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) December 29, 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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 556-9210
<PAGE>
Item 5. Other Events
Effective December 29, 1997, the Company refinanced its revolving line
of credit with Barnett Bank, N.A. (the "Bank"). The original revolving line
of credit was obtained in February, 1996 for $2,000,000 and extended to
$2,500,000 in July, 1997 by a First Amendment to Loan and Security Agree-
ment, Loan Agreement, and Security Agreement. The refinanced revolving
loan agreement has a maturity date of May 1, 2000, as opposed to the prior
lines which were on demand, and is for an amount of up to $1,600,000 and
bears interest at the Bank's prime rate.
The Company also obtained a five year term loan of $1,500,000 due
December 29, 2002 at an annual interest rate of 8.60%. The interest was
fixed based upon a variable rate note (LIBOR plus 2.25% floating rate) and
an interest rate swap agreement entered into with the Bank. The swap
agreement in effect reduces the interest rate risk by allowing the Company
to lock-in a fixed rate by converting the foregoing variable rate obliga-
tion. The term loan is payable in equal principal payments of $25,000
plus interest. Early termination of the swap agreement, either through
prepayment or default on the term loan, may result in a cost or a benefit
to the Company. The market risk from such early termination that arises
from the movement in interest rates may cause a liability to the Company
if interest rates are down, and a benefit to the Company if interest rates
are up, with the Company recognizing a loss or gain resulting from the
difference between its fixed interest rate and the market value of
interest rates at the time of early termination. Under the term loan,
the Company is obligated to adhere to a variety of affirmative and
negative covenants, including but not limited to a debt service ratio of
1:25 to 1:00, a current ratio of 1:5 to 1:00, a capital funds ratio of
total debt to capital funds of no more than 1:7 to 1:00, maintenance of
capital funds equal to or in excess of $3,500,000, and the Company may not
sell any of its assets or properties, except inventory in the ordinary
course of business, within any calendar year for which the aggregate book
value exceeds $500,000. The term loan also provides for restrictions on
transactions with related persons, precludes changes in ownership in the
Company which would reduce the ownership by its parent, Medicore, Inc.
(the "Parent") to less than 51%, and restricts the Company from engaging
in any new unrelated business which might adversely affect the repayment
of the term loan.
Both the revolving and term financing facilities are secured by a first
security interest on corporate assets, have cross-default provisions and
are unconditionally guaranteed by the Parent. The Parent has also subordin-
ated $2,291,665 in principal indebtedness due to it from the Company to
these financing facilities, provided the Company may make payments to its
Parent on the subordinated debt from additional equity that is injected
into the Company or from the use, on a quarterly basis, of retained
earnings arising subsequent to March 31, 1995, so long as the Company is
otherwise in full compliance with all financial covenants of the loan
agreements.
The Company also has two other commercial term loans from the Bank
obtained in February, 1996. One is a five-year term loan of $712,500
expiring February 7, 2001 at an annual rate of interest of 8.28% with
monthly payments of principal and interest of $6,925 based on a 15-year
amortization schedule with the unpaid principal and accrued interest due
on the expiration date. This loan is secured by a mortgage on properties
in Hialeah, Florida owned by the Parent, two of which are leased to the
Company and one parcel being vacant land used as a parking lot. The
Parent has assigned the leases and rents to the Bank as further security
for that term loan,
<PAGE>
provided the Parent may continue to collect the rents until an event of
default, if any. The Parent has also subordinated its interests in the
leases to the mortgage held by the Bank.
The second commercial term loan obtained from the Bank in February,
1996 was for the principal amount of $200,000 for a period of five years
bearing interest at a per annum rate of 1.25% over the Bank's prime rate
and requiring monthly principal payments of $3,333 plus accrued interest
through expiration on February 7, 2001. This $200,000 term loan carries
no prepayment penalty and is secured by all of the Company's tangible per-
sonal property, goods and equipment, and all cash or non-cash proceeds of
such collateral. The Parent has also unconditionally guaranteed the
payment and performance by the Company of these two term loans.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of businesses acquired
Not Applicable
(b) Pro forma financial information
Not Applicable
(c) Exhibits
(99) Additional Exhibits
(i) Second Amendment to Loan and Security Agreement
between the Company and Barnett Bank, N.A. dated as
of December 29, 1997;
(ii) Revolving Promissory Note from the Company to Barnett
Bank, N.A. for $1,600,000 dated as of December 29,
1997;
(iii) Unconditional and Continuing Guaranty of Payment and
Performance(1) by Medicore, Inc.(2) in favor of
Barnett Bank, N.A. dated as of December 29, 1997;
(iv) Subordination Agreements(3) among the Company,
Barnett Bank, N.A. and Medicore, Inc.(2);
(v) Loan Agreement for $1,500,000 between the Company
and Barnett Bank, N.A. dated as of December 29, 1997;
(vi) Promissory Note from the Company to Barnett Bank, N.A.
for $1,500,000 dated as of December 29, 1997;
(vii) Commercial Security Agreement between the Company and
Barnett Bank, N.A. dated as of December 29, 1997;
<PAGE>
(viii) International Swap Dealers Association, Inc. Master
Agreement between the Company and Barnett Bank, N.A.
dated as of December 22, 1997.
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(1) Each of the $1,600,000 Revolving Loan and the $1,500,000 Term Loan has
been unconditionally guaranteed by Medicore, Inc.(2), and each such
unconditional guaranty agreement is substantially similar to the
exhibit filed for the Revolving Loan.
(2) The Parent of the Company owning 63% of the Company's equity.
(3) The Parent has subordinated indebtedness due to it from the Company to
the Revolving and Term Loans, each such Subordination Agreement is
substantially similar to the exhibit filed for the Revolving Loan.
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.
/s/ Thomas K. Langbein
By-------------------------------
THOMAS K. LANGBEIN, Chairman
of the Board and Chief Executive
Officer
Dated: January 20, 1998
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Second Amendment (this "Amendment") is made as of the 29th day of
December, 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 dated
February 8, 1996, as amended by First Amendment to Loan and Security Agree-
ment, Loan Agreement and Security Agreement dated July 31, 1997 (the
"Agreement").
B. Borrower has requested Lender to modify and amend the Agreement,
and Lender is willing to modify the Agreement as more particularly provided
herein.
C. Contemporaneously herewith, the Borrower is executing to the
order of Lender a Revolving Promissory Note in the principal sum of
$1,600,000.
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
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the foregoing recitals are true and correct, and such recitals are incor-
porated herein by reference and made a part hereof for all purposes.
2. Definitions.
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(a) Except as otherwise expressly provided herein, all capi-
talized terms used in this Amendment shall have the meanings set forth in
the Agreement.
(b) The definitions of the following terms contained in Section
1.1 of the Agreement are hereby modified and amended, in their entirety,
to read respectively as set forth below:
"Borrowing Base" shall mean on any date the sum
of (i) seventy-five percent (75%) of the face amount
of Eligible Accounts on such date, plus (ii) the lesser
of (a) twenty percent (20%) of Eligible U.S. Inventory
or (b) $600,000.00.
"Capital Funds" shall mean the "tangible net
worth" (as defined in accordance with GAAP) plus Sub-
ordinated Debt.
"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
earlier to occur of (i) the date upon which the Lender
terminates its obligation to make any further Loans
pursuant to Section 11.2 of the Agreement, or (ii)
May 1, 2000.
"Note" shall mean the Revolving Promissory Note
dated as of December 29, 1997 in the principal sum of
$1,600,000 executed by Borrower to the order of Lender,
as the same may be amended from time to time hereafter.
<PAGE>
(c) Section 1.1 of the Security Agreement is hereby modified
and amended to add the following definition thereto:
"Eligible U.S. Inventory" shall mean the value,
determined in accordance with GAAP, of Inventory
consisting of raw materials and finished goods located
in the United States which the Lender, in its sole
discretion, deems to be Eligible U.S. Inventory, ex-
cluding, however, (i) the amount of progress payments,
predelivery payments, deposits and any other sums
received by Borrower in anticipation of the sale and
delivery of Eligible U.S. Inventory, and (ii) all
Eligible U.S. Inventory on lease to others. The Lender
may determine on a daily basis whether any Inventory
constitutes and continues to constitute Eligible U.S.
Inventory, and if any Eligible U.S. Inventory subse-
quently becomes ineligible for any reason, its ineli-
gibility shall become effective immediately. In
making its determination of Eligible U.S. Inventory,
the Lender will consider whether Inventory satisfies
and continues to satisfy the following requirements:
(a) The Inventory is lawfully owned by Borrower,
is not subject to any lien, claim, consignment,
security interest or prior assignment;
(b) Borrower has the right and power to grant
security interests in such Inventory;
(c) The Inventory is not subject to any
Lien whatsoever, except for the Lender's security
interest and Permitted Liens, and a currently effec-
tive UCC financing statement filed by the Lender
against the Borrower covering such Inventory is on
file in all appropriate filing locations;
(c) The Inventory arose or was acquired in the
ordinary course of Borrower's business and no sub-
stantial portion thereof represents returned, rejected
or damaged goods;
(d) No Account, account receivable or document
of title has been created or issued with respect to
such Inventory;
(e) Each of the warranties and representations
set forth in Section 10.1 hereof has been affirmed
with respect thereto at the time the most recent
Schedule of Inventory was provided to Lender;
(f) The Inventory does not represent work in
process, spare parts, packaging and shipping materials,
supplies, or returned or defective Inventory; and
(g) The Inventory is not otherwise regarded by
Lender as unsuitable collateral.
3. Revolving Credit Facility.
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(a) Clause (ii) of Section 2.1(a) of the Agreement is hereby
modified and amended in its entirety to read as follows:
(ii) One Million Six Hundred Thousand and
no/100 Dollars ($1,600,000.00).
<PAGE>
(b) Section 2.3 of the Agreement is hereby modified and amended,
in its entirety, to read as follows:
2.3 Maximum Credit Facility. Notwithstanding
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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 One Million Six Hundred Thousand No/100
Dollars ($1,600,000.00) at any time outstanding.
4. Affirmative Covenants.
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(a) Section 7.3(c) of the Agreement is hereby modified and
amended, in its entirety, to read as follows:
(c) Within one hundred five (105) days after the
close of the calendar year, beginning with the year
ending December 31, 1997, 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 limita-
tions imposed by the Borrower, from a firm of independent
certified public accountants selected by the Borrower and
acceptable to the Lender, and (ii) internally prepared,
non-audited financial statements, including balance sheets
and profit and loss statements, for the Borrower and each
company included in the audited financial statements as of
the fiscal year then ended, prepared in accordance with
GAAP, applied on a consistent basis 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.
(b) Section 7.3(d) of the Agreement is hereby modified and
amended, in its entirety, to read as follows:
(d) Within 15 days after receipt by Borrower, but
in no event later than 90 days after the submission of
the financial statements described in subsection (c)
above, the following: (i) a certificate from the inde-
pendent certified public accountants of Borrower stating
that, in making their examination of the financial
statements of the Borrower, they obtained no knowledge
of the occurrence or existence of any condition or event
which constitutes or would constitute, upon the giving
of notice or lapse of time or both, any Event of Default,
or a statement specifying the nature and period of
existence of any such condition or event disclosed by
their examination, and (ii) a copy of a "management
letter", if any, from such accountants to the Borrower
in connection with such accountants' audit;
(c) Section 7.3(e) of the Agreement is hereby modified and
amended, in its entirety, to read as follows:
(e) Concurrently with the delivery of the financial
statements described in subsection (a) above and the
quarterly reports required to be delivered pursuant to
subsection (e) below, a certificate from the chief
financial or accounting officer of the Borrower certifying
to Lender that to his knowledge, the
<PAGE>
Borrower has kept, observed, performed and fulfilled
each and every covenant, obligation and agreement
binding upon the Borrower contained in this Agreement
or the other Loan documents, and that no Event of
Default, or any event which with the giving of notice
or lapse of time or both, would constitute an Event
of Default, has occurred or specifying any such Event
of Default, together with a financial covenant com-
pliance worksheet, in form and substance satisfactory
to the Lender, reflecting the computation of the finan-
cial covenants set forth in Sections 7 and 8 hereof
as of the end of the period covered by such financial
statements;
(d) Section 7.3(f) of the Agreement, which was deleted pursuant
to the First Amendment to Loan and Security Agreement, Loan Agreement and
Security Agreement dated July 31, 1997, is hereby added to the Agreement,
so that Section 7.3(f) of the Agreement shall hereafter read as follows:
(f) Within 15 days after the end of each calendar
quarter, a Borrowing Base Certificate reflecting in-
formation as of the end of the quarter;
(e) Section 7.3(g) of the Agreement is hereby modified and
amended, in its entirety, to read as follows:
(g) On or before the 30th day of each quarter
and at such other times as requested by Lender, an
accounts receivable aging report, prepared by
invoice date, and an acounts payable listing and
aging report, all as of the end of the immediately
preceding quarter.
(f) Section 7.3(h) of the Agreement is hereby modified and
amended, in its entirety, to read as follows:
(h) Within 15 days after the submission thereof
to the SEC, copies of the 10-Q and 10-K financial
statements of the Guarantor and the Borrower; and
(g) Section 7.13 of the Agreement is hereby modified and amended,
in its entirety, to read as follows:
7.13 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 calendar year, which
ratio shall be calculated using Borrower's consolidated
financial statements. For purposes hereof, the "Debt
Service Coverage Ratio" shall be calculated at the
end of each calendar year, 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 Indebted-
ness (including the Obligations), plus (c) depreciation
expenses, plus (d) amortization expense, minus (e) divi-
dends, to (2) the sum of (a) current maturities of
long term debt, plus (b) interest expense, all deter-
mined in accordance with GAAP.
(h) The Agreement is hereby modified and amended to add the
following provisions as Section 7.18 and 7.19, respectively, thereto:
7.18 Capital Funds. The Borrower shall at all
-------------
times maintain Capital Funds in an amount equal to or
in excess of $3,500,000. Although the Borrower shall
be required at all times to comply with this Section
7.18, the Lender shall
<PAGE>
test the Borrower's compliance on a quarterly basis
using the consolidated financial statements and other
information provided by Borrower.
7.19 Capital Funds Ratio. The Borrower shall
-------------------
maintain a ratio of Total Debt to Capital Funds of
at least 1.7:1 at all times. Although the Borrower
shall be required at all times to comply with this
Section 7.19, the Lender shall test the Borrower's
compliance on a quarterly basis using the consolidated
financial statements and other information provided by
Borrower.
5. Amendment of Certain Exhibits. Exhibit "A", Exhibit "G" and
------------------------------
Exhibit "I" are hereby modified and amended, in their entirety, to read as
set forth on Exhibit "A", Exhibit "G" and Exhibit "I" attached hereto and
made a part hereof; provided, however, that the Lender reserves the right
to change the nature, scope and content of the form of the Borrowing Base
Certificate attached to the Agreement at Exhibit "A".
6. Amendment of Loan Documents. All references in the Loan Documents
---------------------------
to the Agreement are hereby modified and amended to refer to and mean the
Agreement, as modified hereby.
7. Extent of Amendments; Ratification. Except as expressly modified
----------------------------------
by this Amendment, all of the terms and provisions of the Agreement and
other Loan Documents shall remain in full force and effect. Borrower
hereby acknowledges and confirms that the Agreement and all other Loan
Documents, as modified hereby, constitute valid and binding agreements,
enforceable in accordance with their respective terms. The Agreement
shall 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 en-
cumbrances. 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.
8. 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;
(b) The Borrower is in full compliance with the terms of the
Agreement and the Loan Documents (with the exception of the technical de-
faults waived by Lender pursuant to its letter to Borrower dated March 14,
1997), all representations and warranties contained in the Agreement and
the Loan Documents are true and correct as of the date hereof, and no
default or event of default currently exists under the Agreement 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.
9. 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 Docu-
ments, as modified by this Amendment, including, without limitation, all
UCC search fees, and fees and disbursements of Lender's counsel.
<PAGE>
10. 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 (in-
cluding, without limitation, parent corporations and subsidiaries) and
their respective shareholders, directors, employees, officers, agents,
attorneys, insurers, reinsurers, sureties, successors and assigns (collec-
tively, 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 from the beginning of the world
through and including the date of this Amendment, arising directly or in-
directly out of or in any manner in connection with the Loan Documents, as
modified by this Amendment.
11. 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.
12. Entire Agreement. This Amendment and certain other documents of
----------------
event date herewith contain the entire agreement between the parties con-
cerning 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.
13. 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.
14. 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 INDUCE-
MENT FOR LENDER TO ENTER INTO THIS AMENDMENT.
<PAGE>
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:
/s/ Thomas K. Langbein
- ------------------------- By-----------------------------------
First Witness Name: THOMAS K. LANGBEIN
Title: Chairman of the Board
- -------------------------
Second Witness
BARNETT BANK, N.A., a national banking
association, successor by merger to
Barnett Bank of South Florida, N.A.
/s/ Elvis Calvi
- ------------------------- By-----------------------------------
First Witness Name: ELVIS CALVI
Title: Loan Closing Representative
- -------------------------
Second Witness
STATE OF NEW JERSEY )
) SS
COUNTY OF BERGEN )
The foregoing instrument was acknowledged before me this 30th day of
----
December, 1997, by Thomas K. Langbein the Chairman of the Board of TECHDYNE,
------------------ ---------------------
INC., a Florida corporation, on behalf of the corporation. He/she is per-
sonally known to me or has produced U.S. Passport as identification.
-------------
/s/ Nancy A. Cox
-----------------------------------
Seal: Notary Public
Printed Name of Notary:
My commission expires: NANCY A. COX
Notary Public of New Jersey
My Commission Expires March 6, 2000
[Acknowledgments continued on next page]
<PAGE>
STATE OF GEORGIA )
) SS
COUNTY OF DOUGLAS )
The foregoing instrument was acknowledged before me this 30th day of
----
December, 1997, by Elvis Calvi the Loan Closing Representative 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 U.S.
----
Passport as identification.
- --------
/s/ Dona A. Smith
-----------------------------------
Seal: Notary Public
Printed Name of Notary:
/s/ Dona A. Smith
-----------------------------------
My commission expires:
NOTARY PUBLIC, DOUGLAS COUNTY, GEORGIA
MY COMMISSION EXPIRES JUNE 3RD, 2000
<PAGE>
AMENDMENT TO EXHIBIT "G" TO LOAN AND SECURITY AGREEMENT
EXHIBIT "G"
Subsidiaries of Techdyne, Inc.
Jurisdiction In Percent of
Name Which Incorporated Ownership
---- ------------------ ---------
Techdyne (Scotland) Ltd. Scotland 100%
Techdyne Livingston Ltd. Scotland 100%
<PAGE>
AMENDMENT TO EXHIBIT I TO LOAN AND SECURITY AGREEMENT
EXHIBIT I
Location of Inventory and Equipment
Borrowing inventory and equipment are located at the following facilities:
1. 2230 W. 77th Street, Hialeah, Florida
2. 2200 W. 77th Street, Hialeah, Florida
[3. 2235 W. 77th Street, Hialeah, Florida] [omitted and initialled]
4. 7110 Brittmoore Street, Houston, Texas
5. 113 Cedar Street, Milford, Massachusetts
6. 800 Paloma Drive, Round Rock, Texas
REVOLVING PROMISSORY NOTE
$1,600,000.00 Atlanta, Georgia
as of December 29, 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 ONE MILLION SIX HUNDRED THOUSAND AND NO/100
DOLLARS ($1,600,000.00), 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.
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 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, Loan Agreement and Security Agreement and Second Amend-
ment to Loan and Security Agreement 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 "Maturity Date" shall mean the earlier to occur of
(a) May 1, 2000, or (b) the date upon which the Principal Sum, all interest
accrued thereon, and all other sums payable under this Note shall become
due and payable pursuant to Section 6 below.
Section 1.09 "Note" shall mean this Revolving Promissory Note,
which evidences the Loans, as it may be amended from time to time hereafter.
Section 1.10 "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 1.11 "Prime Rate" shall mean the annual rate of interest
announced from time to time by Barnett Banks, Inc. or its successor as its
prime rate. The Prime Rate is a reference rate for the information and use
of Lender in establishing the actual rates to be charged its borrowers.
If Barnett Banks, Inc. or its successor shall cease to announce a prime
rate, then the "Prime Rate" shall be such substitute prime rate as may be
reasonably selected by Lender.
Section 1.12 "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 condi-
tions 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 here-
under at any one time shall not exceed $1,600,000. Reference should be
made to the Loan Agreement for the term, conditions and provisions appli-
cable 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 fifteenth (15th) day of each month in arrears commencing on the
fifteenth (15th) day of the first month subsequent to the initial Advance
hereunder and continuing thereafter through and until the Maturity Date,
at which time the Principal Sum, together with all accrued interest
thereon, shall become immediately due and payable.
<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 appli-
cable.
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 contem-
plated 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 elim-
inating 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.
<PAGE>
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.
Section 6. Default. Should any "Event of Default" as defined in the
-------
Loan Agreement occur, or should any default occur in the payment or per-
formance of any of the covenants or conditions contained in this Note, in
any Swap Agreement, 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 payable
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 auto-
matically 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, accep-
tance,
<PAGE>
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 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 col-
lateral 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 refer-
ence 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 par-
ticular 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.
<PAGE>
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, 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 connec-
tion 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
<PAGE>
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 $1,600,000, 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.
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 CONNEC-
TION 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
/s/ Thomas K. Langbein
By-----------------------------------
Name: THOMAS K. LANGBEIN
Title: Chairman of the Board
STATE OF NEW JERSEY )
) ss:
COUNTY OF BERGEN )
The foregoing instrument was acknowledged before me this 30th day of
----
December, 1997, by Thomas K. Langbein, as Chairman of the Board of
------------------ ---------------------
TECHDYNE, INC., a Florida corporation, on behalf of that corporation.
He is personally known to me or produced U.S. Passport as identification.
-------------
/s/ Nancy A. Cox
-----------------------------------
NOTARY PUBLIC
My Commission expires: (SEAL)
NANCY A. COX
Notary Public of New Jersey
My Commission Expires March 6, 2000
UNCONDITIONAL AND CONTINUING GUARANTY
OF PAYMENT AND PERFORMANCE
THIS GUARANTY ("Guaranty") is made as of the 29th day of December,
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 avail-
able to Techdyne, Inc., a Florida corporation ("Borrower"), in the aggre-
gate principal amount at any one time outstanding of $1,600,000 (all loans
now or hereafter made under such facility are collectively called the
"Loans").
B. The Loans shall be evidenced by a Revolving 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, Loan Agreement, and
Security Agreement dated July 31, 1997, and Second Amendment to Loan
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 Agree-
ment (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 Agree-
ments".
E. The Borrower is a subsidiary of Guarantor, and accordingly, the
Guarantor will benefit from the Loans, the issuance of the Banker's Accep-
tances 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 considera-
tion thereof, Guarantor guarantees and agrees as follows:
<PAGE>
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 otherwise defined herein, shall have the
meanings assigned to such terms in the Loan Agreement.
3. Guaranty. Guarantor hereby absolutely, irrevocably and uncondi-
--------
tionally 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, liabil-
ities 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 with
out 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, contin-
-------------------
uing 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
<PAGE>
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 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, defer-
ment, 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, contin-
gency 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, modifica-
tion, 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
<PAGE>
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, reor-
ganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshalling of assets and liabilities or similar pro-
ceedings with respect to the Borrower, the Guarantor or any other
person or any of their 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 Obliga
tions 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 obli-
gation, 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 what-
soever, whether similar or dissimilar to the foregoing, whether
foreseen or unforeseen, and any other circumstance which might other-
wise 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
<PAGE>
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 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 here-
under 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, regard-
less 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
<PAGE>
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 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 rati-
fies 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, bank-
ruptcy, 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 other-
wise, 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 insol-
vency 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 ac-
cordance 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
<PAGE>
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 pro-
ceedings 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.
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 obliga-
--------------------
tions, 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 opera-
tions 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 contin-
gent, as of their respective dates.
(iii) There has been no adverse change in the financial con-
dition or operations of Guarantor since the date of the most
recent financial statement given to Lender with respect to Guar-
antor 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
<PAGE>
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 admin-
istrative agency or arbitrator which, if decided adversely to the Guaran-
tor, would 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 represen-
tations 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 govern-
mental 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.
<PAGE>
(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 com-
mission 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.
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 over-
night 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 here-
under, 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 mis-
leading 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.
<PAGE>
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 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 evi-
dencing the payment of the amount so withheld or deducted.
23. Loan Documents. Guarantor acknowledges that its is fully famil-
--------------
iar 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 accor-
dance with the laws of the State of Florida.
(b) Time is of the essence hereof with respect to all obliga-
tions 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 docu-
mentary 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.
<PAGE>
(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 con-
venience 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 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 DOCU-
MENTS. 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 juris-
diction 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, how-
ever, 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 obli-
gation 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.
<PAGE>
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
/s/Thomas K. Langbein
_________________________ By____________________________
Name: THOMAS K. LANGBEIN
Title: Chairman of the Board,
_________________________ CEO & President
STATE OF NEW JERSEY )
)ss.:
COUNTY OF BERGEN )
The foregoing instrument was acknowledged before me this ____ day of
Deember, 1997, by Thomas K. Langbein, the Chairman of the Board, CEO &
- ------- ------------------ ----------------------------
President of MEDICORE, INC., a Florida corporation, on behalf of such
- ---------
corporation. Such individual:
----- is personally known to me or
X
----- produced U.S. Passport as identification.
/s/ Nancy A. Cox
----------------------------
Notary Public
Printed Name of Notary:
My Commission Expires: Nancy A. Cox
Notary Public of New Jersey
My Commission Expires March 6, 2000
[Notarial Seal]
SUBORDINATION AGREEMENT
THIS AGREEMENT is dated as of the 29th day of December, 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 $1,600,000
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, Loan Agreement and Security
Agreement dated July 31, 997 between Borrower and Lender and a Second
Amendent to Loan and Security Agreement of even date hereiwth (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 Sub-
ordinating 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 Promissory Note
in the principal amount of $1,600,000.00 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 consider-
ation 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 "Obliga
tions", 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 allowa-
ble claim in any such proceeding (collectively, the "Senior Debt") all of
the following:
<PAGE>
(a) $2,291,665 in principal indebtedness now owing from Borrower
to the Subordinating Creditor and all renewals, extensions, replace-
ments, substitutions, and modifications thereof;
(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 bank-
ruptcy 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 Agree-
ment, the Borrower may make, and the Subordinating Creditor may receive,
payments on the Subordinated Debt on a dollar for dollar basis from addi-
tional 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 ex-
pressly 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
<PAGE>
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 ordinary course of business between Borrower and Subor-
dinating Creditor.
6. The Subordinating Creditor hereby agrees as follows:
(a) The Subordinating Creditor will not accept or receive (di-
rectly or indirectly) from the Borrower any payment in contravention
of this Agreement, nor will any Subordinating Creditor make any trans-
fer 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 distribu-
tion 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 Subor-
dinating 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 modifi-
cations 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.
<PAGE>
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.
10. 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.
11. 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.
/s/ Elvis Calvi
By_______________________________
Name: ELVIS CALVI
Title: Loan Closing Representative
BORROWER: TECHDYNE, INC., Florida corporation
/s/ Thomas K. Langbein
By_______________________________
Name: THOMAS K. LANGBEIN
Title: Chairman of the Board
SUBORDINATING CREDITOR: MEDICORE, INC., a Florida corporation
/s/ Thomas K. Langbein
By_______________________________
Name: THOMAS K. LANGBEIN
Title: Chairman of the Board,
CEO & President
<PAGE>
EXHIBIT A
to
Subordination Agreement
$2,291,665, which is the principal balance currently owing from the
Borrower to the Subordinating Creditor under advances made by the Subordin-
ating Creditor as evidenced by a Promissory Note dated April 10, 1995
LOAN AGREEMENT
LOAN AGREEMENT dated as of December 29, 1997, by and among TECHDYNE,
INC., a Florida corporation ("Borrower"), and BARNETT BANK, N.A., a
national banking association (together with its successors and assigns,
the "Lender").
W I T N E S S E T H:
RECITALS:
A. The Borrower has requested a $1,500,000 term loan from Lender; and
B. The Lender is willing to provide the term loan in accordance with,
and subject to, the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants,
agreements, terms and conditions contained herein, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. For purposes of this Agreement, in addition to
-------------
the terms defined elsewhere in this Agreement, the following terms shall
have the meanings set forth below (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Affiliate", with respect to any Person, shall mean any other Person:
(i) that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with such Person;
(ii) that beneficially owns or holds 5% or more of any class of Stock or
other equity interest of such Person; or (iii) 5% or more of whose Stock
(or in the case of a Person which is not a corporation, 5% or more of
whose equity interest) is beneficially owned or held by such Person or a
subsidiary of such Person. For purposes hereof, "control" means the pos-
session, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting Stock or other equity interests, by contract, or other-
wise.
"Agreement" or "this Agreement" shall include all amendments, modifi-
cations and supplements hereto and shall refer to this Agreement as the
same may be in effect at the time such reference becomes operative.
"Bankruptcy Code" shall mean Title 11, United States Code, as amended
from time to time, and any successor thereto or replacement thereof.
"CERCLA" shall mean the Comprehensive, Environmental, Response, Com-
pensation and Liability Act of 1980, as amended from time to time, and all
rules and regulations from time to time promulgated thereunder.
<PAGE>
"Capital Funds" shall mean the "tangible net worth" (as defined in
accordance with GAAP) plus Subordinated Debt.
"Capital Lease" shall mean any lease of any property which would, in
accordance with GAAP, be required to be classified and accounted for as a
capital lease on a balance sheet of the lessee.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder which would,
in accordance with GAAP, appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Closing Date" shall mean the date referred to in Section 3.1 hereof.
"Collateral" shall mean and include all of the assets, property or
interests encumbered by the Security Agreement and the other Loan Documents,
and all other property and interests in real or personal property which
shall, from time to time, secure the Obligations.
"Debt Service Coverage Ratio" shall have the meaning specified in
Section 5.11 hereof.
"EPA" shall mean the Environmental Protection Act, as amended from
time to time, and all rules and regulations from time to time promulgated
thereunder.
"Environmental Laws" shall mean CERCLA, EPA, RCRA, OSHA, SARA and all
other federal, state, local and foreign laws relating to pollution or pro-
tection of the environment, including laws relating to emissions, dis-
charges, releases or threatened releases of Hazardous Materials into the
environment (including without limitation ambient air, surface water,
ground water or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Materials, and any and all regulations, codes, plans, orders,
decrees, judgments, injunctions, notices or demand letters issued, entered,
promulgated or approved thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and all rules and regulations from
time to time promulgated thereunder.
"Event of Default" shall have the meaning specified in Section 7 hereof.
"Financials" shall mean the balance sheet, statement of income and
Shareholder's equity and statement of cash flows of the Borrower as at and
for the fiscal year ended December 31, 1996, and all other interim financial
statements or information of the Borrower as of a date subsequent thereto
which have been previously delivered by the Borrower to the Lender.
"GAAP" shall mean generally accepted accounting principles consis-
tently applied and maintained throughout the period indicated and
consistent with the prior financial practice of the relevant Person.
<PAGE>
"Guarantor" shall mean Medicore, Inc., a Florida corporation.
"Guaranty Agreement" shall mean the written guarantee(s) executed by
the Guarantor and all amendments thereto.
"Hazardous Material" shall mean any pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substance or material defined
as such in (or for purposes of) the Environmental Laws, including without
limitation, any waste constituents coming within the definition or list of
hazardous substances in 40 C.F.R. 261.1 through 261.33.
"Indebtedness" shall mean all liabilities, obligations and indebted-
ness of the Borrower of any and every kind and nature, including, without
limitation, the Obligations and all obligations to trade creditors, whether
heretofore, now or hereafter owing, arising, due or payable from the
Borrower to any Person and howsoever evidenced, created, incurred, acquired
or owing, whether primary, secondary, direct, contingent, fixed or other-
wise. Without in any way limiting the generality of the foregoing,
Indebtedness specifically includes the following:
(a) all obligations or liabilities of any Person that are
secured by any Lien upon property owned by the Borrower, even though
the Borrower has not assumed or become liable for the payment thereof;
(b) all obligations or liabilities created or arising under any
lease (including but not limited to any Capital Lease) of real or
personal property, or conditional sale or other title retention agree-
ment with respect to property used or acquired by the Borrower, even
though the rights and remedies of the lessor, seller or Lender there-
under are limited to repossession of such property;
(c) all unfunded pension fund obligations and liabilities;
(d) all the Borrower's obligations or liabilities under
guarantees of Indebtedness;
(e) deferred taxes; and
(f) all Obligations.
"Lender" shall mean Barnett Bank, N.A., a national banking associa-
tion, and its successors and assigns.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing,
and the filing of, or
<PAGE>
agreement to give, any financing statement under the UCC or comparable law
of any jurisdiction).
"Loan" shall mean the loan made by the Lender to the Borrower pursuant
to this Agreement, which Loan is evidenced by the Note.
"Loan Documents" shall mean and collectively refer to this Agreement,
the Note, the Security Agreement, the Swap Agreements, any financing state-
ments, all Guaranty Agreements, and all Supplemental Documentation and any
and all agreements, instruments and documents, including, without limita-
tion, notes, guaranties, mortgages, deeds to secure debt, deeds of trust,
chattel mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, trust account agreements and all
other written matters whether heretofore, now or hereafter executed by or
in behalf of the Borrower or the Guarantor and/or delivered to Lender, with
respect to this Agreement, or with respect to the transactions contemplated
by this Agreement, together with any amendments, modifications and supple-
ments thereto, and any renewals or extensions thereof, in whole or in part.
"Note" shall mean the Promissory Note of even date herewith in the
principal sum of $1,500,000.00 executed by Borrower to the order of Lender,
as the same may be amended from time to time hereafter.
"Obligations" shall mean and include the Loan, the obligations of the
Borrower under this Agreement, the Note, the Security Agreement, the Swap
Agreements, and the other Loan Documents, and all other loans, advances,
debts, liabilities, obligations, covenants and duties owing, arising, due
or payable from the Borrower to the Lender, of any kind or nature, whether
or not evidenced by any note, guaranty or other instrument, arising under
this Agreement, the Note, the Security Agreement, Swap Agreements, or the
other Loan Documents, whether direct or indirect (including those acquired
by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired. The
term includes, but without limitation, all interest, charges, expenses,
fees, attorneys' and paralegals' fees and any other sums chargeable to the
Borrower by the Lender under this Agreement or any of the other Loan Docu-
ments.
"OSHA" shall mean the Occupational Safety and Health Act, as amended
from time to time, and all rules and regulations from time to time promul-
gated thereunder.
"Permitted Liens" shall mean any Liens for current taxes, assessments
or other governmental charges which are not delinquent or remain payable
without any penalty or which are being contested in good faith and with due
diligence by appropriate proceedings but do not (in the Lender's sole
judgment) materially and adversely affect the Lender's rights or the
priority of the Security Agreement.
"Person" shall mean a corporation, an association, a partnership, a
joint venture, a joint stock company, a trust, an organization, a business,
an individual or a government or political subdivision thereof or any
government agency, or any other form of entity.
<PAGE>
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"Revolver Loan Documents" shall mean all documents, whether now
existing or hereafter executed, which evidence, secure, guaranty or other-
wise relate to the Revolver Obligations.
"Revolver Loan Agreement" shall mean the Loan and Security Agreement
of dated February 8, 1996 executed by Borrower and Barnett Bank of South
Florida, N.A., as amended by a First Amendment to Loan and Security Agree-
ment, Loan Agreement and Security Agreement dated July 31, 1997, and
Second Amendment to Loan and Security Agreement of even date herewith,
and as is may be amended from time to time hereafter.
"Revolver Obligations" shall mean all "Obligations", as such term is
defined in the Revolver Loan Agreement.
"SARA" shall mean the Superfund Reauthorization and Amendments Act Of
1986, as amended from time to time, and all rules and regulations promul-
gated thereunder.
"SEC" shall mean the Securities and Exchange Commission or any suc-
cessor thereto.
"Security Agreement" shall mean the Security Agreement of even date
herewith executed by Borrower in favor of Lender as security for the Loan,
as it may be amended from time to time hereafter.
"Shareholder" shall mean, with respect to any Person, each Person
which, directly or indirectly, owns or controls, outstanding Stock of such
Person.
"Solvent" shall mean, as to any Person, that such Person has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts
as they mature and owns property having a value, both at fair valuation and
at present fair saleable value, greater than the amount required to pay its
debts.
"Stock" shall mean all shares, options, interests, partnerships or
other equivalents (howsoever designated) of or in a corporation, whether
voting or non-voting, including, without limitation, common stock, warrants,
preferred stock, convertible debentures and all agreements, instruments and
documents convertible, in whole or in part, into any one or more or all of
the foregoing.
"Subordinated Debt" shall mean Indebtedness of the Borrower that is
subordinated to the Obligations pursuant to an agreement in form and sub-
stance satisfactory to Lender.
"Subsidiary" shall mean any corporation, more than ten percent (10%)
of the outstanding Stock having ordinary voting power to elect a majority
of the board of directors of which is at the time, directly or indirectly,
owned by the Borrower and/or one or more Subsidiaries
<PAGE>
(irrespective of whether, at the time, Stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency).
"Supplemental Documentation" shall mean all agreements, instruments,
documents, financing statements, warehouse receipts, bills of lading,
notices of assignment of accounts, schedules of accounts assigned,
mortgages, deeds of trust, certificates of title and other written matter
necessary or requested by the Lender to perfect and maintain perfected the
Lender's security interest in the Collateral and to consummate the trans-
actions contemplated by this Agreement and the other Loan Documents.
"Swap Agreements" shall mean, collectively, an ISDA Master Agreement
dated as of December 22, 1997, between Borrower and Lender, any other or
additional swap agreements (as defined in 11 U.S.C. 101) between Borrower
and Lender or any of its affiliates, and all other interest rate swap
documents, whether now or hereafter existing, between Borrower and Lender
or any of its affiliates.
"Term Loan Documents" shall mean the Promissory Note dated February 8,
1996 in the principal sum of $712,500.00 executed by Borrower to the order
of Lender, as such promissory note may be modified or amended from time to
time, and all documents, whether now existing or hereafter executed, which
evidence, secure, guaranty or otherwise relate to the loan evidenced thereby.
"Total Debt" shall mean Total Liabilities less Subordinated Debt.
"Total Liabilities" shall mean all liabilities which would be shown
on the liability side of a balance sheet prepared in accordance with GAAP.
"Trademarks, Copyrights and Patents" shall mean all of the Borrower's
right, title and interest in, to and under all trade names, trademarks,
servicemarks, copyrights, patents, and other intellectual property, and
all licenses and registrations of and applications for each of the foregoing.
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time and enacted in the State of Florida and in any other jurisdiction,
as applicable.
"United States" shall mean the United States of America, including
its territories and possessions, and the District of Columbia.
1.2 Accounting Terms. Any accounting terms used in this Agreement
----------------
which are not specifically defined shall have the meanings customarily
given them in accordance with GAAP; provided, however, that in the event
-------- -------
that changes in GAAP shall be mandated by the Financing Accounting Standards
Board, or any similar accounting body of comparable standing, or shall be
recommended by the Borrower's certified public accountants, to the extent
that such changes would modify such accounting terms or the interpretation
or computation thereof, such changes shall be followed in defining such
accounting terms only from and after such date as the
<PAGE>
Borrower and Lender shall have amended this Agreement to the extent
necessary to reflect any such changes in the financial covenants and other
terms and conditions of this Agreement.
1.3 Other Terms. All other terms contained in this Agreement and not
-----------
otherwise expressly defined in this Agreement shall have the meanings
provided for by the UCC as enacted in the State of Florida to the extent
the same are used or defined therein.
SECTION 2. THE LOAN
2.1 Term Loan.
---------
(a) Subject to all of the terms and conditions set forth in this
Agreement and the other Loan Documents, the Lender shall make the Loan to
Borrower on the Closing Date. To evidence the Loan, the Borrower is exe-
cuting and delivering the Note to the Lender on the Closing Date, which
Note shall bear interest and be paid in accordance with and subject to the
terms and conditions of the Note.
2.2 Prepayment. Borrower shall not have the right to prepay all or
----------
any portion of the principal balance of the Loan except in strict compliance
with the provisions of the Note.
2.3 Payments. All payments on or in connection with the Loan are to
--------
be made by Borrower in U.S. Dollars and without any defense, offset or
counterclaim of any kind.
SECTION 3. CLOSING; CONDITIONS OF CLOSING.
3.1 Closing. The closing hereunder shall take place on the date and
-------
at the time of the execution of this Agreement, or at such other time as
the parties hereto shall mutually agree.
3.2 Conditions of Loan. Without limiting in any manner any other
------------------
provisions of this Agreement, the obligation of the Lender to make the
Loan is subject to: (i) the accuracy and correctness of the representations
and warranties of the Borrower contained herein and in the other Loan
Documents and in any certificate delivered pursuant to this Agreement or
the other Loan Documents; (ii) the performance by the Borrower of its
agreements contained herein and in the other Loan Documents; and (iii) the
satisfaction of all of the following conditions:
(a) Note. The Note, in form and substance satisfactory to the
----
Lender and its counsel, shall have been duly authorized, executed and
delivered by the Borrower, shall be in full force and effect and no default
shall exist thereunder.
(b) Articles of Incorporation. The Lender shall have received
-------------------------
copies of the Articles of Incorporation of the Borrower, and all amendments
thereto, certified by the Secretary of State of Florida.
<PAGE>
(c) Certificates of Good Standing. The Lender shall have re-
-----------------------------
ceived certificates for the Borrower, of the corporation's good standing
under the laws of each state where the Borrower is authorized to transact
business.
(d) Items Pertaining to Guarantor. The Lender shall have re-
-----------------------------
ceived each of the items identified in subsections (b) and (c) above with
respect to the Guarantor.
(e) Loan Documents. All Loan Documents required by Lender to be
--------------
executed at Closing shall have been executed and delivered to Lender.
(f) Opinion of Counsel to the Borrower and Guarantor. The Lender
------------------------------------------------
shall have received the opinion of counsel for the Borrower dated the
Closing Date, as to the transactions contemplated by this Agreement, in
form and substance satisfactory to the Lender and its counsel.
(g) Insurance. The Lender shall have received certificates of
---------
insurance evidencing that Borrower maintains liability, business inter-
ruption and all other insurance required to be maintained by the Borrower
pursuant to this Agreement and that the Guarantor maintains all insurance
required to be maintained by the Guarantor pursuant to the terms and
conditions of the Security Agreement and other Loan Documents.
(h) Payment at Closing. There shall have been paid to the re-
------------------
spective parties entitled thereto the amounts specified in the closing
statement to be issued in connection with the closing to the extent any
such amounts are due and owing at, or have been billed to the Lender at or
prior to, the Closing Date.
(i) Taxes. All taxes, fees and other charges in connection
-----
with the execution, delivery, recording, filing and registration of any of
the Loan Documents shall have been paid.
(j) Governmental Approvals. All necessary approvals, authoriza-
----------------------
tions and consents, if any are required, of all governmental bodies (in-
cluding courts) having jurisdiction with respect to the Collateral and the
transactions contemplated by this Agreement shall have been obtained.
(k) No Injunction, Etc. No action, proceeding, investigation,
------------------
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body to
enjoin, restrain, or prohibit, or to obtain substantial damages in respect
of, or which is related to or arises out of this Agreement or the consumma-
tion of the transactions contemplated hereby, or which, in the Lender's
sole discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement.
(l) No Material Adverse Change. There shall not have occurred
--------------------------
(a) any material adverse change in the business, financial condition or
results of operations of the Borrower or of the Guarantor or in the value
of the Collateral since December 31, 1996, or (b) any event, condition or
state of facts which would be expected materially and to affect the business,
financial condition or results of operations of the Borrower or the
Guarantor.
<PAGE>
(m) Proceedings and Documents. All opinions, certificates and
-------------------------
other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance
to the Lender and its counsel. The Lender shall have received copies of
all other instruments and other evidence as the Lender may reasonably
request, in form and substance satisfactory to the Lender and its counsel,
with respect to the transactions contemplated by this Agreement and the
taking of all actions in connection therewith.
(n) Subordinated Debt. Guarantor shall have executed and de-
-----------------
livered to Lender an agreement (in form and substance satisfactory to
Lender) pursuant to which Guarantor shall have subordinated $2,291,665 in
principal indebtedness due from Borrower to Guarantor.
(o) Landlord Waivers. Borrower shall have obtained and delivered
----------------
to Lender waivers or subordination of liens, in form and substance satis-
factory to Lender, from the landlord at each location where any of the
Collateral is located.
(p) Event of Default. No Event of Default, nor any event or
----------------
condition which, with notice, lapse of time or the making of the Loan would
constitute an Event of Default, shall have occurred and be continuing.
3.3 Waiver of Conditions Precedent. If the Lender shall close and
------------------------------
fund the Loan prior to the fulfillment of any of the conditions precedent
set forth in Section 3.2 hereof, the making of the Loan shall constitute
only an extension of time for the fulfillment of such condition and not a
waiver thereof, and the Borrower shall thereafter use its best efforts to
fulfill each such condition promptly.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and each
of the other Loan Documents and to make the Loan, the Borrower makes the
following continuing warranties and representations to the Lender (all
representations as to the Guarantor are based on the best of the Borrower's
knowledge after due investigation):
4.1 Corporate Organization and Power. The Borrower (a) is a corpora-
--------------------------------
tion duly organized, validly existing and in good standing under the laws
of the State of Florida; (b) is qualified to do business and is in good
standing in every other jurisdiction where the nature of its business or
the ownership of its properties requires it to be so qualified; (c) has
the power to own and give Liens in the Collateral and to engage in the
transactions contemplated hereby; and (d) has the full power, authority
and legal right to execute and deliver this Agreement and the other Loan
Documents and to perform and observe the terms and provisions thereof.
4.2 Litigation; Government Regulation. There are no actions, suits
---------------------------------
or proceedings pending or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or the Guarantor at law or in equity
before any court or administrative officer or agency which might result in
a material adverse change in the business or financial condition of the
Borrower or the Guarantor or impair the Borrower's or the Guarantor's
ability to perform their respective
<PAGE>
obligations under the Loan Documents. To the best of the Borrower's
knowledge, the Borrower and the Guarantor are not in violation of or in
default under any applicable statute, rule, order, decree, writ, injunction
or regulation of any governmental body (including any court).
4.3 Taxes. The Borrower and the Guarantor are not delinquent in the
-----
payment of any taxes which have been levied or assessed by any governmental
authority against it or its assets. The Borrower and Guarantor have timely
filed all tax returns which are required by law to be filed, and has paid
all taxes and all other assessments or fees levied upon the Borrower, the
Guarantor or upon their respective properties to the extent that such taxes,
assessments or fees have become due. No controversy in respect of income
taxes is pending or, to the knowledge of the Borrower, threatened.
4.4 Enforceability of Loan Documents: Compliance With Other Instru-
---------------------------------------------------------------
ments. The Loan Documents are the legal, valid and binding obligations of
- -----
the Borrower and the Guarantor, enforceable against the Borrower and the
Guarantor in accordance with their respective terms, subject to applicable
bankruptcy, reorganization, arrangement, insolvency, moratorium, fraudulent
transfer, or other similar laws of general application relating to or
affecting the rights or remedies of creditors, and general principles of
equity including principles of commercial reasonableness, good faith and
fair dealing. The Borrower and the Guarantor are not subject to any cor-
porate or other restriction or to any order, rule, regulation, writ,
injunction or decree of any court or governmental authority or to any
statute which materially and adversely affects its business, property,
assets or financial condition. Neither the Borrower nor the Guarantor is
a party to any labor contract or labor dispute. Neither the Borrower nor
the Guarantor is in default with respect to any indenture, loan agreement,
mortgage, lease, deed or similar agreement related to the borrowing of
monies to which the Borrower or the Guarantor is a party or by which either
the Borrower or the Guarantor is bound. Neither the execution, delivery or
performance of the Loan Documents, nor compliance therewith: (a) conflicts
or will conflict with or results or will result in any breach of, or
constitutes or will constitute with the passage of time or the giving of
notice or both, a default under, (i) the Articles of Incorporation or
Bylaws of the Borrower or the Guarantor, (ii) any law, order, writ, injunc-
tion or decree of anycourt or governmental authority, or (iii) any agree-
ment or instrument to which the Borrower or the Guarantor is a party or by
which the Borrower or the Guarantor or their respective property is bound
or (b) results or will result in the creation or imposition of any Lien
upon their respective properties pursuant to any such agreement or instru-
ment, except the Liens created by the Loan Documents.
4.5 Governmental Authorization. No authorization, consent or
--------------------------
approval of any governmental authority is required for the execution,
delivery and performance of the Loan Documents or the consummation of the
transactions contemplated thereby. The Borrower and the Guarantor have,
and are in good standing with respect to, all governmental approvals,
permits, certificates, inspections, consent and franchises necessary to
continue to conduct their respective businesses as heretofore and presently
conducted and proposed to be conducted and to own or lease and operate
their respective properties as now owned or leased by it. None of such
approvals, permits, certificates, consents, or franchises contains any
term, provision, condition or limitations which is more burdensome than
such as are generally applicable to Persons engaged in the same or similar
business as the Borrower and Guarantor.
<PAGE>
4.6 Event of Default. No event has occurred and is continuing which
----------------
constitutes an Event of Default or would constitute such an Event of
Default after notice or lapse of time or both.
4.7 Margin Securities. None of the transactions contemplated by
-----------------
this Agreement (including, without limitation thereof, the use of the pro-
ceeds of the Loan) will violate or result in a violation of the Securities
Exchange Act of 1934, as amended, or any regulations issued pursuant there-
to. The Borrower does not own or intend to carry or purchase directly or
indirectly any "margin securities" as that term is defined in Regulations
G and U of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), and the proceeds of the Loan will be used only
for the purposes contemplated hereunder. None of the proceeds of the Loan
will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause the Loan to be con-
sidered a "purpose credit" within the meaning of Regulations G, T, U or X
of the Federal Reserve Board. The Borrower will neither take nor permit
any agent acting on its behalf to take any action which might cause this
Agreement or any document or instrument delivered pursuant hereto to
violate any regulation of the Federal Reserve Board.
4.8 Full Disclosure. None of the Loan Documents, nor any statements
---------------
furnished by or on behalf of the Borrower or the Guarantor to the Lender
in connection with the Loan Documents, contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading. To the Borrower's knowledge,
there is no fact which the Borrower has not disclosed to Lender in writing
which materially and adversely affects or, to the Borrower's knowledge,
will materially and adversely affect the Borrower, the Guarantor, Col-
lateral, the Lender's Liens in the Collateral or the priority thereof,
the other assets, business, profits or conditions (financial or otherwise)
of the Borrower, or the ability of the Borrower to perform the Obligations.
4.9 Financials. The Financials delivered to Lender have been pre-
----------
pared in accordance with GAAP, contain no material misstatement or
omission, and fairly present the financial position, assets and liabilities
of the Borrower as of the respective dates thereof and the results of
operations and cash flows of the Borrower for the respective periods then
ended. Except for the transactions contemplated by this Agreement and
except as may have otherwise been disclosed in the annual, quarterly and
current reports (Forms 10-K, 10-Q, and 8-K, respectively) as filed with
the SEC and delivered to Lender, since December 31, 1996, there has been no
material adverse change in the assets, liabilities or cash flows of the
Borrower or in the results of the Borrower's operations or cash flows, and
the Borrower has not incurred any obligation or liability which would
materially and adversely affect its financial condition, business opera-
tions, cash flows or the Collateral.
4.10 Solvency. The Borrower and Guarantor are each Solvent.
--------
4.11 Compliance With Laws. To the best of the Borrower's knowledge,
--------------------
the Borrower has duly complied with, and the Collateral and the Borrower's
and Guarantor's business
<PAGE>
operations and leaseholds are in compliance in all material respects with,
the provisions of all federal, state and local laws, rules and regulations
applicable to the Borrower, the Collateral or the conduct of the Borrower's
or the Guarantor's business, including, without limitation, all Environ-
mental Laws, and there have been no citations, notices or orders of
noncompliance issued to the Borrower under any such law, rule or regulation.
4.12 Guarantor Organization and Power. The Guarantor (a) is a corpora-
--------------------------------
tion duly organization, validly existing and in good standing under the
laws of the State of Florida, (b) is qualified to do business and is in
good standing in every other jurisdiction where the nature of its business
or the ownership of its properties requires it to be so qualified, and
(c) has full power, authority and legal right to execute and deliver the
Guaranty Agreement and to perform and observe the terms and provisions
thereof.
SECTION 5. AFFIRMATIVE COVENANTS.
Until such time as all Obligations have been paid in full and Lender
shall have no further obligations under this Agreement, the Borrower
covenants and agrees that, unless the Lender otherwise consents in writing:
5.1 Repayment of Obligations. The Borrower will repay the Obliga-
------------------------
tions according to the terms of this Agreement, the Note and the other
Loan Documents.
5.2 Performance Under Loan Documents. The Borrower will perform all
--------------------------------
obligations required to be performed by it under the terms of this
Agreement and the other Loan Documents and any other agreements now or
hereafter existing or entered into between the Borrower and the Lender.
5.3 Information as to the Borrower. The Borrower shall deliver to
------------------------------
the Lender:
(a) Within one hundred five (105) days after the close of the
calendar year, beginning with the year ending December 31, 1997, 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 inde-
pendent certified public accountants selected by the Borrower and
acceptable to the Lender, and (ii) internally prepared, non-audited
financial statements, including balance sheets and profit and loss state-
ments, for the Borrower and each company included in the audited financial
statements as of the fiscal year then ended, prepared in accordance with
GAAP, applied on a consistent basis 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.
<PAGE>
(b) Within 15 days after receipt by Borrower, but in no event
later than 90 days after the submission of the financial statements
described in subsection (a) above, the following: (i) a certificate from
the independent certified public accountants of Borrower stating that, in
making their examination of the financial statements of the Borrower, they
obtained no knowledge of the occurrence or existence of any condition or
event which constitutes or would constitute, upon the giving of notice or
lapse of time or both, any Event of Default, or a statement specifying the
nature and period of existence of any such condition or event disclosed
by their examination, and (ii) a copy of a "management letter", if any,
from such accountants to the Borrower in connection with such accountants'
audit;
(c) Concurrently with the delivery of the financial statements
described in subsection (a) above and the quarterly reports required to be
delivered pursuant to subsection (e) below, a certificate from the chief
financial or accounting officer of the Borrower certifying to Lender that
to his knowledge, the Borrower has kept, observed, performed and fulfilled
each and every covenant, obligation and agreement binding upon the Borrower
contained in this Agreement or the other Loan Documents, and that no Event
of Default, or any event which with the giving of notice or lapse of time
or both, would constitute an Event of Default, has occurred or specifying
any such Event of Default, together with a financial covenant compliance
worksheet, in form and substance satisfactory to the Lender, reflecting
the computation of the financial covenants set forth in Sections 5 and 6
hereof as of the end of the period covered by such financial statements;
(d) Within 15 days after the submission thereof to the SEC,
copies of the 10-Q and 10-K financial statements of the Guarantor and the
Borrower;
(e) On or before the thirtieth (30th) 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; and
(f) Upon the Lender's written request, such other information
about the Collateral or the financial condition and operations of the
Borrower or the Guarantor as the Lender may from time to time reasonably
request. The Lender may, upon its determination that there has been an
adverse change in the overall performance and condition of the Borrower,
the Collateral, and/or the Guarantor, require more frequent rendering of
the reports and certificates described in (a) through (e) above.
5.4 Notice of Certain Events. The Borrower shall, immediately upon
------------------------
obtaining knowledge thereof, give written notice to the Lender of: (a) any
material litigation or proceeding brought against the Borrower, whether or
not the claim is considered by the Borrower to be covered by insurance;
(b) any written notice of a violation received by the Borrower from any
governmental regulatory body or law enforcement authority which, if such
violation were established, might have a material adverse effect on the
business of the Borrower, the value of the Collateral, the Lender's Liens
in the Collateral or the priority of such Liens; (c) any labor controversy
which has resulted in a strike or other work action materially affecting
the Borrower;
<PAGE>
(d) any attachment, judgment, Lien, levy or order which may be placed on or
assessed against or threatened against the Borrower if the amount thereof
exceeds $200,000 or against the Collateral in any amount; (e) any Event of
Default or any event which, after notice or lapse of time or both, would
become an Event of Default; and (f) any other matter which has resulted in
a material adverse change in the financial condition, cash flows or opera-
tions of the Borrower or the Guarantor.
5.5 Corporate Existence and Maintenance of Properties. The Borrower
-------------------------------------------------
shall maintain and preserve its corporate existence and all rights, privi-
leges and franchises now enjoyed; and the Borrower shall conduct its
business in an orderly, efficient and customary manner, keep its properties
in good working order and condition, and from time to time make all needed
repairs to, renewals of or replacements of its properties (except to the
extent that any of such properties is obsolete or is being replaced) so
that the efficiency of such property shall be fully maintained and
preserved. The Borrower shall file or cause to be filed in a timely
manner all reports, applications, estimates and licenses which shall be
required by any governmental authority and which, if not timely filed,
would have a material adverse effect on the Borrower, the Collateral, the
Lender's Liens in the Collateral or the priority of such Liens.
5.6 Payment of Indebtedness: Performance of Other Obligations. The
---------------------------------------------------------
Borrower shall pay all Indebtedness for borrowed money at maturity, all
taxes, assessments and other governmental charges which may be levied or
assessed upon the Borrower when due and all other obligations in accordance
with customary trade practices, and comply with all acts, rules, regula-
tions and orders of any legislative, administrative or judicial body or
official applicable to the operation of the Borrower's business; provided,
however, that the Borrower may in good faith by appropriate proceedings
and with due diligence contest any such taxes, assessments, governmental
charges, acts, rules, regulations, orders and directions. The Borrower
shall also observe and remain in compliance with all laws, ordinances,
governmental rules and regulations to which it is subject and obtain all
licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or the conduct of its
business, and all covenants and conditions of all agreements and instru-
ments to which the Borrower is a party, which failure to comply or failure
to obtain would materially and adversely affect the business, prospects,
profits, properties or condition (financial or otherwise) of the Borrower.
5.7 Maintenance of Insurance. The Borrower also agrees to maintain
------------------------
and pay for (a) business interruption insurance, (b) public liability
insurance, and (c) all such other insurance as is customary in the business
in which the Borrower is engaged or which the Lender may otherwise require,
and all of such insurance shall be in such amount, for such periods, with
such companies and in such form as shall be satisfactory to the Lender.
Borrower shall deliver to the Lender certificates of insurance with respect
to the insurance required to be maintained by Borrower and Guarantor with
satisfactory endorsements naming the Lender as additional insured there-
under. Each policy of insurance shall contain a clause requiring the
insurer to give not less than thirty (30) days prior written notice to
the Lender before any cancellation of the policies for any reason whatso-
ever and a clause that the interest of the Lender shall not be impaired or
invalidated by any act or neglect of the Borrower, the Guarantor, or the
owner of the property nor by the occupation of the premises wherein such
property is located for purposes more
<PAGE>
hazardous than are permitted by said policy. The Borrower hereby directs
all insurers under such policies of insurance on the Collateral to pay all
proceeds payable thereunder directly to the Lender. The Borrower hereby
irrevocably makes, constitutes and appoints the Lender (and all officers,
employees or agents designated by the Lender) as the Borrower's true and
lawful attorney (and agent-in-fact) for the purpose of making, settling
and adjusting claims under such policies of insurance, endorsing the name
of the Borrower on any check, draft, instrument or other item or payment
for the proceeds of such policies of insurance and for making all deter-
minations and decisions with respect to such policies of insurance so long
as any of the Obligations are outstanding; provided, however, that prior
to the occurrence of an Event of Default hereunder, the Lender shall not
settle or adjust any insurance claims without the prior written approval
of Borrower. If the Borrower or the Guarantor fails to obtain and maintain
any of the policies of insurance or to pay any premium in whole or in part,
then the Lender may, at the Borrower's expense, without waiving or
releasing any obligation or default by the Borrower hereunder, procure the
same, but shall not be required to do so. All sums so disbursed by the
Lender, including attorneys' fees, court costs, expenses and other charges
related thereto, shall be payable on demand by the Borrower to the Lender
and shall be additional Obligations hereunder secured by the Collateral.
The Borrower shall deliver to the Lender, promptly as rendered, true copies
of all reports made in any reporting forms to insurance companies. Not
less than thirty (30) days prior to the expiration date of the insurance
policies required to be maintained by the Borrower or Guarantor, the
Borrower shall deliver to the Lender one or more certificates of insurance
evidencing renewal of the insurance coverage required hereunder plus such
other evidence of payment of premiums therefor as the Lender may request.
5.8 Maintenance of Books and Records; Inspection. The Borrower shall
--------------------------------------------
maintain adequate books, accounts and records, and prepare all financial
statements required under this Agreement in accordance with GAAP and in
compliance with the regulations of any governmental regulatory body having
jurisdiction over it; and permit employees or agents of the Lender at any
reasonable time to inspect the Borrower's properties, and to examine or
audit the Borrower's books, accounts and records and make copies and
memoranda of them. The Borrower shall permit any representative of the
Lender to visit and inspect any property of the Borrower, to examine all
books of accounts, records, reports and other papers, to make copies and
extracts therefrom, and to discuss the affairs, finances and accounts of
the Borrower withits officers, employees and independent public accountants
(and by this provision the Borrower authorizes said accountants to discuss
the finances and affairs of the Borrower), all at such reasonable times
during normal business hours and as often as may be reasonably requested.
Without limiting the generality of the foregoing, the Borrower shall permit
representatives of the Lender to conduct quarterly field examinations of
the Borrower's premises and books and records (wherever located) during
the Term; provided, however, that the Lender reserves the right at any
time to increase the frequency of such examinations in its sole discretion.
The Lender shall not unreasonably interfere with the business of the
Borrower in exercising any of the examination and audit rights granted to
Lender under this Agreement, and Lender shall maintain the confidentiality
of the information obtained from such examinations and audits in accordance
with applicable law.
5.9 Compliance with ERISA. The Borrower shall at all times make
---------------------
prompt payment of contributions required to meet the minimum funding stand-
ards set forth in ERISA with respect
<PAGE>
to any employee benefit plan; promptly after the filing thereof, furnish to
the Lender copies of any annual report required to be filed under ERISA in
connection with each employee benefit plan; not withdraw from participation
in, permit the termination or partial termination of, or permit the occur-
rence of any other event with respect to any employee benefit plan that
could result in liability to the Pension Benefit Guaranty Corporation;
notify the Lender as soon as practicable of any Reportable Event and of
any additional act or condition arising in connection with any employee
benefit plan which the Borrower believes might constitute grounds for the
termination thereof by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States district court of a trustee to
administer such plan; and furnish to the Lender upon the Lender's request,
such additional information about any employee benefit plan as may be
reasonably requested.
5.10 Compliance with Environmental Laws. The Borrower shall comply,
----------------------------------
and shall use its best efforts to cause the Guarantor to comply, at all
times with all Environmental Laws and all other federal, state or local
statutes, laws, ordinances, rules, regulations, orders or decrees relating
to Environmental Laws.
5.11 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 calendar
year, which ratio shall be calculated using Borrower's consolidated
financial statements. For purposes hereof, the "Debt Service Coverage
Ratio" shall be calculated at the end of each calendar year, 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,
minus (e) dividends, to (2) the sum of (a) current maturities of long
term debt, plus (b) interest expense, all determined in accordance with GAAP.
5.12 Current Ratio. The Borrower shall maintain a Current Ratio of
-------------
at least 1.5:1 at all times. 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 this Section 5.12, the Lender shall
test the Borrower's compliance on a quarterly basis using the consolidated
financial statements and other information provided by Borrower.
5.13 Capital Funds. The Borrower shall at all times maintain Capital
-------------
Funds in an amount equal to or in excess of $3,500,000. Although the
Borrower shall be required at all times to comply with this Section 5.14,
the Lender shall test the Borrower's compliance on a quarterly basis using
the consolidated financial statements and other information provided by
Borrower.
5.14 Capital Funds Ratio. The Borrower shall at all times maintain a
-------------------
ratio of Total Debt to Capital Funds of no more than 1.7:1.0. Although the
Borrower shall be required at all times to comply with this Section 5.14,
the Lender shall test the Borrower's compliance on a quarterly basis using
the consolidated financial statements and other information provided by
Borrower.
<PAGE>
5.15 Bank Accounts. The Borrower shall maintain, and shall cause the
-------------
Guarantor to maintain, their respective cash management accounts and
primary depository accounts with Lender.
SECTION 6. NEGATIVE COVENANTS.
Until such time as all Obligations have been paid in full and Lender
shall have no further obligations under this Agreement, the Borrower
covenants and agrees that, unless the Lender otherwise consents in writing,
the Borrower will not:
6.1 Dissolution. Liquidate or dissolve or merge with any Person if
-----------
the Borrower is not the surviving corporation.
6.2 Liens and Encumbrances. Allow to be created or exist any deed
----------------------
of trust, mortgage, encumbrance or other Lien (including a Lien of attach-
ment, judgment or execution) or security interest (including the interest
of a conditional seller of goods), securing a charge or obligation, on or
of any of the Collateral except for the Liens in favor of the Lender and
the Permitted Liens.
6.3 Disposition of Assets. Sell, transfer, convey or otherwise
---------------------
dispose of any of its assets or property except for (a) sales of inventory
in the ordinary course of business, (b) the sale of assets in any calendar
year for which the aggregate book value does not exceed $500,000.
6.4 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; (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 Borrower provided that such notes must
be secured by a first lien priority pledge of the Stock so purchased.
6.5 Ownership by Guarantor. Allow any change in the ownership of
----------------------
the Borrower's Stock to occur (whether such change is a result of any
voluntary or involuntary transfer or any transfer by operation of law)
which would reduce the Guarantor's ownership of the Stock of Borrower to
less than 51% of the aggregate amount of all issued and outstanding Stock
or to less than 51% of the aggregate amount of all voting Stock.
6.6 New Business. Engage in any business other than the business
------------
in which the Borrower is currently engaged or a business reasonably related
thereto or make any material change in any of its business objectives,
purposes and operations which might in any way adversely affect the
repayment of the Obligations.
6.7 Guaranties. Guarantee or otherwise, in any way, become liable
----------
with respect to the obligations or liabilities of any Person, except
(a) by endorsement of instruments or items of
<PAGE>
payment or for delivery to the Lender on account of the Obligations, or
(b) the existing guaranty of the indebtedness of Techdyne (Scotland), Ltd.
in the amount guaranteed as of June 30, 1995.
6.8 Payments on Subordinated Debt. Make any payments, whether
-----------------------------
directly or indirectly, on any Subordinated Debt or purchase any Subor-
dinated Debt; provided, however, that reductions in Subordinated Debt
shall be permitted on a dollar for dollar basis from additional equity
that is injected into Borrower or from the use of retained earnings, on a
quarterly basis, arising subsequent to March 31, 1995, so long as (a) at
the time of any reduction of the Subordinated Debt from additional equity
or the use of retained earnings the Borrower shall be in full compliance
with all financial covenants contained in this Agreement as of the end
of the most recent quarter, (b) both before and immediately after the
contemplated reduction, no Event of Default shall exist under this
Agreement, and (c) both before and immediately after the contemplated
reduction, no facts or circumstances exist which, with notice and/or lapse
of time, could constitute an Event of Default under this Agreement.
SECTION 7. EVENTS OF DEFAULT.
7.1 Event of Default. The occurrence of any one or more of the
----------------
following events shall constitute an "Event of Default":
(a) The Borrower fails to pay any portion of the Obligations
when due and Payable or declared due and payable;
(b) The Borrower fails or neglects to observe, perform or comply
with any other term, provision, condition, covenant, warranty or representa-
tion contained in this Agreement or the other Loan Documents or in any
other agreement now existing or hereafter executed evidencing, securing or
relating in any way to the Obligations, which is required to be observed,
performed or complied with by the Borrower; provided, however, that the
breach by Borrower of any non-financial covenant that is reasonably
susceptible to cure by Borrower within 30 days shall not constitute an
Event of Default if such breach is fully cured within 30 days after written
notice from Lender;
(c) If any representation or warranty made in writing by or on
behalf of the Borrower or the Guarantor in this Agreement, or in the other
Loan Documents or in any other agreement now existing or hereafter executed
between the Borrower and/or the Guarantor and the Lender, or in connection
with the transactions contemplated hereby or thereby, shall prove to have
been false or incorrect in any material respect at the time at which such
representation or warranty was made;
(d) The occurrence of any breach of, or default or event of
default under, any of the Loan Documents (including, without limitation,
any breach or default by Guarantor under the Security Agreement or Guaranty
Agreement);
<PAGE>
(e) The failure of the Borrower to pay, on or before the due
date thereof, any principal, interest or other sum due to Lender, including,
without limitation, any sums due under the Revolver Loan Documents or the
Term Loan Documents;
(f) There shall occur any material uninsured damage to or loss,
theft or destruction of any of the Collateral;
(g) The Borrower or the Guarantor is enjoined, restrained or in
any way prevented by the order of any court or any administrative or regu-
latory agency from conducting all or any material part of its business;
(h) The filing by the Borrower or Guarantor of any voluntary
petition seeking liquidation, reorganization, arrangement, readjustment of
debts or for any other relief under the Bankruptcy Code or under any other
act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign, now or hereafter existing;
(i) The filing against the Borrower or Guarantor of any involun-
tary petition seeking liquidation, reorganization, arrangement, readjustment
of debts or for any other relief under the Bankruptcy Code or under any
other act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign, now or hereafter existing, and such petition is not
dismissed within forty-five (45) days of the filing thereof or within such
forty-five (45) day period an order for relief under the Bankruptcy Code or
any other applicable act or law shall be entered;
(j) The Borrower or Guarantor ceases to be Solvent, or the
Borrower or Guarantor ceases to conduct its business as now conducted;
(k) A notice of lien, levy or assessment in an amount in excess
of $200,000 is filed of record to all or any portion of the Borrower's or
Guarantor's assets by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other govern-
mental agency, including, without limitation, the Pension Benefit Guaranty
Corporation, or if any taxes or debts owing at any time or times hereafter
to any one of them becomes a Lien upon the Collateral or any other asset
of the Borrower or the Guarantor and the same is not dismissed, released,
discharged or transferred to bond within thirty (30) days after the same
becomes a Lien or, in the case of ad valorem taxes, prior to the last day
when payment may be made without penalty or such earlier date upon which
payment is required pursuant to the terms of the Security Agreement or
other Loan Documents;
(l) Any of the Loan Documents for any reason ceases to be in full
force and effect unless the document is re-established or reinstated within
10 days of Lender's written notice to Borrower, or any of the Loan Docu-
ments for any reason is declared to be null and void, or the Borrower or
Guarantor denies that it has any further liability under any Loan Document
to which it is a party, or gives notice to such effect;
<PAGE>
(m) Any strike, lockout, labor dispute, embargo, condemnation,
act of God or public enemy, or other casualty which causes the cessation
or substantial curtailment of Borrower's revenue producing activities for
30 days or more;
(n) The loss, suspension or revocation of, or failure to renew,
any material license or permit now held or hereafter acquired by the
Borrower unless the Borrower fully remedies such loss, suspension, revoca-
tion or failure to renew within 30 days;
(o) The Lender does not have or ceases to have a valid and
perfected first priority Lien in the Collateral (subject to Permitted
Liens), in each case, for any reason other than the failure of the Lender
to take any action within its control;
(p) The entry of a judgment or the issuance of a warrant of
attachment, execution or similar process against the Borrower or the
Guarantor or any of their respective assets in excess of $400,000, which
shall not be dismissed, discharged or bonded within thirty (30) days;
(q) If a custodian, trustee, receiver or assignee for the
benefit of creditors is appointed or takes possession of the Collateral,
or any of the Borrower's other assets;
(r) The occurrence of any of the following events: (i) the
happening of a Reportable Event with respect to any profit sharing or
pension plan of the Borrower governed by ERISA; (ii) the appointment of
a trustee by an appropriate United States District Court to administer
any such plan; (iii) the institution of any proceedings by the Pension
Benefit Guaranty Corporation to terminate any such plan or to appoint a
trustee to administer any such plan; (iv) the failure of the Borrower to
furnish to the Lender a copy of each report which is filed by the Borrower
with respect to each such plan promptly after the filing thereof with the
Secretary of Labor or the Pension Benefit Guaranty Corporation; or (v) the
failure of the Borrower to notify the Lender promptly upon receipt by the
Borrower of any notice of the institution of any proceeding or any other
actions which may result in the termination of any such plans;
(s) There shall occur any change in the Collateral, the Lender's
Lien in the Collateral or the priority of such Lien, or in the business of
the Borrower or its operations, conduct or prospects thereof, which,
individually or in the aggregate, would have a material adverse effect on
the Borrower's ability to repay the obligations;
(t) There shall occur any change of control or ownership of the
majority of the outstanding stock of the Borrower except as expressly
allowed under Section 6.5 above; or
(u) There shall occur any material adverse change in the
financial condition of the Borrower or the Guarantor.
7.2 Acceleration of the Obligations. Upon and after an Event of
-------------------------------
Default (other than an Event of Default specified in Section 7.1(h) or
(i) hereof), all of the Obligations may, at the option of the Lender,
and without demand, notice (except for any notice and cure period ex-
pressly required under Section 7.1) or legal process of any kind, be
declared, and immediately
<PAGE>
shall become, due and payable, and upon the occurrence of an Event of
Default specified in Section 7.1(h) or (i) or hereof, all of the Obliga-
tions shall automatically become due and payable, without demand, notice
or legal process of any kind, anything in the Note or other contract
evidencing any such obligation or in the Loan Documents or in any other
agreement to the contrary notwithstanding.
7.3 Default Rate of Interest. Upon the occurrence and during the
------------------------
continuance of an Event of Default, all of the Obligations shall bear
interest at the Default Rate set forth in the Note until either such
Event of Default is cured to the Lender's satisfaction or otherwise waived
in writing by the Lender or the Obligations are paid in full and this
Agreement is terminated.
SECTION 8. RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT.
8.1 Rights and Remedies. Upon and after the occurrence of any Event
-------------------
of Default, the Lender shall have, in addition to all other rights and
remedies which the Lender may have under this Agreement, the other Loan
Documents, and applicable law, the following rights and remedies, all of
which may be exercised with or without further notice to the Borrower:
(a) all of the rights and remedies of a secured party under the UCC of the
State of Florida, or any other state where such rights and remedies are
asserted; (b) the right to foreclose the Liens created under the Loan
Documents or under any other agreement relating to the Collateral, by any
available judicial procedure or without judicial process; (c) the right to
the fullest extent allowed by law, to enter any premises where the
Collateral may be located, through self-help and without judicial process,
without first obtaining a final judgment or giving the Borrower notice and
opportunity for a hearing on the validity of the Lender's claim, for the
purpose of taking possession or removing the same, or require the Borrower
to assemble the Collateral and make it available to the Lender at a place
to be designated by the Lender; and/or (d) the right to exercise any or all
of the remedies available to Lender (whether pursuant to the Loan Documents
or otherwise available at law or in equity). The Borrower agrees that the
Lender has no obligation to preserve rights to the Collateral against any
Person or to marshall any Collateral for the benefit of any Person.
8.2 Rights and Remedies Cumulative; Non-Waiver; Etc. The enumeration
-----------------------------------------------
of the Lender's rights and remedies set forth in this Agreement is not
intended to be exhaustive and the exercise by the Lender of any right or
remedy shall not preclude the exercise of any other rights or remedies, all
of which shall be cumulative, and shall be in addition to any other right
or remedy given hereunder, under the Loan Documents or under any other
agreement between the Borrower and the Lender or which may now or hereafter
exist in law or in equity or by suit or otherwise. No delay or failure to
take action on the part of the Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or
shall be construed to be a waiver of any Event of Default. No course of
dealing between the Borrower and the Lender or the Lender's employees shall
be effective to change, modify or discharge any provision of this Agreement
or to constitute a waiver of any Event of Default. The Lender shall not,
under any circumstances or in any event whatsoever, have any liability for
any error, omission or delay of any kind occurring in the
<PAGE>
liquidation of the Collateral or for any damages resulting therefrom except
damages directly attributable to the Lender's gross negligence or willful
misconduct.
SECTION 9. PAYMENT OF EXPENSES.
Whether or not the transactions contemplated by this Agreement shall
be consummated, the Borrower will:
9.1 Fees and Expenses. Pay or reimburse the Lender upon demand for
-----------------
all expenses (including, without limitation, reasonable attorneys' and
paralegals' expenses and travel expenses) incurred or paid by the Lender
in connection with: (a) the preparation, execution, delivery, interpreta-
tion, modification or amendment of this Agreement or the other Loan
Documents (provided that the legal fees of Lender in connection with the
initial closing of this transaction and the transaction contemplated by
the Revolver Loan Agreement shall not exceed $6,000, exclusive of title
insurance premiums, long distance telephone charges, photocopying expense,
delivery charges and other disbursements); (b) charges for appraisers,
examiners, auditors or similar Persons engaged by Lender with respect to
rendering opinions concerning the Borrower's financial condition, the
Borrower's books, records and procedures, and the condition and value of
the Collateral; (c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by the Lender or the Borrower or any other
Person) in any way relating to the Collateral, this Agreement or the other
Loan Documents, or the Loan; (d) any attempt to enforce any rights of the
Lender or any participant against the Borrower or any other Person which
may be obligated to the Lender by virtue of this Agreement or the other
Loan Documents; (e) any attempt to inspect, evaluate, verify, protect,
collect, sell, liquidate or otherwise dispose of the Collateral; and
(f) the execution, delivery, filing and recording of all documents required
by the Lender to perfect the Lender's Liens in the Collateral, including
without limitation, any documentary stamp tax or any other taxes incurred
because of such execution, delivery, filing or recording.
9.2 Taxes. Indemnify and/save the Lender harmless from and against
-----
any and all liability and loss with respect to or resulting from the non-
payment or delayed payment of any and all intangible personal property,
documentary stamp and other taxes, fees and excises, if any, including any
interest and penalties, which may be, or be determined to be, payable in
connection with the transactions contemplated by this Agreement or the Loan
Documents or in any modification hereof or thereof.
9.3 Brokerage Fees. Indemnify and hold the Lender harmless from
--------------
and against any and all finder's or brokerage fees and commissions which
may be payable in connection with the transactions contemplated by this
Agreement other than any fees or commissions of finders or brokers engaged
by the Lender.
SECTION 10. MISCELLANEOUS.
10.1 Survival of Agreements. All agreements, covenants, representa-
----------------------
tions and warranties contained herein or made in writing by or on behalf
of the Borrower in connection with the
<PAGE>
transactions contemplated hereby shall survive the execution and delivery
of this Agreement and the other Loan Documents until the Obligations are
fully paid and performed and Lender shall have no further obligations under
this Agreement. No termination or cancellation (regardless of cause or
procedure) of this Agreement shall in any way affect or impair the powers,
obligations, duties, rights and liabilities of the parties hereto in any
way with respect to any transaction or event occurring prior to such
termination or cancellation. The Borrower further agrees that to the
extent that the Borrower makes a payment or payments to the Lender, which
payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to
be repaid to a trustee, receiver or any other party under any bankruptcy,
insolvency or similar state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part
thereof intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been received by the Lender.
10.2 Governing Law; Waiver of Jury Trial. THIS AGREEMENT SHALL BE
-----------------------------------
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETER-
MINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF
LAW PROVISIONS) OF THE STATE OF FLORIDA. THE BORROWER HEREBY CONSENTS
TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN DADE
COUNTY, STATE OF FLORIDA, AND CONSENTS THAT ALL SERVICE OF PROCESS BE
MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO THE BORROWER AT THE
ADDRESS STATED IN SECTION 10.3 HEREOF AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3)
DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
THE BORROWER WAIVES ANY OBJECTION WHICH THE BORROWER MAY HAVE BASED ON
LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO ANY SUIT
OR PROCEEDING INSTITUTED BY THE LENDER UNDER THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS IN ANY STATE OR FEDERAL COURT LOCATED WITHIN DADE COUNTY,
FLORIDA. NOTHING IN THIS SECTION 10.2 SHALL AFFECT THE RIGHT OF THE
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH
HAS JURISDICTION OVER THE BORROWER OR ITS PROPERTY. EACH OF THE BORROWER
AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND UNCONDITION-
ALLY WAIVES TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE 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 LOAN OR THE LOAN DOCUMENTS.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND TO MAKE THE LOAN.
<PAGE>
10.3 Notice. All notices and other communications hereunder shall be
------
in writing and shall be deemed to have been validly served, given or
delivered three (3) days after deposit in the United States malls, with
postage prepaid, and addressed to the party to be notified as follows:
If to Borrower: Techdyne, Inc.
2337 W. 76th Street
Hialeah, FL 33016
Attn: Daniel R. Ouzts
Facsimile Number: (305) 825-0961
With a copy to: Lawrence E. Jaffe, Esq.
777 Terrace Avenue - 5th Floor
Hasbrouck Heights, NJ 07604
Facsimile Number: (201) 288-8208
If to the
Lender at: Barnett Bank, N.A.
101 Hialeah Drive
Second Floor
Hialeah, Florida 33010
Attn: Ricardo Lujan
Facsimile Number: (305) 883-2493
With a copy to: Coll Davidson Carter Smith Salter
& Barkett, P.A
201 South Biscayne Boulevard, Suite 3200
Miami, Florida 33131
Attn: Sherry A. Stanley, Esq.
Facsimile Number: (305) 374-7296
or to such other address as each party may designate for itself by like
notice, or on the date of delivery to such party at such address, if notice
is given or delivered by hand, telex, telegram, facsimile transmittal, or
overnight courier.
10.4 Indemnification of the Lender and its Affiliates. From and at
------------------------------------------------
all times after the date of this Agreement, and in addition to all of the
Lender's other rights and remedies against the Borrower, the Borrower
agrees to hold the Lender its Affiliates and their respective officers,
directors and employees, harmless from, and to indemnify the Lender, its
Affiliates and their respective officers, directors and employees against,
all losses, damages, costs and expenses (including, but not limited to,
attorneys' and paralegals' fees, costs and expenses) incurred by the
Lender, its Affiliates and their respective officers, directors and
employees from and after the date hereof, whether direct, indirect or
consequential, as a result of or arising from or relating to any suit,
action or proceeding by any Person, whether threatened or initiated,
asserting a claim for
<PAGE>
any legal or equitable remedy against any Person under any statute or
regulation, including, but not limited to, any federal or state securities
laws, or under any common law or equitable cause or otherwise, arising from
or in connection with the negotiation, preparation, execution or performance
of, or the financing transactions contemplated by, this Agreement and the
other Loan Documents, the Lender's furnishing of funds to the Borrower
pursuant to this Agreement; provided, however, that the foregoing indemni-
fication shall not protect a Lender or its Affiliates from loss, damage,
cost or expense directly attributable to such Lender's or any Affiliate's
willful misconduct or gross negligence. All of the foregoing losses,
damages, costs and expenses of the Lender, its Affiliates and their re-
spective officers, directors and employees shall be payable by the Borrower
upon demand by the Lender and shall be additional Obligations hereunder
secured by the Collateral.
10.5 Waivers by the Borrower. Except as otherwise provided for in
-----------------------
this Agreement, the Borrower waives (a) presentment, demand and protest
and notice of presentment, protest, non-payment, maturity and all other
notices; (b) notice prior to taking possession or control of the Collateral
or any bond or security which might be required by any court prior to
allowing the Lender to exercise any of the its remedies; and (c) the
benefit of all valuation, appraisement and exemption laws.
10.6 Lawful Charges. It is the intent of the parties that the rate
--------------
of interest and all other charges due from the Borrower be lawful. Not-
withstanding anything to the contrary contained in this Agreement or the
Note, if at any time until payment in full of the obligations, the rate
of interest payable with respect to the Loan (the "Stated Rate") exceeds
the highest lawful rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable
hereto (the "Maximum Lawful Rate"), then in such event and so long as the
Maximum Lawful Rate would be so exceeded, the Stated Rate shall be equal
to the Maximum Lawful Rate; provided, however, that if at any time there-
after the Stated Rate is less than the Maximum Lawful Rate, the Borrower
shall continue to pay interest hereunder at the Maximum Lawful Rate until
such time as the total interest received by the Lender from the making of
Loan hereunder is equal to the total interest which the Lender would have
received had the Stated Rate been (but for the operation of this paragraph)
the interest rate payable since the Closing Date. Thereafter, the interest
rate payable hereunder shall be the Stated Rate unless and until the Stated
Rate again exceeds the Maximum Lawful Rate, in which event this paragraph
shall again apply. In no event shall the total interest received by the
Lender pursuant to the terms hereof exceed the amount which the Lender
could lawfully have received had the interest due hereunder been calculated
for the full Term at the Maximum Lawful Rate. If for any reason payment of
a portion of interest or charges as required by this Agreement would exceed
the limit established by applicable law, then the obligation to pay
interest or charges shall automatically be reduced to such limit and if
any amounts in excess of such limit shall have been paid, then such amounts
shall be applied to the unpaid principal amount of the Obligations or
refunded so that under no circumstances shall interest or charges required
hereunder exceed the maximum rate allowed by law.
<PAGE>
10.7 Assignment. The Borrower may not sell, assign or transfer this
----------
Agreement, or the other Loan Documents or any portion thereof, including
without limitation, the Borrower's rights, title, interests, remedies,
powers, and duties hereunder or thereunder. The Borrower hereby consents
to the Lender's participation, sale, assignment, transfer or other disposi-
tion at any time or times hereafter of this Agreement or the other Loan
Documents, or of any portion hereof or thereof, including without limita-
tion, the Lender's rights, title, interests, remedies, powers and duties
hereunder or thereunder.
10.8 Amendment. This Agreement and the other Loan Documents cannot
---------
be amended, changed, discharged or terminated orally, but only by an instru-
ment in writing signed by the Lender and the Borrower.
10.9 Severability. To the extent any provision of this agreement is
------------
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement.
10.10 Entire Agreement. This Agreement and the other documents,
----------------
certificates and instruments referred to herein constitute the entire
agreement between the parties and supersede and rescind any prior agree-
ments relating to the subject matter hereof.
10.11 Binding Effect. All of the terms of this Agreement and the
--------------
other Loan Documents, as the same may from time to time be amended, shall
be binding upon, inure to the benefit of and be enforceable by the respec-
tive successors and assigns of the Borrower and the Lender. This pro-
vision, however, shall not be deemed to modify Section 10.7.
10.12 Captions. The captions to the various sections and subsections
--------
of this Agreement have been inserted for convenience only and shall not
limit or affect any of the terms hereof.
10.13 Disbursement of Loan Proceeds. The Borrower hereby authorizes
-----------------------------
and directs the Lender to disburse, for and on behalf of the Borrower and
for the Borrower's account, the proceeds of Loan made by the Lender to the
Borrower pursuant to this Agreement to such Person or Persons as the
Borrower shall direct, whether in writing or orally.
10.14 Injunctive Relief. The Borrower recognizes that in the event
-----------------
the Borrower fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Lender. The Borrower therefore agrees that the
Lender, if the Lender so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of
proving actual damages.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
TECHDYNE, INC., a Florida corporation
/s/ Thomas K. Langbein
By:-----------------------------------
Name: THOMAS K. LANGBEIN
Title: Chairman of the Board
BARNETT BANK, N.A., a national banking
association
/s/ Elvis Calvi
By:-----------------------------------
Name: ELVIS CALVI
Title: Loan Closing Representative
PROMISSORY NOTE
$1,500,000.00 Atlanta, Georgia
as of December 29, 1997
For value received, TECHDYNE, INC., a Florida corporation (together
with its successors, legal representatives and assigns, the "Maker")
promises to pay to the order of BARNETT BANK, N.A., a national banking
association (such banking association, its successors and assigns, and all
successor holders of this Note are referred to herein as the "Payee"), at
101 Hialeah Drive, 2nd Floor, Hialeah, Florida 33010 or at such other place
as Payee may from time to time hereafter direct in writing, in legal tender
of the United States of America, the principal sum of ONE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,500,000.00) or so much as may be
advanced hereunder, with interest on the principal balance outstanding
hereunder from time to time at the rates provided below, with such
principal and interest under this Note shall to be due and payable as
provided in Section 3 below.
1. Definitions.
-----------
In addition to other defined terms used in this Note, the following
terms shall have the meanings set forth below:
"Adjusted Libor Rate" for each Interest Period shall mean a
-------------------
daily rate that is equal the applicable Libor Rate plus the Applica-
ble Margin.
"Applicable Margin" shall mean 225 basis points.
-----------------
"Business Banking Day" shall mean each day other than a Saturday,
--------------------
a Sunday or any holiday on which commercial banks in Jacksonville,
Florida, are closed for business.
"Interest Period" shall mean each period commencing on each
---------------
Interest Rate Adjustment Date and ending on the next Interest Rate
Adjustment Date.
"Interest Rate Adjustment Date" shall mean the first day of
-----------------------------
January, 1997, and the first day of every one-month period thereafter.
"Libor Rate" for each Interest Period shall mean the offered
----------
rate for deposits in United States dollars in the London Interbank
market for a one-month period which appears on the Libor Rate
Reference Page as of 11:00 a.m. (London time) on the day that is
two London Banking Days preceding the first Business Banking Day
of the Interest Period, adjusted for reserves by dividing that rate
by 1.00 minus the Reserve Requirement. If at least two such offered
rates appear on the Libor Rate Reference Page, the rate will be the
arithmetic mean of such offered rates adjusted for reserves as afore-
said. At Payee's option, the Payee may elect at any time during
the term of this Note not to adjust the Libor Rate for reserves.
However, the election of the Payee not to adjust the Libor Rate for
reserves shall not constitute a waiver of the Payee's right to do so
prospectively at any time thereafter. Maker hereby expressly agrees
that at any time any principal amount is outstanding hereunder, the
<PAGE>
Payee shall be entitled to thereafter adjust the Libor Rate for
reserves in determining the Adjusted Libor Rate, notwithstanding
the failure of Payee to do so at any prior time. The Payee may, in
its sole discretion, use rate quotations for daily or annual periods
in lieu of quotations for substantially equivalent monthly periods.
"Libor Rate Reference Page" shall mean either (a) the Reuters
-------------------------
Screen LIBO Page, (b) the Dow Jones Telerate Page 3750, or (c) such
other nationally recognized source, as any at the foregoing may from
time to time be used by Payee in its sole discretion as a reference
for determining any applicable Libor Rate.
"Loan Agreement" shall mean the Loan Agreement of even date
--------------
hereunder between Maker and Payee, as shall agreement may be modified
or amended from time to time.
"Loan Documents" shall mean this Note, the Loan Agreement, the
--------------
Security Agreement and all other documents now or hereafter evi-
dencing, securing, guarantying or otherwise relating to the indebted-
ness evidenced by this Note or any portion thereof, as such documents
may be modified or amended from time to time.
"London Banking Day" shall mean each day other than a Saturday,
------------------
a Sunday or any holiday on which commercial banks in London, England
are closed for business.
"Maturity Date" means December 29, 2002.
-------------
"Prime Rate" shall mean the annual rate of interest announced
----------
from time to time by Barnett Banks, Inc., or its successor, as its
prime rate of interest, subject to change on a daily basis. Should
Barnett Banks, Inc. or its successor at any time not announce a prime
rate, the Payee in its reasonable discretion, may choose a substitute
prime rate. The Prime Rate is a reference rate for the information
and use of the Payee in establishing the actual rates to be charged
to its borrowers.
"Regulation D" shall mean Regulation D of the Board of Governors
------------
of the Federal Reserve System as from time to time in effect and any
successor thereto or other regulation or official interpretation of
said Board of Governors relating to reserve requirements applicable
to member banks of the Federal Reserve System.
"Reserve Requirement" shall mean the maximum percentage require-
-------------------
ment (rounded to the next higher 1/100 of 1% and expressed as a
decimal) in effect for any day during the Interest Period, including,
without limitation (a) any basic, supplemental, marginal or emergency
reserves under any regulations under any governmental authority, and
(b) any reserves prescribed by the Board of Governors of the Federal
Reserve system (or any successor), including, without limitation,
Regulation D, for determining the maximum reserve requirement for
"Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the Libor
Rate is determined), but without benefit or credit of proration,
exemptions, or offsets that might otherwise be available to the Payee
from time to time under such regulation. Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by the Payee against (i) any
category of liabilities that include deposits by reference to
<PAGE>
which the Libor Rate is to be determined; or (ii) any category of
extension of credit or other assets that includes loans bearing
interest at a rate based on the Libor Rate. The determination by
Payee of the Reserve Requirement shall be conclusive and binding.
"Security Agreement" shall mean the Commercial Security Agreement
------------------
of even date herewith between Maker and Payee, as shall agreement
may be modified or amended from time to time.
"Swap Agreements" shall mean, collectively, an ISDA Master
---------------
Agreement dated as of December 22, 1997, between Maker and Payee, any
other or additional swap agreements (as defined in 11 U.S.C. 101)
between Maker and Payee or any of its affiliates, and all other
interest rate swap documents, whether now or hereafter existing,
between Maker and Payee or any of its affiliates.
2. Interest.
--------
(a) Interest shall initially accrue on the outstanding principal
balance of this Note at a rate of 8.21875% per annum, but the rate of
interest shall be adjusted on each Interest Rate Adjustment Date so that
interest shall accrue at the Adjusted Libor Rate for the Interest Period
commencing on such Interest Rate Adjustment Date. Notwithstanding anything
to the contrary provided in this Note, (i) the non-default rate under this
Note shall be subject to the provisions of Section 2(d) below, and (ii)
from and after the occurrence of any default under this Note or any
document executed in connection herewith, the entire unpaid principal
balance under this Note shall bear interest at the Default Rate as pro-
vided in Section 9 below. Interest on this Note shall be calculated on
the basis of a 360-day year and the actual number of days elapsed (i.e.,
interest for each day any principal is outstanding shall be computed at
the annual rate divided by 360); provided, however, that interest at the
Default Rate shall be calculated on the basis of a 365 or 366, day year,
as applicable.
(b) If Payee determines that the maintenance of any Adjusted
Libor Rate would violate any applicable law, rule, regulation, or direc-
tive, whether or not having the force of law, or if the Payee determines
the Adjusted Libor Rate does not accurately reflect the cost of maintaining
the loan evidenced by this Note, then, at the election of Payee, the non-
default interest rate applicable to the principal amount outstanding under
this Note shall thereafter be adjusted to such interest rate as may be
determined by Payee. Such interest rate shall be based upon such substi-
tute, but reasonably comparable index as may be selected by Payee.
3. Payments.
--------
Accrued interest on the principal sum outstanding hereunder shall be
due and payable monthly, commencing on the fifteenth (15th) day of the
first calendar month immediately following the date hereof, and on the
fifteenth (15th) day of each calendar month thereafter through the
Maturity Date. In addition to such monthly interest payments, Maker
shall pay to Payee, commencing on the fifteenth (15th) day of the first
calendar month immediately following the date hereof, and on fifteenth
(15th) day of each calendar month thereafter through the Maturity Date,
a monthly principal payment of $25,000.00. Subject to the rights of
Payee under Section 8 below to accelerate the maturity of this Note,
all outstanding principal, all accrued but unpaid interest, and all other
sums payable under or in connection with this Note shall be due and payable
on the Maturity Date.
<PAGE>
4. Manner of Payment.
-----------------
All payments hereunder shall be made in immediately available funds
on or before 2:00 pm (Miami time) on the due date thereof and such payments
shall be made in lawful money of the United States of America. Maker shall
not be entitled to any deduction, deferment, suspension, set-off, defense
or counter-claim in respect of any principal, interest or other sums due
under this Note.
5. Prepayment.
----------
The principal amount outstanding under this Note may be prepaid in
whole or in part upon ten (10) days written notice to Payee only upon the
last day of any Interest Period. Any partial prepayments shall be applied
to the principal amounts due under this Note in the inverse order of
maturity. Any prepayment in full must be accompanied by payment in full
of all accrued but unpaid interest and all other sums payable under this
Note and all other Loan Documents. The prepayment of this Note shall not
limit, release or otherwise affect the liability of Maker under the Swap
Agreements.
6. Application of Payments.
-----------------------
Prior to the occurrence of any default under this Note, all payments
hereunder shall first be applied to interest and then to principal. Upon
the occurrence of any default under this Note, all payments hereunder shall
be applied to interest, principal, costs and expenses of Payee, and/or any
other sums payable under or in connection with this Note, in such manner
as the Payee may elect in its sole and absolute discretion.
7. Late Charges.
------------
In the event that any payment due under this Note is not received
by Payee on or before 10 days after the due date thereof, Maker must pay
to Payee a late charge of five percent (5%) of the amount of such payment.
The right to collect a late charge shall be in addition to all other rights
and remedies of Payee under or in connection with the loan evidenced hereby,
including the right to accelerate the entire balance outstanding under this
Note as a result of the Maker's default. The Maker agrees that such late
charge is a fair and reasonable charge for the increased administrative
costs incurred in connection with handling late payments and is not a
penalty.
8. Default.
-------
If any principal, interest or other sum payable hereunder or any of
the other Loan Documents is not paid on the due date thereof, if all out-
standing unpaid principal, all accrued but unpaid interest, and all other
sums payable under this Note or the other Loan Documents are not paid in
full on the Maturity Date, if Maker shall default in the performance or
observance of the covenants contained in the Loan Agreement, if Maker or
any endorser or guarantor of this Note shall die or become insolvent
(however such insolvency may be evidenced) or shall file a voluntary
bankruptcy petition or be the subject of an involuntary bankruptcy
petition, or if the Maker or any guarantor shall make a general assign-
ment for the benefit of creditors, or if the Maker shall suspend the
transaction of its usual business, or if there is a material change in
the financial condition of the Maker or any guarantor, or if any default
or event of default shall occur under the Loan Agreement, any Swap
Agreement, or other Loan Documents (after taking into consideration all
applicable cure periods), or if Maker shall default in the payment of any
other indebtedness or liability of any kind whatsoever now or hereafter
due from Maker to Payee, then this Note shall be deemed to be in
<PAGE>
default and all principal, interest and other sums payable hereunder shall
at the option of the Payee become and be due and payable forthwith, without
presentation, demand, protest, notice of protest, or any other notice of
dishonor of any kind, all of which are hereby expressly waived.
9. Default Rate.
------------
Notwithstanding anything to the contrary provided herein, from and
after the occurrence of any default under this Note, the Loan Agreement,
or any of the Loan Documents, the entire principal amount outstanding
under this Note shall bear interest (regardless of whether or not the
maturity of this Note is accelerated as a result of the default) at a
rate (the "Default Rate") equal to the highest rate permitted under then
applicable law, but if no such highest rate is established by applicable
law, or in the event the highest rate is otherwise indeterminable, the
Default Rate shall be equal to, and the entire principal balance shall
bear interest at the rate of, the Adjusted Libor Rate plus 5% per annum.
10. Legal Rate of Interest.
----------------------
It is the intent of the parties hereto that in no event shall any
interest or payment in the nature of the interest under this Note exceed
the maximum rate of interest allowed by applicable law, as amended from
time to time, and in the event any such payment is paid by the Maker or
received by the Payee, then such excess sum shall be credited as a pay-
ment of principal, unless the Maker shall notify the Payee, in writing,
that the Maker elects to have such excess sum returned to it forthwith.
The Payee may, in determining the maximum rate of interest allowed under
applicable law, as amended from time to time, take advantage of any law,
rule or regulation in effect from time to time and available to the Payee
which exempts the Payee from any limit upon the rate of interest it may
charge or grants to the Payee the right to charge a higher rate of interest
than that allowed by Chapter 687, Florida Statutes. Without limiting the
generality of the foregoing, Payee shall, to the fullest extent allowable,
be entitled to charge and collect interest at the rate allowed by Chapters
656 and 665, Florida Statutes.
11. Presentment, Extensions, Substitutions, Etc.
-------------------------------------------
Maker and all others who are or may become liable for the payment
hereof severally, to the fullest extent allowed by law, hereby: (a) waive
presentment for payment, demand, notice of demand, notice of non-payment,
or dishonor, protest and notice of protest of this Note, and all other
notices in connection with the delivery, acceptance, performance, default,
or enforcement of the payment of this Note, (b) consent to all extensions
of time, renewals, postponements of time of payment of this Note or other
modifications hereof that may be granted by Payee from time to time, both
prior to or after the maturity date hereof (whether by acceleration or in
due course), without the necessity of notice, consent or consideration to
the Maker or any others who are or may become liable for payment of this
Note, (c) agree that Payee may accept, substitute, exchange, add, or
release any security for the indebtedness evidenced by this Note or add or
release any party or person primarily or secondarily liable hereon, without
the necessity of notice, consent or consideration, (d) agree that the Payee
shall not be required first to institute any suit, or to exhaust its
remedies against the Maker or any other person or entity liable or to
become liable hereunder or against any security for this Note in order
to enforce the payment of this Note against any person now or hereafter
liable for the payment hereof, (e) agree that, notwithstanding the occur-
rence of any of the foregoing, they shall be and remain jointly and
severally, directly and primarily liable for all sums due under this
Note (unless the Payee has specifically and expressly released such party
in a written document executed by an authorized officer of Payee, provided
that any such release shall not release any other
<PAGE>
persons or entities not thereby expressly and specifically released), and
(f) waive all applicable exemption rights (whether under the state consti-
tution or otherwise).
12. Venue, Jurisdiction.
-------------------
The Maker and all others who are, or who may become, liable for the
payment hereof severally, irrevocably and unconditionally (a) agree that
any suit, action or other legal proceeding arising out of, under or
relating to this Note may be brought, at the option of the Payee in a court
of record of the State of Florida in Dade County, Florida, in the United
States District Court for the Southern District of Florida, or in any
other court of competent jurisdiction; (b) consent to the jurisdiction of
each such Court in any such suit, action or proceeding; and (c) waive any
objection which it or they may have to the laying of venue of any such suit,
action, or proceeding in any of such courts.
13. Governing Law.
-------------
This Note shall be construed, interpreted, enforced and governed by
and in accordance with the laws of the State of Florida (excluding the
principles thereof governing conflicts of law), and to the extent appli-
cable, federal law.
14. Severability.
------------
If any provision or portion of this Note is declared or found by a
court of competent jurisdiction to be unenforceable or null and void, such
provision or portion thereof shall be deemed stricken and severed from
this Note, and the remaining provisions and portions thereof shall continue
in full force and effect.
15. Written Modification or Waiver Only.
-----------------------------------
This Note may not be amended, extended, or modified except by an
instrument in writing executed by an authorized officer of the Payee.
No waiver of any of the provisions of this Note shall be effective unless
such waiver is contained in a written instrument executed by an authorized
officer of Payee. Any waiver of any provision hereof shall be effective
only in the specific instance and for the specific purpose for which given.
16. Time of the Essence; Miscellaneous.
----------------------------------
Time is of the essence hereof with respect to all provisions of this
Note. The use of the words "herein", "hereof", "hereunder" and any other
words of similar import refer to this Note as a whole and not to any par-
ticular paragraph or other subdivision of this Note. The headings of the
paragraphs are for convenience of reference only, and are not to be con-
sidered a part hereof and shall not in any way limit or otherwise affect
any of the terms hereof. The singular shall include the plural and vice
versa, and any reference to the male or female or neuter gender shall
include all others.
17. Taxes.
-----
The Maker and all others liable under this Note shall pay any and all
present or future stamp or documentary taxes, intangible taxes, withholding
taxes and all other taxes, imposts or levies that from time to time may be
payable as a result of the execution, delivery, payment, existence or
<PAGE>
enforcement of this Note or any of the other Loan Documents, together with
all penalties or interest that may become due in connection therewith. All
payments hereunder and any of the other Loan Documents are payable free
and clear of, and without deduction for or on account of, any present or
future taxes, duties or other charges levied or imposed by any governmental
authority through withholding or deduction with respect to any such
payments. If any taxes, duties or other charges are so levied or imposed,
the Maker shall pay additional interest or will make additional payments
in such amounts so that every net payment of principal of and interest on
this Note and all other amounts payable under the other Loan Documents,
after withholding or deduction for or on account of any such present or
future taxes, duties or charges, will not be less than the amount provided
for herein or in the other Loan Documents. The Maker shall furnish
promptly to the Payee copies of official receipts evidencing such with-
holding or deduction.
18. Costs and Expenses.
------------------
Upon the occurrence of any default under this Note or any of the other
Loan Documents, the Maker and all other persons or entities liable under
this Note shall be jointly and severally liable for all reasonable costs
and expenses incurred by Payee, including without limitation, all reasonable
attorneys' and paralegal fees and costs, court costs and all costs of
collecting or attempting to collect the sums due and payable hereunder
(whether before trial, at trial, on appeal, in bankruptcy, or otherwise).
19. Security Agreement; Loan Documents.
----------------------------------
This Note is secured by the Security Agreement and is subject to the
provisions of the Security Agreement, Loan Agreement and other Loan
Documents.
20. Setoffs.
-------
The Maker and any endorsers, sureties, guarantors, and all others who
are, or who may become liable for the payment hereof, severally expressly
grant to the Payee a continuing first-lien security interest in any and
all money, general or specific deposits, or property of any such parties
now or hereafter in the possession of the Payee. The Maker and such other
parties authorize and empower the Payee, in its sole discretion, at any
time after the occurrence of a default hereunder or under any of the other
Loan Documents (after the expiration of any applicable cure period) to
appropriate and, in such order as the Payee may elect, apply any such
money, deposits or property to the payment hereof or to the payment of
any and all indebtedness, liabilities and obligations of such parties to
the Payee or any of the Payee's affiliates, whether now existing or here-
after created or arising or now owned or hereafter acquired by the Payee
or any of the Payee's affiliates (whether such indebtedness, liabilities
and obligations are joint or several, direct or indirect, absolute or
contingent, liquidated or unliquidated, matured or unmatured, including,
but not limited to, any indebtedness, liabilities and obligations relating
to any letter of credit issued by the Payee for the account of any such
parties).
21. Waiver of Jury Trial.
--------------------
MAKER AND PAYEE HEREBY KNOWINGLY, VOLUNTARILY AND iNTENTIONALLY WAIVE
THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE, AND ANY AGREEMENT OR OTHER DOCUMENT NOW EXISTING OR HEREAFTER
EXECUTED IN CONJUNCTION HEREWITH, OR ANY
<PAAGE>
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF EITHER PARTY.
IN WITNESS WHEREOF, this Promissory Note was duly executed as of the
date first above written.
TECHDYNE, INC., a Florida corporation
/s/ Thomas K. Langbein
By:-----------------------------------
Name: THOMAS K. LANGBEIN
Title: Chairman of the Board
STATE OF NEW JERSEY )
) SS
COUNTY OF BERGEN )
The foregoing instrument was acknowledged before me this 30th day of
----
December, 1997, by Thomas K. Langbein, the Chairman of the Board of
------------------ ---------------------
TECHDYNE, INC., a Florida corporation, on behalf of that corporation.
He [check one]:
----- is personally known to me or
X
----- produced U.S. Passport as identification.
-------------
/s/ Nancy A. Cox
-----------------------------------
My Commission expires: Notary Public
Printed Name: NANCY A. COX
Notary Public of New Jersey
My Commission Expires March 6, 2000
COMMERCIAL SECURITY AGREEMENT
THIS COMMERCIAL SECURITY AGREEMENT is entered into between TECHDYNE, INC.,
a Florida corporation ("Grantor") in favor of BARNETT BANK, N.A. (referred
to below as "Lender").
For valuable consideration, Grantor grants to Lender a security interest
in the Collateral to secure the Indebtedness and agrees that Lender shall
have the rights stated in this Agreement with respect to the Collateral,
in addition to all other rights which Lender may have by law.
1. DEFINITIONS. The following words shall have the following meanings when
used in this Agreement. Terms not otherwise defined in this Agreement shall
have the meanings attributed to such terms in the Uniform Commercial Code.
All references to dollar amounts shall mean amounts in lawful money of the
United States of America.
(a) Agreement. The word "Agreement" means this Commercial Security
Agreement, as this Commercial Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules
attached to this Commercial Security Agreement from time to time.
(b) Collateral. The word "Collateral" means any and all property
which is now or hereafter owned by the Grantor or in which the Grantor
now has or hereafter acquires an interest, whether such property is
now existing or hereafter made, constructed, created or arising, in-
cluding, without limitation: (i) all tangible property wherever
located, including, without limitation, all goods, inventory, equip-
ment, fixtures and personal property, and (ii) all intangible personal
property, including without limitation, (A) any and all accounts,
contract rights, book debts, checks, notes, drafts, acceptances, and
any and all amounts due to Grantor from a factor or other forms of
obligations and receivables, now existing or hereafter arising, (B)
any and all of Grantor's instruments, documents, and other writings
of any type, (C) any and all of the Grantor's general intangibles,
(D) any and all chattel paper, and (E) any and all tradenames, trade-
marks, and logos. Without limiting the generality of the foregoing,
the word "Collateral" includes all the following, whether now owned
or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(1) All attachments, accessions, accessories, tools, parts, sup-
plies, increases, and additions to and all replacements of and
substitutions for any property described above;
(2) All products and produce of any of the property described
in this Collateral section;
(3) All accounts, contract rights, general intangibles, instru-
ments, rents, monies, revenues, issues, profits, payments, and
all other rights, arising out of a sale, lease, trade, exchange
or other disposition of any of the property described in this
Collateral section;
(4) All proceeds (including insurance proceeds) from the sale,
destruction, loss, condemnation or other disposition of any of
the property described in this Collateral section;
(5) All proceeds, refunds or rebates from the cancellation of
any insurance policies or any of the property described in this
Collateral section or from any warranty, service, disability or
credit insurance product or policy for Grantor, for the benefit
of Grantor or for any of the property described in this Collateral
section; and
(6) All records and data relating to any of the property de-
scribed in this Collateral section, whether in the form of a
writing, photograph, microfilm, microfiche, or electronic media,
together with all of Grantor's right, title, and interest in and
to all computer software required to utilize, create, maintain,
and process any such records or data on electronic media.
(c) Accounts. The word "accounts" means all accounts, instruments,
documents, chattel paper, reimbursements and obligations in any form
owing to Grantor arising out of the sale or lease of goods or the
rendition of services by Grantor whether or not earned by performance;
all credit insurance, guaranties, letters of credit, advice of credit,
and other security for any of the foregoing; all merchandise returned
to or reclaimed by Grantor; and Grantor's books relating to any of the
foregoing. For purposes of this Agreement, Grantor's grant of accounts
to Lender as Collateral includes an assignment of all accounts to
Lender.
(d) Equipment. The word "equipment" means all equipment, fixtures,
machinery, machine tools, office equipment, furniture, furnishings,
motors, motor vehicles, tools, dies, parts, jigs, goods, and all
improvements thereto, and all supplies used or to be used in connec-
tion therewith, including, without limitation, each of the items of
equipment set forth on any schedule of equipment that is either now
or in the future delivered by Grantor to Lender.
(e) General Intangibles. The words "general intangibles" mean all
general intangibles, choses in action, causes of action, and all other
personal property of every kind and nature (other than goods and ac-
counts) including, without limitation, patents, trademarks, trade
names, service marks, copyrights, and applications for any of the
above; and goodwill, trade secrets, licenses, franchises, rights
under agreements, deposit accounts, tax refunds, tax refund claims,
moneys due from pension funds, governmental reimbursements and
Grantor's books relating to any of the foregoing.
<PAGE>
(f) Inventory. The word "inventory" means any and all goods, wares,
merchandise, and other tangible personal property, including raw
materials, work in process, supplies and components, and finished
goods, packing and shipping materials, and all documents of title,
whether negotiable or nonnegotiable, representing any of the foregoing.
(g) Event of Default. The words '"Event of Default" mean and include
without limitation any of the Events of Default set forth below in the
section titled "Events of Default."
(h) Grantor. The word "Grantor" means TECHDYNE, INC., and its suc-
cessors and assigns.
(i) Guarantor. The word "Guarantor" means MEDICORE, INC., a Florida
corporation, and all other guarantors, sureties, and accommodation
parties in connection with the Indebtedness.
(j) Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note, including all principal and interest, together
with all other indebtedness and costs and expenses for which Grantor
is responsible under this Agreement, Swap Agreements or under any of
the Related Documents, together with all other obligations, debts and
liabilities, plus interest thereon, of Grantor, or any one or more of
them, to Lender, as well as all claims by Lender against Grantor,
whether existing now or later; whether they are voluntary or involun-
tary, due or not due, direct or indirect, absolute or contingent,
liquidated or unliquidated; whether Grantor may be liable individually
or jointly with others; whether Grantor may be obligated as guarantor,
surety, accommodation party or otherwise; whether recovery upon such
indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such indebtedness may be or hereafter may
become otherwise unenforceable.
(k) Lender. The word "Lender" means BARNETT BANK, N.A., its suc-
cessors and assigns.
(l) Note. The word "Note" means the note of even date herewith in
the principal amount of $1,500,000 from Grantor to Lender, together
with all renewals of, extensions of, modifications of, refinancings
of, consolidations of and substitutions for the note.
(m) Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, agreements not to encumber, swap agreements,
and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
(n) Swap Agreements. The words "Swap Agreements" mean and include,
collectively, an ISDA Master Agreement dated as of December 29, 1997,
between Grantor and Lender, any other or additional swap agreements
(as defined in 11 U.S.C. 101) between Grantor and Lender or any of
its affiliates, and all other interest rate swap documents, whether
now or hereafter existing, between Grantor and Lender or any of its
affiliates.
2. OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as
follows:
(a) No Merger; Name Change, Etc. Except as disclosed in writing
delivered to Lender; (i) no entity has merged into Grantor or been
consolidated, with Grantor, and Grantor's business structure and
entity has not changed; (ii) no entity has sold substantially all of
its assets to Grantor or sold assets to Grantor outside the ordinary
course of such seller's business at anytime in the past; and (iii)
Grantor has not changed its name or identity or used any new trade
name or merged or consolidated with any other entity.
(b) Taxes. All assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against
Grantor or any of its property have been paid in full before delin-
quency or before the expiration of any extension period; and Grantor
has made due and timely payment or deposit of all federal, state, and
local taxes, assessments, or contributions required of it by law,
except only for items that Grantor is currently contesting diligently
and in good faith and that have been fully disclosed in writing to
Lender.
(c) Perfection of Security Interest. Grantor agrees to execute such
financing statements and to take whatever other actions are requested
by Lender to further grant, to perfect and to continue Lender's
security interest in the Collateral. Upon request of Lender, Grantor
will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Grantor will note Lender's interest
upon any and all chattel paper if not delivered to Lender for posses-
sion by Lender. Grantor hereby makes, constitutes and appoints Lender
as its irrevocable true and lawful attorney-in-fact for the purpose
of executing any documents necessary to perfect or to continue the
security interest granted in this Agreement. Any person dealing with
Grantor shall be entitled to rely conclusively on any written or oral
statement of Lender that this power of attorney is in effect. Lender
may at any time, and without further authorization from Grantor, file
a carbon, photographic or other reproduction of any financing statement
or of this Agreement for use as a financing statement. Grantor will
reimburse Lender for all expenses for the perfection and the continua-
tion of the perfection of Lender's security interest in the Collateral.
Grantor promptly will notify Lender of any change in Grantor's name
including any change to the assumed business names of Grantor. This
is a continuing Security Agreement and will continue in effect even
though all or any part of the Indebtedness is paid in full and even
though for a period of time Grantor may not be indebted to Lender.
<PAGE>
(d) No Violation. The execution and delivery of this Agreement will
not violate any law or agreement governing Grantor or to which Grantor
is a party, and its certificate or articles of incorporation and
bylaws do not prohibit any term or condition of this Agreement.
(e) Enforceability of Collateral. To the extent the Collateral con-
sists of accounts, contract rights, chattel paper, or general intan-
gibles, the Collateral is enforceable in accordance with its terms,
is genuine, and complies with applicable laws concerning form, content
and manner of preparation and execution, and all persons appearing to
be obligated on the Collateral have authority and capacity to contract
and are in fact obligated as they appear to be on the Collateral. At
the time any account becomes subject to a security interest in favor
of Lender, the account shall be a good and valid account representing
an undisputed, bona fide indebtedness incurred by the account debtor,
for merchandise held subject to delivery instructions or theretofore
shipped or delivered pursuant to a contract of sale, or for services
theretofore performed by Grantor with or for the account debtor; there
shall be no setoffs or counterclaims against any such account; no
agreement under which any deductions or discounts may be claimed shall
have been made with the account debtor except those disclosed to Lender
in writing.
(f) Aging Reports. Unless otherwise waives or modified in writing by
Lender, Grantor shall from time to time hereafter, but not less
frequently than quarterly, execute and deliver to Lender, a detailed
aging of accounts by total, a summary aging of accounts by account
debtor, a reconciliation statement, and an accounts payable schedule.
(g) Records. Grantor will keep or will cause to be kept, accurate
and complete records of the accounts and will deliver such records and
other financial information to Lender as are requested, and that Lender
or its designee shall have the right at any time upon request to call
Grantors place(s) of business at intervals solely determined by Lender,
and without hindrance or delay, inspect, audit, make test verifica-
tions, send verification of an account to any account debtor and
otherwise check and make copies of books, records, journals, orders,
receipts, correspondence and other data related to the accounts or
the processing or collection thereof.
(h) Instruments. If any account shall be evidenced by a promissory
note, trade acceptance or any other instrument for the payment of
money, Grantor upon Lender's request, will promptly deliver same to
Lender, properly endorsed to Lender's order. Regardless of the form
of such endorsement, Grantor hereby waives presentment, demand,
notice of dishonor, protest and notice of protest and all other
notices to which Grantor might be entitled.
(i) Inventory Reports. To the extent the Collateral consists of in-
ventory, unless otherwise waived or modified in writing by Lender,
Grantor shall from time to time but not less than quarterly execute
and deliver to Lender no later than the 15th day of each quarter
during the term of this Agreement an inventory report, acceptable
to Lender specifying Grantor's cost and the resale price of Grantor's
raw materials, work in process, and finished goods and such other
information as Lender may reasonably request.
(j) Removal of Collateral. Grantor shall keep the Collateral (or to
the extent the Collateral consists of intangible property such as
accounts, the records concerning the Collateral) at the locations
identified in Exhibit "A" attached hereto or at such other locations
as are acceptable to Lender. Except in the ordinary course of its
business, including the sale of inventory, Grantor shall not remove
the Collateral from its existing locations without the prior written
consent of Lender. To the extent that the Collateral consists of
vehicles, or other titled property Grantor shall not take or permit
any action which would require application for certificates of title
for the vehicles outside the State of Florida, without the prior
written consent of Lender.
(k) Transactions Involving Collateral. Except for inventory sold or
accounts collected in the ordinary course of Grantor's business,
Grantor shall not sell, offer to sell, consign or otherwise transfer
or dispose of the Collateral. While Grantor is not in default under
this Agreement, Grantor may sell inventory, but only in the ordinary
course of its business and only to buyers who qualify as a buyer in
the ordinary course of business. A sale in the ordinary course of
Grantor's business does not include a transfer in partial or total
satisfaction of a debt or any bulk sale. Grantor shall not pledge,
mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than
the security interest provided for in this Agreement, without the
prior written consent of Lender. This includes security interests
even if junior in right to the security interests granted under this
Agreement. Unless waived by Lender, all proceeds from any disposition
of the Collateral (for whatever reason) shall be held in trust for
Lender and shall not be commingled with any other funds; provided
however, this requirement shall not constitute consent by Lender to
any sale or other disposition. Upon receipt, Grantor shall immediately
deliver any such proceeds to Lender.
(l) Title. Grantor represents and warrants to Lender that it holds
good and marketable title to the Collateral, free and clear of all
liens and encumbrances except for the lien of this Agreement. No
financing statement covering any of the Collateral is on file in any
public office other than those which reflect the security interest
created by this Agreement or to which Lender has specifically
consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons. Upon Lender's
request, if Grantor now or hereafter has any vehicle or equipment for
which a certificate of title has been or will be issued, Grantor shall
immediately deliver to Lender, properly endorsed, each certificate of
title for such vehicle or equipment for the lien of Lender to be
recorded.
<PAGE>
(m) Maintenance and Inspection of Collateral. Grantor shall maintain
all tangible Collateral in good operating condition and make all
necessary repairs to preserve the Collateral's value. Grantor will
not commit or permit damage to or destruction of the Collateral or
any part of the Collateral. Lender and its designated representatives
and agents shall have the right at all reasonable times to examine,
inspect, test, and audit the Collateral wherever located.
(n) Notice. At least thirty (30) days prior to the occurrence of any
of the following events, Grantor will deliver to Lender written notice
of such impending events: (i) any addition, deletion or a change in
Grantor's place(s) of business and/or the location(s) of the Col-
lateral; or (ii) any addition, deletion or change in Grantor's name,
any doing business as name, trade name, fictitious name, identity or
legal structure.
(o) Taxes, Assessments and Liens. Grantor will pay when due all
taxes, assessments and liens upon it and the Collateral, its use or
operation, upon this Agreement, upon any promissory note or notes
evidencing the Indebtedness, or upon any of the other Related Docu-
ments. Grantor may withhold any such payment or may elect to contest
any lien if Grantor is in good faith conducting an appropriate pro-
ceeding to contest the obligation to pay and so long as Lender's
interest in the Collateral is not jeopardized in Lender's sole
opinion. If the Collateral is subjected to a lien which is not dis-
charged within thirty (30) days, Grantor shall deposit with Lender
cash, a sufficient corporate surety bond or other security satisfac-
tory to Lender in an amount adequate to provide for the discharge of
the lien plus any interest, costs, reasonable attorneys' fees or
other charges that could accrue as a result of foreclosure or sale.
Grantor will, in the event of appropriation or taking of all or any
part of the Collateral, give Lender prompt written notice thereof.
Lender shall be entitled to receive directly, and Grantor shall
promptly pay over to Lender, any awards or other amounts payable with
respect to such condemnation, requisition or other taking and in its
sole discretion may apply the proceeds as it deems best without regard
to if an Event of Default has or has not occurred.
(p) Accounting System. Grantor at all times hereafter shall maintain
a consistent system of accounting, with ledger and account cards and/or
computer tapes, disks, printouts, and records that contain information
pertaining to the Collateral that may from time to time be requested
by Lender. Grantor shall not modify or change its method of accounting
or enter into any agreement hereafter with any third-party accounting
firm and/or service bureau for the preparation and/or storage of
Grantor's accounting records without said accounting firm's and/or
service bureau's agreeing to provide to Lender information regarding
the Collateral and Grantor's financial condition.
(q) Compliance With Governmental Requirements. Grantor shall comply
promptly with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect, applicable to
the ownership, production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance or regula-
tion and withhold compliance during any proceeding, including appro-
priate appeals, so long as Lender's interest in the Collateral, in
Lender's opinion, is not jeopardized.
(r) Collateral Value. If Lender deems the value of the Collateral to
be threatened by any out of the ordinary loss, dissipation, destruc-
tion, damage or other cause, or if the Collateral is decreasing in
value, thereupon, or at anytime thereafter, Grantor upon demand by
Lender agrees to forthwith deposit with Lender, additional collateral
to the satisfaction of Lender.
(s) Hazardous Substances. The terms "hazardous waste," "hazardous
substance," "disposal," release," and "threatened release," as used
in this Agreement, shall have the same meanings as set forth in the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No.
99099 (SARA"), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act,
49 U.S.C. Section 6901, et seq., or other applicable state or Federal
laws, rules, or regulations adopted pursuant to any of the foregoing.
Except as disclosed to and acknowledged by Lender in writing, Grantor
represents and warrants that: (i) During the period of Grantor's
ownership of Grantor's properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened
release of any hazardous waste or substance by any person on, under,
or about any of the properties. (ii) Grantor has no knowledge of, or
reason to believe that there has been (A) any use, generation, manu-
facture, storage, treatment, disposal, release, or threatened release
of any hazardous waste or substance by any prior owners or occupants
of any of the properties, or (B) any actual or threatened litigation
or claims of any kind by any person relating to such matters; (iii)
Neither Grantor nor any tenant, contractor, agent or other authorized
user of any of the properties shall use, generate, manufacture, store,
treat, dispose of, or release any hazardous waste or substance on,
under, or about any of the properties and any such activity shall be
conducted in compliance with all applicable federal, state, and local
laws, regulations, and ordinances, including without limitation those
laws, regulations and ordinances described above. Grantor authorizes
Lender and its agents to enter upon the properties to make such
inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be for Lender's purposes
only and shall not be construed to create any responsibility or liabil-
ity on the part of Lender to Grantor or to any other person. The
representations and warranties contained herein are based on Grantor's
due diligence in investigating the Collateral and the properties for
hazardous waste. Grantor hereby (1) releases and waives any future
claims against Lender for indemnity or contribution in the event
Grantor becomes liable for cleanup or other costs under any such laws,
and (2) agrees to fully and promptly pay, perform, discharge and
defend, indemnify and hold harmless Lender against any and all claims,
orders, demands, causes of action, proceedings, judgments, losses,
liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of
this section of this Agreement or as a consequence
<PAGE>
of any use, generation, manufacture, storage, disposal, release or
threatened release, whether occurring prior to or after Grantor's
ownership or interest in the properties, whether or not the same was
or should have been known to Grantor. The provisions of this section
of this Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the satisfaction of this
Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
(t) Environmental Compliance and Reports. Grantor shall comply in all
respects with all environmental protection federal, state and local
laws, statutes, regulations and ordinances; not cause or permit to
exist, as a result of an intentional or unintentional action or
omission on its part or on the part of any third party, on property
owned and/or occupied by Grantor, any environmental activity where
damage may result to the environment, unless such environmental
activity is pursuant to the conditions of a permit issued by the
appropriate federal, state or local governmental authorities; shall
furnish to Lender promptly and in any event within thirty (30) days
after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter, or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional
action or omission on Grantor's part in connection with any environ-
mental activity whether or not there is damage to the environment
and/or other natural resources.
(u) Maintenance of Casualty Insurance. Grantor shall procure and
maintain all risks insurance, including without limitation fire, theft
and liability coverage of the kinds and in amounts customarily insured
against by businesses in the same or similar business, together with
business interruption insurance and such other insurance as Lender
may require with respect to the Collateral, in form, coverages and
basis reasonably acceptable to Lender and issued by a company or
companies reasonably acceptable to Lender. Grantor, upon request of
Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished
without at least thirty (30) days' prior written notice to Lender and
not including any disclaimer of the insurer's liability for failure
to give such a notice. In connection with all policies covering assets
in which Lender holds or is offered a security interest, Grantor will
provide Lender with such lender loss payable or other endorsements as
Lender may require. If Grantor at any time fails to obtain or maintain
any insurance as required under this Agreement, Lender may (but shall
not be obligated to) obtain such insurance as Lender deems appropriate,
including if it so chooses "single interest insurance," which will
cover only Lender's interest in the Collateral.
(v) Application of Insurance Proceeds. Grantor shall promptly notify
Lender of any loss or damage to the Collateral. Lender may make proof
of loss if Grantor fails to do so within fifteen (15) days of the
casualty. All proceeds of any insurance on the Collateral, including
accrued proceeds thereon, shall be held by Lender as part of the
Collateral. If Lender consents to repair or replacement of the
damaged or destroyed Collateral, Lender shall, upon satisfactory proof
of expenditure, pay or reimburse Grantor from the proceeds for the
reasonable cost of repair or restoration. If Lender does not consent
to repair or replacement of the Collateral, Lender shall retain a
sufficient amount of the proceeds to pay all of the Indebtedness, and
shall pay the balance to Grantor. Any proceeds which have not been
disbursed within six (6) months after their receipt and which Grantor
has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
(w) Insurance Reports. Grantor, upon request of Lender, shall furnish
to Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following:
(i) the name of the insurer; (ii) the risks insured; (iii) the amount
of the policy; (iv) the property insured; (v) the then current value
on the basis of which insurance has been obtained and the manner of
determining that value; and (vi) the expiration date of the policy.
In addition, Grantor shall upon request by Lender (however not more
often than annually) have an independent appraiser satisfactory to
Lender determine, as applicable, the cash value or replacement cost
of the Collateral.
3. GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have posses-
sion of the tangible personal property and beneficial use of all the Col-
lateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to
possession and beneficial use shall not apply to any Collateral where
possession of the Collateral by Lender is required by law to perfect
Lender's security interest in such Collateral. If Lender at any time has
possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose
as Grantor shall request or as Lender, in Lender's sole discretion, shall
deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise
reasonable care. Lender shall not be required to take any steps necessary
to preserve any rights in the Collateral against prior parties, nor to
protect, preserve or maintain any security interest given to secure the
Collateral.
4. LENDER'S DUTY OF CARE. Lender shall have no duty of care with respect
to the Collateral except that Lender shall exercise reasonable care with
respect to the Collateral in Lender's custody. Lender shall be deemed to
have exercised reasonable care if such property is accorded treatment
substantially equal to that which Lender accords its own property or if
Lender takes such action with respect to the Collateral as Grantor shall
request or agree to in writing, provided that no failure to comply with
any such request nor any omission to do any such act requested by Grantor
shall be deemed a failure to exercise reasonable care. Lender's failure to
take steps to preserve rights against any parties or property shall not be
deemed to be failure to exercise reasonable care with respect to the
Collateral in Lender's custody.
5. WAIVERS. Grantor waives demand, protest, notice of protest, notice
of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension
or renewal of any or all commercial paper,
<PAGE>
accounts, documents, instruments, chattel paper, and guaranties at any
time held by Lender on which Grantor may in any way be liable.
6. ASSIGNMENT AND PLEDGE OF ADDITIONAL RIGHTS. Grantor, in order to
further secure the prompt and punctual payment and satisfaction of the
Indebtedness in favor of Lender in principal, interest, costs, expenses,
attorneys' fees and other fees and charges, hereby assigns, pledges and
grants to Lender a security interest in the following additional rights
(the "Rights"):
(a) Options and Agreements to Sell. Any and all of Grantor's present
and future options or agreements to sell the Collateral, or any part
or parts thereof, including without limitation, Grantor's rights to
exercise and/or enforce such options or agreements.
(b) Sale Proceeds. Any and all of Grantor's present and future rights,
title and interest in and to any and all cash, cash equivalent,
property and other proceeds derived or to be derived from the sale,
transfer, assignment and/or other distribution of the Collateral,
whether in cash, farm products, or otherwise, and whether from or
through any federal or state government agency or program or otherwise,
including without limitation all rights to payments by or through the
Commodity Credit Corporation or the ASCS; all rights to payments for
participation in the Agricultural Conservation Program, the Cropland
Adjustment Program, the Cropland Conversion Program, the National Wool
Act of 1954, the Wheat, Feed Grain and Cotton Programs of the Agricul-
tural Adjustment Act of 1938, and any other such programs of the
United States Department of Agriculture; and all payments in kind,
including without limitation PIK certificates and commodities redeemed
or acquired by PIK certificates, warehouse receipts, chemicals and
fertilizers, documents, letters of entitlement, and deficiency, conser-
vation reserve, and diversion and storage payments, together with,
Grantor's rights to receive such proceeds and Grantor's rights to en-
force collection and payment thereof.
(c) Insurance Proceeds. Any and all of Grantor's present and future
rights, title and interest in and to any unearned insurance premiums
and proceeds of insurance affecting all or any part of the Collateral,
including the right to receive such unearned insurance premiums and
insurance proceeds directly from the insurer and, where applicable,
to enforce any rights that Grantor may have to collect such amounts.
(d) Condemnation Proceeds. Any and all of Grantor's present and
future rights, title and interest in and to the proceeds of any award
or claim for direct or consequential damages relating to any condemna-
tion, expropriation, or any part of the Collateral by any governmental
authority, including the right to receive such condemnation proceeds
directly from such a governmental authority and, where applicable, to
enforce frights that Grantor may have to collect such condemnation
proceeds.
(e) Damages. Any and all of Grantor's rights, title and interest and
other claims or demands that Grantor now has or may hereafter acquire
against anyone with respect to any damage to all or any part of the
Collateral.
7. EXPENDITURES BY LENDER. If not discharged or paid when due, Lender
may (but shall not be obligated to) discharge or pay any amounts required
to be discharged or paid by Grantor under this Agreement, including without
limitation all taxes, liens, security interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may
(but shall not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Lender
for such purposes will then bear interest at the rate charged under the
Note from the date incurred or paid by Lender to the date of repayment by
Grantor. All such expenses shall become a part of the Indebtedness and, at
Lender's option, will (a) be payable on demand, (b) be added to the balance
of the Note and be apportioned among and be payable with any installment
payments to become due during either (i) the term of any applicable insur-
ance policy or (ii) the remaining term of the Note, or (c) be treated as a
balloon payment which will be due and payable at the Note's maturity. This
Agreement also will secure payment of these amounts. Such right shall be
in addition to all other nights and remedies to which Lender may be entitled
upon the occurrence of an Event of Default.
8. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
(a) Default on Indebtedness. An event of default as defined in the
Note.
(b) Other Defaults. Failure of Grantor to comply with or to perform
any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or in any other agreement
between Lender and Grantor, or the occurrence of any default or event
of default under any of the Related Documents.
(c) False Statements. Any warranty, representation or statement made
or furnished to Lender by or on behalf of Grantor under this Agreement
is false or misleading in any material respect, either now or at the
time made or furnished.
(d) Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral documents to create a valid and perfected security
interest or lien) at any time.
(e) Insolvency. The dissolution or termination of Grantor's existence
as a going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor's property, any assignment for the
benefit of creditors, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Grantor.
<PAGE>
(f) Creditor Proceedings. Commencement of foreclosure, whether by
judicial proceeding, self-help, repossession or any other method, by
any creditor of Grantor or by any governmental agency against the
Collateral or any other collateral securing the Indebtedness. This
includes a garnishment of any of Grantor's deposit accounts with
Lender.
(g) Forfeiture. The filing of formal charges under any federal or
state law against Grantor or the Collateral which forfeiture is a
potential penalty. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the proceeding and
if Grantor gives Lender written notice of the proceeding and deposits
with Lender monies or a surety bond for the proceeding in an amount
determined in good faith by Lender as being an adequate reserve or
bond for the dispute.
(h) Events Affecting Guarantor. Any of the preceding events occurs
with respect to any Guarantor of any of the Indebtedness.
9. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under
this Agreement, at any time thereafter, Lender shall have all the rights of
a secured Party under the Florida Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the following
rights and remedies:
(a) Accelerate Indebtedness. Lender may declare the entire Indebted-
ness, including any prepayment penalty which Grantor would be required
to pay, immediately due and payable, without presentment, demand,
protest, or notice, all of which are expressly waived by Grantor.
(b) Processing of Collateral. Grantor hereby agrees that Lender or
its designate may do whatever Lender in its sole discretion deems to
be commercially reasonable to prepare any Collateral for disposition
and to dispose of any Collateral, including without limitation
operating any manufacturing or other processes relating to the
Collateral. Lender may transfer Collateral into its name or that of
a nominee and receive the dividends, royalties or income thereof.
Lender shall have no duty as to the collection or protection of the
Collateral or any income therefrom, nor as to the preservation of
rights against prior parties, nor as to the preservation of any right
pertaining thereto.
(c) Actions regarding Collateral. Lender may dispose of the Col-
lateral in its then-existing condition or, at its election, may take
such measures as it deems necessary or advisable to refurbish, repair,
improve, process, finish, operate, demonstrate, and prepare for sale
the Collateral and may store, ship, reclaim, recover, protect, adver-
tise for sale or lease, and insure the Collateral. If any Collateral
consists of documents, Lender may proceed either as to the documents
or as to the goods represented thereby. Lender may pay, purchase,
contest, or compromise any encumbrance, charge, or lien that, in the
opinion of Lender, appears to be prior or superior to its lien and pay
all expenses incurred in connection therewith.
(d) Assemble Collateral. Lender may require Grantor to deliver to
Lender all or any portion of the Collateral and any and all certifi-
cates of title and other documents relating to the Collateral. Lender
may require Grantor to assemble the Collateral and make it available
to Lender at a place to be designated by Lender. Lender also shall
have full power to enter upon the property of Grantor to take posses-
sion of and remove the Collateral and Lender may remain on such
premises and use the premises for the purpose of collecting, preparing,
and disposing of the Collateral, without any liability for rent or
occupancy charges. If the Collateral contains other goods not covered
by this Agreement at the time of repossession, Grantor agrees Lender
may take such other goods, provided that Lender makes reasonable
efforts to return them to Grantor after repossession.
(e) Sell the Collateral. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
its own name or that of Grantor. Lender may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to
decline speedily in value or is of a type customarily sold on a
recognized market, Lender will give Grantor reasonable notice of the
time after which any private sale or any other intended disposition
of the Collateral is to be made. The requirements of reasonable notice
shall be met if such notice is given at least ten (10) days before
the time of the sale or disposition. Lender may adjourn any public or
private sale from time to time to a reasonably specified time and
place by announcement at the time and place of sale previously fixed,
without further notice by publication or otherwise of the time and
place of such adjourned sale, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
All expenses relating to the disposition of the Collateral, including
without limitation the expenses of retaking, holding, insuring, pre-
paring for sale and selling the Collateral, shall become a part of
the Indebtedness secured by this Agreement and shall be payable on
demand, with interest at the Note default rate from date of expendi-
ture until repaid.
(f) Appoint Receiver. To the extent permitted by applicable law,
Lender shall have the following rights and remedies regarding the
appointment of a receiver: (i) Lender may have a receiver appointed
as a matter of right, (ii) the receiver may be an employee of Lender
and may serve without bond, (iii) all fees of the receiver and his or
her attorney shall become a part of the Indebtedness secured by this
Agreement and shall be payable on demand, with interest at the Note
rate from date of expenditure until repaid, and (iv) Lender, any
affiliate of Lender or any other person or entity, shall upon any
public sale(s) and, to the extent permitted by law, upon any private
sale(s) have the right to purchase the whole or any part of the Col-
lateral so sold, free of any right or equity of redemption of Grantor.
<PAGE>
(g) Disposition of Collateral. Without demand of performance or other
demand, advertisement or notice of any kind (except the notice(s)
specified herein regarding the time and place of public sale or dis-
position or time after which a private sale or disposition is to occur)
to Grantor (which all and each of demands, advertisements and/or
notices are hereby expressly waived), Lender may forthwith collect,
receive, appropriate and realize upon the Collateral, in full or in
any part thereof, may abandon, not claim or not take possession of any
Collateral, and/or may forthwith sell, lease, assign, give an option
or options to purchase or sell or otherwise dispose of and deliver
the Collateral (or contract to do so), or any part thereof, in one or
more parcels at public or private sale(s) at Lender's offices or
elsewhere at such price(s) as Lender may determine, for cash or on
credit or for future delivery without assumption of any credit risk.
(h) Collect Revenues, Apply Accounts. Lender, either itself or
through a receiver, may collect the payments, rents, income, and
revenues from the Collateral. Lender may at any time in its dis-
cretion transfer any Collateral into its own name or that of its
nominee and receive the payments, rents, income, and revenues there-
from and hold the same as security for the Indebtedness or apply it
to payment of the Indebtedness in such order of preference as Lender
may determine. Insofar as the Collateral consists of accounts,
general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose, or
realize on the Collateral for cash, credit or otherwise as Lender may
determine, whether or not Indebtedness or Collateral is then due. For
these purposes, Lender may, on behalf of and in the name of Grantor,
receive, open and dispose of mail addressed to Grantor; change any
address to which mail and payments are to be sent; endorse and/or
sign the name of Grantor on notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment,
shipment, or storage of any Collateral; grant credit extensions of
time or payment or performance or any other indulgences to anyone
with respect to any account; accept the return of the goods represented
by any account; or do anything else which Grantor would be legally
permitted to do. To facilitate collection, Lender may notify account
debtors and obligors on any Collateral to make payments directly to
Lender.
Lender shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any or all of
the Collateral or in any way relating to the rights of Lender here-
under, including attorneys' fees and legal expenses, to the payment
in whole or in part of the Indebtedness, in such order as Lender may
elect, and only after applying such net proceeds and after the payment
by Lender of any other amount required by any provision of law, need
Lender account for the surplus, if any to Grantor.
(i) Obtain Deficiency. Grantor shall remain liable for any deficiency
if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled even if
the transaction described in this subsection is a sale of accounts or
chattel paper. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency
remaining on the Indebtedness due to Lender after application of all
amounts received from the exercise of the rights provided in this
Agreement.
(j) Waiver. To the extent permitted by applicable law, Grantor waives
all claims, damages and demands against Lender arising out of the
repossession, retention, sale or disposition of the Collateral.
(k) License. Lender is hereby granted a license or other right to use,
without charge, Grantor's patents, copyrights, trade secrets, technical
processes, rights of use of any name, trade names, trademarks, labels,
and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising
for sale, and selling any Collateral, and Grantor's rights under all
licenses and all franchise agreements shall inure to Lender's benefit.
(l) Other Rights and Remedies. Lender shall have all the rights and
remedies of a secured creditor under the provisions of the Uniform
Commercial Code, as may be amended from time to time. In addition,
Lender shall have and may exercise any or all other rights and
remedies it may have available at law, in equity, or otherwise.
(m) Cumulative Remedies. All of Lender's rights and remedies, whether
evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or con-
currently. Election by Lender to pursue any right or remedy concurrent-
ly or in any sequence shall not exclude pursuit of any other right or
remedy concurrently or in any sequence, and an election to make ex-
penditures or to take action to perform an obligation of Grantor under
this Agreement, after Grantor's failure to perform, shall not affect
Lender's right to declare a default and to exercise its remedies.
10. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Agreement:
(a) Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement and supersedes all prior
understandings and correspondence, oral or written, with respect to
the subject matter hereof. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration
or amendment.
(b) Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
<PAGE>
(c) Attorneys' Fees; Expenses. In any action in connection with the
Indebtedness, this Agreement or the enforcement of this Agreement,
the non-prevailing party shall pay the costs and expenses of the pre-
vailing party. Lender may pay someone else to enforce this Agreement
and Grantor shall pay the costs and expenses incurred in connection
therewith. Lender need not commence a lawsuit in order to be eligible
to recover costs and expenses (for example, costs and expenses for
bankruptcy proceedings, including, without limitation, efforts to
modify or vacate any automatic stay or injunction would be recoverable
as would costs and expenses incurred in any appeals or any post-
judgment collection services). As used herein, costs and expenses
include, without limitation, reasonable attorneys' fees and legal
expenses.
(d) Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
(e) Extensions and Compromises. With respect to any Collateral or
the Indebtedness, Grantor assents to all extensions or postponements
to the time of payment thereof or any other indulgence in connection
therewith, to each substitution, exchange or release of Collateral,
to the release of any party primarily or secondarily liable, to the
acceptance of partial payment thereon or to the settlement or com-
promise thereof, all in such manner and such time or times as Lender
may deem advisable. No forbearance in exercising any right or remedy
on any one or more occasions shall operate as a waiver thereof on any
future occasion; and no single or partial exercise of any right or
remedy shall preclude any other exercise thereof or the exercise of
any other right or remedy.
(f) Notices. All notices required to be given under this Agreement
shall be given in writing and shall be effective when actually
delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States registered or certified
mail, first class, postage prepaid, return receipt requested,
addressed to the party to whom the notice is to be given at the
address shown below; notification by facsimile is specifically not
allowed. Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's
address. To the extent permitted by applicable law, if there is
more than one Grantor, notice to any Grantor will constitute notice
to all Grantors. For notice purposes, Grantor agrees to keep Lender
informed at all times of Grantor's current address(es). The addresses
for the Grantor and Lender are as follows:
Grantor: Techdyne, 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
Lender: Barnett Bank, N.A.
101 Hialeah Drive
Second Floor
Hialeah, FL 33010
Attn: Ricardo Lujan
(g) Power of Attorney. Grantor hereby appoints Lender as its true and
lawful attorney-in-fact, irrevocably, with full power of substitutions,
do the following: (i) to demand, collect, receive, receipt for, sue
and recover all sums of money or other property which may now or
hereafter become due, owing or payable from the Collateral; (ii) to
execute, sign and endorse any and all claims, instruments, receipts,
checks, drafts or warrants issued in payment for the Collateral; (iii)
to settle or compromise any and all claims arising under the Collateral
and, in the place and stead of Grantor, to execute and deliver its
release and settlement for the claim; and (iv) to file any claim or
claims or to take any action or institute or take part in any pro-
ceedings, either in its own name or in the name of Grantor, or other-
wise, which in the discretion of Lender may seem to be necessary or
advisable. This power is given as security for the Indebtedness, and
the authority hereby conferred is and shall be irrevocable and shall
remain in full force and effect until renounced by Lender.
(h) Severability. If a court of competent jurisdiction finds any pro-
vision of this Agreement to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision
invalid or unenforceable as to any other persons or circumstances. If
feasible, any such offending provision shall be deemed to be modified
to be within the limits of enforceability or validity; however, if the
offending provision cannot be so modified, it shall be stricken and
all other provisions of this Agreement in all other respects shall
remain valid and enforceable.
(i) Successor Interests. Subject to the limitations set forth above
on transfer of the Collateral, this Agreement shall be binding upon
and inure to the benefit of the parties, their successors and assigns.
<PAGE>
(j) Time. Time is of the essence of all requirements of Grantor herein.
(k) Waiver. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed
by Lender. No delay or omission on the part of Lender in exercising
any right shall operate as a waiver of such right or any other right.
A waiver by Lender of a provision of this Agreement shall not
prejudice or constitute a waiver of Lender's right otherwise to demand
strict compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Grantor, shall constitute a waiver of any of
Lender's rights or of any of Grantor's obligations as to any future
transactions, circumstances or events. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by
Lender in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of
Lender.
11. AUDITS. Lender reserves its right to conduct unannounced inventory
audits, at its sole discretion, with the assistance of its Asset Based
Lending Department. In addition, Lender shall make asset-based lending
audits upon reasonable notice to Grantor and at the Grantor's expense.
12. RELATED DOCUMENTS. The obligations of Grantor under this Agreement
are in addition to the obligations of Grantor under the Related Documents.
13. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE LENDER (BY ITS ACCEPTANCE
HEREOF) HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE RELATED DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER TO MAKE THE LOAN
EVIDENCED BY THE NOTE.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS, THIS AGREEMENT IS
DATED AS OF DECEMBER 29, 1997.
GRANTOR:
TECHDYNE, INC., a Florida corporation
/s/Thomas K. Langbein
By:________________________________
Name: THOMAS K. LANGBEIN
Title: Chairman of the Board
<PAGE>
EXHIBIT "A"
LOCATION OF COLLATERAL
2230 W. 77th Street, Hialeah, FL
2200 W. 77th Street, Hialeah, FL
2235 W. 77th Street, Hialeah, FL
7110 Brittmoore Street, Houston Texas
113 Cedar Street, Milford, Massachusetts
800 Paloma Drive, Round Rock, Texas
(Local Currency -- Single Jurisdiction)
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of December 22, 1997
Techdyne, Inc. Barnett Bank, N.A.
...........................(Party "A") .........................(Party"B")
have entered and/or anticipate entering into one or more transactions (each
a "Transaction") that are or will be governed by this Master Agreement,
which includes the schedule (the "Schedule"), and the documents and other
confirming evidence (each a "Confirmation") exchanged between the parties
confirming those Transactions.
Accordingly, the parties agree as follows: --
1. Interpretation
(a) Definitions. The terms defined in Section 12 and in the Schedule
will have the meanings therein specified for the purpose of this Master
Agreement.
(b) Inconsistency. In the event of any inconsistency between the pro-
visions of the Schedule and the other provisions of this Master Agreement,
the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this "Agree-
ment"), and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other provisions
of this agreement
(ii) Payments under this Agreement will be made on the due date
for value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments
in the required currency. Where settlement is by delivery (that is,
other than by payment), such delivery will be made for receipt on the
due date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
Copyright 1992 by International Swap Dealer Association, Inc. ISDA 1992
Second Printing
<PAGE>
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (l) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effective-
ly designated and (3) each other applicable condition precedent
specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving
a payment or delivery by giving notice to the other party at least five
Local Business Days prior to the scheduled date for the payment or delivery
to which such change applies unless such other party gives timely notice
of a reasonable objection to such change.
(c) Netting. If on any date amounts would otherwise be payable: --
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation
to make payment of any such amount will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have been
payable by one party exceeds the aggregate amount that would otherwise
have been payable by the other party, replaced by an obligation upon the
party by whom the larger aggregate amount would have been payable to pay
to the other party the excess of the larger aggregate amount over the
smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net
amount will be determined in respect of all amounts payable on the same
date in the same currency in respect of such Transactions, regardless of
whether such amounts are payable in respect of the same Transaction. The
election may be made in the Schedule or a Confirmation by specifying that
subparagraph (ii) above will not apply to the Transactions identified as
being subject to the election, together with the starting date (in which
case subparagraph (ii) above will not, or will cease to, apply to such
Transactions from such date). This election may be made separately for
different groups of Transactions and will apply separately to each pairing
of branches or offices through which the parties make and receive payments
or deliveries.
(d) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Trans-
action, a party that defaults in the performance of any payment obligation
will, to the extent permitted by law and subject to Section 6(c), be
required to pay interest (before as well as after judgment) on the overdue
amount to the other party on demand in the same currency as such overdue
amount, for the period from (and including) the original due date for
payment to (but excluding) the date of actual payment, at the Default
Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed. If, prior to the occurrence or
effective designation of an Early Termination Date in respect of the rele-
vant Transaction, a party defaults in the performance of any obligation
required to be settled by delivery, it will compensate the other party on
demand if and to the extent provided for in the relevant Confirmation or
elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be
deemed to be repeated by each party on each date on which a Transaction is
entered into) that: --
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the
laws of the jurisdiction of its organisation or incorporation and, if
relevant under such laws, in good standing;
<PAGE>
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it
has under any Credit Support Document to which it is a party and has
taken all necessary action to authorize such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery and per
formance do not violate or conflict with any law applicable to it, any
provision of its constitutional documents, any order or judgment of
any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it
or any of its assets;
(iv) Consents. All governmental and other consents that are required
to have been obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party have been obtained and
are in full force and effect and all conditions of any such consents
have been complied with; and
(v) Obligations Binding. Its obligations under this Agreement and
any Credit Support Document to which it is a party constitute its
legal, valid and binding obligations, enforceable in accordance with
their respective terms (subject to applicable bankruptcy, reorganisa-
tion, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to equitable
principles of general application (regardless of whether enforcement
is sought in a proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event
of Default or, to its knowledge, Termination Event with respect to it
has occurred and is continuing and no such event or circumstance would
occur as a result of its entering into or performing its obligations under
this Agreement or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or pro-
ceeding at law or in equity or before any court, tribunal, governmental
body, agency or official or any arbitrator that is likely to affect the
legality, validity or enforceability against it of this Agreement or any
Credit Support Document to which it is a party or its ability to perform
its obligations under this Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that
is furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as
of the date of the information, true, accurate and complete in every
material respect.
4. Agreements
Each party agrees with the other that, so long as either party has or may
have any obligation under this Agreement or under any Credit Support
Document to which it is a party: --
(a) Furnish Specified Information. It will deliver to the other party
any forms, documents or certificates specified in the Schedule or any
Confirmation by the date specified in the Schedule or such Confirmation
or, if none is specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or
any Credit Support Document to which it is a party and will use all reason-
able efforts to obtain any that may become necessary in the future.
<PAGE>
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations under
this Agreement or any Credit Support Document to which it is a party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any of the following events constitutes
an event of default (an "Event of Default") with respect to such party: --
(i) Failure to Pay or Deliver. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section
2(a)(i) or 2(d) required to be made by it if such failure is no
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(d) or to give notice of a Termination Event) to be complied with or
performed by the party in accordance with this Agreement if such
failure is not remedied on or before the thirtieth day after notice
of such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to
be complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applica-
ble grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be
in full force and effect for the purpose of this Agreement (in
either case other than in accordance with its terms) prior to
the satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms, dis-
claims, repudiates or rejects, in whole or in part, or challenges
the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation made or repeated or deemed
to have been made or repeated by the party or any Credit Support
Provider of such party in this Agreement or any Credit Support
Document proves to have been incorrect or misleading in any material
respect when made or repeated or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit
Support Provider of such party or any applicable Specified Entity
of such party (1) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period,
there occurs a liquidation of, an acceleration of obligations under,
or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace
period, in making any payment or delivery due on the last payment,
delivery or exchange date of, or any payment on early termination of,
a Specified Transaction (or such default continues for at least three
Local Business Days if there is no applicable notice requirement or
grace period) or (3) disaffirms, disclaims, repudiates or rejects,
in whole or in part, a Specified Transaction (or such action is taken
by any person or entity appointed or empowered to operate it or act
on its behalf);
<PAGE>
(vi) Cross Default. If "Cross Default" is specified in the
Schedule as applying to the party, the occurrence or existence of
(l) a default, event of default or other similar condition or event
(however described) in respect of such party, any Credit Support
Provider of such party or any applicable Specified Entity of such
party under one or more agreements or instruments relating to
Specified Indebtedness of any of them (individually or collectively)
in an aggregate amount of not less than the applicable Threshold
Amount (as specified in the Schedule) which has resulted in such
Specified Indebtedness becoming, or becoming capable at such time
of being declared, due and payable under such agreements or instru-
ments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments
on the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments
(after giving effect to any applicable notice requirement or grace
period);
(vii) Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party: --
(1) is dissolved (other than pursuant to a consolidation, amalga-
mation or merger); (2) becomes insolvent or is unable to pay its
debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its credi-
tors; (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such pro-
ceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of
an order for its winding-up or liquidation or (B) is not dis-
missed, discharged, stayed or restrained in each case within 30
days of the institution or presentation thereof; (5) has a reso-
lution passed for its winding-up, official management or liquida-
tion (other than pursuant to a consolidation, amalgamation or
merger); (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all
or substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or substan-
tially all its assets and such secured party maintains possession,
or any such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter, (8) causes
or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect to
any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the fore-
going acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets to,
another entity and, at the time of such consolidation, amalgamation,
merger or transfer: --
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it
or its predecessor was a party by operation of law or pursuant
to an agreement reasonably satisfactory to the other party to
this Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance
by such resulting, surviving or transferee entity of its obli-
gations under this Agreement.
<PAGE>
(b) Termination Events. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any event specified below constitutes an
Illegality if the event is specified in (i) below, and, if specified to be
applicable, a Credit Event Upon Merger if the event is specified pursuant
to (ii) below or an Additional Termination Event if the event is specified
pursuant to (iii) below: --
(i) Illegality. Due to the adoption of, or any change in, any appli-
cable law after the date on which a Transaction is entered into, or
due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdic-
tion of any applicable law after such date, it becomes unlawful
(other than as a result of a breach by the party of Section 4(b))
for such party (which will be the Affected Party): --
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other material
provision of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which the
party (or such Credit Support Provider) has under any Credit
Support Document relating to such Transaction;
(ii) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity
or X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be, immedi-
ately prior to such action (and, in such event, X or its successor or
transferee, as appropriate, will be the Affected Party); or
(iii) Additional Termination Event. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party
or Affected Parties shall be as specified for such Additional Termina-
tion Event in the Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also consti-
tutes an Illegality, it will be treated as an Illegality and will not
constitute an Event of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred
and is then continuing, the other party (the "Non-defaulting Party") may,
by not more than 20 days notice to the Defaulting Party specifying the
relevant Event of Default, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all out-
standing Transactions. If, however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early Termina-
tion Date in respect of all outstanding Transactions will occur immedi-
ately upon the occurrence with respect to such party of an Event of
Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent
analogous thereto, (8), and as of the time immediately preceding the insti-
tution of the relevant proceeding or the presentation of the relevant peti-
tion upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
<PAGE>
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, speci-
fying the nature of that Termination Event and each Affected Trans-
action and will also give such other information about that Termina-
tion Event as the other party may reasonably require.
(ii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1)
occurs and there are two Affected Parties, each party will use all
reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iii) Right to Terminate. If: --
(1) an agreement under Section 6(b)(ii) has not been effected
with respect to all Affected Transactions within 30 days after
an Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality other than that referred to in Section
6(b)(ii), a Credit Event Upon Merger or an Additional Termina-
tion Event occurs,
either party in the case of an Illegality, any Affected Party in the
case of an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then continuing, designate a day not earlier than the day
such notice is effective as an Early Termination Date in respect of
all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the
date so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termina-
tion Date, no further payments or deliveries under Section 2(a)(i) or
2(d) in respect of the Terminated Transactions will be required to be
made, but without prejudice to the other provisions of this Agreement.
The amount, if any, payable in respect of an Early Termination Date
shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following
the occurrence of an Early Termination Date, each party will make
the calculations on its part, if any, contemplated by Section 6(e)
and will provide to the other party a statement (1) showing, in
reasonable detail, such calculations (including all relevant quota-
tions and specifying any amount payable under Section 6(e)) and
(2) giving details of the relevant account to which any amount
payable to it is to be paid. In the absence of written confirmation
from the source of a quotation obtained in determining a Market
Quotation, the records of the party obtaining such quotation will
be conclusive evidence of the existence and accuracy of such quota-
tion.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an
Early Termination Date which is designated or occurs as a result of
an Event of Default) and on the day which is two Local Business Days
after the day on which notice of the amount payable is effective (in
the case of an Early Termination Date which is designated as a result
of a Termination Event). Such amount will be paid together with (to
the extent permitted under
<PAGE>
applicable law) interest thereon (before as well as after judgment),
from (and including) the relevant Early Termination Date to (but
excluding) the date such amount is paid, at the Applicable Rate. Such
interest will be calculated on the basis of daily compounding and the
actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs,
the following provisions shall apply based on the parties' election in
the Schedule of a payment measure, either 'Market Quotation" or "Loss",
and a payment method, either the "First Method" or the "Second Method".
If the parties fail to designate a payment measure or payment method in
the Schedule, it will be deemed that "Market Quotation" or the "Second
Method", as the case may be, shall apply. The amount, if any, payable in
respect of an Early Termination Date and determined pursuant to this
Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from an
Event of Default: --
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A)
the sum of the Settlement Amount (determined by the Non-de-
faulting Party) in respect of the Terminated Transactions and
the Unpaid Amounts owing to the Non-defaulting Party over (B)
the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a posi-
tive number, the Non-defaulting Party's Loss in respect of this
Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A)
the sum of the settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Unpaid
Amounts owing to the Non-defaulting Party less (B) the Unpaid
Amounts owing to the Defaulting Party If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will
pay the absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the Non-
defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to the De-
faulting Party.
(ii) Termination Events. If the Early Termination Date results from
a Termination Event: --
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if
Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed to
be references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be calculated
in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties: --
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of
(a) one-half of the difference between the Settlement Amount
of
<PAGE>
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Unpaid Amounts owing to X less
(II) the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the Trans-
actions are being terminated, in respect of all Terminated
Transactions) and an amount will be payable equal to
one-half of the difference between the Loss of the party
with the higher Loss ("X') and the Loss of the party with
the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable pre-esti-
mate of loss and not a penalty. Such amount is payable for the loss of
bargain and the loss of protection against future risks and except as
otherwise provided in this Agreement neither party will be entitled
to recover any additional damages as a consequence of such losses.
7. Transfer
Neither this Agreement nor any interest or obligation in or under this
Agreement may be transferred (whether by way of security or otherwise) by
either party without the prior written consent of the other party, except
that: --
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or
transfer of all or substantially all its assets to, another entity
(but without prejudice to any other right or remedy under this Agree-
ment); and
(b) a party may make such a transfer of all or any part of its
interest in any amount payable to it from a Defaulting Party under
Section 6(e).
Any purported transfer that is not in compliance with this Section
will be void.
8. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties with respect to its subject matter
and supersedes all oral communication and prior writings with respect
thereto.
(b) Amendments. No amendment, modification or waiver in respect of
this Agreement will be effective unless in writing (including a
writing evidenced by a facsimile transmission) and executed by each
of the parties or confirmed by an exchange of telexes or electronic
messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii)
and 6(c)(ii), the obligations of the parties under this Agreement will
survive the termination of any Transaction.
<PAGE>
(d) Remedies Cumulative. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement
are cumulative and not exclusive of any rights, powers, remedies and
privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver
in respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be
deemed an original.
(ii) The parties intend that they are legally bound by the
terms of each Transaction from the moment they agree to those
terms (whether orally or otherwise). A Confirmation shall be
entered into as soon as practicable and may be executed and
delivered in counterparts (including by facsimile transmission)
or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which
in each case will be sufficient for all purposes to evidence
a binding supplement to this Agreement. The parties will specify
therein or through another effective means that any such counter-
part, telex or electronic message constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right,
power or privilege in respect of this Agreement will not be presumed
to operate as a waiver, and a single or partial exercise of any right,
power or privilege will not be presumed to preclude any subsequent or
further exercise, of that right, power or privilege or the exercise
of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience
of reference only and are not to affect the construction of or to be
taken into consideration in interpreting this Agreement.
9. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including
legal reasonable fees, incurred by such other party by reason of the en-
forcement and protection of its rights under this Agreement or any Credit
Support Document to which the Defaulting Party is a party or by reason of
the early termination of any Transaction, including, but not limited to,
costs of collection.
10. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice
or other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or
in accordance with the electronic messaging system details provided (see
the Schedule) and will be deemed effective as indicated: --
(i) if in writing and delivered in person or by courier, on the
date it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
<PAGE>
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), on the date that mail
is delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that elec-
tronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt,
as applicable, is not a Local Business Day or that communication is
delivered (or attempted) or received, as applicable, after the close of
business on a Local Business Day, in which case that communication shall
be deemed given and effective on the first following day that is a Local
Business Day.
(b) Change of Addresses. Either party may by notice to the other change
the address, telex or facsimile number or electronic messaging system
details at which notices or other communications are to be given to it.
11. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably: --
(i) submits to the jurisdiction of the English courts, if this Agree-
ment is expressed to be governed by English law, or to the non-exclu-
sive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any
claim that such Proceedings have been brought in an inconvenient forum
and further waives the right to object, with respect to such Pro-
ceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party from bringing Proceedings
in any other jurisdiction (outside, if this Agreement is expressed to be
governed by English law, the Contracting States, as defined in Section 1(3)
of the Civil Jurisdiction and Judgments Act 1982 or any modification,
extension or re-enactment thereof for the time being in force) nor will
the bringing of Proceedings in any one or more jurisdictions preclude the
bringing of Proceedings in any other jurisdiction.
(c) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues
and assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii) juris-
diction of any court, (iii) relief by way of injunction, order for specific
performance or for recovery of property, (iv) attachment of its assets
(whether before or after judgment) and (v) execution or enforcement of
any judgment to which it or its revenues or assets might otherwise be
entitled in any Proceedings in the courts of any jurisdiction and irre-
vocably agrees, to the extent permitted by applicable law, that it will
not claim any such immunity in any Proceedings.
12. Definitions
As used in this Agreement: --
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
<PAGE>
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, all Transactions affected by the occurrence
of such Termination Event and (b) with respect to any other Termination
Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person,
any entity controlled, directly or indirectly, by the person, any entity
that controls, directly or indirectly, the person or any entity directly
or indirectly under common control with the person. For this purpose,
"control" of any entity or person means ownership of a majority of the
voting power of the entity or person.
"Applicable Rate" means: --
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with
Section 6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"consent" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is speci-
fied as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if
it were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with
Section 6(a) or 6(b)(iii).
"Event of Default" has the meaning specified in Section 5(a) and, if appli-
cable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"law" includes any treaty, law, rule or regulation and "lawful" and "unlaw-
ful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commer-
cial banks are open for business (including dealings in foreign exchange
and foreign currency deposits) (a) in relation to any obligation under
Section 2(a)(i), in the place(s) specified in the relevant Confirmation
or, if not so specified, as otherwise agreed by the parties in writing or
determined pursuant to provisions contained, or incorporated by reference,
in this Agreement, (b) in relation to any other payment, in the place where
the relevant account is located, (c) in relation to any notice or other
communication, including notice contemplated
<PAGE>
under Section 5(a)(i), in the city specified in the address for notice
provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located
and (d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, an amount that party
reasonably determines in good faith to be its total losses and costs (or
gain, in which case expressed as a negative number) in connection with
this Agreement or that Terminated Transaction or group of Terminated
Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication,
loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any
gain resulting from any of them). Loss includes losses and costs (or gains)
in respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the rele-
vant Early Termination Date and not made, except, so as to avoid duplica-
tion, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out-of-pocket expenses referred to
under Section 9. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the
earliest date thereafter as is reasonably practicable. A party may (but
need not) determine its Loss by reference to quotations of relevant rates
or prices from one or more leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transac-
tions and a party making the determination, an amount determined on the
basis of quotations from Reference Market-makers. Each quotation will be
for an amount, if any, that would be paid to such party (expressed as a
negative number) or by such party (expressed as a positive number) in
consideration of an agreement between such party (taking into account any
existing Credit Support Document with respect to the obligations of such
party) and the quoting Reference Market-maker to enter into a transaction
(the "Replacement Transaction") that would have the effect of preserving
for such party the economic equivalent of any payment or delivery (whether
the underlying obligation was absolute or contingent and assuming the satis-
faction of each applicable condition precedent) by the parties under
Section 2(a)(i) in respect of such Terminated Transaction or group of
Terminated Transactions that would, but for the occurrence of the relevant
Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group
of Terminated Transactions are to be excluded but, without limitation, any
payment or delivery that would, but for the relevant Early Termination
Date, have been required (assuming satisfaction of each applicable condi-
tion precedent) after that Early Termination Date is to be included. The
Replacement Transaction would be subject to such documentation as such
party and the Reference Market-maker may, in good faith, agree. The party
making the determination (or its agent) will request each Reference Market-
maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as
soon as reasonably practicable after the relevant Early Termination Date.
The day and time as of which those quotations are to be obtained will be
selected in good faith by the party obliged to make a determination under
Section 6(e), and, if each party is so obliged, after consultation with
the other. If more than three quotations are provided, the Market Quota-
tion will be the arithmetic mean of the quotations, without regard to the
quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation
remaining after disregarding the highest and lowest quotations. For this
purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation
in respect of such Terminated Transaction or group of Terminated Trans-
actions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without
proof or evidence of any actual cost) to the Non-defaulting Party (as
certified by it) if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
<PAGE>
"Potential Event of Default" means any event which, with the giving of
notice or the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant
market selected by the party determining a Market Quotation in good faith
(a) from among dealers of the highest credit standing which satisfy all
the criteria that such party applies generally at the time in deciding
whether to offer or to make an extension of credit and (b) to the extent
practicable, from among such dealers having an office in the same city.
"Scheduled Payment Date" means a date on which a payment or delivery is
to be made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of reten-
tion or withholding or similar right or requirement to which the payer of
an amount under Section 6 is entitled or subject (whether arising under
this Agreement, another contract, applicable law or otherwise) that is
exercised by, or imposed on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termina-
tion Date, the sum of: --
(a) the Market Quotations (whether positive or negative) for each
Terminated Transaction or group of Terminated Transactions for which a
Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Ter-
minated Transactions for which a Market Quotation cannot be determined or
would not (in the reasonable belief of the party making the determination)
produce a commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety
or otherwise) in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter
entered into between one party to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such party)
and the other party to this Agreement (or any Credit Support Provider of
such other party or any applicable Specified Entity of such other party)
which is a rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect
to any of these transactions), (b) any combination of these transactions
and (c) any other transaction identified as a Specified Transaction in
this Agreement or the relevant confirmation.
"Terminated Transactions" means with respect to any Early Termination Date
(a) if resulting from a Termination Event, all Affected Transactions and
(b) if resulting from an Event of Default, all Transactions (in either
case) in effect immediately before the effectiveness of the notice desig-
nating that Early Termination Date (or, if "Automatic Early Termination"
applies, immediately before that Early Termination Date).
"Termination Event" means an Illegality or, if specified to be applicable,
a Credit Event Upon Merger or an Additional Termination Event.
<PAGE>
"Termination Rate" means a rate per annum equal to the arithmetic mean of
the cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termin-
ation Date, the aggregate of (a) in respect of all Terminated Transactions,
the amounts that became payable (or that would have become payable but for
Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such
Early Termination Date and which remain unpaid as at such Early Termination
Date and (b) in respect of each Terminated Transaction, for each obligation
under Section 2(a)(i) which was (or would have been but for Section
2(a)(iii)) required to be settled by delivery to such party on or prior
to such Early Termination Date and which has not been so settled as at
such Early Termination Date, an amount equal to the fair market value of
that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to
the extent permitted under applicable law) interest, in the currency of
such amounts, from (and including) the date such amounts or obligations
were or would have been required to have been paid or performed to (but
excluding) such Early Termination Date, at the Applicable Rate Such
amounts of interest will be calculated on the basis of daily compounding
and the actual number of days elapsed. The fair market value of any obli-
gation referred to in clause (b) above shall be reasonably determined by
the party obliged to make the determination under-Section 6(e) or, if each
party is so obliged it shall be the average of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respec-
tive dates specified below with effect from the date specified on the
first page of this document.
Techdyne, Inc. Barnett Bank, N.A.
(Party "A") (Party "B")
/s/ Thomas K. Langbein /s/ Lance M. Chambers
By: .......................... By: .........................
Name: THOMAS K. LANGBEIN Name:
Title: Chairman of the Board Title: Vice President
of Directors
Date: December 22, 1997 Date:
<PAGE>
SCHEDULE
to the
MASTER AGREEMENT
dated as of December 22, 1997 between
Techdyne, Inc. ("Party A")
and Barnett Bank, N.A. ("Party B")
1. Termination Provisions
----------------------
(a) "Specified Entity" for purposes of Section 5(a)(v) means each party's
Affiliates. If a party or any Credit Support Provider of a party is a
partnership, then for purposes of Sections 5(a)(v), 5(a)(vi), 5(a)(vii)
and 5(b)(ii), "Specified Entity" also means each general partner of that
partnership.
(b) "Specified Transaction" has its meaning as defined in Section 12,
provided that "Default under Specified Transaction" excludes Force Majeure
as defined below.
(c) "Cross Default" applies to both parties, but excludes Force Majeure.
"Force Majeure" means nonpayment resulting solely from a wire transfer or
operational problem or error (so long as sufficient funds are available),
or from the general unavailability of the relevant currency due to exchange
controls or other similar governmental action, but only if payment is made
within three Business Days after the problem has been corrected, the error
has been discovered or the currency becomes available.
With respect to Party A, "Cross Default" is amended by inserting at the
end of Section 5(a)(vi): "or (3) any default, event of default or other
similar condition or event (however described) under any Financial Agree-
ment."
"Specified Indebtedness" means any obligation (whether present, future,
contingent or otherwise, as principal or surety or otherwise) in respect
of borrowed money or relating to the payment or delivery of funds, securi-
ties or other property (including, without limitation, collateral).
"Threshold Amount" means, with respect to Party B, an amount (including
its equivalent in another currency) equal to the higher of $10,000,000 or
3% of its stockholders' equity as reflected on its most recent financial
statements or call reports, and with respect to Party A, any amount of
Specified Indebtedness.
(d) "Credit Event Upon Merger" applies to both parties.
(e) "Automatic Early Termination" does not apply to either party.
(f) Payments on Early Termination. "Market Quotation" and the "Second
Method" apply, subject to the following:
(i) "Market Quotation" for any Terminated Transaction that is, or is
subject to, any unexercised option shall be determined by taking
into account the economic equivalent of the option.
(ii) The Non-defaulting Party may, upon the occurrence of an Early
Termination Date, offset payments due by it under this Agreement
(or under any Specified Transaction) against, and apply such pay-
ments to the satisfaction of, any obligations owing by the
Defaulting Party (including any Office of the Defaulting Party) to
the Non-defaulting Party or any of the Non-defaulting Party's Affil-
iates (including any Office of the Non-defaulting Party or its
Affiliates) whether matured or unmatured, and it is a condition
precedent to the Non-defaulting Party's obligation to make any such
payments that such obligations of the Defaulting Party have been paid
in full or
<PAGE>
satisfied by offset as contemplated hereunder. For this purpose, the
Non-defaulting Party may convert any such payments or obligations
into the currency of the other at a rate of exchange (including premi-
ums and costs of exchange) at which it could purchase the relevant
currency acting in good faith.
(g) "Additional Termination Event" applies to Party A if Party A, any
Credit Support Provider of Party A or any Specified Entity of Party A is
a natural person, and means the death of, or the appointment of a guardian
for, that natural person (in which case Party A will be the Affected Party
for that purpose).
II. Documents
---------
(a) Delivery of Documents. When it delivers this Agreement, Party A shall
also deliver to Party B the Closing Documents in form and substance rea-
sonably satisfactory to Party B. For each Transaction, Party A shall
deliver, promptly upon request, a duly executed incumbency certificate
for the person(s) executing the Confirmation for Party A for that Trans-
action.
(b) "Closing Documents" means an opinion of counsel covering Party A's
Basic Representations under Section 3(a)(i), or in lieu thereof, Party A's
Authorizing Documents for this Agreement and the Transactions and a duly
executed incumbency certificate for the person(s) executing this Agreement
for Party A.
(c) "Authorizing Documents" of a party or its Credit Support Provider
means a certified copy of the board of directors' resolutions or that
party of Credit Support Provider (or for a partnership, a copy of its
partnership agreement and a certified copy of the resolutions of the
partnership or of each general partner).
III. Miscellaneous
-------------
(a) Addresses for Notices.
To Party A: To Party B:
Techdyne, Inc. Barnett Bank, N.A. - Investment Operations
---------------------- ------------------------------------------
2230 West 77 Street 9000 Southside Boulevard, MC 576-1215
---------------------- -------------------------------------
Hialeah, FL 33016 Jacksonville, Florida 32256
---------------------- ----------------------------
Attention: Mr. Tom Langbein Attention: Penney Lendzian
----------------- ----------------
Fax (305) 556-9210 Fax (904) 464-2200
-------------- --------------
Phone (305) 364-1350 Phone (904) 464-2187
-------------- --------------
(b) "Calculation Agent" means Party B.
(c) "Credit Support Document" means each document which by its terms
secures, guarantees or otherwise supports Party A's obligations hereunder
from time to time, whether or not this Agreement, any Transaction, or any
type of Transaction entered into hereunder is specifically referenced or
described in any such document.
(d) "Credit Support Provider" means each party to a Credit Support Docu-
ment that provides or is obligated to provide security, a guaranty or other
credit support for Party A's obligations hereunder.
(e) "Affiliate" has its meaning as defined in Section 12, except for Party
B under Section 5(a)(v), "Affiliate" means the bank holding company that
owns Party B.
(f) Governing Law. This Agreement will be governed by and construed in
accordance with the law (and not the law of conflicts) of the State of New
York.
<PAGE>
(g) Waiver of Jury Trial. To the extent permitted by applicable law, each
party irrevocably waives any and all right to trial by jury in any legal
proceeding in connection with this Agreement, any Credit Support Document
to which it is a party, or any Transaction.
(h) Netting of Payments. If payments are due by each party on the same
day under two or more Transactions, then Section 2(c)(ii) will not apply
to those payments if a party gives notice to the relevant Office(s) of the
other party on or before the second New York Business Day before that
payment date stating that those payments will be netted or, if given by
the Calculation Agent, stating the net amount due.
(i) Recorded Conversations. Each party may electronically record all tele-
phone conversations between them in connection with this Agreement or any
Transaction, and any such recordings may be submitted in evidence in any
proceeding to establish any matters pertinent to this Agreement or any
Transaction.
(j) Additional Representations. Section 3 is amended by adding the fol-
lowing Sections 3(e) and 3(f):
"(e) for any Relevant Agreement: (i) its acts as principal and not as
agent, (ii) it acknowledges that the other party acts only arm's length
and is not its agent, broker, advisor or fiduciary in any respect, and any
agency, brokerage, advisory or fiduciary services that the other party (or
any of its affiliates) may otherwise provide to the party (or to any of its
affiliates) excludes the Relevant Agreement, (iii) it is relying solely
upon its own evaluation of the Relevant Agreement (including the present
and future results, consequences, risks, and benefits thereof, whether
financial, accounting, tax, legal, or otherwise) and upon advise from its
own professional advisors, (iv) it understands the Relevant Agreement and
those risks, has determined they are appropriate for it, and willingly
assumes those risks, and (v) it has not relied and will not be relying
upon any evaluation or advice (including and recommendation, opinion, or
representation) from the other party, its affiliates or the representatives
or advisors of the other party or its affiliates (except representations
expressly made in the Relevant Agreement or an opinion of counsel required
thereunder).
"Relevant Agreement" means this Agreement, each Transaction, each Confirma-
tion, any Credit Support Document, and any agreement (including any amend-
ment, modification, transfer or early termination) between the parties
relating thereto or to any Transaction.
(f) it is an "eligible swap participant" within the meaning of 17 C.F.R.
Section 35.1."
(k) The obligations of certain Credit Support Providers to guarantee or
otherwise secure Party A's obligations under the Financial Agreements are
limited pursuant to the terms of certain Financial Agreements and any such
limitations shall apply equally to the obligations of those Credit Support
Providers under the Relevant Agreements.
IV. ISDA Definitions
----------------
(a) Incorporation. This agreement and each Transaction are subject to
the 1991 ISDA Definitions (as published by the International Swaps Dealers
Association, Inc.) and will be governed by the provisions of the ISDA
Definitions, without regard to any amendments to the ISDA Definitions
subsequent to the date hereof. The provisions of the ISDA Definitions are
incorporated by reference in, and shall be deemed to be part of, this docu-
ment and each Confirmation.
(b) Inconsistency. In the event of any inconsistency between the pro-
visions of this document and the ISDA Definitions, this document will
prevail.
<PAGE>
V. Additional Terms
----------------
(a) Covenants of Financial Agreements. (i) Party A shall provide Party B
at all times hereunder with the same covenant protection as Party B
requires of Party A under Financial Agreements. Therefore, in addition
to the Cross Default provisions of this Agreement, and notwithstanding
the satisfaction of any obligation or promise to pay money to Party A under
any Financial Agreement, or the termination or cancellation of any
Financial Agreement, Party A hereby agrees to perform, comply with and
observe for the benefit of Party B hereunder all affirmative and negative
covenants contained in each Financial Agreement applicable to Party A
(excluding any obligations or promise to pay money under any Financial
Agreement) at any time Party A has any obligation (whether absolute or
contingent) under this Agreement. (ii) For purposes hereof: (A) the
affirmative and negative covenants of each Financial Agreement applicable
to Party A (together with related definitions and ancillary provisions,
but in any event excluding any obligation or promise to pay money under
any Financial Agreement) are incorporated (and upon execution of any
future Financial Agreement, shall automatically be incorporated) by ref-
erence herein (mutatis mutandis); (B) if other lenders or creditors are
parties to any Financial Agreement, then references therein to the lenders
or creditors shall be deemed references to Party B; and (C) for any such
covenant applying only when any loan, other extension of credit, obligation
or commitment under the Financial Agreement is outstanding, that covenant
shall be deemed to apply hereunder at any time Party A has any obligation
(whether absolute or contingent) under this Agreement.
(b) "Financial Agreement" means each existing or future agreement or in-
strument relating to any loan or extension or credit from Party B to Party
A (whether or not anyone else is a party thereof, or unless consented to
in writing by Party B, any amendment, modification, addition, waiver or
consent thereto or thereof).
IN WITNESS WHEREOF, the parties have executed this Schedule by their duly
authorized signatories as of the date hereof.
Barnett Bank, N.A.
/s/ Lance M. Chambers
By:--------------------------
Title: Vice President
Date:
Techdyne, Inc.
/s/ Thomas K. Langbein
By:--------------------------
Title: Chairman of the
Board of Directors
Date: December 22, 1997
<PAGE>
BARNETT BANK, N.A.
RATE SWAP TRANSACTION
CONFIRMATION
Dated December 22, 1997
Mr. Tom Langbein
Techdyne, Inc.
2330 W. 76th Street
Hialeah, Florida 33016
Dear Mr. Langbein:
The purpose of this letter is to set forth the terms and conditions of
the Rate Swap Transaction entered into between Techdyne, Inc. ("Party A")
and Barnett Bank, N.A. ("Party B") on the Trade Date referred to below.
This letter constitutes a "Confirmation" as referred to in the Rate
Swap Agreement specified below.
1. This Confirmation supplements, forms a part of, and is subject to,
the Interest Rate Swap Agreement dated as of December 22, 1997, (the "Rate
Swap Agreement") between Party A and Party B. All provisions contained or
incorporated by reference in the Rate Swap Agreement shall govern this
Confirmation except as expressly modified below.
2. The definitions and provisions contained in the 1992 ISDA defini-
tions (as published by the International Swap Dealers Association, Inc.)
are incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation, this Con-
firmation will govern.
3. The terms of the particular Rate Swap Transaction to which this
Confirmation relates are as follows:
This swap agreement ($1,500,000.00 swap amount) of 6.35% versus 1
month LIBOR, in combination with Party's loan with Barnett Bank,
N.A. at a rate of 1 month LIBOR +2.25%, will give Party A an effec-
tive borrowing cost/rate on this $1,500,000.00 of 8.60% fixed.
Notional Amount: US$1,500,000.00 original maturity; see attached
schedule for principal outstanding at each payment date. The
begining notional amount will amortize by $25,000.00 per month
begining January 15, 1998.
Trade Date: December 22, 1997
Effective Date: December 29, 1997
<PAGE>
Termination Date: December 15, 2002, subject to adjustmentin accord-
ance with the Modified Following Business Day Convention
Fixed Amount:
Fixed Rate Payor: Party A
Period End Dates: The 15th day of each month commencing on
January 15, 1998 up to and including the
Termination Date
Subject to the Modified Following Business Day convention
Fixed Rate: 6.35% per annum
Day Count Fraction: Act/360
Floating Amount:
Floating Rate Payor: Party B
Period End Dates: The 15th day of each month commencing on
January 15, 1998 up to and including the
Termination Date
Subject to the Modified Following Business Day convention
Floating Rate Option: USD-LIBOR-BBA (Page 3750 Telerate)
Designated Maturity: 1 Month
Day Count Fraction: Act/360
Reset Dates: The effective date and each floating
rate payor payment date, except the
termination date
LIBOR Determination Date: Two London Business days prior
to the reset date.
Compounding: Inapplicable
Business Days: In both London and New York
Calculating Agent: Party B
<PAGE>
Party A Payment Dates: On the Period End Dates
Party B Payment Dates: On the Period End Dates
Account Details:
Payments to Party A: Please advise
Payments to Party B: Barnett Bank, N.A.,
will advise.
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us.
Very truly yours,
Barnett Bank, N.A.
/s/ Lance M. Chambers
By:--------------------------
Name:
Title: Vice President
Date:
Techdyne, Inc.
- --------------
/s/Thomas K. Langbein
By:------------------------
Name: THOMAS K. LANGBEIN
Title: Chairman of the Board of Directors
Date: December 22, 1997
By:-----------------------
Name:
Title:
Date:
