromise any claim of Lender against
Borrower or any other person liable for any indebtedness, liability or
obligation of Borrower. Guarantor hereby ratifies and confirms any such
extension, renewal, change, release, waiver, surrender, exchange,
modification, impairment, substitution, settlement, adjustment or compromise
and agree that the same shall be binding upon Guarantor, and Guarantor hereby
expressly waives any and all defenses, counterclaims or offsets which
Guarantor might or could have by reason thereof, it being understood that
Guarantor shall at all times be bound by this Guaranty and remain fully
liable to Lender hereunder.
10. Effect of Bankruptcy Proceedings, etc. This Guaranty shall continue
to be effective or be automatically reinstated, as the case may be, if at any
time payment, in whole or in part, of any of the sums due to the Lender pursuant
to the terms of any Loan Document is rescinded or must otherwise be restored or
returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Borrower or any other person, or upon or as a result of
the appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to the Borrower or other person or any substantial part of
its property, or otherwise, all as though such payment had not been made. If an
event permitting the acceleration of the maturity of the principal amount of the
Note or any of the obligations of Borrower under the Acceptance Agreements shall
at any time have occurred and be continuing, and such acceleration shall at such
time be prevented by reason of the pendency against the Borrower or any other
person of a case or proceeding under a bankruptcy or insolvency law, the
Guarantor agrees that, for purposes of this Guaranty and its obligations
hereunder, the maturity of the principal amount of the Note or such other
obligations shall be deemed to have been accelerated with the same effect as if
the Lender had accelerated the same in accordance with the terms of the Loan
Documents and the Guarantor shall forthwith pay such principal amount, any
interest thereon and any other amounts guaranteed hereunder, without further
notice or demand.
11. Remedies. In the event that Guarantor shall fail to perform promptly
as herein provided, Lender shall have the right (from time to time, without
first requiring performance on the part of the Borrower) to require payment and
performance by the Guarantor of any Obligations, by action at law or in equity
or both, and further to collect in any such action reasonable compensation for
all loss, costs, damage, injury and expense sustained or incurred by Lender as a
consequence of such breach.
12. Interest and Expenses of Enforcement. Any sum required to be paid by
Guarantor to Lender pursuant to the terms hereof shall bear interest at the
non-default rate set forth in the Loan Documents from the due date thereof until
10 days after demand from Lender and thereafter all such sums shall bear
interest at the Post-Default Rate (as such term is defined in the Note) until
paid. Guarantor agrees to pay any and all costs and expenses incurred by
Lender in enforcing any rights or remedies under this Guaranty, including,
without limitation, all reasonable fees and expenses of the Lender's attorneys,
including fees and expenses of any appeals, regardless of whether any specific
legal proceedings should be commenced or initiated.
13. Consideration. Guarantor acknowledges that its undertakings hereunder
are given in consideration of the Lender making the Loans to Borrower and
issuing the Banker's Acceptances at the Borrower's request and that Lender would
not make the Loans to Borrower or issue any Banker's Acceptance were it not for
the execution and delivery of this Guaranty.
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<PAGE>
14. No Waiver. No failure on the part of Lender to pursue any remedy
hereunder or under the Loan Documents shall constitute a waiver on its part of
the right to pursue said remedy on the basis of the same or a subsequent breach.
No extension, substitution, modification, amendment or renewal of the Loan
Documents shall serve to waive the provisions hereof or discharge Guarantor from
any obligation or liability herein contained in whole or in part, except to the
extent expressly provided by Lender in writing.
15. Guaranty Independent. Guarantor agrees that all of the obligations,
agreements and liabilities hereunder are joint and several and are independent
of and in addition to the undertakings of the Borrower pursuant to the Loan
Documents and any other obligations of Guarantor to Lender. A separate action
may be brought to enforce the provisions hereof whether or not Borrower is a
party in any such action. Borrower and Guarantor may be sued together, or any
of them may be sued separately without first or contemporaneously suing the
other.
16. Representations and Warranties. The Guarantor hereby represents and
warrants the following:
(a) Financial Statements.
(i) All financial statements and data that have been given
to Lender by Guarantor with respect to Guarantor (A) are complete and
correct in all material respects as of the date given; and
(B) accurately present the financial condition of Guarantor on each
date as of which, and the results of such Guarantor's operations for
the periods for which, the same have been furnished.
(ii) All financial statements, balance statements, and any
notes thereto with respect to Guarantor furnished to Lender disclose
all material liabilities of Guarantor, fixed and contingent, as of
their respective dates.
(iii) There has been no adverse change in the financial
condition or operations of Guarantor since the date of the most recent
financial statement given to Lender with respect to Guarantor other
than changes in the ordinary course of business, none of which changes
have been materially adverse individually or in the aggregate.
(b) Other Arrangements. Guarantor is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions set forth in any agreement or instrument to which Guarantor is a
party, a default which would or may materially and adversely affect Guarantor's
ability to fulfill its obligations under this Guaranty.
(c) Other Information. All other reports, papers and written data
and information given to Lender by Guarantor with respect to Guarantor are
accurate and correct in all material respects and complete insofar as
completeness may be necessary to give Lender a true and accurate knowledge of
the subject matter.
(d) Litigation. There is not now pending against or affecting
Guarantor, nor to the knowledge of Guarantor is there threatened, any action,
suit or proceeding at law or in equity or by or before any administrative agency
or arbitrator which, if decided adversely to the Guarantor, would
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<PAGE>
individually or collectively have a material adverse effect on the Guarantor.
(e) Taxes. Guarantor has filed all federal, state, provincial,
county, municipal and other income tax returns required to have been filed by
Guarantor and has paid all taxes that have become due pursuant to such returns
or pursuant to any assessments received by Guarantor, and Guarantor does not
know of any basis for any material additional assessment against it in respect
of such taxes.
(g) Existence and Good Standing. Guarantor is a validly existing
Florida corporation in good standing in the State of Florida and in all other
jurisdictions where the nature of its business requires that it qualify as a
foreign corporation.
Guarantor knows of no facts which would, in any manner, indicate that the
statements and the implications therefrom set forth in the representations and
warranties contained in this Section 16 are not true and complete.
17. Affirmative Covenants. Guarantor covenants and agrees that, so long
as this Guaranty shall remain in effect, each Guarantor will, unless the Lender
shall otherwise consent in writing:
(a) Financial Statements. Furnish or cause to be furnished to Lender
(i) the financial statements and other information relating to the Guarantor
required to be delivered pursuant to the Loan Documents; and (ii) such other
information as Lender may from time to time reasonably request.
(b) Taxes Affecting the Guarantor. File all United States, state,
provincial, county, municipal and other income tax returns required to be filed
by them and pay before the same become delinquent all taxes that become due
pursuant to such returns or pursuant to any assessments received by the
Guarantor.
(c) Compliance with Laws. Promptly and faithfully comply in all
material respects with all laws, ordinances, rules, regulations and
requirements, both present and future, of every duly constituted governmental
authority or agency having jurisdiction that may be applicable to them.
(d) Books and Records. Maintain full and complete books of account
and other records, in form reasonably satisfactory to Lender, and furnish to
Lender such information concerning the financial condition of Guarantor as
Lender shall reasonably request.
(e) Notice. Give prompt written notice to Lender (i) of any action
or proceeding instituted by or against the Guarantor or as to which Guarantor
shall have received written notice in any court or by any commission or other
regulatory body, or of any such proceedings threatened against the Guarantor
which has a reasonable likelihood of resulting in a judgment or judgments in
excess of $200,000 and (ii) of any other action, event or condition of any
nature known to Guarantor or of which it should have knowledge which constitutes
a default under this Guaranty or any of the Loan Documents or which, with notice
or lapse of time or both, would constitute such a default, or a default of the
Borrower or any other guarantor under any other contract, instrument or
agreement to which any of them is a party or by which any of them or any of
their respective properties or assets may be bound or to which any may be
subject, which default might have a material adverse effect upon the business,
operations, properties, assets or financial condition of the Guarantor.
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18. Amendments, Etc. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by Lender, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
19. Notices, Demand and Other Instruments. All notices, offers,
acceptances, rejections, consents, requests and other communications to the
Guarantor hereunder shall be in writing and shall be deemed to have been given
(i) when delivered in person, or (ii) when sent by certified mail, return
receipt requested, or (iii) when sent by telecopier, telex or other telegraphic
means (with receipt confirmed) or (iv) on receipt after being sent by express
mail or delivery service guaranteeing overnight delivery, to the following
address:
Medicore, Inc.
2337 W. 76th Street
Hialeah, FL 33016
Attn: Daniel R. Ouzts
with a copy to:
Lawrence E. Jaffe, Esq.
777 Terrace Avenue - 5th Floor
Hasbrouck Heights, NJ 07604
or to such other address as the Guarantor shall furnish by notice to the Lender
in writing. Notices need not be given or made by an officer of either party but
shall be deemed sufficiently given if made by the counsel of such party, and all
of such notices shall be deemed in compliance hereof provided only they be given
in the manner specified herein.
20. Breach of Warranty. Guarantor shall be deemed to be in default of
this Guaranty if any representation or warranty made by Guarantor hereunder,
under any statement, instrument or certificate delivered by Guarantor to Lender
pursuant to the provisions hereof, or under any other agreement between
Guarantor and Lender made in connection with the Loans or any Banker's
Acceptance shall be incapable of being given by Guarantor, or, if given, shall
be determined by Lender to have been false or misleading in any material respect
as of the date on which the same was made, or shall be breached, and in such
case, Lender shall be entitled to exercise the remedies described in Section 11
hereof.
21. Separate Property. Guarantor shall be fully liable under this
Guaranty, and Guarantor does further agree that any and all of the property of
the Guarantor shall be subject to execution for any judgment or decree on or
enforcing this Guaranty by a court of competent jurisdiction against Guarantor.
Guarantor agrees that any property held by Guarantor as tenants-in-common or any
other form of joint ownership shall also be subject to enforcement of this
Guaranty, and the Guarantor hereby waives any exemption under the constitution
and laws of each jurisdiction where any such separate property or other property
is located.
22. Withholding Laws. If under any applicable law or regulation or the
interpretation thereof by any governmental authority charged with the
administration thereof, Guarantor shall be required to make any withholding or
deduction from any payment (whether of interest or otherwise) to be made by
Guarantor to Lender hereunder for or in respect of any present or future taxes,
levies, imposts, duties, charges or fees of any nature, the amount due to Lender
from Guarantor in respect of
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such payment shall be increased to the extent necessary to insure that after
making such withholding or deduction, and any withholdings or deductions
required to be made in respect of any such increase, Lender shall receive an
amount equal to the amount which Lender would have received had no such
withholding or deduction been required to be made. In the event of any such
withholding or deduction, Guarantor shall deliver to Lender, forthwith after
receipt by Guarantor, the official receipt or other official documentation
evidencing the payment of the amount so withheld or deducted.
23. Loan Documents. Guarantor acknowledges that its is fully familiar
with the terms, provisions and conditions of the Loan Documents and that its
execution of this Guaranty shall also serve as its consent to and approval of
the terms and provisions thereof.
24. Miscellaneous.
(a) This Guaranty shall be governed by and construed in accordance
with the laws of the State of Florida.
(b) Time is of the essence hereof with respect to all obligations
hereunder.
(c) The obligations and promises set forth herein shall be joint and
several undertakings and liabilities of each party executing this Guaranty, and
Lender may proceed hereunder against any one or more of said parties without
waiving its right to proceed against any of the others.
(d) Guarantor agrees 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 Guaranty.
(e) If any term, provision, covenant or condition hereof or any
application thereof should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, all terms, provisions, covenants and conditions
hereof, and all applications thereof not held invalid, void or unenforceable
shall continue in full force and effect and shall in no way be affected,
impaired or invalidated thereby.
(f) This Guaranty may be executed in any number of counterparts, each
of which shall be deemed an original hereof and all of which together shall
constitute but one and the same instrument.
(g) The use of the words "herein", "hereof", "hereunder" and any
other words of similar import refer to this Guaranty as a whole and not to any
particular paragraph, subparagraph or other subdivision of this Guaranty unless
specifically noted otherwise in this Guaranty. The use of the word "person" in
this Guaranty shall refer to and include any natural person, entity,
corporation, partnership, association, firm, company, joint venture and
governmental authority.
(h) The headings of the paragraphs of this Guaranty are for
convenience of reference only, and are not to be considered a part hereof, and
shall not limit or expand or otherwise affect any of the terms hereof.
(i) GUARANTOR AND LENDER (BY ITS ACCEPTANCE HEREOF) DO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS GUARANTY, OR ANY COURSE OF
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CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PERSON IN CONNECTION WITH THE LOANS, THE BANKER'S ACCEPTANCES OR THE
LOAN DOCUMENTS. THIS WAIVER BY GUARANTOR OF ITS RIGHT TO A JURY TRIAL IS A
MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOANS AND ISSUE THE BANKER'S
ACCEPTANCES.
(j) In the event Lender seeks to enforce this Guarantor by legal
action, Guarantor hereby waives the right to be sued in the city or county of
Guarantor's principal place of business. The Guarantor does hereby irrevocably
and unconditionally submit to the non-exclusive jurisdiction of any United
States Federal or Florida state court sitting in Dade County, Florida, in any
action or proceeding arising out of or connected (directly or indirectly) to
this Guaranty. Guarantor agrees that any final judgment in any such action
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law. Nothing in this Section shall
affect the right of Lender to bring any action or proceeding against Guarantor
or its property in the courts of any other jurisdiction. The foregoing consent,
in advance, to the jurisdiction of the above-mentioned courts is a material
inducement for Lender to make the Loans and issue the Banker's Acceptances. The
Guarantor agrees and consents to the service of process upon Guarantor in
connection with any suit, action or proceeding arising out of or related to
(directly or indirectly) this Guaranty by certified mail, return receipt
requested, to the address of the Guarantor provided in Section 19 above;
provided, however, that the foregoing shall not affect the right of Lender to
effect the service of process in any other manner provided by law.
(k) In this Guaranty, wherever the context so requires, the neuter
gender includes the masculine and/or feminine gender, the singular numbers
include the plural, and the plural numbers include the singular.
(l) This Guaranty creates a continuing obligation and the obligation
of Guarantor hereunder shall be binding upon Guarantor and its successors,
heirs, representatives and assigns and shall inure to the benefit of and be
enforceable by Lender and its successors and assigns.
IN WITNESS WHEREOF, the Guarantor has duly executed this Guaranty as of the
day and year first above written.
Signed, sealed and delivered MEDICORE, INC., a Florida
in the presence of: corporation
By____________________________
_________________________ Name:
Title:
_________________________
)
)ss.:
)
The foregoing instrument was acknowledged before me this ____ day of July,
1997, by ___________________, the ______________________ of MEDICORE, INC., a
Florida corporation, on behalf of such corporation. Such individual:
11
<PAGE>
_____ is personally known to me or
_____ produced __________________ as identification.
____________________________
Notary Public
Printed Name of Notary:
____________________________
My Commission Expires:
[Notarial Seal]
12
<PAGE>
SUBORDINATION AGREEMENT
THIS AGREEMENT is dated this ____ day of _______________, 1997, among
BARNETT BANK, N.A., a national banking association (hereinafter called the
"Lender"), TECHDYNE, INC., a Florida corporation (hereinafter called the
"Borrower"), and MEDICORE, INC., a Florida corporation (hereinafter called the
"Subordinating Creditor").
W I T N E S S E T H
WHEREAS, the Borrower has requested the Lender to make a $2,500,000
revolving credit facility available to Borrower in accordance with the terms of
a Loan and Security Agreement dated February 8, 1996 between Borrower and
Barnett Bank of South Florida, N.A., as amended by a First Amendment to Loan and
Security Agreement of even date herewith between Borrower and Lender (as so
amended and as it may be modified, amended, renewed or extended from time to
time without the necessity of notice to or the consent of the Subordinating
Creditor, the "Loan Agreement");
WHEREAS, pursuant to the Loan Agreement, the Lender shall made loans
(collectively, the "Loans") to Borrower and may issue banker's acceptances
(collectively, the "Banker's Acceptances") at the request of Borrower;
WHEREAS, the Loans are to be evidenced by a Revolving Demand Promissory
Note in the principal amount of $2,500,000 of even date herewith executed by
Borrower in favor of Lender (as it may be modified, amended, renewed or extended
from time to time without the necessity of notice to or the consent of the
Subordinating Creditor, the "Note");
WHEREAS, the Subordinating Creditor directly owns an interest in the
Borrower and as such will enjoy substantial benefits from the availability to
Borrower of the Loans and Banker's Acceptances.
NOW, THEREFORE, in consideration of the Lender's execution of the Loan
Agreement and making Loans and issuing Banker's Acceptances and in consideration
of the benefits accruing to the Subordinating Creditor by reason of said Loans
and Banker's Acceptances, and as an inducement to the Lender to make said Loans
and issue the Banker's Acceptances, the parties hereto agree as follows:
1. All capitalized terms used in this Agreement, unless otherwise defined
herein, shall have the meanings set forth in the Loan Agreement.
2. The Subordinating Creditor hereby subordinates to the "Obligations",
as such term is defined in the Loan Agreement, whether now existing or hereafter
arising, including without limitation, interest after the commencement of any
bankruptcy proceeding affecting the Borrower, whether under Title 11 of the
United States Code or otherwise, at the rate specified in the Loan Documents,
whether or not such interest is an allowable claim in any such proceeding
(collectively, the "Senior Debt") all of the following:
(a) $2,150,000 in principal indebtedness now owing from Borrower to
the Subordinating Creditor and all renewals, extensions, replacements,
substitutions, and modifications thereof;
<PAGE>
(b) All interest, fees, costs and other liabilities which may now or
hereafter be due in connection with the indebtedness identified in
subsection (a) above, both prior to and subsequent to any bankruptcy of the
Borrower; and
(c) Any debts, claims, redemption rights, loan obligations or any
other obligations of any type whatever of the Borrower now or hereafter
held by the Subordinating Creditor as a result of or in connection with the
Subordinated Debt.
The indebtedness, interest, fees, costs, obligations and other liabilities
identified in subsections (a), (b), and (c) above are collectively called the
"Subordinated Debt".
3. Notwithstanding anything to the contrary provided in this Agreement,
the Borrower may make, and the Subordinating Creditor may receive, payments on
the Subordinated Debt on a dollar for dollar basis from additional equity that
is injected into Borrower or from the use, on a quarterly basis, of retained
earnings arising subsequent to March 31, 1995, so long as at the time of any
payment of the Subordinated Debt: (a) the Borrower shall be in full compliance
with all financial covenants contained in the Loan Agreement as of the end of
the most recent quarter, (b) both before and immediately after the contemplated
payment, no Event of Default shall exist under the Loan Agreement, and (c) both
before and immediately after the contemplated payment, no facts or circumstances
exist which, with notice and/or lapse of time, could constitute an Event of
Default under the Loan Agreement. The payments on the Subordinated Debt that
are expressly permitted under this Section 3 are hereinafter called the
"Permitted Reductions".
4. Except for the Permitted Reductions, no direct or indirect payment
shall be made on or in connection with, or with respect to, the Subordinated
Debt. Except for the Permitted Reductions, the Senior Debt must be paid in full
prior to any payment of any kind or nature on the Subordinated Debt and all
claims of the Subordinating Creditor against the Borrower under or in connection
with the Subordinated Debt are hereby assigned to Lender as security for all
Senior Debt. Subordinating Creditor will, from time to time upon Lender's
request, execute and file such documents (including, without limitation,
financing statements) as the Lender deems necessary or appropriate to perfect,
preserve or enforce its rights hereunder. In the event that there is any
promissory note or other evidence of indebtedness (whether now or hereafter
existing) relating to the Subordinated Debt, then the Borrower and the
Subordinating Creditor shall endorse the same with a legend stating that it is
subject to this Agreement and, if so requested, will deliver the same to the
Lender.
5. The Borrower hereby agrees that while the Obligations or any part
thereof remain outstanding, it will not satisfy nor make any principal, interest
or other payments of any nature whatsoever upon the Subordinated Debt (including
debts, claims, redemption rights, loan obligations or any other obligations of
any type whatever to the Subordinating Creditor) except as expressly permitted
under Section 3 above. The Borrower agrees that should it make any payment in
contravention of this Agreement while any part of the Obligations remain
outstanding, the same shall constitute an Event of Default under the Loan
Agreement, entitling the Lender to exercise any and all remedies for default
thereunder unless said payment is in the form of trade payables arising in the
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<PAGE>
ordinary course of business between Borrower and Subordinating Creditor.
6. The Subordinating Creditor hereby agrees as follows:
(a) The Subordinating Creditor will not accept or receive (directly
or indirectly) from the Borrower any payment in contravention of this
Agreement, nor will any Subordinating Creditor make any transfer to third
parties not a party to this Agreement or take any other action designed to
secure indirectly from the Borrower the payment of any sums in
contravention of this Agreement.
(b) The Subordinating Creditor shall be liable to Lender for any sums
it accepts or receives from the Borrower in contravention of this
Agreement, and such sums, when remitted to Lender, shall be applied to the
Obligations in such order as Lender may elect in its sole discretion. All
sums received by the Subordinating Creditor in contravention of this
Agreement shall be deemed to be trust funds held for the benefit of Lender.
(c) In the event of the liquidation of the Borrower or distribution
of its assets, any obligation of the Borrower to the Lender (including
interest after the commencement of any proceeding under Chapter 11 of the
United States Code at the rate specified in the Loan Documents, whether or
not such interest is an allowable claim in any such proceeding) shall be
satisfied and discharged before the Subordinating Creditor receives any
distributive share or payment on account of the obligations of the Borrower
to Subordinating Creditor.
(d) The Subordinating Creditor agrees that it will not hereafter
assign, transfer or convey all or any portion of the Subordinated Debt or
any interest therein.
(e) The Subordinating Creditor will mark its books and records and
all documents evidencing the Subordinated Debt to reflect that such debt is
subordinated pursuant to the terms and conditions of this Agreement.
7. All of the Obligations, whether now existing or hereafter arising
(including, without limitation, interest after the commencement of any
bankruptcy proceeding affecting the Borrower, whether under Title 11 of the
United States Code or otherwise, at the rate specified in the Loan Documents,
whether or not such interest is an allowable claim in any such proceeding) and
any and all renewals, extensions, enlargements and modifications thereof, shall
be entitled to the benefit of this Agreement and shall constitute Senior Debt.
8. Payments in contravention of this Agreement may be made by the
Borrower only with express written approval of the Lender, which may be granted
or denied in Lender's sole discretion.
9. The Subordinating Creditor hereby represents and warrants to Lender
that the Subordinated Debt constitutes the only liabilities of Borrower to the
Subordinating Creditor, except for trade payables in the ordinary course of
business.
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<PAGE>
10. The Borrower and Subordinating Creditor acknowledge and agree that
the Note is a demand obligation, and notwithstanding anything to the contrary
provided in the Loan Documents, the Lender may demand payment thereof at any
time.
11. This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns, including without
limitation all successor owners of the Senior Debt or any portion thereof.
12. LENDER, BORROWER AND SUBORDINATING CREDITOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE SUBORDINATED DEBT, THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PERSON IN CONNECTION WITH THE OBLIGATIONS (AS DEFINED IN THE LOAN AGREEMENT),
THE LOAN AGREEMENT, THE SUBORDINATED DEBT, THE SENIOR DEBT OR ANY DOCUMENTS
RELATING TO THE FOREGOING. THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO
MAKE THE LOANS AND ISSUE BANKER'S ACCEPTANCES.
IN WITNESS WHEREOF, this Agreement was executed as of the date first above
written.
LENDER: BARNETT BANK, N.A.
By_______________________________
Name:
Title:
BORROWER: TECHDYNE, INC., Florida corporation
By___________________________
Name:
Title:
SUBORDINATING CREDITOR: MEDICORE, INC., a Florida corporation
By___________________________
Name:
Title:
