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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 10, 1996
Delta Computec Inc.
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(Exact Name of Registrant as Specified in its Charter)
New York
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(State or Other Jurisdiction of Incorporation)
0-14733 16-1146345
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(Commission File Number) (I.R.S. Employer EIN No.)
366 White Spruce Blvd., Rochester, New York 14623
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(Address of Principal Executive Offices) (Zip Code)
201-440-8585
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changes Since Last Report)
Total number of pages in Report (including Exhibits) 75.
Exhibit Index located on page 10.
INFORMATION TO BE INCLUDED IN THE REPORT
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Item 1. Changes of Control of the Registrant.
On February 21, 1997, Delta Computec Inc. (the "Registrant"), issued
an aggregate of 11,440,475 common shares to Joseph M. Lobozzo II ("Lobozzo"),
the Chairman, a director, a principal shareholder and the controlling person of
the Registrant (5,720,238 common shares were issued to Lobozzo) and to Joanne M.
Lobozzo ("Joanne Lobozzo"), the wife of Lobozzo (5,720,237 common shares were
issued to Joanne Lobozzo), as a result of the exercise of an Option originally
granted by the Registrant to Lobozzo in May 1995, and thereafter amended and
restated as of February 20, 1997 (the "Second Restated May 1995 Option
Agreement"). The Second Restated May 1995 Option Agreement was issued as a
result of a certain Option Transfer Document whereby Lobozzo agreed to transfer
a portion of his interest in the then existing May 1995 Option Agreement to
Joanne Lobozzo. As a result of the issuance of the 11,440,475 common shares, the
amount of authorized but unissued common shares of the Registrant increased from
6,811,575 common shares to 18,252,050 common shares. A copy of the Option
Exercise Document is annexed to this Form 8-K Current Report as Exhibit 1, and a
copy of the Option Transfer Document (the "Option Transfer Document"), is
annexed to this Form 8-K Current Report as Exhibit 2.
The Registrant considers that, as a result of the issuance and
subsequent exercise of the Second Restated May 1995 Option Agreement, and the
issuance of the 7,520,237 common shares to Joanne Lobozzo, Joanne Lobozzo also
became a control person of the Registrant. Lobozzo remains a control person of
the Registrant.
The issuance of the common shares on February 21, 1997, raised
Joanne Lobozzo's common share ownership in the Registrant to 5,815,112 common
shares of the Registrant, or 31.86% of the now 18,252,050 issued and outstanding
common shares, thereby causing Joanne Lobozzo to become a control person of the
Registrant. The issuance to Lobozzo of the 5,720,238 common shares of the
Registrant, caused his common share ownership to increase to 6,730,113 common
shares of the Registrant, or 36.87% of the common shares of the Registrant.
Lobozzo remains a control person of the Registrant.
Lobozzo's ownership of the 6,730,113 common shares of the Registrant
includes 435,000 common shares owned by JML Optical
Page 2 of 75
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Industries, Inc. ("JML"), of which Lobozzo is the president, a director and
principal shareholder, and the 480,000 Pledged Shares currently held by NCFC, as
described in Item 5(B), below. Lobozzo and Joanne Lobozzo have reached an
agreement as to the division of the Pledged Shares under certain circumstances.
(See Item 5(B), below).
In addition, as of February 21, 1997: (a) the three adult children
of Lobozzo and Joanne Lobozzo also each owned 300,000 common shares of the
Registrant (an aggregate of 900,000 common shares) as to which each of Lobozzo
and Joanne Lobozzo disclaim any beneficial interest;
(b) Lobozzo and Joanne Lobozzo each held a Second Restated October
1992 Option Agreements (as defined in 5(B) below) to purchase 652,175 common
shares of the Registrant (an aggregate of 1,304,350 common shares); and
(c) Lobozzo and Joanne Lobozzo each held a half ownership of the
Registrant's debt obligations in the following amounts: (i) Second Restated
Lobozzo Subordinated Debenture due January 31, 1998, $300,000.50 (an aggregate
of $600,001); (ii) Lobozzo Commitment, $200,000 (an aggregate of $400,000);
(iii) 1996 Additional Lobozzo Advances, $316,800 (an aggregate of $633,600);
(iv) Lobozzo Loan, up to $1,275,000 (an aggregate of up to $2,550,000); and (v)
half of the Overbase Loans as the Overbase Loans may exist from time to time.
Each of the capitalized terms are described in Item 5(A), below, wherein the
transfer of those financing interests are described in greater detail.
If Lobozzo and Joanne Lobozzo exercised the Second Restated October
1992 Option Agreement, if the 480,000 Pledged Shares were returned to Lobozzo
and divided equally between Lobozzo and Joanne Lobozzo, if Lobozzo was not
required to deliver any additional shares or options to NCFC pursuant to the
Pledge Security Agreement (as each of those terms are herein defined), and if no
other options were exercised, and without considering the common shares owned by
the adult children of Lobozzo and Joanne Lobozzo, then the number of issued and
outstanding common shares of the Registrant would increase from 18,252,050 to
19,556,400 common shares (of the 20,000,000 authorized common shares), and
Lobozzo would own 7,142,288 common shares (or 36.52% of the 19,556,400 issued
and outstanding common shares), and Joanne Lobozzo would own 6,707,287 common
shares (or 34.3%).
Page 3 of 75
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Item 5. Other Events.
A. Amendment to Credit Agreement and Other Lending Agreements.
The Registrant, Lobozzo, and where necessary, Joanne Lobozzo, have
agreed to certain amendments of a certain Amended and Restated Credit Agreement
and Other Agreements (the "Lobozzo Credit Agreement") dated October 10, 1996,
and amended by Amendment No. 1 thereto as of November 18, 1996.
By a document entitled Amendment No. 2 to Amended and Restated
Credit Agreement and Other Agreements dated December 10, 1996 ("Amendment No.
2"), the Registrant and Lobozzo agreed to amend the Lobozzo Credit Agreement, as
amended. Amendment No.2 is annexed to this Form 8-K Current Report as Exhibit 3.
Amendment No. 2 provides as follows:
(a) it changes the definition of "Maturity Date" of the Lobozzo
Credit Agreement from December 10, 1996, to March 31, 1997;
(b) it amends Schedule 2.1 to the Lobozzo Credit Agreement to revise
the eligibility factors for Eligible Inventory (as that term is defined in the
Lobozzo Credit Agreement) for the months of January, February and March, 1997,
as follows: to, respectively, 101 1/4%, 100% and 98.75% of Eligible Receivables;
and
(c) it adds a new Section 9 to provide that if the amount of Loans
permitted under the Lobozzo Credit Agreement ever exceed by an amount of at
least $300,000 the amount otherwise permitted by the Borrowing Base (the
"Overbase Loans"), then checks will not be written on the Registrant's principal
bank account except by the Registrant's Secretary and Assistant Secretary who
are also officers and directors of JML.
By a document entitled Amendment No. 3 to Amended and Restated
Credit Agreement and Other Agreements dated February 19, 1997 ("Amendment No.
3"), the Registrant and Lobozzo agreed to amend certain loan documents between
the Registrant and Lobozzo. Amendment No. 3 is annexed to this Form 8-K Current
Report as Exhibit 4. Amendment No. 3 contains provisions which affect each of
the following: (a) the 8% Subordinated Debenture issued October
Page 4 of 75
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28, 1992, as amended, in the original face amount of $600,001 (the "Second
Restated Lobozzo Subordinated Debenture"); (b) the Lobozzo commitment ("Lobozzo
Commitment"), whereby, pursuant to a certain letter agreement between the
Registrant and Lobozzo dated May 1, 1995, Lobozzo agreed to provide up to
$400,000 of an overadvance facility which was entered into as of that date
between the Registrant, Lobozzo and the Registrant's then commercial lender,
National Canada Finance Corp. ("NCFC"); (c) the additional advances made by
Lobozzo to the Registrant between July 25, 1996, and October 9, 1996, in the
aggregate amount of $633,600 (the "1996 Additional Lobozzo Advances"); (d) the
Lobozzo Credit Agreement, as amended, whereby Lobozzo agreed to provide the
borrower with loans of up to $2,550,000 (the "Lobozzo Loan"); and (e) the
Overbase Loans (collectively, the Lobozzo Subordinated Debenture, the Lobozzo
Commitment, the 1996 Additional Lobozzo Advances, the Lobozzo Loan and the
Overbase Loans are referred to as the "Total Lobozzo Credit Facilities").
Amendment No. 3 amended the Total Lobozzo Credit Facilities to
provide that half of each of the component parts of the Total Lobozzo Credit
Facilities were transferred from Lobozzo to his wife, Joanne Lobozzo, such that,
following the transfer, Joanne Lobozzo held the following amounts of each such
component part of the Total Lobozzo Credit Facilities: (i) Lobozzo Subordinated
Debenture, $300,000.50; (ii) Lobozzo Commitment, $200,000; (iii) 1996 Additional
Lobozzo Advances, $316,800; (iv) Lobozzo Loan, up to $1,275,000; and (v) half of
the Overbase Loans as the Overbase Loans may exist from time to time. By
accepting the transfer of half of the Total Lobozzo Credit Facilities which
entitled her to half of the rights, benefits, obligations and interest in those
Total Lobozzo Credit Facilities, Joanne Lobozzo, pursuant to Amendment No. 3,
also agreed to fulfill half of the obligations of Lobozzo pursuant to each of
the component parts of the Total Lobozzo Credit Facilities. Lobozzo retained the
untransferred half of each component part of the Total Lobozzo Credit Facilities
in amounts equal to the amounts transferred to Joanne Lobozzo.
By a document entitled Amendment No. 4 to Amended and Restated
Credit Agreement and Other Agreements dated February 20, 1997 ("Amendment No.
4"), the Registrant, Lobozzo and Joanne Lobozzo agreed to amend certain loan
documents between the
Page 5 of 75
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Registrant, Lobozzo and Joanne Lobozzo. Amendment No. 4 is annexed to this Form
8-K Current Report as Exhibit 5. Amendment No. 4 provides as follows:
(a) it changes the definition of "Maturity Date" of the amended
Lobozzo Credit Agreement from March 31, 1997, to April 30, 1997;
(b) it amends Schedule 2.1 to the amended Lobozzo Credit Agreement
to revise the factors for Eligible Receivables (as that term is defined in the
amended Lobozzo Credit Agreement) for the month of April, 1997, to 97.5% of
Eligible Receivables.
B. Amendment to Option Agreements.
By the Option Transfer Document between Lobozzo, Joanne Lobozzo and
the Registrant, Lobozzo agreed to transfer to Joanne Lobozzo half of the May
1995 Option Agreement. The May 1995 Option Agreement, as originally issued,
entitled Lobozzo to purchase up to 11,440,475 common shares of the Registrant
(the "May 1995 Option Shares") between May 20, 1995, and May 20, 1996, for the
payment of an aggregate of $10.00. The Registrant agreed to amend the May 1995
Option Agreement as part of the NCFC Restructuring (the "NCFC Restructuring",
which was reported in a Form 8-K Current Report dated October 24, 1996), to
extend the expiration date of the original May 1995 Option Agreement to October
10, 2001, in order to accommodate the obligations undertaken by the Registrant
and Lobozzo to NCFC pursuant to the NCFC Restructuring to provide additional
common shares to NCFC under certain circumstances, as described below. By the
Option Transfer Document, Lobozzo agreed to transfer to Joanne Lobozzo the right
to acquire half of the May 1995 Option Shares, 5,720,237 common shares, for the
payment of an aggregate of $5.00. The forms of Second Amended and Restated May
1995 Stock Option Agreements which were issued to Lobozzo and to Joanne Lobozzo
as a result of the transfer are annexed to this Form 8-K Current Report as
Exhibits 6 and 7. As noted in Item 1, above, Lobozzo and Joanne Lobozzo
received, respectively, 5,720,238 and 5,720,237 common shares as a result of the
exercise of the Second Restated May 1995 Option Agreements.
By the Securities Transfer Document dated January 13, 1997, between
Lobozzo, Joanne Lobozzo and the Registrant (the "Securities Transfer Document"),
Lobozzo agreed to transfer to
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Joanne Lobozzo: (a) half of the original October 1992 Option Agreement which he
received from the Registrant in October, 1992, which, as later amended, entitled
Lobozzo to purchase up to 1,304,350 common shares of the Registrant through
January 31, 1998 (as amended, the "Second Restated October 1992 Option
Agreement"), the transfer consisting of the right to purchase up to 652,175
common shares while retaining to Lobozzo the right to purchase 652,175 common
shares; and (b) half of the pledge obligation of Lobozzo to NCFC, pursuant to a
certain Pledge Security Agreement between Lobozzo and NCFC dated October 10,
1996 ("Pledge Security Agreement"), issued as part of the NCFC Restructuring.
Pursuant to the Pledge Security Agreement, Lobozzo pledged to NCFC 480,000
common shares of the Registrant registered in Lobozzo's name (the "Pledged
Shares"), and, under certain circumstances if there is a default under the
$750,000 Amended and Restated Term Promissory Note from the Registrant to NCFC
dated October 10, 1996 (also part of the NCFC Restructuring), Lobozzo agreed to
assign to NCFC a portion of the Second Restated May 1995 Option Agreement for
the number of common shares of the Registrant which, when added to the Pledged
Shares, would give NCFC the right to 17 1/2% of the issued and outstanding
common shares of the Registrant. Pursuant to the Securities Transfer Document,
Joanne Lobozzo agreed to fulfill half of Lobozzo's obligations to NCFC pursuant
to the Pledge Security Agreement (whether or not Joanne Lobozzo had exercised
her portion of the Second Restated May 1995 Option Agreement), and Lobozzo
agreed to transfer to Joanne Lobozzo half of the Pledge Shares which Lobozzo
ever receives back from NCFC. A copy of the Securities Transfer Document is
annexed to this Form 8-K Current Report as Exhibit 8. Copies of the Second
Amended and Restated Option Agreements relative to the October 1992 Option
Agreement are annexed hereto as Exhibits 9 and 10.
As part of the transactions described above, the Registrant issued the
Second Amended and Restated 8% Subordinated Debentures due January 31, 1998, to
Lobozzo (in the principal face amount of $300,000.50) and to Joanne Lobozzo (in
the principal face amount of $300,000.50). Copies of these Second Restated
Lobozzo Debentures are annexed to this Form 8-K Current Report as Exhibits 11
and 12.
The Registrant also issued a First Amended and Restated Promissory Note whereby
the payee was changed from Lobozzo, individually, to Lobozzo and Joanne Lobozzo,
which document amended and restated the promissory note originally issued to
Lobozzo as part of the NCFC Restructuring. A copy of the First Amended and
Restated
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Promissory Note is annexed to this Form 8-K Current Report as Exhibit 13.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following Exhibits are filed as part of this Report. The
description of each of the Exhibits as set forth in this Form 8-K Current Report
is qualified in its entirety by the full documents which are annexed hereto.
1. Option Exercise Documents relative to the Second Restated May 1995
Option Agreement.
2. Option Transfer Document relative to the Second Restated May 1995
Option Agreement.
3. Amendment No. 2 to Amended and Restated Credit Agreement and Other
Agreements dated December 10, 1996.
4. Amendment No. 3 to Amended and Restated Credit Agreement and Other
Agreements dated January 13, 1997.
5. Amendment No. 4 to Amended and Restated Credit Agreement and Other
Agreements dated February 18, 1997.
6. Second Amended and Restated May 1995 Stock Option Agreement (Joseph M.
Lobozzo II).
7. Second Amended and Restated May 1995 Stock Option Agreement (Joanne M.
Lobozzo).
8. Securities Transfer Document.
9. Second Amended and Restated October 1992 Option Agreement (Joseph M.
Lobozzo II).
10. Second Amended and Restated October 1992 Option Agreement (Joanne M.
Lobozzo).
11. Second Amended and Restated 8% Subordinated Debenture due January 31,
1998 - No. 1 (Joseph M. Lobozzo II).
Page 8 of 75
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12. Second Amended and Restated 8% Subordinated Debenture due January 31,
1998 - No. 2 (Joanne Lobozzo).
13. First Amended and Restated Promissory Note.
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.
Delta Computec Inc.
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Registrant
Date: February 20, 1997 By: /s/ John DeVito
-----------------------------------
John DeVito, President
Page 9 of 75
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INDEX TO EXHIBITS
The following Exhibits are filed as part of this Report:
1. Option Exercise Documents relative to the Second Restated May 1995 Option
Agreement - Page 10.
2. Option Transfer Document relative to the Second Restated May 1995 Option
Agreement - Page 12.
3. Amendment No. 2 to Amended and Restated Credit Agreement and Other Agreements
dated December 10, 1996 - Page 15.
4. Amendment No. 3 to Amended and Restated Credit Agreement and Other Agreements
dated January 13, 1997 - Page 17.
5. Amendment No. 4 to Amended and Restated Credit Agreement and Other Agreements
dated February 18, 1997 - Page 24.
6. Second Amended and Restated May 1995 Stock Option Agreement (Joseph M.
Lobozzo II) - Page 27.
7. Second Amended and Restated May 1995 Stock Option Agreement (Joanne M.
Lobozzo) - Page 31.
8. Securities Transfer Document - 35.
9. Second Amended and Restated October 1992 Option Agreement (Joseph M. Lobozzo
II) - Page 40.
10. Second Amended and Restated October 1992 Option Agreement (Joanne M.
Lobozzo) - Page 46.
11. Second Amended and Restated 8% Subordinated Debenture due January 31, 1998 -
No. 1 (Joseph M. Lobozzo II) - Page 52.
12. Second Amended and Restated 8% Subordinated Debenture due January 31, 1998 -
No. 2 (Joanne Lobozzo) - Page 61.
Page 10 of 75
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13. First Amended and Restated Promissory Note - Page 70.
Page 11 of 75
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JOSEPH M. LOBOZZO II
C/O JML Optical Industries, Inc.
690 Portland Avenue
Rochester, New York 14621
January 15, 1997
Delta Computec Inc.
900 Huyler Street
Teterboro, New Jersey 07608
Attention: John DeVito, President
Gentlemen:
This letter will notify Delta Computec Inc. ("Delta") that the
undersigned, Joseph M. Lobozzo II ("Optionholder") hereby exercises the option
granted to Optionholder pursuant to that certain Amended and Restated Stock
Option Agreement dated December 31, 1996, which superseded that certain Stock
Option Agreement from Delta to Optionholder dated May 1, 1995.
The Amended and Restated Stock Option Agreement grants the Optionholder
the right to purchase up to 5,720,238 common shares of Delta (the "Option
Shares") upon payment of the sum of $5.00, and the Optionholder hereby exercises
that option in its entirety.
Enclosed herewith is a bank check [or money order or certified check]
No. 8535175365-2 in the amount of $5.00 representing payment in full for the
5,720,238 Option Shares. Also enclosed herewith is the original of the Amended
and Restated Option Agreement for cancellation upon issuance of the certificate
representing the 5,720,238 Option Shares.
It is my understanding that the 5,720,238 Option Shares are restricted
securities, that stop transfer orders will be issued against those Option
Shares, and that a legend, satisfactory to Delta, will be placed on the
certificate representing the Option Shares.
Please forward the certificate for the 5,720,238 Option Shares to me at
the above address.
Very truly yours,
/s/ Joseph M. Lobozzo II
Joseph M. Lobozzo II
cc: Mr. Frank Donnelly
American Stock Transfer Company
Page 12 of 75
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JOANNE M. LOBOZZO
756 Rock Beach Road
Rochester, New York 14621
January 15, 1997
Delta Computec Inc.
900 Huyler Street
Teterboro, New Jersey 07608
Attention: John DeVito, President
Gentlemen:
This letter will notify Delta Computec Inc. ("Delta") that the
undersigned, Joanne M. Lobozzo ("Optionholder") hereby exercises the option
granted to Optionholder pursuant to that certain Amended and Restated Stock
Option Agreement dated December 31, 1996, which superseded that certain Stock
Option Agreement from Delta to Optionholder dated May 1, 1995.
The Amended and Restated Stock Option Agreement grants the Optionholder
the right to purchase up to 5,720,237 common shares of Delta (the "Option
Shares") upon payment of the sum of $5.00, and the Optionholder hereby exercises
that option in its entirety.
Enclosed herewith is a bank check [or money order or certified check] No.
8535175365-2 in the amount of $5.00 representing payment in full for the
5,720,237 Option Shares. Also enclosed herewith is the original of the Amended
and Restated Option Agreement for cancellation upon issuance of the certificate
representing the 5,720,237 Option Shares.
It is my understanding that the 5,720,237 Option Shares are restricted
securities, that stop transfer orders will be issued against those Option
Shares, and that a legend, satisfactory to Delta, will be placed on the
certificate representing the Option Shares.
Please forward the certificate for the 5,720,237 Option Shares to me at
the above address.
Very truly yours,
/s/ Joanne M. Lobozzo
Joanne M. Lobozzo
cc: Mr. Frank Donnelly
American Stock Transfer Company
Page 13 of 75
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Option Transfer Document
Joseph M. Lobozzo II ("Lobozzo"), is the holder of a certain Option
Agreement dated May 1, 1995, issued by Delta Computec Inc. ("Delta"), a copy of
which is annexed hereto (the "Option Agreement"). The Option Agreement provides
in part that Lobozzo has the right to purchase up to 11,440,475 common shares of
Delta (the "Option Shares") upon payment of an aggregate of Ten Dollars ($10.00)
through May 20, 1999. The Option Agreement further provides that it is not
assignable without the prior written consent of Delta, which consent shall not
be unreasonably withheld.
Lobozzo desires to assign and transfer to Joanne M. Lobozzo, and by the
execution of this Option Transfer Document (the "OTD") does hereby assign and
transfer to Joanne M. Lobozzo, a portion of the Option Agreement. The portion of
the Option Agreement to be assigned (the "Assigned Portion") consists of the
right to purchase 5,720,237 Option Shares under the Option Agreement, for an
exercise price of an aggregate of Five Dollars ($5.00). Lobozzo is retaining for
himself the right to purchase the balance of the Option Shares, or 5,720,328
Option Shares, for an exercise price of an aggregate of Five Dollars ($5.00).
Joanne M. Lobozzo desires to accept the Assigned Portion of the Option
Agreement, and by the execution of this OTD does hereby accept the assignment
and transfer to her of the Assigned Portion of the Option Agreement being
assigned and transferred to her by Lobozzo. Joanne M. Lobozzo, by her execution
of this OTD, accepts all terms and conditions of the Option Agreement in
accordance with the assignment of the Assigned Portion of the Option Agreement,
and agrees to be bound by those terms and conditions. Included within the terms
and conditions of the Option Agreement with which Joanne M. Lobozzo agrees to be
bound, are the terms and conditions relative to compliance with federal and
state securities statutes and regulations.
Joanne M. Lobozzo hereby accepts the Assigned Portion of the Option
Agreement on the following additional terms and conditions:
A. Joanne M. Lobozzo hereby grants, first to Lobozzo, and if not
accepted by Lobozzo, then to Delta, a right of first refusal (the "Right") with
regard to the Assigned Portion of the 5,720,237, Option Shares covered by the
Assigned Portion of the Option Agreement.
B. The Right requires Joanne M. Lobozzo to provide Lobozzo, and
Delta, with written notice, by registered or certified mail, return receipt
requested, no less than sixty (60) days prior to the date that Joanne M. Lobozzo
proposes to transfer to any person other than to Lobozzo or to Delta (a
"Third-Party Transferee"), by any means whatsoever, all or any part of the
Page 14 of 75
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Assigned Portion of the Option Agreement or all or any part of the Assigned
Portion of the Option Shares, and to grant to Lobozzo the right to acquire the
Assigned Portion of the Option Agreement or the Assigned Portion of the Option
Shares which is proposed to be transferred to a Third-Party Transferee, upon
payment to Joanne M. Lobozzo of the purchase price ("Purchase Price") equal to
the Purchase Price which Joanne M. Lobozzo proposes to receive from a
Third-Party Transferee, and upon the same terms and conditions (the "Terms")
which a Third-Party Transferee would utilize to make payment of the Purchase
Price. In the event that any consideration is ever proposed to be provided to
Joanne M. Lobozzo relative to such a proposed transfer of the Assigned Portion
of the Option Agreement or the Assigned Portion of the Option Shares which is
other than in cash or a cash equivalent, then such non-cash consideration will
be valued at its monetary equivalent for purposes of the Right. Within the 60
day period covered by the written notice, Lobozzo must notify Joanne M. Lobozzo
in writing of his decision either to exercise the Right (which would require
Lobozzo to pay to Joanne M. Lobozzo the equivalent of the consideration she
would have otherwise received from a proposed Third-Party Transferee at such
times, and on such Terms, as a proposed Third-Party Transferee would have paid
with regard to a proposed transfer), or to reject the Right. In the event that
Lobozzo either rejects the Right or does not respond in writing prior to the end
of the 60 day period, then Delta shall be entitled to exercise the Right for an
additional thirty (30) days after the expiration of the original sixty (60) day
period by paying the same Purchase Price on the same Terms as originally offered
to Lobozzo. If neither Lobozzo nor Delta has exercised the Right by the
expiration of all time periods set forth in this paragraph (B), then Joanne M.
Lobozzo shall be free to transfer the Assigned Portion of the Option Agreement
or the Assigned Portion of the Option Shares free from the conditions of the
Right but subject to the other conditions of this OTD.
C. A proposed transfer during the life of Joanne M. Lobozzo, either
by gift or otherwise without consideration, will require the same written
notification required by paragraph (B), and will entitled Lobozzo, or if he does
not accept, Delta, to receive the Assigned Portion of the Option Agreement or
the Assigned Portion of the Option Shares, without consideration. A transfer as
a result of the death of Joanne M. Lobozzo, either by intestacy or by will,
shall entitle Lobozzo, or Delta if Lobozzo rejects such transfer, to acquire the
Assigned Portion of the Option Agreement or the Assigned Portion of the Option
Shares upon payment to the estate of Joanne M. Lobozzo the fair market value of
the Assigned Portion of the Option Agreement or the Assigned Portion of the
Option Shares as of the date of the death of Joanne M. Lobozzo. Such amount is
to be paid to the personal representative of Joanne M. Lobozzo commencing six
months after the date of her death and the payments are to be completed in equal
annual portions, with interest at the prime rate of Manufacturers & Traders
Trust Company as in effect from time to time, over a five year period from the
date of her death, with a right to prepay without penalty.
Page 15 of 75
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D. Anything to the contrary notwithstanding in this OTD, no transfer
shall ever be made of all or any portion of the Assigned Portion of the Option
Agreement or the Assigned Portion of the Option Shares unless a Third-Party
Transferee executes such documents as are satisfactory to Lobozzo, Delta and
each of their respective counsel relative to compliance with federal or state
securities statutes or regulations, and otherwise agrees to be bound by the
terms of the Restated and Reissued Option Agreement.
E. The Right to acquire the Assigned Portion of the Option Shares
shall be applicable to both the Restated and Reissued Option Agreement in the
original face amount of 5,720,237 Option Shares to which reference is made in
the following paragraph, as well as to any Option Shares ever issued as a result
of the full or partial exercise of the Restated and Reissued Option Agreement in
the original face amount of 5,720,237.
The Board of Directors of Delta has approved the assignment of the portion
of the Option Agreement which is being effectuated by this OTD. The original
Option Agreement is annexed hereto for cancellation upon issuance: (a) to
Lobozzo of a Restated and Reissued Option Agreement for 5,720,238 Option Shares;
and (b) to Joanne M. Lobozzo of a Restated and Reissued Option Agreement for
5,720,237 Option Shares.
IN WITNESS WHEREOF, this Option Transfer Document has been executed as of
the date set forth below.
December 27, 1996 /s/Joseph M. Lobozzo II
---------------------------
Joseph M. Lobozzo
December 27, 1996 /s/ Joanne M. Lobozzo
---------------------------
Joanne M. Lobozzo
February 19, 1997 DELTA COMPUTEC INC.
By: /s/ John DeVito
---------------------------
John DeVito, President
Page 16 of 75
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AMENDMENT NO. 2
to
AMENDED AND RESTATED CREDIT AGREEMENT AND OTHER AGREEMENTS
This Amendment No. 2 to Amended and Restated Credit Agreement and
Other Agreements ("Amendment No. 1"), is made as of the 10th day of December,
1996, by and among JOSEPH M. LOBOZZO II, an individual having an office at 690
Portland Avenue, Rochester, New York 14621 (the "Lender" or "Lobozzo"), DELTA
COMPUTEC INC., a New York corporation having its principal place of business
located at 900 Huyler Street, Teterboro, New Jersey 07608 ("DCI"), and DELTA
DATA NET, INC., a New York corporation having its principal place of business
located at 900 Huyler Street, Teterboro, New Jersey 07608 ("DDI"). DCI and DDI
are referred to collectively as the Borrower.
W I T N E S S E T H
A. WHEREAS, the Borrower and the Lobozzo entered into a certain Amended
and Restated Credit Agreement as of October 10, 1996, which was amended by
Amendment No. 1 thereto executed on November 18, 1996 (such original agreement,
as amended by Amendment No. 1, referred to collectively as the "October 1996
Credit Agreement") ; and
B. WHEREAS, the Borrower and the Lender desire to amend the October 1996
Credit Agreement to provide for an extension of the October 1996 Credit
Agreement with regard to the agreement of Lobozzo to continue to grant Loans
based on a revised Borrowing Base (as those terms are defined in the October
1996 Credit Agreement); and
C. WHEREAS, the Borrower executed and delivered to Lobozzo a certain
Amended and Restated Promissory Note dated as of October 10, 1996, in connection
with the October 10, 1996 Credit Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Incorporation of Recitals. The recitals set forth in the WHEREAS
paragraphs of this Amendment No. 2 are intended to be, and are, incorporated
into this Amendment No. 2 as a part hereof.
2. Amendment to October 1996 Credit Agreement. (a) The parties hereto
agree that, from and after December 10, 1996, the definition of the term
"Maturity Date" set forth in paragraph 1.1 of the October 1996 Credit Agreement
be, and it hereby is, amended to read as follows: "Maturity Date" means March
31, 1997.
(b) Schedule 2.1 of the October 1996 Credit Agreement is hereby
revised by adding eligibility factors for Eligible Inventory (as that term is
defined in the October 1996 Credit Agreement) for the months of January through
March, 1997, as follows:
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"101 1/4% for the month of January, 1997.
"100% for the month of February, 1997.
"98 3/4% for the month of March, 1997."
(c) A new Section 9 shall be added to the October 1996 Credit
Agreement to read as follows:
"9. Additional Requirements. In the event that the amount of the
Loans as outstanding from time to time ever exceeds the amount of Loans
which would otherwise be permitted by the Borrowing Base by an amount of
at least $300,000 (an "Overbase Amount"), then it is understood and agreed
that, without the written consent of Lender, no checks will be written on
the Borrower's account with Manufacturer & Traders Trust Company other
than by Michael Julian, the Borrower's Secretary or Michael McCusker, the
Borrower's Assistant Secretary. It is further understood and agreed that
at the time that the Overbase Amount again falls below $300,000, then
checks may be written on the M&T Account by any authorized signatory."
3. Lender hereby waives any non-compliance which may have existed with
regard to the Borrowing Base for the period between November 18, 1996, the date
of Amendment No. 1, and December 10, 1996, the date of this Amendment No. 2.
4. Except as amended by this Amendment No. 2, the terms and conditions of
the October 1996 Credit Agreement are hereby reaffirmed in their entirety.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to be
duly executed and delivered by the proper and duly authorized officers as of the
date first above written.
/s/Joseph M. Lobozzo II
------------------------------------
Joseph M. Lobozzo II
DELTA COMPUTEC INC.
By: /s/ John DeVito
---------------------------------
John DeVito, President
DELTA DATA NET, INC.
By: /s/ John DeVito
---------------------------------
John DeVito, President
Page 18 of 75
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AMENDMENT No. 3
to
AMENDED AND RESTATED CREDIT AGREEMENT AND OTHER AGREEMENTS
This February 19, 1997, Amendment No. 3 to Amended and Restated
Credit Agreement and Other Agreements (the "Amendment No. 3"), is made by and
among JOSEPH M. LOBOZZO II, an individual having an office at 690 Portland
Avenue, Rochester, New York 14621 (the "Lender" or "Lobozzo"), JOANNE M.
LOBOZZO, the wife of Lobozzo, with an address of 756 Rock Beach Road, Rochester,
New York 14617 ("Joanne Lobozzo"), DELTA COMPUTEC INC., a New York corporation
having its principal place of business located at 900 Huyler Street, Teterboro,
New Jersey 07608 ("DCI"), and DELTA DATA NET, INC., a New York corporation
having its principal place of business located at 900 Huyler Street, Teterboro,
New Jersey 07608 ("DDI"). DCI and DDI are referred to collectively as the
Borrower.
W I T N E S S E T H
A. This Amendment No. 3 is intended to amend in certain respects as set
forth herein, the terms and conditions of a certain 8% Subordinated Debenture
originally issued by DDI on October 28, 1992, as Amended and Restated on
February 16, 1995, pursuant to which DCI and DDI agree to pay to Lobozzo
$600,001 by January 31, 1998 (the "Lobozzo Subordinated Debenture"), which
Lobozzo Subordinated Debenture if guaranteed by DCI.
B. This Amendment No. 3 is intended to amend in certain respects as set
forth herein, the terms and conditions of a certain letter agreement dated May
1, 1995 (the "1995 Letter Agreement"), pursuant to which Lobozzo loaned to
Borrower $400,000 as part of Lobozzo's commitment (the "Lobozzo Commitment", as
defined in the 1995 Letter Agreement) to fund a portion of an overadvance
facility (the "Overadvance Facility", as defined in the 1995 Letter Agreement)
which was entered into, also as of May 1, 1995, between the Borrower and the
Borrower's then commercial lender, National Canada Finance Corp. ("NCFC").
C. This Amendment No. 3 is also intended to amend in certain respects as
set forth herein, the terms and conditions of certain additional loan advances
(the "Additional Advances") between July 25, 1996, and October 9, 1996, in the
aggregate amount of $633,600, such Additional Advances being acknowledged by a
series of documents executed contemporaneously with the Additional Advances (the
"Additional Advance Documents").
D. This Amendment No. 3 is also intended to amend in certain respects as
set forth herein, the terms and conditions of a certain Amended and Restated
Credit Agreement (the "October 1996 Credit Agreement") between the Borrower and
Lobozzo whereby Lobozzo has agreed to provide the Borrower with Loans (as
defined in the October 1996 Credit Agreement) up to $2,550,000.
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E. The October 1996 Credit Agreement was one of a series of agreements
executed on October 10, 1996, whereby the credit facility between the Borrower,
and the Borrower's prior commercial lender, National Canada Finance Corp.
("NCFC"), was restructured (collectively, the "NCFC Restructuring"). This
Amendment No. 3 is also intended to amend each document executed by Lobozzo as
part of the NCFC Restructuring to provide that the rights and obligations of
Lobozzo pursuant to the NCFC Restructuring, as reflected in the documents used
to accomplish the NCFC Restructuring, are intended to be shared equally between
Lobozzo and Joanne Lobozzo. Included within the documents relative to the NCFC
Restructuring which, in addition to the October 1996 Credit Agreement, are
intended to be amended to reflect the purposes of this Recital, are the
following: Assignment; Intercreditor Agreement; Pledge Security Agreement (and
attachments thereto); Limited Non-Recourse Guaranty and Suretyship Agreement;
Amended and Restated Promissory Note; Amended and Restated General Security
Agreement; Amended and Restated Unlimited Continuing Guaranty; and Amended and
Restated General Security Agreement (SAI/Delta, Inc.) (collectively, the "NCFC
Restructuring Documents").
F. This Amendment No. 3 is also intended to amend in certain respects as
set forth herein, the terms and conditions of certain loans and advances made by
Lobozzo to Delta from and after October 10, 1996, the date of the October 1996
Credit Agreement, consisting of Loans (as defined in the October 1996 Credit
Agreement) as outstanding from time to time which ever exceed the amount of
Loans which would otherwise be permitted by the Borrowing Base (as defined in
the October 1996 Credit Agreement), such excess Loans being referred to as the
"Overbase Loans". The Overbase Loans are acknowledged by a series of documents
executed contemporaneously with the granting of the Overbase Loans (the
"Overbase Loan Documents").
G. Pursuant to a document entitled Amended No. 1 to Amended and Restated
Credit Agreement and Other Documents ("Amendment No. 1"), the interest rate
relative to the Lobozzo Commitment, the Additional Advances and the October 1996
Credit Agreement was reduced.
H. Pursuant to a document entitled Amended No. 2 to Amended and Restated
Credit Agreement and Other Documents ("Amendment No. 2"), among other matters
dealt with therein, the Maturity Date of the October 1996 Credit Agreement was
extended to March 31, 1997, and certain other amendments or waivers were made
with regard to any non-compliance which may have existed with the Borrowing Base
(as defined in the October 1996 Credit Agreement.
I. Lobozzo has advised the Borrower that Lobozzo desires to transfer to
Joanne Lobozzo half of Lobozzo's rights, benefits, obligations and interest with
regard to:
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(i) The Lobozzo Subordinated Debenture;
(ii) The May 1995 Letter Agreement and the Lobozzo Commitment;
(iii) The Additional Advances and the Additional Advance Documents;
(iv) The Loan and the October 1996 Credit Agreement and the NCFC
Restructuring Documents; and
(v) The Overbase Loans and the Overbase Loan Documents;
and the Borrower has agreed to acknowledge the transfer from Lobozzo to Joanne
Lobozzo, all on the terms and conditions set forth herein.
NOW, THEREFORE, it is agreed as follows:
1. Incorporation of Recitals. The recitals set forth in the recital
paragraphs of this Amendment No. 3 are intended to be, and are, incorporated
into this Amendment No. 3 as a part hereof.
2. Amendment to Lobozzo Subordinated Debenture.
(a) By the execution of this Amendment No. 3, Lobozzo hereby
transfers to Joanne Lobozzo half of Lobozzo's rights, benefits, obligations and
interest in the Lobozzo Subordinated Debenture, such that such rights, benefits,
obligations and interest of Lobozzo in the Lobozzo Subordinated Debenture are
owned one-half by Lobozzo ($300,000.50) and one-half by Joanne Lobozzo
($300,000.50).
(b) By the execution of this Amendment No. 3, Joanne Lobozzo accepts
the transfer of half of Lobozzo's rights, benefits, obligations and interest in
the Lobozzo Subordinated Debenture, and agrees to fulfill half of any
obligations of Lobozzo pursuant to the Lobozzo Subordinated Debenture.
(c) The parties hereto agree that, from and after February 19, 1997,
the Lobozzo Subordinated Debenture be, and it hereby is, amended to change the
definition of the term "Lobozzo" from a single person, Joseph M. Lobozzo II, to
two persons, jointly and severally, Joseph M. Lobozzo II and Joanne M. Lobozzo,
and that further Reaffirmed and Restated Lobozzo Subordinated Debentures will be
issued to Lobozzo and to Joanne Lobozzo as set forth in paragraph 2(a) of this
Amendment No. 3.
(d) Except as amended by this Amendment No. 3, the terms and
conditions of the Lobozzo Subordinated Debenture be, and they hereby are, hereby
reaffirmed in their entirety.
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<PAGE>
3. Amendment to Lobozzo Commitment and 1995 Letter Agreement.
(a) By the execution of this Amendment No. 3, Lobozzo hereby
transfers to Joanne Lobozzo half of Lobozzo's rights, benefits, obligations and
interest in the 1995 Letter Agreement and in the Lobozzo Commitment, such that
such rights, benefits, obligations and interest of Lobozzo in the 1995 Letter
Agreement and of the Lobozzo Commitment are owned one-half by Lobozzo ($200,000)
and one-half by Joanne Lobozzo ($200,000).
(b) By the execution of this Amendment No. 3, Joanne Lobozzo accepts
the transfer of half of Lobozzo's rights, benefits, obligations and interest in
the 1995 Letter Agreement and in the Lobozzo Commitment, and agrees to fulfill
half of any obligations of Lobozzo pursuant to the 1995 Letter Agreement and the
Lobozzo Commitment.
(c) The parties hereto agree that, from and after February 19, 1997,
the 1995 Letter Agreement, as amended by Amendment No. 1 and as amended by
Amendment No. 2 be, and it hereby is, amended to change the definition of the
term "Lobozzo" from a single person, Joseph M. Lobozzo II, to two persons,
Joseph M. Lobozzo II and Joanne M. Lobozzo, and that further Amended and
Restated 1995 Letter Agreements will be issued to Lobozzo and to Joanne Lobozzo
as set forth in paragraph 3(a) of this Amendment No. 3.
(d) Except as amended by this Amendment No. 3, the terms and
conditions of the 1995 Letter Agreement, as previously amended by Amendment No.
1 and Amendment No. 2, are hereby reaffirmed in their entirety.
4. Amendment to Additional Advance and Additional Advance Documents.
(a) By the execution of this Amendment No. 3, Lobozzo hereby
transfers to Joanne Lobozzo half of Lobozzo's rights, benefits, obligations and
interest in the Additional Advance Documents and in the Additional Advances,
such that the rights, benefits, obligations and interest of the Additional
Advance Documents and of the Additional Advances are owned one-half by Lobozzo
($316,800 as of October 9, 1996) and one-half by Joanne Lobozzo ($3-6,800 as of
October 9, 1996).
(b) By the execution of this Amendment No. 3, Joanne Lobozzo accepts
the transfer of half of Lobozzo's rights, benefits, obligations and interest in
the Additional Advance Documents and in the Additional Advances, and agrees to
fulfill half of any obligations of Lobozzo pursuant to the Additional Advance
Documents and the Additional Advances.
Page 22 of 75
<PAGE>
(c) The parties hereto agree that, from and after February 19, 1997,
the Additional Advance Documents, as amended by Amendment No. 1 and as amended
by Amendment No. 2 be, and they hereby are, amended to change the lender of the
Additional Advances from a single person, Joseph M. Lobozzo II, to two persons,
Joseph M. Lobozzo II and Joanne M. Lobozzo, and that further Amended and
Restated Additional Advance Documents will be issued to Lobozzo and to Joanne
Lobozzo as set forth in paragraph 4(a) of this Amendment No. 3.
(d) Except as amended by this Amendment No. 3, the terms and
conditions of the Additional Advance Documents, as previously amended by
Amendment No. 1 and Amendment No. 2, are hereby reaffirmed in their entirety.
5. Amendment to Loan and October 1996 Credit Agreement and NCFC
Restructuring Documents.
(a) By the execution of this Amendment No. 3, Lobozzo hereby
transfers to Joanne Lobozzo half of Lobozzo's rights, benefits, obligations and
interest in the October 1996 Credit Agreement and in the Loan and in the NCFC
Restructuring Documents, such that the rights, benefits, obligations and
interest of the October 1996 Credit Agreement and of the Loan and of the NCFC
Restructuring Documents are owned one-half by Lobozzo (up to $1,275,000) and
one-half by Joanne Lobozzo (up to $1,275,000).
(b) By the execution of this Amendment No. 3, Joanne Lobozzo accepts
the transfer of half of Lobozzo's rights, benefits, obligations and interest in
the October 1996 Credit Agreement and in the Loan and in the NCFC Restructuring
Documents, and agrees to fulfill half of any obligations of Lobozzo pursuant to
the October 1996 Credit Agreement and the Loan and the NCFC Restructuring
Documents.
(c) The parties hereto agree that, from and after February 19, 1997,
the October 1996 Credit Agreement, as amended by Amendment No. 1 and as amended
by Amendment No. 2, and the NCFC Restructuring Documents, be, and they hereby
are, amended to change the "Lender" from a single person, Joseph M. Lobozzo II,
to two persons, Joseph M. Lobozzo II and Joanne M. Lobozzo, that the reference
to "Lobozzo" in any of those documents be, and they hereby are, amended to
change "Lobozzo" from a single person, Joseph M. Lobozzo II, to two persons,
Joseph M. Lobozzo II and Joanne M. Lobozzo, and that a further Amended and
Restated Credit Agreement, a further Amended and Restated Promissory Note, and
further amended documents comprising component parts of the NCFC Restructuring
Documents will be issued to Lobozzo and to Joanne Lobozzo as set forth in
paragraph 5(a) of this Amendment No. 3, and until such time as any of those
documents are issued, the existing
Page 23 of 75
<PAGE>
documents will be deemed, between Joseph M. Lobozzo II and Joanne Lobozzo, to
have been amended as set forth in this Amendment No. 3.
(d) Except as amended by this Amendment No. 3, the terms and
conditions of the October 1996 Credit Agreement, as previously amended by
Amendment No. 1 and Amendment No. 2, and the terms of the NCFC Restructuring
Documents, are hereby reaffirmed in their entirety.
6. Amendment to Overbase Loan and the Overbase Loan Documents.
(a) By the execution of this Amendment No. 3, Lobozzo hereby
transfers to Joanne Lobozzo half of Lobozzo's rights, benefits, obligations and
interest in the Overbase Loan Documents and in the Overbase Loan, such that the
rights, benefits, obligations and interest of the Overbase Loan Documents and of
the Overbase Loan are owned one-half by Lobozzo and one-half by Joanne Lobozzo
as those Overbase Loans may exist from time to time.
(b) By the execution of this Amendment No. 3, Joanne Lobozzo accepts
the transfer of half of Lobozzo's rights, benefits, obligations and interest in
the Overbase Loan Documents and in the Overbase Loan, and agrees to fulfill half
of any obligations of Lobozzo pursuant to the Overbase Loan Documents and the
Overbase Loan.
(c) The parties hereto agree that, from and after February 19, 1997,
the Overbase Loan Document as amended by Amendment No. 1 and as amended by
Amendment No. 2 be, and they hereby are, amended to change the lender of the
Overbase Loan from a single person, Joseph M. Lobozzo II, to two persons, Joseph
M. Lobozzo II and Joanne M. Lobozzo.
(d) Except as amended by this Amendment No. 3, the terms and
conditions of the Overbase Loan Documents, as previously amended by Amendment
No. 1 and Amendment No. 2, are hereby reaffirmed in their entirety.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3 to be
duly executed and delivered by individual signatories and by the proper and duly
authorized officers of the Borrower as of the date first above written.
/s/ Joseph M. Lobozzo II
--------------------------------------
Joseph M. Lobozzo II
/s/ Joanne M. Lobozzo
--------------------------------------
Joanne M. Lobozzo
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<PAGE>
DELTA COMPUTEC INC.
By: /s/ John DeVito
----------------------------------
John DeVito, President
DELTA DATA NET, INC.
By: /s/ John DeVito
----------------------------------
John DeVito, President
Page 25 of 75
<PAGE>
AMENDMENT No. 4
to
AMENDED AND RESTATED CREDIT AGREEMENT AND OTHER AGREEMENTS
This February 20, 1997, Amendment No. 4 to Amended and Restated
Credit Agreement and Other Agreements (the "Amendment No. 4"), is made by and
among JOSEPH M. LOBOZZO II, an individual having an office at 690 Portland
Avenue, Rochester, New York 14621 (the "Lender" or "Lobozzo"), JOANNE M.
LOBOZZO, the wife of Lobozzo, with an address of 756 Rock Beach Road, Rochester,
New York 14617 ("Joanne Lobozzo"), DELTA COMPUTEC INC., a New York corporation
having its principal place of business located at 900 Huyler Street, Teterboro,
New Jersey 07608 ("DCI"), and DELTA DATA NET, INC., a New York corporation
having its principal place of business located at 900 Huyler Street, Teterboro,
New Jersey 07608 ("DDI"). DCI and DDI are referred to collectively as the
Borrower.
W I T N E S S E T H
A. This Amendment No. 4 is intended to amend in certain respects as set
forth herein, the terms and conditions of a certain Amended and Restated Credit
Agreement (the "October 1996 Credit Agreement", which term refers to the
original agreement issued on October 10, 1996, and as amended by Amendments Nos.
1, 2 and 3, thereto, as described below) between the Borrower and Lobozzo and
Joanne Lobozzo whereby Lobozzo and Joanne Lobozzo have agreed to provide the
Borrower with Loans (as defined in the October 1996 Credit Agreement) up to
$2,550,000.
B. Pursuant to a document entitled Amended No. 1 to Amended and Restated
Credit Agreement and Other Documents ("Amendment No. 1"), the interest rate
relative to the Lobozzo Commitment, the Additional Advances and the October 1996
Credit Agreement was reduced.
C. Pursuant to a document entitled Amended No. 2 to Amended and Restated
Credit Agreement and Other Documents ("Amendment No. 2"), among other matters
dealt with therein, the Maturity Date of the October 1996 Credit Agreement was
extended to March 31, 1997, and certain other amendments or waivers were made
with regard to any non-compliance which may have existed with the Borrowing Base
(as defined in the October 1996 Credit Agreement.
D. Pursuant to a document entitled Amended No. 3 to Amended and Restated
Credit Agreement and Other Documents ("Amendment No. 3"), Lobozzo transferred to
Joanne Lobozzo half of Lobozzo's rights, benefits, obligations and interest with
regard to: (i) an 8% Subordinated Debenture issued in October 1992 in the
original face amount of $600,001; (ii) A May 1995 Letter Agreement whereby
Lobozzo agreed to provide the Lobozzo Commitment to the Borrower in
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the original amount of $400,000; (iii) The 1996 Additional Lobozzo Advances for
the period from July 25, 1996 through October 9, 1996 in the aggregate amount of
$633,600; (iv) The Loan and the October 1996 Credit Agreement in an amount of up
to $2,550,000; and (v) the Overbase Loans and the Overbase Loan Documents for
the amounts in whereby the Loans exceed the Borrowing Base as set forth in the
October 1996 Credit Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Incorporation of Recitals. The recitals set forth in the recital
paragraphs of this Amendment No. 4 are intended to be, and are, incorporated
into this Amendment No. 4 as a part hereof.
2. Amendment to Loan and October 1996 Credit Agreement.
(a) The parties hereto agree that, from and after the date of this
Amendment No. 4, the definition of the term "Maturity Date" set forth in
paragraph 1.1 of the October 1996 Credit Agreement be, and it hereby is, amended
to read as follows: "Maturity Date" means April 30, 1997.
(b) Schedule 2.1 of the october 1996 Credit Agreement is hereby
revised by adding eligibility factors for Eligible Inventory (as that term is
defined in the October 1996 Credit Agreement) for the month of April, 1997, as
follows: "97.5% for the month of April, 1997".
3. Certain Waivers. Lender hereby waives any non-compliance which may have
existed with regard to the Borrowing Base for the period between December 10,
1996, the date of Amendment No. 2, and February 20, 1997, the date of this
Amendment No. 4.
4. Reaffirmation of Terms. Except as amended by this Amendment No. 4, and
by the previous Amendments Nos. 1, 2 and 3, the terms and conditions of the
original October 1996 Credit Agreement are hereby reaffirmed in their entirety.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 4 to be
duly executed and delivered by individual signatories and by the proper and duly
authorized officers of the Borrower as of the date first above written.
/s/ Joseph M. Lobozzo II
--------------------------------------
Joseph M. Lobozzo II
/s/ Joanne M. Lobozzo
--------------------------------------
Joanne M. Lobozzo
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DELTA COMPUTEC INC.
By: /s/ John DeVito
----------------------------------
John DeVito, President
DELTA DATA NET, INC.
By: /s/ John DeVito
----------------------------------
John DeVito, President
Page 28 of 75
<PAGE>
DELTA COMPUTEC INC.
900 Huyler Street
Teterboro, New Jersey 07608
February 19, 1997
SECOND AMENDED AND RESTATED MAY 1995 STOCK OPTION AGREMENT
JOSEPH M. LOBOZZO II - 5,720,238 Common Shares
Mr. Joseph M. Lobozzo II
690 Portland Avenue
Rochester, New York 14621
Dear Mr. Lobozzo:
This letter agreement, issued in accordance with a certain Option Transfer
Document (the "Option Transfer Document", annexed hereto), constitutes a Second
Amended and Restated Stock Option Agreement (the "Second Restated May 1995
Option Agreement") between Delta Computec Inc. ("Delta"), and Joseph M. Lobozzo
II (the "Optionee" or "Joseph Lobozzo"), and this Second Restated May 1995
Option Agreement supersedes in part a certain Stock Option Agreement dated May
1, 1995, between Delta and Joseph Lobozzo (the "Original May 1995 Option
Agreement"), which entitled Joseph Lobozzo to acquire up to 11,440,475 common
shares of Delta. The common shares covered by this Second Restated May 1995
Option Agreement constitute a portion of the common shares as to which the
Original May 1995 Option Agreement applied.
Pursuant to a certain Pledge Security Agreement (the "Pledge Security
Agreement") between Delta, Joseph Lobozzo and National Canada Finance Corp.
("NCFC"), the former commercial lender to Delta, which constituted a portion of
the NCFC Restructuring which was described in a Form 8-K Current Report of Delta
dated October 24, 1996 (the "NCFC Restructuring"), among other matters, under
certain circumstances, if there is a default under the $750,000 Amended and
Restated Promissory Note from Delta to NCFC in the face amount of $750,000 dated
October 10, 1996, Joseph Lobozzo agreed to assign to NCFC a portion of an
Amended and Restated Stock Option Agreement for the number of common shares of
Delta which, when added to the 480,000 common shares of Delta currently pledged
by Joseph Lobozzo to NCFC, would give NCFC the right to 17 1/2% of the issued
and outstanding common shares of Delta. In order to effectuate the assignment to
NCFC, a form of Amended and Restated Stock Option Agreement (the "First Restated
May 1995 Option Agreement") was annexed as an exhibit to the Pledge Security
Agreement.
Page 29 of 75
<PAGE>
Pursuant to the Option Transfer Document, Joseph Lobozzo agreed to
transfer to his spouse, Joanne M. Lobozzo ("Joanne Lobozzo"), the portion of the
Original May 1995 Option Agreement which would entitle Joanne Lobozzo to
purchase up to 5,720,237 common shares of Delta, while retaining for Joseph
Lobozzo the right to purchase 5,720,238 common shares of Delta. Pursuant to a
certain Securities Transfer Document (the "Securities Transfer Document", a copy
of which is attached hereto), Joanne Lobozzo has agreed to fulfill half of
Joseph Lobozzo's obligations to NCFC pursuant to the Pledge Security Agreement
(whether or not Joanne Lobozzo has exercised her portion of this Second Restated
May 1995 Option Agreement).
The Original May 1995 Option Agreement was originally issued as
consideration for Joseph Lobozzo agreeing to assist Delta (and its affiliated
companies) in their relationship with NCFC, and as further consideration for
Joseph Lobozzo's agreement to provide the Lobozzo Commitment to Delta as set
forth in a letter agreement between Delta and Joseph Lobozzo of May 1, 1995 (the
"Lobozzo Commitment Letter"). The First Restated May 1995 Option Agreement was
agreed to be issued as further consideration for Lobozzo purchasing a portion of
Delta's obligation to NCFC as of October 10, 1996, pursuant to the NCFC
Restructuring. It is acknowledged that the First Restated May 1995 Option
Agreement was part of a negotiated transaction between Delta and Joseph Lobozzo
and was not issued to Optionee as an incentive to service or continued service
to Delta by Optionee.
This Second Restated May 1995 Option Agreement is hereby granted to
Optionee on the following terms and conditions:
1. From May 20, 1995 through May 20, 1999, Optionee shall have, and is
hereby granted, an option (the "Option") to purchase up to 5,720,238 common
shares, subject to adjustment as described below (the "Option Shares"), of
Delta. The Optionee may exercise the Option in whole or in part from time to
time but not in amounts less than 100,000 common shares per exercise.
2. The cash exercise price (the "Cash Exercise Price") for the exercise of
the Option and for the purchase of the Option Shares, shall be ($5.00). The Cash
Exercise Price is to be paid by certified or bank check or money order payable
to the order of Delta. The consideration provided to Delta by Joseph Lobozzo
pursuant to the transactions set forth in the Lobozzo Commitment Letter (the
"Lobozzo Consideration") is also a portion of the exercise price of the Option.
3. The Board of Directors of Delta has determined that the fair market
value of the Lobozzo Consideration plus the Cash Exercise Price exceeds the fair
value and the par value of the Option Shares, although no representation is made
that the Option Shares will not be assessable.
Page 30 of 75
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4. Delta acknowledges that it has reserved for issuance a sufficient
number of Delta's authorized and unissued common shares, representing the Option
Shares and that it will keep the Option Shares reserved during the life of this
Second Restated May 1995 Option Agreement.
5. The Optionee may exercise this Option by sending to Delta a written
notice of exercise which notice is received at any time prior to May 20, 1999.
As soon as is reasonably practicable after any exercise of the Option as herein
provided, Delta shall deliver or cause to be delivered at the office of Delta,
certificates representing the number of common shares of Delta as to which this
Second Restated May 1995 Option Agreement may be exercised in accordance with
the provisions of this Second Restated May 1995 Option Agreement and a check or
money order in respect of the payment of the Cash Exercise Price.
6. This Second Restated May 1995 Option Agreement, and the Option Shares,
are each restricted securities and are subject to the provisions of paragraphs
9, 10 and 11 of the Lobozzo Commitment Letter, a copy of which is annexed
hereto.
7. Delta agrees to pay any and all fees or costs associated with the
exercise of the Option, including, if necessary, any listing fee for the Option
Shares with the National Association of Securities Dealers, Inc., and any and
all state, federal or other fees or costs associated therewith.
8. If, and whenever, before the expiration of the Option, Delta shall
effect a subdivision or consolidation of its common shares, or the payment of a
share dividend on its common shares without receipt of consideration by Delta,
the number of Option Shares with respect to which this Option may thereafter be
exercised: (i) in the event of an increase in the number of outstanding common
shares, shall be proportionately increased; and (ii) in the event of a reduction
in the number of outstanding common shares, shall be proportionately reduced.
9. This Second Restated May 1995 Option Agreement is binding on, and shall
inure to the benefit of, Delta and the Optionee, and each of their successors
and assigns. This Second Restated May 1995 Option Agreement shall not terminate
in the event of the death or disability of Joseph Lobozzo or as a result of
Joseph Lobozzo ceasing to be an officer or director of Delta. This Second
Amended May 1995 Option Agreement, and the Option granted hereby, is
transferrable, if Optionee is an individual, by will or by the laws of descent
and distribution, but is otherwise not transferrable without the prior written
consent of Delta, which consent will not be unnecessarily withheld. Delta hereby
grants its consent to the assignment of all or a portion of this Second Restated
May 1995 Option Agreement to NCFC provided that, at the time of such assignment,
Optionee, NCFC and Delta each execute that certain
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<PAGE>
Assignment Agreement drafted October 10, 1996, to which a copy of the First
Restated May 1995 Option Agreement is annexed as an exhibit. In addition, Delta
hereby consents to the assignment of this Second Restated May 1995 Option
Agreement by NCFC at and after such time as it may be exercisable.
10. This Second Restated May 1995 Option Agreement supersedes: (i) the
Original May 1995 Option Agreement between Lobozzo and Delta; and (ii) any and
all prior discussions and negotiations with regard to the subject matter hereof
and may only by amended by a writing executed by Delta and Optionee. This Second
Restated May 1995 Option Agreement is subject to the applicable provisions of
the Option Transfer Document and the Securities Transfer Document.
11. This Second Restated May 1995 Option Agreement will be governed by the
laws of the State of New York without consideration of its conflicts of laws
principles.
Very truly yours,
DELTA COMPUTEC INC.
By: /s/ John DeVito
--------------------------
John DeVito
President
Accepted and agreed to:
/s/Joseph M. Lobozzo II ("Optionee")
- -----------------------
Joseph M. Lobozzo II
Page 32 of 75
<PAGE>
DELTA COMPUTEC INC.
900 Huyler Street
Teterboro, New Jersey 07608
February 19, 1997
SECOND AMENDED AND RESTATED MAY 1995 STOCK OPTION AGREMENT
JOANNE M. LOBOZZO - 5,720,237 Common Shares
Mr. Joanne M. Lobozzo
765 Rock Beach Road
Rochester, New York 14617
Dear Mrs. Lobozzo:
This letter agreement, issued in accordance with a certain Option Transfer
Document (the "Option Transfer Document", annexed hereto), constitutes a Second
Amended and Restated Stock Option Agreement (the "Second Restated May 1995
Option Agreement") between Delta Computec Inc. ("Delta"), and Joanne M. Lobozzo
(the "Optionee" or "Joanne Lobozzo"), and this Second Restated May 1995Option
Agreement supersedes in part a certain Stock Option Agreement dated May 1, 1995,
between Delta and Joseph M. Lobozzo II (the "Original May 1995 Option
Agreement"), which entitled Joseph M. Lobozzo II ("Joseph Lobozzo") to acquire
up to 11,440,475 common shares of Delta. The common shares covered by this
Second Restated May 1995 Option Agreement constitute a portion of the common
shares as to which the Original May 1995 Option Agreement applied.
Pursuant to a certain Pledge Security Agreement (the "Pledge Security
Agreement") between Delta, Joseph Lobozzo and National Canada Finance Corp.
("NCFC"), the former commercial lender to Delta, which constituted a portion of
the NCFC Restructuring which was described in a Form 8-K Current Report of Delta
dated October 24, 1996 (the "NCFC Restructuring"), among other matters, under
certain circumstances, if there is a default under the $750,000 Amended and
Restated Promissory Note from Delta to NCFC in the face amount of $750,000 dated
October 10, 1996, Joseph Lobozzo agreed to assign to NCFC a portion of an
Amended and Restated Stock Option Agreement for the number of common shares of
Delta which, when added to the 480,000 common shares of Delta currently pledged
by Joseph Lobozzo to NCFC, would give NCFC the right to 17 1/2% of the issued
and outstanding common shares of Delta. In order to effectuate the assignment to
NCFC, a form of Amended and Restated Stock Option Agreement (the "First Restated
May 1995 Option Agreement") was annexed as an exhibit to the Pledge Security
Agreement.
Page 33 of 75
<PAGE>
Pursuant to the Option Transfer Document, Joseph Lobozzo agreed to
transfer to his spouse, Joanne Lobozzo, the portion of the Original May 1995
Option Agreement which would entitle Joanne Lobozzo to purchase up to 5,720,237
common shares of Delta, while retaining for Joseph Lobozzo the right to purchase
5,720,238 common shares of Delta. Pursuant to a certain Securities Transfer
Document (the "Securities Transfer Document", a copy of which is attached
hereto), Joanne Lobozzo has agreed to fulfill half of Joseph Lobozzo's
obligations to NCFC pursuant to the Pledge Security Agreement (whether or not
Joanne Lobozzo has exercised her portion of this Second Restated May 1995 Option
Agreement).
The Original May 1995 Option Agreement was originally issued as
consideration for Joseph Lobozzo agreeing to assist Delta (and its affiliated
companies) in their relationship with NCFC, and as further consideration for
Joseph Lobozzo's agreement to provide the Lobozzo Commitment to Delta as set
forth in a letter agreement between Delta and Joseph Lobozzo of May 1, 1995 (the
"Lobozzo Commitment Letter"). The First Restated May 1995 Option Agreement was
agreed to be issued as further consideration for Lobozzo purchasing a portion of
Delta's obligation to NCFC as of October 10, 1996, pursuant to the NCFC
Restructuring. It is acknowledged that the First Restated May 1995 Option
Agreement was part of a negotiated transaction between Delta and Joseph Lobozzo
and was not issued to Optionee as an incentive to service or continued service
to Delta by Optionee.
This Second Restated May 1995 Option Agreement is hereby granted to
Optionee on the following terms and conditions:
1. From May 20, 1995 through May 20, 1999,, Optionee shall have, and is
hereby granted, an option (the "Option") to purchase up to 5,720,237 common
shares, subject to adjustment as described below (the "Option Shares"), of
Delta. The Optionee may exercise the Option in whole or in part from time to
time but not in amounts less than 100,000 common shares per exercise.
2. The cash exercise price (the "Cash Exercise Price") for the exercise of
the Option and for the purchase of the Option Shares, shall be ($5.00). The Cash
Exercise Price is to be paid by certified or bank check or money order payable
to the order of Delta. The consideration provided to Delta by Joseph Lobozzo
pursuant to the transactions set forth in the Lobozzo Commitment Letter (the
"Lobozzo Consideration") is also a portion of the exercise price of the Option.
3. The Board of Directors of Delta has determined that the fair market
value of the Lobozzo Consideration plus the Cash Exercise Price exceeds the fair
value and the par value of the Option Shares, although no representation is made
that the Option Shares will not be assessable.
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<PAGE>
4. Delta acknowledges that it has reserved for issuance a sufficient
number of Delta's authorized and unissued common shares, representing the Option
Shares and that it will keep the Option Shares reserved during the life of this
Second Restated May 1995 Option Agreement.
5. The Optionee may exercise this Option by sending to Delta a written
notice of exercise which notice is received at any time prior to May 20, 1999.
As soon as is reasonably pracicable after any exercise of the Option as herein
provided, Delta shall deliver or cause to be delivered at the office of Delta,
certificates representing the number of common shares of Delta as to which this
Second Restated May 1995 Option Agreement may be exercised in accordance with
the provisions of this Second Restated May 1995 Option Agreement and a check or
money order in respect of the payment of the Cash Exercise Price.
6. This Second Restated May 1995 Option Agreement, and the Option Shares,
are each restricted securities and are subject to the provisions of paragraphs
9, 10 and 11 of the Lobozzo Commitment Letter, a copy of which is annexed
hereto.
7. Delta agrees to pay any and all fees or costs associated with the
exercise of the Option, including, if necessary, any listing fee for the Option
Shares with the National Association of Securities Dealers, Inc., and any and
all state, federal or other fees or costs associated therewith.
8. If, and whenever, before the expiration of the Option, Delta shall
effect a subdivision or consolidation of its common shares, or the payment of a
share dividend on its common shares without receipt of consideration by Delta,
the number of Option Shares with respect to which this Option may thereafter be
exercised: (i) in the event of an increase in the number of outstanding common
shares, shall be proportionately increased; and (ii) in the event of a reduction
in the number of outstanding common shares, shall be proportionately reduced.
9. This Second Restated May 1995 Option Agreement is binding on, and shall
inure to the benefit of, Delta and the Optionee, and each of their successors
and assigns. This Second Restated May 1995 Option Agreement shall not terminate
in the event of the death or disability of Joanne Lobozzo or of Joseph Lobozzo
or as a result of Joseph Lobozzo ceasing to be an officer or director of Delta.
This Second Amended May 1995 Option Agreement, and the Option granted hereby, is
transferrable, if Optionee is an individual, by will or by the laws of descent
and distribution, but is otherwise not transferrable without the prior written
consent of Delta, which consent will not be unnecessarily withheld. Delta hereby
grants its consent to the assignment of all or a portion of this Second Restated
May 1995 Option Agreement to NCFC provided that, at the time of such assignment,
Optionee, NCFC and Delta each execute that
Page 35 of 75
<PAGE>
certain Assignment Agreement drafted October 10, 1996, to which a copy of the
First Restated May 1995 Option Agreement is annexed as an exhibit. In addition,
Delta hereby consents to the assignment of this Second Restated May 1995 Option
Agreement by NCFC at and after such time as it may be exercisable.
10. This Second Restated May 1995 Option Agreement supersedes: (i) the
Original May 1995 Option Agreement between Lobozzo and Delta; and (ii) any and
all prior discussions and negotiations with regard to the subject matter hereof
and may only by amended by a writing executed by Delta and Optionee. This Second
Restated May 1995 Option Agreement is subject to the applicable provisions of
the Option Transfer Document and the Securities Transfer Document.
11. This Second Restated May 1995 Option Agreement will be governed by the
laws of the State of New York without consideration of its conflicts of laws
principles.
Very truly yours,
DELTA COMPUTEC INC.
By: /s/ John DeVito
--------------------------
John DeVito
President
Accepted and agreed to:
/s/Joseph M. Lobozzo II ("Optionee")
- -----------------------
Joseph M. Lobozzo II
Page 36 of 75
<PAGE>
SECURITIES TRANSFER DOCUMENT
This Securities Transfer Document ("Securities Document") is made by
and among JOSEPH M. LOBOZZO II, an individual having an office at 690 Portland
Avenue, Rochester, New York 14621 (the "Lender" or "Lobozzo"), JOANNE M.
LOBOZZO, the wife of Lobozzo, with an address of 756 Rock Beach Road, Rochester,
New York 14617("Joanne Lobozzo"), DELTA COMPUTEC INC., a New York corporation
having its principal place of business located at 900 Huyler Street, Teterboro,
New Jersey 07608 ("Delta'), and DELTA DATA NET, INC., a New York corporation
having its principal place of business located at 900 Huyler Street, Teterboro,
New Jersey 07608 ("Data Net"). Delta and Data Net are referred to collectively
as the "Borrower".
RECITALS
A. Lobozzo desires to complete the transfer to Joanne Lobozzo of half of
his securities in, debt obligations from, and obligations to, the Borrower and
others having relations with the Borrowers, including NCFC (as herein defined),
and Joanne Lobozzo desires to receive half of the Lobozzo's securities in, debt
obligations from, and obligations to, the Borrower and such others, all as set
forth in this Securities Document.
B. The transfers to be effectuated pursuant to this Securities Document
are in the nature of gifts between Lobozzo and Joanne Lobozzo, who are husband
and wife.
NOW THEREFORE, THE TRANSFERS ARE STATED TO BE AS FOLLOWS:
I. Transfer of a portion of the 1992 Option Agreement.
1. Joseph M. Lobozzo II ("Lobozzo"), is the holder of a certain Option
Agreement dated October 28, 1992, as amended and restated on February 16, 1995
(the "1992 Option Agreement"), issued by Delta Computec Inc. ("Delta"), a copy
of which is annexed hereto as Exhibit A (the "1992 Option Agreement"). The
Option Agreement provides in part that Lobozzo has the right to purchase up to
1,304,350 common shares of Delta (the "Option Shares") upon payment of $.46 per
share through January 31, 1998.
2. The 1992 Option Agreement was issued pursuant to Lobozzo in October,
1992, at the time that Data Net issued to Lobozzo (and guaranteed by Data Net's
parent, Delta Computec Inc. ("DCI")), an 8% Subordinated Debenture in the face
amount of $600,001 (the "Lobozzo Subordinated Debenture"). By a separate
document entitled Amendment No. 3 to Amended and Restated Credit Agreement and
Certain other Agreements ("Amendment No. 3"), of even date herewith, Lobozzo has
transferred to his wife, Joanne M. Lobozzo ("Joanne Lobozzo"), half of Lobozzo's
interest in and to the Lobozzo Subordinated Debenture.
Page 37 of 75
<PAGE>
3. Lobozzo desires to assign and transfer to Joanne Lobozzo, and by the
execution of this Securities Document does hereby assign and transfer to Joanne
Lobozzo, a portion of the 1992 Option Agreement. The portion of the Option
Agreement to be assigned (the "Assigned Portion") consists of the right to
purchase 652,175 Common Shares under 1992 Option Agreement, which will be
amended and restated (the "Amended and Restated 1992 Option Agreement"), for an
exercise price of forty-six cents ($.46) per common share Lobozzo is retaining
for himself the right to purchase the balance of the Option Shares, or 652,175
Option Shares, for an exercise price of forty-six cents per common share, which
is also to be set forth in an Amended and Restated 1992 Option Agreement.
4. Joanne Lobozzo desires to accept the Assigned Portion of the 1992
Option Agreement, and by the execution of this Securities Document does hereby
accept the assignment and transfer to her of the Assigned Portion of the 1992
Option Agreement being assigned and transferred to her by Lobozzo. Joanne
Lobozzo, by her execution of this Securities Document, accepts all terms and
conditions of the Amended and Restated 1992 Option Agreement in accordance with
the assignment of the Assigned Portion of the 1992 Option Agreement, and agrees
to be bound by those terms and conditions. Included within the terms and
conditions of the Amended and Restated 1992 Option Agreement with which Joanne
Lobozzo agrees to be bound, are the terms and conditions relative to compliance
with federal and state securities statutes and regulations.
5. Joanne Lobozzo hereby accepts the Assigned Portion of the Amended and
Restated 1992 Option Agreement on the following additional terms and conditions:
A. Joanne M. Lobozzo hereby grants, first to Lobozzo, and if not
accepted by Lobozzo, then to Delta, a right of first refusal (the "Right") with
regard to the Assigned Portion of the 652,175 Option Shares covered by the
Assigned Portion of the Amended and Restated 1992 Option Agreement.
B. The Right requires Joanne Lobozzo to provide Lobozzo, and Delta,
with written notice, by registered or certified mail, return receipt requested,
no less than sixty (60) days prior to the date that Joanne Lobozzo proposes to
transfer to any person other than to Lobozzo or to Delta (a "Third-Party
Transferee"), by any means whatsoever, all or any part of the Assigned Portion
of the Amended and Restated 1992 Option Agreement or all or any part of the
Assigned Portion of the Option Shares, and to grant to Lobozzo the right to
acquire the Assigned Portion of the Amended and Restated 1992 Option Agreement
or the Assigned Portion of the Option Shares which is proposed to be transferred
to a Third-Party Transferee, upon payment to Joanne Lobozzo of the purchase
price ("Purchase Price") equal to the Purchase Price which Joanne Lobozzo
Page 38 of 75
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<PAGE>
proposes to receive from a Third-Party Transferee, and upon the same terms and
conditions (the "Terms") which a Third-Party Transferee would utilize to make
payment of the Purchase Price. In the event that any consideration is ever
proposed to be provided to Joanne Lobozzo relative to such a proposed transfer
of the Assigned Portion of the Amended and Restated 1992 Option Agreement or the
Assigned Portion of the Option Shares which is other than in cash or a cash
equivalent, then such non-cash consideration will be valued at its monetary
equivalent for purposes of the Right. Within the 60 day period covered by the
written notice, Lobozzo must notify Joanne Lobozzo in writing of his decision
either to exercise the Right (which would require Lobozzo to pay to Joanne
Lobozzo the equivalent of the consideration she would have otherwise received
from a proposed Third-Party Transferee at such times, and on such Terms, as a
proposed Third-Party Transferee would have paid with regard to a proposed
transfer), or to reject the Right. In the event that Lobozzo either rejects the
Right or does not respond in writing prior to the end of the 60 day period, then
Delta shall be entitled to exercise the Right for an additional thirty (30) days
after the expiration of the original sixty (60) day period by paying the same
Purchase Price on the same Terms as originally offered to Lobozzo. If neither
Lobozzo nor Delta has exercised the Right by the expiration of all time periods
set forth in this paragraph (B), then Joanne Lobozzo shall be free to transfer
the Assigned Portion of the 1992 Option Agreement or the Assigned Portion of the
Option Shares free from the conditions of the Right but subject to the other
conditions of this Securities Document.
C. A proposed transfer during the life of Joanne Lobozzo, either by
gift or otherwise without consideration, will require the same written
notification required by paragraph (B), and will entitled Lobozzo, or if he does
not accept, Delta, to receive the Assigned Portion of the Amended and Restated
1992 Option Agreement or the Assigned Portion of the Option Shares, without
consideration. A transfer as a result of the death of Joanne Lobozzo, either by
intestacy or by will, shall entitle Lobozzo, or Delta if Lobozzo rejects such
transfer, to acquire the Assigned Portion of the 1992 Option Agreement or the
Assigned Portion of the Option Shares upon payment to the estate of Joanne
Lobozzo the fair market value of the Assigned Portion of the Amended and
Restated 1992 Option Agreement or the Assigned Portion of the Option Shares as
of the date of the death of Joanne M. Lobozzo. Such amount is to be paid to the
personal representative of Joanne Lobozzo commencing six months after the date
of her death and the payments are to be completed in equal annual portions, with
interest at the prime rate of Manufacturers & Traders Trust Company as in effect
from time to time, over a five year period from the date of her death, with a
right to prepay without penalty.
Page 39 of 75
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<PAGE>
D. Anything to the contrary notwithstanding in this Securities
Document, no transfer shall ever be made of all or any portion of the Assigned
Portion of the Amended and Restated 1992 Option Agreement or the Assigned
Portion of the Option Shares unless a Third-Party Transferee executes such
documents as are satisfactory to Lobozzo, Delta and each of their respective
counsel relative to compliance with federal or state securities statutes or
regulations, and otherwise agrees to be bound by the terms of the Amended and
Restated 1992 Option Agreement.
E. The Right to acquire the Assigned Portion of the Option Shares
shall be applicable to both the Amended and Restated 1992 Option Agreement in
the original face amount of 652,175 Option Shares, as well as to any Option
Shares ever issued as a result of the full or partial exercise of the Amended
and Restated 1992 Option Agreement in the original face amount of 652,175 common
shares.
II. Transfer of Pledge Obligations and other matters.
6. Lobozzo has pledged to National Canada Finance Corporation ("NCFC")
480,000 Common Shares (the "Pledged Shares") pursuant to a certain Pledge
Security Agreement between Lobozzo and NCFC dated October 10, 1996 ("Pledge
Agreement"), a copy of which is annexed hereto as Exhibit B.
7. The Pledge Agreement was executed between Lobozzo and NCFC at the time
that Delta issued its Amended and Restated Promissory Note to NCFC on October
10, 1996 (the "NCFC Promissory Note"), and the Pledge Agreement provides, in
part, that in addition to the Pledge of the Pledged Shares, Lobozzo would, under
certain circumstances if there is a default under the NCFC Promissory Note,
assign to NCFC a portion of Lobozzo's option from Delta issued in May, 1995 (the
"May 1995 Option Agreement"), such portion to be for a number of common shares
of Delta (the "Option Shares") which, when added to the Pledged Shares, shall
give NCFC the right to 17 1/2% of the issued and outstanding common shares of
Delta.
8. Lobozzo has transferred to Joanne Lobozzo pursuant to an Option
Transfer Document, annexed hereto as Exhibit C, half of the May, 1995 Option
agreement for 5,720,237 common shares by a Restated and Revised Option Agreement
dated as of December 30, 1996 (the "Joanne Restated Option Agreement").
9. Lobozzo hereby transfers and assigns to Joanne Lobozzo, and Joanne
Lobozzo hereby accepts from Lobozzo, the transfer of the obligations of Lobozzo
under the Pledge Agreement to the effect that, in the event that Lobozzo is ever
required to deliver any Option Shares to NCFC, Joanne Lobozzo will take such
actions: (a) if the Joanne Restated Option Agreement is unexercised, to assign
Page 40 of 75
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<PAGE>
to NCFC, pursuant to the form of Exhibit B annexed to the Pledge Agreement, a
portion of Joanne Lobozzo's portion of the Joanne Restated Option Agreement,
representing half of the amount of the Option Shares required to be delivered to
NCFC by Lobozzo; or (b) if the Joanne Restated Option Agreement has been
exercised, to assign to NCFC, a portion of Joanne Lobozzo's Option Shares
received as a result of any such exercise, representing half of the amount of
the Option Shares required to be delivered to NCFC by Lobozzo.
10. Joanne Lobozzo covenants and agrees that, so long as the obligation
exists to provide any options, or common shares, to NCFC pursuant to the Pledge
Agreement, she will retain in her sole name a sufficient portion of such option,
or a sufficient portion of common shares, or both, to enable her to fulfill her
obligations pursuant to paragraph 8 of this Securities Document.
11. Lobozzo hereby transfers to Joanne Lobozzo half of his right to
receive back from NCFC the Pledged Shares. In the event that the Pledged Shares
are ever returned, in whole or in part, by NCFC to Lobozzo, Lobozzo agrees to
transfer half of those Pledged Shares to Joanne Lobozzo, such transfer to be
effective as of the date of this Securities Document.
The Board of Directors of Delta has approved the assignment of the portion
of the 1992 Option Agreement which is being effectuated by this Securities
Document. The original 1992 Option Agreement is annexed hereto for cancellation
upon issuance: (a) to Lobozzo of an Amended and Restated Option Agreement for
652,175 Option Shares; and (b) to Joanne Lobozzo of an Amended and Restated
Option Agreement for 652,175 Option Shares.
IN WITNESS WHEREOF, this Securities Transfer Document has been executed as
of the date set forth below.
January 13, 1997 /s/ Joseph M. Lobozzo II
---------------------------
Joseph M. Lobozzo
January 13, 1997 /s/ Joanne M. Lobozzo
---------------------------
Joanne M. Lobozzo
January 13, 1997 DELTA COMPUTEC INC.
By: /s/ John DeVito
------------------------
John DeVito, President
January 13, 1997 DELTA DATA NET, INC.
By: /s/ John DeVito
------------------------
John DeVito, President
Page 41 of 75
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<PAGE>
THE SECURITIES REPRESENTED BY THIS SECOND AMENDED AND RESTATED OCTOBER 1992
OPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), OR APPLICABLE STATE SECURITIES LAWS ("STATE ACTS"), AND CAN NOT
BE SOLD, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED UNLESS IN COMPLIANCE
WITH THE ACT AND STATE ACTS AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
DELTA COMPUTEC INC.
SECOND AMENDED AND RESTATED OCTOBER 1992 OPTION AGREEMENT
JOSEPH M. LOBOZZO II - 652,175 Common Shares
Option to Purchase Six Hundred Fifty-two Thousand One Hundred Seventy-five
(652,175) common shares of Delta Computec Inc.
Date of Original Issue: October 28, 1992
Date of amendment and restatement: February 16, 1995.
Date of Second Amendment and Restatement: February 19, 1997
This Second Amended and Restated October 1992 Option Agreement (the
"Second Restated October 1992 Option Agreement"), is issued in accordance with a
certain Securities Transfer Document (the "Securities Transfer Document",
annexed hereto). This Second Restated October 1992 Option Agreement is issued by
Delta Computec Inc., a corporation duly organized and existing under the laws of
the State of New York (herein referred to as "Delta"), with an office for the
conduct of business located at 900 Huyler Street, Teterboro, New Jersey 07608,
and Joseph M. Lobozzo II (the "OPTIONEE" or "JOSEPH LOBOZZO"), for value
previously received by Delta.
This Second Restated October 1992 Option Agreement grants an option (the
"Option") to OPTIONEE to purchase up to Six Hundred Fifty-two Thousand One
Hundred Seventy-five (652,175) common shares of Delta (the "Option Shares"),
pursuant to the terms and conditions set forth in this Second Restated October
1992 Option Agreement. This Second Restated October 1992 Option Agreement is
issued in replacement for an Option Agreement originally issued to JOSEPH
LOBOZZO on October 28, 1992, in the face amount of One Million Three Hundred
Four Thousand Three Hundred Fifty (1,304,350) common shares (the "Original
October 1992 Option Agreement"), and amended and restated on February 16, 1995,
to extend the expiration date from October 28, 1995, to January 31, 1998 (the
"First Restated October 1992 Option Agreement").
This Second Restated October 1992 Option Agreement is also issued in
recognition of a transfer of one-half of the Option from JOSEPH LOBOZZO to his
spouse, Joanne M. Lobozzo ("JOANNE LOBOZZO") on February 19, 1997, pursuant to
the Securities Transfer Document, while retaining in JOSEPH LOBOZZO the
remaining one-half of the Option. The transfer of a portion of the Original
October 1992 Option Agreement from JOSEPH LOBOZZO to JOANNE LOBOZZO was
consented to and approved by Delta's Board of Directors.
Page 42 of 75
<PAGE>
The Option Shares shall be purchasable at a price for each common share of
forty-six cents ($.46). The Option shall be exercisable, in whole or in part, at
any time from and after the date of its original issuance, through 3:00 P.M. on
January 31, 1998 (the "Exercise Date"). A partial exercise of the Option must be
an exercise of at least One Hundred Thousand (100,000) Option Shares. In order
to exercise all or any part of this Option, OPTIONEE shall be required to
complete, execute and transmit to Delta, the Option Exercise Form annexed to
this Option Agreement as Exhibit A, and, simultaneously therewith, to remit to
Delta by cashier's check or certified check, funds for each Option Share as to
which the Option Exercise Form applies. This Second Restated October 1992 Option
Agreement is not transferrable and the original option was not exercisable
before June 2, 1993. Delta acknowledges that the Original October 1992 Option
Agreement was issued for financial consulting and loan accommodation services
rendered by JOSEPH LOBOZZO to Delta, and was not, in any manner, issued to
JOSEPH LOBOZZO for services rendered, or to be rendered, to Delta as a director.
The Original October 1992 Option Agreement was subject to ratification at the
next annual or special meeting of shareholders of Delta.
As of the date of the Original October 1992 Option Agreement, and as of
the date of this Second Restated October 1992 Option Agreement, Delta represents
to OPTIONEE that the capitalization of Delta consists of 20,000,000 authorized
common shares, $.01 par value, of which 3,072,325 common shares were issued and
outstanding as of October 28, 1992, and of which 6,811,575 common shares were
issued an outstanding as of February 19, 1997, and 5,000,000 authorized
preferred shares, $.01 par value, of which no preferred shares have ever been
issued or outstanding. As of the date of this Second Restated October 1992
Option Agreement, Delta has authority to issue up to 600,000 common shares
pursuant to an Incentive Stock Option Plan and up to 100,000 common shares
pursuant to a Non-qualified Option Plan for directors, some of which common
shares pursuant to each plan have been issued.
The Exercise Price shall be subject to adjustment from time to time as
follows:
If Delta shall: (A) pay a dividend or other distribution on its capital
stock in its common shares; (B) subdivide its outstanding common shares into a
greater number of common shares; or (C) combine its outstanding common shares
into a smaller number of common shares; then the Exercise Price in effect
immediately prior to the occurrence of any event set forth in subclauses (A),
(B) or (C) of this sentence, shall be adjusted proportionately to the effect
that OPTIONEE, upon submission of an Option Exercise Form relating to all or any
part of the Option Shares, after the record date fixing shareholders to be
affected by such event, shall be entitled to receive upon exercise the number of
such common shares of Delta which OPTIONEE would have been entitled to receive
after the happening of such event set forth in subclauses (A), (B)
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<PAGE>
or (C) had any such exercise occurred immediately prior to such record date.
Such adjustment shall be made whenever any such event shall occur, and also
shall be effective retroactively as to any exercise which occurs between such
record date and the date of the occurrence of any such event set forth in
subclauses (A), (B) or (C) of the first sentence of this paragraph.
In the event of any: (i) consolidation or merger of Delta (other than a
consolidation or merger in which Delta is the surviving entity); (ii) sale,
conveyance, lease, or transfer of all or substantially all of the property or
assets of Delta; (iii) reclassification, capital reorganization or change in
Delta's common shares (other than solely a change in par value, or from par
value to no par value); or (iv) consolidation or merger of another entity into
Delta in which there is a reclassification or change of Delta's common shares,
then, and in each such event, OPTIONEE shall have the right thereafter to
convert the Option Shares then represented by this Second Restated October 1992
Option Agreement into the kind and amount of capital shares and other securities
and property receivable upon such capitalization, reclassification, sale,
merger, or other change, by holders of the number of Option Shares as to which
this Second Restated October 1992 Option Agreement might have been exercised
immediately prior to the occurrence of any such event.
In case this Second Restated October 1992 Option Agreement is exercised in
part only, upon transmittal of an Option Exercise Form to Delta at its principal
offices together with the required payment, Delta shall cancel this Second
Restated October 1992 Option Agreement and authenticate and deliver to OPTIONEE
a new Second Restated October 1992 Option Agreement relating to the number of
Option Shares of the unexpired portion of this Second Restated October 1992
Option Agreement, with the same terms and conditions contained in this Second
Restated October 1992 Option Agreement.
In case this Second Restated October 1992 Option Agreement is exercised in
full, OPTIONEE shall be required to surrender this Second Restated October 1992
Option Agreement to Delta, and, upon surrender of this Second Restated October
1992 Option Agreement to Delta at its principal offices, this Second Restated
October 1992 Option Agreement shall be cancelled by Delta and shall be of no
further force and effect.
No fractional shares will be issued upon any exercise, but an adjustment
in cash will be made at a rate equal to the closing price for the common shares
of Delta on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ") (or on any market then obtaining to the Delta common shares),
at the close of business three (3) days prior to the receipt by Delta of the
Option Exercise Form, in respect of any fraction of a share which would
otherwise be issuable upon the submission of an Option Exercise Form conversion.
Page 44 of 75
<PAGE>
If at any time Delta shall propose: (a) to fix a record date for the
making of any monetary distribution, or the distribution or issuance of stock or
securities, or to effect the subdivision or combination of the outstanding
common shares of Delta; or (b) to effect any reclassification or change of
outstanding common shares of Delta, through any consolidation, merger,
conveyance, transfer or other disposition; or (c) to effect any liquidation,
dissolution or winding up of Delta; then, and in any one or more of such cases,
Delta shall cause notice thereof to be mailed to OPTIONEE at such address as
appears on the Option Register at least 20 Business Days prior to the date on
which: (i) the books of Delta shall close, or a record be taken, for such
distribution, subdivision, combination or change to the Certificate of
Incorporation; or (ii) such subdivision or combination (if the books are not
closed and no record is taken therefor) or such reclassification, change,
consolidation, merger, conveyance, transfer, liquidation, dissolution, or
winding-up shall be effective, as the case may be.
Delta covenants that it will at all times reserve and keep available,
solely for the purpose of issuance or delivery upon exercise of this Second
Restated October 1992 Option Agreement as herein provided, such number of common
shares of Delta as shall be issuable upon the exercise of this Second Restated
October 1992 Option Agreement. Delta covenants that all of its common shares so
reserved, shall, upon payment therefor as set forth in this Second Restated
October 1992 Option Agreement, and upon issuance in accordance with the terms
and conditions of this Second Restated October 1992 Option Agreement, be duly
and validly issued and fully paid and non-assessable.
As promptly as is reasonably practicable after any exercise of the Option
as herein provided, Delta shall deliver or cause to be delivered at the office
of Delta certificates representing the number of fully paid and non-assessable
common shares of Delta as to which this Second Restated October 1992 Option
Agreement may be exercised in accordance with the provisions of this Second
Restated October 1992 Option Agreement and a check or cash in respect of any
fraction of a common share.
Delta shall maintain or cause to be maintained an Option Agreement
Register (the "Option Register") at Delta's offices in Rochester, New York or
Teterboro, New Jersey, listing the names and addresses of all holders of Second
Restated October 1992 Option Agreements in form and substance similar to this
Second Restated October 1992 Option Agreement, now or hereafter arising.
After the issuance date of this Second Restated October 1992 Option
Agreement, OPTIONEE shall, in the case of the proposed issuance of, of the
proposed granting by Delta of, rights or options to purchase Delta's voting
shares of any class or any shares or other securities convertible into or
carrying rights or options to purchase its voting shares of any class, be
notified in writing by the Board of Directors of Delta at least twenty (20)
Page 45 of 75
<PAGE>
days prior to the proposed issuance of such shares or options, and shall have
the option to purchase the shares or securities so offered for sale, or have
granted to OPTIONEE options for the shares or other securities so optioned
("HOLDER'S OPTION"), in such proportions as would, if the HOLDER'S OPTION was
exercised, preserve the relative unlimited voting rights and percentage
ownership of OPTIONEE, and all other persons holding other Second Restated
October 1992 Option Agreements in form and substance similar to this Second
Restated October 1992 Option Agreement (individually, a "HOLDER" and
collectively, "HOLDERS") (taking into account securities held by Affiliated
Entities, to include but not be limited to corporations in which any HOLDER is a
majority stockholder and the persons listed on Schedule A hereto), had the
OPTIONEE fully exercised the Option granted by this Second Restated October 1992
Option Agreement at the issuance date of this Second Restated October 1992
Option Agreement (herein defined as 51% of the voting power of all common shares
of Delta on a fully diluted basis) and at a price or prices not less favorable
than the price or prices at which such shares or other securities are proposed
to be offered for sale or optioned to others, by notifying the Board of
Directors of Delta at least three (3) days prior to the proposed issuance or
optioning of such shares or securities of OPTIONEE's intention to exercise
OPTIONEE's portion of the HOLDER'S OPTION. The OPTIONEE hereby waives the
applicability of this paragraph to the issuance, or reissuance, to JOSEPH
LOBOZZO or to others, of a certain May 1995 Stock Option Agreement (as amended
and restated from time to time) whereby JOSEPH LOBOZZO was granted an option to
purchase up to 11,440,475 common shares of Delta, which May 1995 Stock Option
Agreement later had half of the rights thereunder transferred to JOANNE LOBOZZO.
This Second Restated October 1992 Option Agreement supersedes: (i) the
Original October 1992 Option Agreement; (ii) the First Restated October 1992
Option Agreement; and (iii) any and all prior discussions and negotiations with
regard to the subject matter hereof and may only be amended by a writing
executed by Delta and OPTIONEE. This Second Restated October 1992 Option
Agreement is subject to the provisions of the Securities Transfer Document.
IN WITNESS WHEREOF, on the 19th day of February, 1997, Delta has caused
this Second Amended and Restated October 1992 Option Agreement to be executed in
its corporate name by its President, its corporate seal to be impressed hereon,
and attested by its Secretary or Assistant Secretary.
DELTA COMPUTEC INC.
By: /s/ John DeVito
-------------------------
John DeVito, President
Attest:
/s/ Michael McCusker Accepted and agreed to
- ----------------------
Assistant Secretary
/s/ Joseph M. Lobozzo II
-------------------------
Joseph M. Lobozzo II
Page 46 of 75
<PAGE>
EXHIBIT A
OPTION EXERCISE FORM
The undersigned, the registered holder of the Option granted by the
Second Amended and Restated October 1992 Option Agreement issued by Delta
Computec Inc. ("Delta") on February 19, 1997, pursuant to a Securities Transfer
Document dated January 13, 1997, hereby irrevocably exercises the Option to
purchase the number of common shares of Delta set forth below, and accompanies
this exercise by the payment in full, at a price of $.46 per share, for each and
every share covered by this Option Exercise Form.
NAME OF HOLDER: ____________________________________________
ADDRESS OF HOLDER: ____________________________________________
____________________________________________
TELEPHONE (WITH AREA CODE): ____________________________________________
SOCIAL SECURITY OR
EMPLOYER I.D. NUMBER: ____________________________________________
NUMBER OF SHARES AS TO WHICH
THE OPTION IS EXERCISED
(MINIMUM OF 100,000 UNLESS
THE FACE AMOUNT OF THE RESTATED
OPTION AGREEMENT IS FOR LESS
THAN 100,000 SHARES) ____________________________________________
BALANCE OF RESTATED OPTION
AGREEMENT AFTER EXERCISE ____________________________________________
PAYMENT ATTACHED $ __________________________________________
(CERTIFIED OR
CASHIER'S CHECK)
Page 47 of 75
<PAGE>
THE SECURITIES REPRESENTED BY THIS SECOND AMENDED AND RESTATED OCTOBER 1992
OPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), OR APPLICABLE STATE SECURITIES LAWS ("STATE ACTS"), AND CAN NOT
BE SOLD, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED UNLESS IN COMPLIANCE
WITH THE ACT AND STATE ACTS AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
DELTA COMPUTEC INC.
SECOND AMENDED AND RESTATED OCTOBER 1992 OPTION AGREEMENT
JOSEPH M. LOBOZZO II - 652,175 Common Shares
Option to Purchase Six Hundred Fifty-two Thousand One Hundred Seventy-five
(652,175) common shares of Delta Computec Inc.
Date of Original Issue: October 28, 1992
Date of amendment and restatement: February 16, 1995.
Date of Second Amendment and Restatement: February 19, 1997
This Second Amended and Restated October 1992 Option Agreement (the
"Second Restated October 1992 Option Agreement"), is issued in accordance with a
certain Securities Transfer Document (the "Securities Transfer Document",
annexed hereto). This Second Restated October 1992 Option Agreement is issued by
Delta Computec Inc., a corporation duly organized and existing under the laws of
the State of New York (herein referred to as "Delta"), with an office for the
conduct of business located at 900 Huyler Street, Teterboro, New Jersey 07608,
and Joseph M. Lobozzo II (the "OPTIONEE" or "JOSEPH LOBOZZO"), for value
previously received by Delta.
This Second Restated October 1992 Option Agreement grants an option (the
"Option") to OPTIONEE to purchase up to Six Hundred Fifty-two Thousand One
Hundred Seventy-five (652,175) common shares of Delta (the "Option Shares"),
pursuant to the terms and conditions set forth in this Second Restated October
1992 Option Agreement. This Second Restated October 1992 Option Agreement is
issued in replacement for an Option Agreement originally issued to JOSEPH
LOBOZZO on October 28, 1992, in the face amount of One Million Three Hundred
Four Thousand Three Hundred Fifty (1,304,350) common shares (the "Original
October 1992 Option Agreement"), and amended and restated on February 16, 1995,
to extend the expiration date from October 28, 1995, to January 31, 1998 (the
"First Restated October 1992 Option Agreement").
This Second Restated October 1992 Option Agreement is also issued in
recognition of a transfer of one-half of the Option from JOSEPH LOBOZZO to his
spouse, Joanne M. Lobozzo ("JOANNE LOBOZZO") on February 19, 1997, pursuant to
the Securities Transfer Document, while retaining in JOSEPH LOBOZZO the
remaining one-half of the Option. The transfer of a portion of the Original
October 1992 Option Agreement from JOSEPH LOBOZZO to JOANNE LOBOZZO was
consented to and approved by Delta's Board of Directors.
Page 42 of 75
<PAGE>
The Option Shares shall be purchasable at a price for each common share of
forty-six cents ($.46). The Option shall be exercisable, in whole or in part, at
any time from and after the date of its original issuance, through 3:00 P.M. on
January 31, 1998 (the "Exercise Date"). A partial exercise of the Option must be
an exercise of at least One Hundred Thousand (100,000) Option Shares. In order
to exercise all or any part of this Option, OPTIONEE shall be required to
complete, execute and transmit to Delta, the Option Exercise Form annexed to
this Option Agreement as Exhibit A, and, simultaneously therewith, to remit to
Delta by cashier's check or certified check, funds for each Option Share as to
which the Option Exercise Form applies. This Second Restated October 1992 Option
Agreement is not transferrable and the original option was not exercisable
before June 2, 1993. Delta acknowledges that the Original October 1992 Option
Agreement was issued for financial consulting and loan accommodation services
rendered by JOSEPH LOBOZZO to Delta, and was not, in any manner, issued to
JOSEPH LOBOZZO for services rendered, or to be rendered, to Delta as a director.
The Original October 1992 Option Agreement was subject to ratification at the
next annual or special meeting of shareholders of Delta.
As of the date of the Original October 1992 Option Agreement, and as of
the date of this Second Restated October 1992 Option Agreement, Delta represents
to OPTIONEE that the capitalization of Delta consists of 20,000,000 authorized
common shares, $.01 par value, of which 3,072,325 common shares were issued and
outstanding as of October 28, 1992, and of which 6,811,575 common shares were
issued an outstanding as of February 19, 1997, and 5,000,000 authorized
preferred shares, $.01 par value, of which no preferred shares have ever been
issued or outstanding. As of the date of this Second Restated October 1992
Option Agreement, Delta has authority to issue up to 600,000 common shares
pursuant to an Incentive Stock Option Plan and up to 100,000 common shares
pursuant to a Non-qualified Option Plan for directors, some of which common
shares pursuant to each plan have been issued.
The Exercise Price shall be subject to adjustment from time to time as
follows:
If Delta shall: (A) pay a dividend or other distribution on its capital
stock in its common shares; (B) subdivide its outstanding common shares into a
greater number of common shares; or (C) combine its outstanding common shares
into a smaller number of common shares; then the Exercise Price in effect
immediately prior to the occurrence of any event set forth in subclauses (A),
(B) or (C) of this sentence, shall be adjusted proportionately to the effect
that OPTIONEE, upon submission of an Option Exercise Form relating to all or any
part of the Option Shares, after the record date fixing shareholders to be
affected by such event, shall be entitled to receive upon exercise the number of
such common shares of Delta which OPTIONEE would have been entitled to receive
after the happening of such event set forth in subclauses (A), (B)
Page 43 of 75
<PAGE>
or (C) had any such exercise occurred immediately prior to such record date.
Such adjustment shall be made whenever any such event shall occur, and also
shall be effective retroactively as to any exercise which occurs between such
record date and the date of the occurrence of any such event set forth in
subclauses (A), (B) or (C) of the first sentence of this paragraph.
In the event of any: (i) consolidation or merger of Delta (other than a
consolidation or merger in which Delta is the surviving entity); (ii) sale,
conveyance, lease, or transfer of all or substantially all of the property or
assets of Delta; (iii) reclassification, capital reorganization or change in
Delta's common shares (other than solely a change in par value, or from par
value to no par value); or (iv) consolidation or merger of another entity into
Delta in which there is a reclassification or change of Delta's common shares,
then, and in each such event, OPTIONEE shall have the right thereafter to
convert the Option Shares then represented by this Second Restated October 1992
Option Agreement into the kind and amount of capital shares and other securities
and property receivable upon such capitalization, reclassification, sale,
merger, or other change, by holders of the number of Option Shares as to which
this Second Restated October 1992 Option Agreement might have been exercised
immediately prior to the occurrence of any such event.
In case this Second Restated October 1992 Option Agreement is exercised in
part only, upon transmittal of an Option Exercise Form to Delta at its principal
offices together with the required payment, Delta shall cancel this Second
Restated October 1992 Option Agreement and authenticate and deliver to OPTIONEE
a new Second Restated October 1992 Option Agreement relating to the number of
Option Shares of the unexpired portion of this Second Restated October 1992
Option Agreement, with the same terms and conditions contained in this Second
Restated October 1992 Option Agreement.
In case this Second Restated October 1992 Option Agreement is exercised in
full, OPTIONEE shall be required to surrender this Second Restated October 1992
Option Agreement to Delta, and, upon surrender of this Second Restated October
1992 Option Agreement to Delta at its principal offices, this Second Restated
October 1992 Option Agreement shall be cancelled by Delta and shall be of no
further force and effect.
No fractional shares will be issued upon any exercise, but an adjustment
in cash will be made at a rate equal to the closing price for the common shares
of Delta on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ") (or on any market then obtaining to the Delta common shares),
at the close of business three (3) days prior to the receipt by Delta of the
Option Exercise Form, in respect of any fraction of a share which would
otherwise be issuable upon the submission of an Option Exercise Form conversion.
Page 44 of 75
<PAGE>
If at any time Delta shall propose: (a) to fix a record date for the
making of any monetary distribution, or the distribution or issuance of stock or
securities, or to effect the subdivision or combination of the outstanding
common shares of Delta; or (b) to effect any reclassification or change of
outstanding common shares of Delta, through any consolidation, merger,
conveyance, transfer or other disposition; or (c) to effect any liquidation,
dissolution or winding up of Delta; then, and in any one or more of such cases,
Delta shall cause notice thereof to be mailed to OPTIONEE at such address as
appears on the Option Register at least 20 Business Days prior to the date on
which: (i) the books of Delta shall close, or a record be taken, for such
distribution, subdivision, combination or change to the Certificate of
Incorporation; or (ii) such subdivision or combination (if the books are not
closed and no record is taken therefor) or such reclassification, change,
consolidation, merger, conveyance, transfer, liquidation, dissolution, or
winding-up shall be effective, as the case may be.
Delta covenants that it will at all times reserve and keep available,
solely for the purpose of issuance or delivery upon exercise of this Second
Restated October 1992 Option Agreement as herein provided, such number of common
shares of Delta as shall be issuable upon the exercise of this Second Restated
October 1992 Option Agreement. Delta covenants that all of its common shares so
reserved, shall, upon payment therefor as set forth in this Second Restated
October 1992 Option Agreement, and upon issuance in accordance with the terms
and conditions of this Second Restated October 1992 Option Agreement, be duly
and validly issued and fully paid and non-assessable.
As promptly as is reasonably practicable after any exercise of the Option
as herein provided, Delta shall deliver or cause to be delivered at the office
of Delta certificates representing the number of fully paid and non-assessable
common shares of Delta as to which this Second Restated October 1992 Option
Agreement may be exercised in accordance with the provisions of this Second
Restated October 1992 Option Agreement and a check or cash in respect of any
fraction of a common share.
Delta shall maintain or cause to be maintained an Option Agreement
Register (the "Option Register") at Delta's offices in Rochester, New York or
Teterboro, New Jersey, listing the names and addresses of all holders of Second
Restated October 1992 Option Agreements in form and substance similar to this
Second Restated October 1992 Option Agreement, now or hereafter arising.
After the issuance date of this Second Restated October 1992 Option
Agreement, OPTIONEE shall, in the case of the proposed issuance of, of the
proposed granting by Delta of, rights or options to purchase Delta's voting
shares of any class or any shares or other securities convertible into or
carrying rights or options to purchase its voting shares of any class, be
notified in writing by the Board of Directors of Delta at least twenty (20)
Page 45 of 75
<PAGE>
days prior to the proposed issuance of such shares or options, and shall have
the option to purchase the shares or securities so offered for sale, or have
granted to OPTIONEE options for the shares or other securities so optioned
("HOLDER'S OPTION"), in such proportions as would, if the HOLDER'S OPTION was
exercised, preserve the relative unlimited voting rights and percentage
ownership of OPTIONEE, and all other persons holding other Second Restated
October 1992 Option Agreements in form and substance similar to this Second
Restated October 1992 Option Agreement (individually, a "HOLDER" and
collectively, "HOLDERS") (taking into account securities held by Affiliated
Entities, to include but not be limited to corporations in which any HOLDER is a
majority stockholder and the persons listed on Schedule A hereto), had the
OPTIONEE fully exercised the Option granted by this Second Restated October 1992
Option Agreement at the issuance date of this Second Restated October 1992
Option Agreement (herein defined as 51% of the voting power of all common shares
of Delta on a fully diluted basis) and at a price or prices not less favorable
than the price or prices at which such shares or other securities are proposed
to be offered for sale or optioned to others, by notifying the Board of
Directors of Delta at least three (3) days prior to the proposed issuance or
optioning of such shares or securities of OPTIONEE's intention to exercise
OPTIONEE's portion of the HOLDER'S OPTION. The OPTIONEE hereby waives the
applicability of this paragraph to the issuance, or reissuance, to JOSEPH
LOBOZZO or to others, of a certain May 1995 Stock Option Agreement (as amended
and restated from time to time) whereby JOSEPH LOBOZZO was granted an option to
purchase up to 11,440,475 common shares of Delta, which May 1995 Stock Option
Agreement later had half of the rights thereunder transferred to JOANNE LOBOZZO.
This Second Restated October 1992 Option Agreement supersedes: (i) the
Original October 1992 Option Agreement; (ii) the First Restated October 1992
Option Agreement; and (iii) any and all prior discussions and negotiations with
regard to the subject matter hereof and may only be amended by a writing
executed by Delta and OPTIONEE. This Second Restated October 1992 Option
Agreement is subject to the provisions of the Securities Transfer Document.
IN WITNESS WHEREOF, on the 19th day of February, 1997, Delta has caused
this Second Amended and Restated October 1992 Option Agreement to be executed in
its corporate name by its President, its corporate seal to be impressed hereon,
and attested by its Secretary or Assistant Secretary.
DELTA COMPUTEC INC.
By: /s/ John DeVito
-------------------------
John DeVito, President
Attest:
/s/ Michael McCusker Accepted and agreed to
- ----------------------
Assistant Secretary
/s/ Joseph M. Lobozzo II
-------------------------
Joseph M. Lobozzo II
Page 46 of 75
<PAGE>
EXHIBIT A
OPTION EXERCISE FORM
The undersigned, the registered holder of the Option granted by the
Second Amended and Restated October 1992 Option Agreement issued by Delta
Computec Inc. ("Delta") on February 19, 1997, pursuant to a Securities Transfer
Document dated January 13, 1997, hereby irrevocably exercises the Option to
purchase the number of common shares of Delta set forth below, and accompanies
this exercise by the payment in full, at a price of $.46 per share, for each and
every share covered by this Option Exercise Form.
NAME OF HOLDER: ____________________________________________
ADDRESS OF HOLDER: ____________________________________________
____________________________________________
TELEPHONE (WITH AREA CODE): ____________________________________________
SOCIAL SECURITY OR
EMPLOYER I.D. NUMBER: ____________________________________________
NUMBER OF SHARES AS TO WHICH
THE OPTION IS EXERCISED
(MINIMUM OF 100,000 UNLESS
THE FACE AMOUNT OF THE RESTATED
OPTION AGREEMENT IS FOR LESS
THAN 100,000 SHARES) ____________________________________________
BALANCE OF RESTATED OPTION
AGREEMENT AFTER EXERCISE ____________________________________________
PAYMENT ATTACHED $ __________________________________________
(CERTIFIED OR
CASHIER'S CHECK)
Page 47 of 75
<PAGE>
THE SECURITIES REPRESENTED BY THIS SECOND AMENDED AND RESTATED OCTOBER 1992
OPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), OR APPLICABLE STATE SECURITIES LAWS ("STATE ACTS"), AND CAN NOT
BE SOLD, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED UNLESS IN COMPLIANCE
WITH THE ACT AND STATE ACTS AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
DELTA COMPUTEC INC.
SECOND AMENDED AND RESTATED OCTOBER 1992 OPTION AGREEMENT
JOANNE M. LOBOZZO - 652,175 Common Shares
Option to Purchase Six Hundred Fifty-two Thousand One Hundred Seventy-five
(652,175) common shares of Delta Computec Inc.
Date of Original Issue: October 28, 1992
Date of amendment and restatement: February 16, 1995.
Date of Second Amendment and Restatement: February 19, 1997
This Second Amended and Restated October 1992 Option Agreement (the
"Second Restated October 1992 Option Agreement"), is issued in accordance with a
certain Securities Transfer Document (the "Securities Transfer Document",
annexed hereto). This Second Restated October 1992 Option Agreement is issued by
Delta Computec Inc., a corporation duly organized and existing under the laws of
the State of New York (herein referred to as "Delta"), with an office for the
conduct of business located at 900 Huyler Street, Teterboro, New Jersey 07608,
and Joanne M. Lobozzo (the"OPTIONEE" or "JOANNE LOBOZZO"), for value previously
received by Delta.
This Second Restated October 1992 Option Agreement grants an option (the
"Option") to OPTIONEE to purchase up to Six Hundred Fifty-two Thousand One
Hundred Seventy-five (652,175) common shares of Delta (the "Option Shares"),
pursuant to the terms and conditions set forth in this Second Restated October
1992 Option Agreement. This Second Restated October 1992 Option Agreement is
issued in replacement for an Option Agreement originally issued to the spouse of
JOANNE LOBOZZO, Joseph M. Lobozzo II ("JOSEPH LOBOZZO") on October 28, 1992, in
the face amount of One Million Three Hundred Four Thousand Three Hundred Fifty
(1,304,350) common shares (the "Original October 1992 Option Agreement"), and
amended and restated on February 16, 1995, to extend the expiration date from
October 28, 1995, to January 31, 1998 (the "First Restated October 1992 Option
Agreement").
This Second Restated October 1992 Option Agreement is also issued in
recognition of a transfer of one-half of the Option from JOSEPH LOBOZZO to
JOANNE LOBOZZO on February 19, 1997, pursuant to the Securities Transfer
Document, while retaining in JOSEPH LOBOZZO the remaining one-half of the
Option. The transfer of a portion of the Original October 1992 Option Agreement
from JOSEPH LOBOZZO to JOANNE LOBOZZO was consented to and approved by Delta's
Board of Directors.
Page 48 of 75
<PAGE>
The Option Shares shall be purchasable at a price for each common share of
forty-six cents ($.46). The Option shall be exercisable, in whole or in part, at
any time from and after the date of its original issuance, through 3:00 P.M. on
January 31, 1998 (the "Exercise Date"). A partial exercise of the Option must be
an exercise of at least One Hundred Thousand (100,000) Option Shares. In order
to exercise all or any part of this Option, OPTIONEE shall be required to
complete, execute and transmit to Delta, the Option Exercise Form annexed to
this Option Agreement as Exhibit A, and, simultaneously therewith, to remit to
Delta by cashier's check or certified check, funds for each Option Share as to
which the Option Exercise Form applies. This Second Restated October 1992 Option
Agreement is not transferrable and the original option was not exercisable
before June 2, 1993. Delta acknowledges that the Original October 1992 Option
Agreement was issued for financial consulting and loan accommodation services
rendered by JOSEPH LOBOZZO to Delta, and was not, in any manner, issued to
JOSEPH LOBOZZO for services rendered, or to be rendered, to Delta as a director.
The Original October 1992 Option Agreement was subject to ratification at the
next annual or special meeting of shareholders of Delta.
As of the date of the Original October 1992 Option Agreement, and as of
the date of this Second Restated October 1992 Option Agreement, Delta represents
to OPTIONEE that the capitalization of Delta consists of 20,000,000 authorized
common shares, $.01 par value, of which 3,072,325 common shares were issued and
outstanding as of October 28, 1992, and of which 6,811,575 common shares were
issued an outstanding as of February 19, 1997, and 5,000,000 authorized
preferred shares, $.01 par value, of which no preferred shares have ever been
issued or outstanding. As of the date of this Second Restated October 1992
Option Agreement, Delta has authority to issue up to 600,000 common shares
pursuant to an Incentive Stock Option Plan and up to 100,000 common shares
pursuant to a Non-qualified Option Plan for directors, some of which common
shares pursuant to each plan have been issued.
The Exercise Price shall be subject to adjustment from time to time as
follows:
If Delta shall: (A) pay a dividend or other distribution on its capital
stock in its common shares; (B) subdivide its outstanding common shares into a
greater number of common shares; or (C) combine its outstanding common shares
into a smaller number of common shares; then the Exercise Price in effect
immediately prior to the occurrence of any event set forth in subclauses (A),
(B) or (C) of this sentence, shall be adjusted proportionately to the effect
that OPTIONEE, upon submission of an Option Exercise Form relating to all or any
part of the Option Shares, after the record date fixing shareholders to be
affected by such event, shall be entitled to receive upon exercise the number of
such common shares of Delta which OPTIONEE would have been entitled to receive
after the happening of such event set forth in subclauses (A), (B)
Page 49 of 75
<PAGE>
or (C) had any such exercise occurred immediately prior to such record date.
Such adjustment shall be made whenever any such event shall occur, and also
shall be effective retroactively as to any exercise which occurs between such
record date and the date of the occurrence of any such event set forth in
subclauses (A), (B) or (C) of the first sentence of this paragraph.
In the event of any: (i) consolidation or merger of Delta (other than a
consolidation or merger in which Delta is the surviving entity); (ii) sale,
conveyance, lease, or transfer of all or substantially all of the property or
assets of Delta; (iii) reclassification, capital reorganization or change in
Delta's common shares (other than solely a change in par value, or from par
value to no par value); or (iv) consolidation or merger of another entity into
Delta in which there is a reclassification or change of Delta's common shares,
then, and in each such event, OPTIONEE shall have the right thereafter to
convert the Option Shares then represented by this Second Restated October 1992
Option Agreement into the kind and amount of capital shares and other securities
and property receivable upon such capitalization, reclassification, sale,
merger, or other change, by holders of the number of Option Shares as to which
this Second Restated October 1992 Option Agreement might have been exercised
immediately prior to the occurrence of any such event.
In case this Second Restated October 1992 Option Agreement is exercised in
part only, upon transmittal of an Option Exercise Form to Delta at its principal
offices together with the required payment, Delta shall cancel this Second
Restated October 1992 Option Agreement and authenticate and deliver to OPTIONEE
a new Second Restated October 1992 Option Agreement relating to the number of
Option Shares of the unexpired portion of this Second Restated October 1992
Option Agreement, with the same terms and conditions contained in this Second
Restated October 1992 Option Agreement.
In case this Second Restated October 1992 Option Agreement is exercised in
full, OPTIONEE shall be required to surrender this Second Restated October 1992
Option Agreement to Delta, and, upon surrender of this Second Restated October
1992 Option Agreement to Delta at its principal offices, this Second Restated
October 1992 Option Agreement shall be cancelled by Delta and shall be of no
further force and effect.
No fractional shares will be issued upon any exercise, but an adjustment
in cash will be made at a rate equal to the closing price for the common shares
of Delta on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ") (or on any market then obtaining to the Delta common shares),
at the close of business three (3) days prior to the receipt by Delta of the
Option Exercise Form, in respect of any fraction of a share which would
otherwise be issuable upon the submission of an Option Exercise Form conversion.
Page 50 of 75
<PAGE>
If at any time Delta shall propose: (a) to fix a record date for the
making of any monetary distribution, or the distribution or issuance of stock or
securities, or to effect the subdivision or combination of the outstanding
common shares of Delta; or (b) to effect any reclassification or change of
outstanding common shares of Delta, through any consolidation, merger,
conveyance, transfer or other disposition; or (c) to effect any liquidation,
dissolution or winding up of Delta; then, and in any one or more of such cases,
Delta shall cause notice thereof to be mailed to OPTIONEE at such address as
appears on the Option Register at least 20 Business Days prior to the date on
which: (i) the books of Delta shall close, or a record be taken, for such
distribution, subdivision, combination or change to the Certificate of
Incorporation; or (ii) such subdivision or combination (if the books are not
closed and no record is taken therefor) or such reclassification, change,
consolidation, merger, conveyance, transfer, liquidation, dissolution, or
winding-up shall be effective, as the case may be.
Delta covenants that it will at all times reserve and keep available,
solely for the purpose of issuance or delivery upon exercise of this Second
Restated October 1992 Option Agreement as herein provided, such number of common
shares of Delta as shall be issuable upon the exercise of this Second Restated
October 1992 Option Agreement. Delta covenants that all of its common shares so
reserved, shall, upon payment therefor as set forth in this Second Restated
October 1992 Option Agreement, and upon issuance in accordance with the terms
and conditions of this Second Restated October 1992 Option Agreement, be duly
and validly issued and fully paid and non-assessable.
As promptly as is reasonably practicable after any exercise of the Option
as herein provided, Delta shall deliver or cause to be delivered at the office
of Delta certificates representing the number of fully paid and non-assessable
common shares of Delta as to which this Second Restated October 1992 Option
Agreement may be exercised in accordance with the provisions of this Second
Restated October 1992 Option Agreement and a check or cash in respect of any
fraction of a common share.
Delta shall maintain or cause to be maintained an Option Agreement
Register (the "Option Register") at Delta's offices in Rochester, New York or
Teterboro, New Jersey, listing the names and addresses of all holders of Second
Restated October 1992 Option Agreements in form and substance similar to this
Second Restated October 1992 Option Agreement, now or hereafter arising.
After the issuance date of this Second Restated October 1992 Option
Agreement, OPTIONEE shall, in the case of the proposed issuance of, of the
proposed granting by Delta of, rights or options to purchase Delta's voting
shares of any class or any shares or other securities convertible into or
carrying rights or options to purchase its voting shares of any class, be
notified in writing by the Board of Directors of Delta at least twenty (20)
Page 51 of 75
<PAGE>
days prior to the proposed issuance of such shares or options, and shall have
the option to purchase the shares or securities so offered for sale, or have
granted to OPTIONEE options for the shares or other securities so optioned
("HOLDER'S OPTION"), in such proportions as would, if the HOLDER'S OPTION was
exercised, preserve the relative unlimited voting rights and percentage
ownership of OPTIONEE, and all other persons holding other Second Restated
October 1992 Option Agreements in form and substance similar to this Second
Restated October 1992 Option Agreement (individually, a "HOLDER" and
collectively, "HOLDERS") (taking into account securities held by Affiliated
Entities, to include but not be limited to corporations in which any HOLDER is a
majority stockholder and the persons listed on Schedule A hereto), had the
OPTIONEE fully exercised the Option granted by this Second Restated October 1992
Option Agreement at the issuance date of this Second Restated October 1992
Option Agreement (herein defined as 51% of the voting power of all common shares
of Delta on a fully diluted basis) and at a price or prices not less favorable
than the price or prices at which such shares or other securities are proposed
to be offered for sale or optioned to others, by notifying the Board of
Directors of Delta at least three (3) days prior to the proposed issuance or
optioning of such shares or securities of OPTIONEE's intention to exercise
OPTIONEE's portion of the HOLDER'S OPTION. The OPTIONEE hereby waives the
applicability of this paragraph to the issuance, or reissuance, to JOSEPH
LOBOZZO or to others, of a certain May 1995 Stock Option Agreement (as amended
and restated from time to time) whereby JOSEPH LOBOZZO was granted an option to
purchase up to 11,440,475 common shares of Delta, which May 1995 Stock Option
Agreement later had half of the rights thereunder transferred to JOANNE LOBOZZO.
This Second Restated October 1992 Option Agreement supersedes: (i) the
Original October 1992 Option Agreement; (ii) the First Restated October 1992
Option Agreement; and (iii) any and all prior discussions and negotiations with
regard to the subject matter hereof and may only be amended by a writing
executed by Delta and OPTIONEE. This Second Restated October 1992 Option
Agreement is subject to the provisions of the Securities Transfer Document.
IN WITNESS WHEREOF, on the 19th day of February, 1997, Delta has caused
this Second Amended and Restated October 1992 Option Agreement to be executed in
its corporate name by its President, its corporate seal to be impressed hereon,
and attested by its Secretary or Assistant Secretary.
DELTA COMPUTEC INC.
By: /s/ John DeVito
-------------------------
John DeVito, President
Attest:
/s/ Michael McCusker Accepted and agreed to
- ----------------------
Assistant Secretary
/s/ Joanne M. Lobozzo
-------------------------
Joanne M. Lobozzo
Page 52 of 75
<PAGE>
EXHIBIT A
OPTION EXERCISE FORM
The undersigned, the registered holder of the Option granted by the
Second Amended and Restated October 1992 Option Agreement issued by Delta
Computec Inc. ("Delta") on February 19, 1997, pursuant to a Securities Transfer
Document dated January 13, 1997, hereby irrevocably exercises the Option to
purchase the number of common shares of Delta set forth below, and accompanies
this exercise by the payment in full, at a price of $.46 per share, for each and
every share covered by this Option Exercise Form.
NAME OF HOLDER: ____________________________________________
ADDRESS OF HOLDER: ____________________________________________
____________________________________________
TELEPHONE (WITH AREA CODE): ____________________________________________
SOCIAL SECURITY OR
EMPLOYER I.D. NUMBER: ____________________________________________
NUMBER OF SHARES AS TO WHICH
THE OPTION IS EXERCISED
(MINIMUM OF 100,000 UNLESS
THE FACE AMOUNT OF THE RESTATED
OPTION AGREEMENT IS FOR LESS
THAN 100,000 SHARES) ____________________________________________
BALANCE OF RESTATED OPTION
AGREEMENT AFTER EXERCISE ____________________________________________
PAYMENT ATTACHED $ __________________________________________
(CERTIFIED OR
CASHIER'S CHECK)
Page 53 of 75
<PAGE>
THE SECURITIES REPRESENTED BY THIS SECOND AMENDED AND RESTATED 8% SUBORDINATED
DEBENTURE DUE JANUARY 31, 1998, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("ACT"), OR APPLICABLE STATE SECURITIES LAWS ("STATE
ACTS") AND CAN NOT BE SOLD, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED
UNLESS IN COMPLIANCE WITH THE ACT AND STATE ACTS AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.
DELTA DATA NET, INC.
SECOND AMENDED AND RESTATED
8% SUBORDINATED DEBENTURE DUE JANUARY 31, 1998 - No. 1
$300,000.50 Date of Original Issue: October 28, 1992
Date of Amendment and Restatement: February 16, 1995
Date of Second Amendment and Restatement: February 19, 1997
This Second Amended and Restated 8% Subordinated Debenture due January 31,
1998 - No. 1 (the "Second Restated Lobozzo Debenture") of Delta Data Net, Inc.,
a corporation duly organized and existing under the laws of the State of New
York (herein referred to as the "Company"), and guaranteed by Delta Computec
Inc. (herein referred to as the "Guarantor", and collectively with the Company,
the "Borrowers") is one of two Second Restated Lobozzo Debentures being issued
by the Company and guaranteed by the Guarantor, each in the face amount of
$300,000.50 (an aggregate amount of $600,001), to, respectively, Joseph M.
Lobozzo II ("Joseph Lobozzo") and his spouse, Joanne M. Lobozzo ("Joanne
Lobozzo", and collectively, with Joseph M. Lobozzo, the "Lenders").
The Borrowers are also obligated to the Lenders under an Amended and
Restated Credit Agreement dated as of October 10, 1996, which has been amended
by four amendments thereto (as amended, the "October 1996 Credit Agreement").
The October 1996 Credit Agreement, as originally issued, provided the Borrowers
with the ability to borrow pursuant to a secured credit facility, for loans of
up to $2,550,000 from Joseph Lobozzo. The Loans (as defined in the October 1996
Credit Agreement) were evidenced by an Amended and Restated Promissory Note
between the Borrowers and Joseph Lobozzo (the "Lobozzo Note"). Joseph Lobozzo
entered into the October 1996 Credit Agreement and the Lobozzo Note as the
assignee by a certain Assignment dated October 10, 1996 ("Assignment"), of a
portion of the obligations of the Borrowers which previously existed between the
Borrowers and their prior commercial lender, National Canada Finance Corp.
("NCFC"), pursuant to an amended and restated credit agreement between the
Borrowers and NCFC (collectively, as amended, the "NCFC Credit Agreement"). All
obligations of NCFC under the NCFC Credit Agreement or the promissory notes
issued from time to time from the Borrower to NCFC under the NCFC Credit
Agreement, which were assigned by NCFC to Lobozzo by the Assignment, are now
covered under the October 1996 Credit Agreement.
Page 54 of 75
<PAGE>
Half of the obligations of the Borrowers to Joseph Lobozzo pursuant to the
October 1996 Credit Agreement and the Lobozzo Note (and certain other
obligations of Borrowers to Joseph Lobozzo, including half of the obligations
pursuant to this 8% Amended and Restated Subordinated Debenture) were
subsequently transferred by a Securities Transfer Document dated January 13,
1997 ("Securities Transfer Document") from Joseph Lobozzo to Joanne Lobozzo. The
obligations of the Borrowers under the October 1996 Credit Agreement and the
obligations of the Borrowers under the Lobozzo Note and all other instruments
and documents relating to each of those obligations, constitute "Senior
Indebtedness".
The original 8% Subordinated Debenture issued October 28, 1992, due
October 28, 1995 (the "Original Lobozzo Debenture"), as amended by an Amended
and Restated 8% Subordinated Debenture issued February 16, 1995, due January 31,
1998 (the "First Restated Lobozzo Debenture"), is being amended and restated by
this Second Restated Lobozzo Debenture, in order, in part, to induce Lenders to
continue their lending relationship with the Borrowers.
NOW, THEREFORE, this Second Restated Lobozzo Debenture - No. 1, hereby
amends and restates the Original Lobozzo Debenture and the First Restated
Lobozzo Debenture, to read as follows:
Delta Data Net, Inc., for value received, hereby promises to pay to Joseph
Lobozzo, 690 Portland Avenue, Rochester, New York 14621 (herein collectively,
together with Joanne Lobozzo, the recipient of the Second Restated Lobozzo
Debenture - No. 2, and any other person who may ever hold one of this series of
Second Restated Lobozzo Debentures, referred to individually as a "Lender" and
collectively as the "Lenders"), the principal sum of Three Hundred Thousand and
50/100 Dollars ($300,000.50)(herein referred to as the Principal), on January
31, 1998, or sooner as provided below, at 12:00 noon ("Stated Maturity Date"),
at the Company's offices located at 366 White Spruce Blvd., Rochester, New York
14623, or 900 Huyler Street, Teterboro, New Jersey 07608, or at such other place
designated by the Lender, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest thereon during the term of this
Second Restated Lobozzo Debenture, at an annual interest rate of eight percent
(8%) per annum. Interest shall be payable to Lender on the first day of each and
every month (each date being referred to as an "Interest Payment Date") on the
Principal outstanding from time to time, with the first interest payment due and
payable on December 1, 1992. Thereafter interest shall be due and payable on
each Interest Payment Date until the Principal is paid in full. Payment of
interest may be made at the option of the Lender by check mailed to the address
of the Lender as such address may appear above or on the Debenture Register (as
hereinafter defined) of the Company. This Second Restated Lobozzo Debenture is
guaranteed by Guarantor as set forth herein.
Notwithstanding the Stated Maturity Date, Principal payments shall be
sooner made as follows:
Page 55 of 75
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<PAGE>
(a) A Principal payment equal to the lesser of Two Hundred Thousand
Dollars ($200,000) or 100% of the Consolidated Net Income of the Company and the
Guarantor for the fiscal year ending October 31, 1995, shall be paid January 31,
1996, provided that:
(i) The Company and the Guarantor are not in default on the Senior
Indebtedness as herein defined; and
(ii) After such Principal payment and the payment of all interest
then due on this Second Restated Lobozzo Debenture, the Borrowing Base of
Borrower (as defined in the October 1996 Credit Agreement") will provide the
availability for at least an additional Two Hundred Thousand Dollars ($200,000)
of Loans under the October 1996 Credit Agreement.
(b) A principal payment equal to the lesser of Two Hundred Thousand
Dollars ($200,000) or 100% of the Consolidated Net Income of the Company and the
Guarantor for the fiscal year ending October 31, 1996, shall be paid January 31,
1997, provided that:
(i) The Company and the Guarantor are not in default on the Senior
Indebtedness as herein defined; and
(ii) After such Principal payment and the payment of all interest
then due on this Second Restated Lobozzo Debenture, the Borrowing Base of
Borrower will provide the availability for at least an additional Two Hundred
Thousand Dollars ($200,000) of Loans under the October 1996 Credit Agreement.
The Lender has waived the Principal payments due under paragraphs (a) and
(b) as of the date of the issuance of this Second Restated Lobozzo Debenture.
Any remaining Principal balance will be paid in full on January 31, 1998.
This Second Restated Lobozzo Debenture is issued on the following terms
and conditions:
1. This Second Restated Lobozzo Debenture - No. 1, is one of two duly
authorized Second Restated Lobozzo Debentures issued by the Company to the
Lenders, each in the original Principal amount of Three Hundred Thousand and
50/100 dollars ($300,000.50), each of which is due January 31, 1998 (herein,
collectively with all future Second Restated Lobozzo Debentures issued upon
surrender of this, or any other Second Restated Lobozzo Debenture, referred to
as the "Debenture").
2. (a) Lender, by its acceptance hereof, covenants and agrees, that this
Debenture is subject to the provisions of this paragraph 2, and each person ever
holding a Debenture, whether upon original issuance or upon transferor
assignment hereof, accepts and agrees to be bound by such provisions. This
Debenture, including the Principal hereof and interest hereon, is subordinate
and junior in right of payment to the Senior Indebtedness.
Page 56 of 75
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<PAGE>
(b) The subordination of this Debenture to the Senior Indebtedness
is to the effect that, in the case of:
(i) any bankruptcy, insolvency, receivership, conservatorship,
reorganization, or arrangement with, or assignment for the
benefit of, creditors, readjustment of debt, marshalling of
assets and liabilities or similar proceeding, or any
liquidation or winding-up of, or relating to, the Company,
whether voluntary or involuntary; and
(ii) the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise; and
(iii) upon: (A) the occurrence of any event of default with
respect to Senior Indebtedness permitting the holder to
accelerate the maturity thereof; and (B) receipt by the
Company, with a copy to Lender, from any holder of Senior
Indebtedness of written notice of such occurrence, no payment
shall be made by the Company on account of the Principal of,
or interest on, the Debenture,
then, in any of such events, all of such Principal of, and premium, if any, and
interest on, Senior Indebtedness, shall first be paid in full in cash or
provision for such payment by deposit of the requisite cash in trust with a bank
or banks (either theretofore acting as trustees under indentures pursuant to
which Senior Indebtedness shall have been issued, or duly appointed paying
agents for the purpose), before any payment or provision is made on account of
the Principal of, or premium on, or interest on this Debenture.
(c) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership proceedings in
connection therewith, relative to the Company or its creditors or its property,
and in the event of any proceedings for voluntary liquidation, dissolution or
other winding up of the Company, whether or not involving insolvency or
bankruptcy proceedings, then all Principal of, and premium, if any, and interest
on, Senior Indebtedness shall first be paid in full in cash or provision made as
provided in paragraph 2(b) for such payment before any payment or distribution
is made on account of the Principal or interest on this Debenture. If the Lender
does not file a proper claim or proof of debt in the form required in any
dissolution, liquidation, insolvency, receivership, bankruptcy or similar
proceeding of the Company prior to the expiration of the time to file such
claims or proofs, then any holder of the Senior Indebtedness shall have the
right to demand, sue for, collect, receive and give receipt for the payments and
distributions in respect of this Debenture
Page 57 of 75
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<PAGE>
which are required to be paid or delivered to holders of Senior Indebtedness as
herein provided. The Company shall give prompt notice to the Lender of any event
or proceeding referred to in the first sentence of this paragraph 2(c).
(d) In any of the proceedings referred to in paragraph 2(c) above,
any payment or distribution of any kind or character, whether in cash, property,
stock or obligations, which may be payable or deliverable in respect to this
Debenture shall be paid or delivered directly and ratably to the holders of
Senior Indebtedness or their representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued according to the aggregate amounts remaining
unpaid on account of the Principal of, and premium, if any, and interest on,
such Senior Indebtedness, to the extent necessary to make payment in full and of
all Principal of, and premium, if any, and interest on Senior Indebtedness
remaining unpaid; and in the event that, notwithstanding the foregoing
provisions of this paragraph 2(d), or notwithstanding the provisions of
paragraph 2(b), any payment or distribution, whether in cash, property, stock or
obligations, shall be received by the holder of this Debenture before all
principal of, and premium, if any, and interest on, Senior Indebtedness is paid
in full in cash, or provision made as aforesaid for its payment, and, in the
case of a payment made notwithstanding the provisions of paragraph 2(b), after
written notices of the failure to comply with paragraph 2(b) has been given to
the Lender, such payment or distribution shall be ratably held for the benefit
of, and shall be ratably paid over or delivered to the holders of, Senior
Indebtedness remaining unpaid or unprovided for or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Indebtedness may have been issued,
as provided in the foregoing paragraphs 2(b) or 2(c), whichever is applicable,
for application to the payment of principal of, and premium, if any, and
interest on, such Senior Indebtedness until all principal of, and premium, if
any, and interest on, Senior Indebtedness shall be paid in full, after giving
effect to any concurrent payment or distribution, or provision therefor, to the
holder of such Senior Indebtedness.
(e) Subject to the payment in full of all Senior Indebtedness, the
Lender shall be subrogated to the rights of any holder of Senior Indebtedness to
receive payments or distributions until the Principal of, and interest on, this
Debenture shall be paid in full. For the purposes of such subrogation, no
payment or distribution received by any holder of Senior Indebtedness of cash,
securities or other property to which the Lender would have been entitled except
for this paragraph 2 shall, as between the Company and its creditors other than
the holders of Senior Indebtedness, on the one hand, and the Lender, on the
other, be deemed to be a payment or distribution by the Company to or on account
of Senior Indebtedness.
(f) No present or future holder of Senior Indebtedness shall be
prejudiced in its right to enforce subordination of this Debenture by any act or
failure to act on the part of the Company. The provisions of this paragraph 2
are for the purpose of defining the relative rights of the holders of Senior
Indebtedness, on the one hand, and the Lender, on the other hand, against the
Company and its property and nothing herein shall impair, as between the Company
Page 58 of 75
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<PAGE>
and the Lender, the obligation of the Company, which is unconditional and
absolute, to pay to the Lender the Principal hereof, and interest hereon, in
accordance with its terms and the provisions hereof; nor shall anything herein
prevent the Lender from exercising all rights, powers and remedies otherwise
permitted by applicable law or hereunder upon default hereunder subject to the
rights, if any, under this paragraph 2 of holders of Senior Indebtedness to
receive cash, property, stock or obligations otherwise payable or deliverable to
the Holder.
(g) No right of any present or future holder of any Senior
Indebtedness to enforce subordination, as herein provided, shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company; or any other agreement or instrument regardless of any knowledge
thereof any such holder may have or be otherwise charged with. Without limiting
the effect of the preceding paragraphs, any holder of Senior Indebtedness may,
at any time and from time to time, without the consent of or notice to any
Lender, without impairing or releasing any of the rights of any such holder of
Senior Indebtedness hereunder, upon or without any terms or conditions and in
whole or in part:
(i) change the manner, place or terms of payment, and/or
change or extend the time of payment of, renew or alter, and Senior Indebtedness
or any other liability of the Company to such holder, any security therefor, or
any liability incurred directly or indirectly in respect thereof, and the
provisions hereof shall apply to the Senior Indebtedness of the Company to such
holder as so changed, extended, renewed or altered;
(ii) as permitted by applicable law (including the Uniform
Commercial Code as then in effect in applicable jurisdictions in New York
State), sell, exchange, realize upon or otherwise deal with in any manner and in
any order any property by whomsoever at any time pledged or mortgaged to secure,
or howsoever securing, and Senior Indebtedness or any other liability of the
Company to such holder or any other liabilities incurred directly or indirectly
in respect thereof or hereof, and/or any offsets thereagainst;
(iii) exercise or refrain from exercising or release any
rights and/or remedies against the Company or others (including, without
limitation, any guarantor of Senior Indebtedness);
(iv) settle or compromise any Senior Indebtedness or any other
liability of the Company to such holder or any security therefor, or any
liability incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Company to creditors of the Company other
than such holder; and
(v) apply any sums by whomsoever paid and howsoever realized
to any liability or liabilities of the Company to such holder of the October
1996 Credit Agreement regardless of what liability or liabilities of the Company
to such holder remain unpaid.
Page 59 of 75
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<PAGE>
(h) The terms and provisions of this paragraph 2 or any other
provisions hereof which relate to the subordination provided for in this
paragraph 2 or to the rights of the holders of Senior Indebtedness are hereby
made for the benefit of, and shall be enforceable by, such holders and their
successors and assigns and shall not be altered or affected by the provisions of
the October 1996 Credit Agreement or any modification or amendment thereof. Each
holder of Senior Indebtedness shall be deemed to have acquired Senior
Indebtedness in reliance on the covenants and provisions contained in this
paragraph 2. In the event of any inconsistence between the provisions of this
paragraph 2 and any other provision of this Debenture, the provisions of this
paragraph 2 shall govern and prevail. Unless the Senior Indebtedness is no
longer outstanding, no amendment shall be made to paragraph 2 hereof or this
sentence or which advances the maturity date or increases the rate of interest
payable with respect to the unpaid Principal amount of this Debenture or
otherwise affects any provision hereof which relates to the subordination
provided for in paragraph 2 or to the rights of holders of Senior Indebtedness,
without the prior written consent of the holders of Senior Indebtedness affected
thereby.
(i) No payment of Principal of, or interest on, this Debenture shall
be made prior to the scheduled date for payment set forth above in this
Debenture.
(j) Notwithstanding anything herein contained to the contrary, all
the provisions of this Debenture shall be subject to the provisions of this
paragraph 2, so far as the same may be applicable thereto.
3. The Company shall maintain or cause to be maintained a Debenture
Register (the "Debenture Register") at the Company's office in Rochester, New
York, or in Teterboro, New Jersey, as set forth above, listing the names and
addresses of all holders of this Debenture, now existing or hereafter arising.
4. The following events shall constitute Events of Default under this
Debenture:
(a) Any failure by the Company to perform any obligation, covenant
or agreement under this Debenture that is not cured within twenty (20) days
after Lender gives the Company written notice thereof;
(b) Financial difficulties of Company as evidenced by: any admission
in writing of inability to pay debts as they become due; the filing of a
voluntary or involuntary petition in bankruptcy, or under any chapters of the
Bankruptcy Code, or under any federal or state statute providing for relief of
debtors; making an assignment for the benefit of creditors; or the appointment
of a receiver or trustee for all or a major part of its property unless such
receiver or trustee is removed within ninety (90) days;
(c) The sale of all or substantially all of the assets of the
Company without the prior written consent of the Lender; and
Page 60 of 75
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<PAGE>
(d) If any representation or warranty made by the Company in this
Debenture is found to be false or subsequently violated during the term hereof.
5. Upon the occurrence of any Event of Default, and the giving of twenty
(20) days written notice thereof to Lender at 690 Portland Avenue, Rochester,
New York 14621, or such other address the Lender may hereafter designate by
written notice to the Company, all amounts due and owing under this Debenture,
including all interest accrued on the Principal hereunder, shall, at Lender's
Option, immediately become due and payable without presentment, demand, protest,
or other notice of any kind. If this Debenture is referred to an attorney for
collection and/or satisfaction of the Company's obligations hereunder, the
Company agrees to pay and reimburse Lender for all such reasonable attorneys'
fees and other costs of collection as Lender shall have paid or shall have
become obligated to pay.
6. The Company shall furnish to Lender within three (3) days of placing
any portion of the Principal into certificates of deposit, a document listing
the institution issuing the certificates of deposit, the interest rate thereon,
the maturity date, and the account number thereof.
7. The Company shall be responsible to pay all Lender's legal fees and
related expenses arising from or relating to this Debenture within five (5) days
of receipt of a bill from Lender for the same. The Company shall, be deemed to
be in receipt of such bill two (2) days after certified mailing, return receipt
requested.
8. This Debenture shall not be modified or amended without the prior
written consent of the Lender.
9. The Company and the Lender agree that this Debenture shall be
interpreted and construed according to the laws of the State of New York.
IN WITNESS WHEREOF, on the 19th day of February, 1997, the Company has
caused this Second Amended and Restated 8% Subordinated Debenture due January
31, 1998 - No. 1, to be executed in its corporate name by its President, its
corporate seal to be impressed hereon, and attested by its Secretary or
Assistant Secretary.
DELTA DATA NET, INC.
By: /s/ John DeVito
----------------------------
John DeVito, President
Attest:
/s/ Michael McCusker
- --------------------
Assistant Secretary
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<PAGE>
SUBORDINATED GUARANTY
Delta Computec Inc., the parent of Delta Data Net, Inc., hereby
irrevocably, absolutely and unconditionally guarantees the full and prompt
payment obligations of Delta Data Net, Inc., pursuant to the Second Amended and
Restated 8% Subordinated Debenture due January 31, 1998, including, without
limitation, the payment of Principal, interest, fees, costs and expenses. This
is a Guaranty of payment and not of collection. This Guaranty is also
subordinated to Senior Indebtedness in accordance with the provisions of the
Second Amended and Restated 8% Subordinated Debenture due January 31, 1998.
Attest: DELTA COMPUTEC INC.
/s/ Michael McCusker By: /s/ John DeVito
- -------------------- ------------------------
Assistant Secretary John DeVito, President
CONSENT AND ACCEPTANCE
The Lender, Joseph M. Lobozzo II, for value received, receipt of which is
acknowledged, hereby accepts and agrees to the foregoing Seconded Amended and
Restated 8% Subordinated Debenture due January 31, 1998, in replacement of the
originally issued 8% Subordinated Debenture due October 28, 1995, and in further
replacement of the Amended and Restated 8% Subordinated Debenture due January
31, 1998. Further, Lender ratifies and affirms the Intercreditor Agreement
between Lobozzo and National Canada Finance Corp. dated October 10, 1996. Lender
affirms that this Consent and Acceptance is given, and the Second Amended and
Restated 8% Subordinated Debenture due January 31, 1998, is accepted, in order,
in part, to induce Lender to waive certain non-compliance under the October 1996
Credit Agreement.
Dated: February 19, 1997 LENDER
/s/ Joseph M. Lobozzo II
------------------------------
Joseph M. Lobozzo II
/s/ Joanne M. Lobozzo
------------------------------
Joanne M. Lobozzo
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On this ___ day of February, 1997, before me personally came Joseph M.
Lobozzo II, to me known and known to me to be the same person described in and
who executed the within instrument and he duly acknowledged to me that he
executed the same.
______________________________
Notary Public
Page 62 of 75
/TEXT>
<PAGE>
THE SECURITIES REPRESENTED BY THIS SECOND AMENDED AND RESTATED 8% SUBORDINATED
DEBENTURE DUE JANUARY 31, 1998, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("ACT"), OR APPLICABLE STATE SECURITIES LAWS ("STATE
ACTS") AND CAN NOT BE SOLD, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED
UNLESS IN COMPLIANCE WITH THE ACT AND STATE ACTS AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.
DELTA DATA NET, INC.
SECOND AMENDED AND RESTATED
8% SUBORDINATED DEBENTURE DUE JANUARY 31, 1998 - No. 2
$300,000.50 Date of Original Issue: October 28, 1992
Date of Amendment and Restatement: February 16, 1995
Date of Second Amendment and Restatement: February 19, 1997
This Second Amended and Restated 8% Subordinated Debenture due January 31,
1998 - No. 2 (the "Second Restated Lobozzo Debenture") of Delta Data Net, Inc.,
a corporation duly organized and existing under the laws of the State of New
York (herein referred to as the "Company"), and guaranteed by Delta Computec
Inc. (herein referred to as the "Guarantor", and collectively with the Company,
the "Borrowers") is one of two Second Restated Lobozzo Debentures being issued
by the Company and guaranteed by the Guarantor, each in the face amount of
$300,000.50 (an aggregate amount of $600,001), to, respectively, Joanne M.
Lobozzo ("Joanne Lobozzo") and her spouse, Joseph M. Lobozzo II ("Joseph
Lobozzo", and collectively, with Joanne Lobozzo, the "Lenders").
The Borrowers are also obligated to the Lenders under an Amended and
Restated Credit Agreement dated as of October 10, 1996, which has been amended
by four amendments thereto (as amended, the "October 1996 Credit Agreement").
The October 1996 Credit Agreement, as originally issued, provided the Borrowers
with the ability to borrow pursuant to a secured credit facility, loans of up to
$2,550,000 from Joseph Lobozzo. The Loans (as defined in the October 1996 Credit
Agreement) were evidenced by an Amended and Restated Promissory Note between the
Borrowers and Joseph Lobozzo (the "Lobozzo Note"). Joseph Lobozzo entered into
the October 1996 Credit Agreement and the Lobozzo Note as the assignee by a
certain Assignment dated October 10, 1996 ("Assignment"), of a portion of the
obligations of the Borrowers which previously existed between the Borrowers and
their prior commercial lender, National Canada Finance Corp. ("NCFC"), pursuant
to an amended and restated credit agreement between the Borrowers and NCFC
(collectively, as amended, the "NCFC Credit Agreement"). All obligations of NCFC
under the NCFC Credit Agreement or the promissory notes issued from time to time
from the Borrower to NCFC under the NCFC Credit Agreement, which were assigned
by NCFC to Lobozzo by the Assignment, are now covered under the October 1996
Credit Agreement.
Page 63 of 75
<PAGE>
Half of the obligations of the Borrowers to Joseph Lobozzo pursuant to the
October 1996 Credit Agreement and the Lobozzo Note (and certain other
obligations of Borrowers to Joseph Lobozzo, including half of the obligations
pursuant to this 8% Amended and Restated Subordinated Debenture) were
subsequently transferred by a Securities Transfer Document dated January 13,
1997 ("Securities Transfer Document") from Joseph Lobozzo to Joanne Lobozzo. The
obligations of the Borrowers under the October 1996 Credit Agreement and the
obligations of the Borrowers under the Lobozzo Note and all other instruments
and documents relating to each of those obligations, constitute "Senior
Indebtedness".
The original 8% Subordinated Debenture issued October 28, 1992, due
October 28, 1995 (the "Original Lobozzo Debenture"), as amended by an Amended
and Restated 8% Subordinated Debenture issued February 16, 1995, due January 31,
1998 (the "First Restated Lobozzo Debenture"), is being amended and restated by
this Second Restated Lobozzo Debenture, in order, in part, to induce Lenders to
continue their lending relationship with the Borrowers.
NOW, THEREFORE, this Second Restated Lobozzo Debenture - No. 2, hereby
amends and restates the Original Lobozzo Debenture and the First Restated
Lobozzo Debenture, to read as follows:
Delta Data Net, Inc., for value received, hereby promises to pay to Joanne
Lobozzo, 756 Rock Beach Road, Rochester, New York 14617 (herein collectively,
together with Joseph Lobozzo, the recipient of the Second Restated Lobozzo
Debenture - No. 1, and any other person who may ever hold one of this series of
Second Restated Lobozzo Debentures, referred to individually as a "Lender" and
collectively as the "Lenders"), the principal sum of Three Hundred Thousand and
50/100 Dollars ($300,000.50)(herein referred to as the Principal), on January
31, 1998, or sooner as provided below, at 12:00 noon ("Stated Maturity Date"),
at the Company's offices located at 366 White Spruce Blvd., Rochester, New York
14623, or 900 Huyler Street, Teterboro, New Jersey 07608, or at such other place
designated by the Lender, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest thereon during the term of this
Second Restated Lobozzo Debenture, at an annual interest rate of eight percent
(8%) per annum. Interest shall be payable to Lender on the first day of each and
every month (each date being referred to as an "Interest Payment Date") on the
Principal outstanding from time to time, with the first interest payment due and
payable on December 1, 1992. Thereafter interest shall be due and payable on
each Interest Payment Date until the Principal is paid in full. Payment of
interest may be made at the option of the Lender by check mailed to the address
of the Lender as such address may appear above or on the Debenture Register (as
hereinafter defined) of the Company. This Second Restated Lobozzo Debenture is
guaranteed by Guarantor as set forth herein.
Notwithstanding the Stated Maturity Date, Principal payments shall be
sooner made as follows:
Page 64 of 75
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<PAGE>
(a) A Principal payment equal to the lesser of Two Hundred Thousand
Dollars ($200,000) or 100% of the Consolidated Net Income of the Company and the
Guarantor for the fiscal year ending October 31, 1995, shall be paid January 31,
1996, provided that:
(i) The Company and the Guarantor are not in default on the Senior
Indebtedness as herein defined; and
(ii) After such Principal payment and the payment of all interest
then due on this Second Restated Lobozzo Debenture, the Borrowing Base of
Borrower (as defined in the October 1996 Credit Agreement") will provide the
availability for at least an additional Two Hundred Thousand Dollars ($200,000)
of Loans under the October 1996 Credit Agreement.
(b) A principal payment equal to the lesser of Two Hundred Thousand
Dollars ($200,000) or 100% of the Consolidated Net Income of the Company and the
Guarantor for the fiscal year ending October 31, 1995, shall be paid January 31,
1996, provided that:
(i) The Company and the Guarantor are not in default on the Senior
Indebtedness as herein defined; and
(ii) After such Principal payment and the payment of all interest
then due on this Second Restated Lobozzo Debenture, the Borrowing Base of
Borrower will provide the availability for at least an additional Two Hundred
Thousand Dollars ($200,000) of Loans under the October 1996 Credit Agreement.
The Lender has waived the Principal payments due under paragraphs (a) and
(b) as of the date of the issuance of this Second Restated Lobozzo Debenture.
Any remaining Principal balance will be paid in full on January 31, 1998.
This Second Restated Lobozzo Debenture is issued on the following terms
and conditions:
1. This Second Restated Lobozzo Debenture - No. 2, is one of two duly
authorized Second Restated Lobozzo Debentures issued by the Company to the
Lenders, each in the original Principal amount of Three Hundred Thousand and
50/100 dollars ($300,000.50), each of which is due January 31, 1998 (herein,
collectively with all future Second Restated Lobozzo Debentures issued upon
surrender of this, or any other Second Restated Lobozzo Debenture, referred to
as the "Debenture").
2. (a) Lender, by its acceptance hereof, covenants and agrees, that this
Debenture is subject to the provisions of this paragraph 2, and each person ever
holding a Debenture, whether upon original issuance or upon transferor
assignment hereof, accepts and agrees to be bound by such provisions. This
Debenture, including the Principal hereof and interest hereon, is subordinate
and junior in right of payment to the Senior Indebtedness.
Page 65 of 75
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<PAGE>
(b) The subordination of this Debenture to the Senior Indebtedness
is to the effect that, in the case of:
(i) any bankruptcy, insolvency, receivership, conservatorship,
reorganization, or arrangement with, or assignment for the
benefit of, creditors, readjustment of debt, marshalling of
assets and liabilities or similar proceeding, or any
liquidation or winding-up of, or relating to, the Company,
whether voluntary or involuntary; and
(ii) the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise; and
(iii) upon: (A) the occurrence of any event of default with
respect to Senior Indebtedness permitting the holder to
accelerate the maturity thereof; and (B) receipt by the
Company, with a copy to Lender, from any holder of Senior
Indebtedness of written notice of such occurrence, no payment
shall be made by the Company on account of the Principal of,
or interest on, the Debenture,
then, in any of such events, all of such Principal of, and premium, if any, and
interest on, Senior Indebtedness, shall first be paid in full in cash or
provision for such payment by deposit of the requisite cash in trust with a bank
or banks (either theretofore acting as trustees under indentures pursuant to
which Senior Indebtedness shall have been issued, or duly appointed paying
agents for the purpose), before any payment or provision is made on account of
the Principal of, or premium on, or interest on this Debenture.
(c) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership proceedings in
connection therewith, relative to the Company or its creditors or its property,
and in the event of any proceedings for voluntary liquidation, dissolution or
other winding up of the Company, whether or not involving insolvency or
bankruptcy proceedings, then all Principal of, and premium, if any, and interest
on, Senior Indebtedness shall first be paid in full in cash or provision made as
provided in paragraph 2(b) for such payment before any payment or distribution
is made on account of the Principal or interest on this Debenture. If the Lender
does not file a proper claim or proof of debt in the form required in any
dissolution, liquidation, insolvency, receivership, bankruptcy or similar
proceeding of the Company prior to the expiration of the time to file such
claims or proofs, then any holder of the Senior Indebtedness shall have the
right to demand, sue for, collect, receive and give receipt for the payments and
distributions in respect of this Debenture
Page 66 of 75
-4-
<PAGE>
which are required to be paid or delivered to holders of Senior Indebtedness as
herein provided. The Company shall give prompt notice to the Lender of any event
or proceeding referred to in the first sentence of this paragraph 2(c).
(d) In any of the proceedings referred to in paragraph 2(c) above,
any payment or distribution of any kind or character, whether in cash, property,
stock or obligations, which may be payable or deliverable in respect to this
Debenture shall be paid or delivered directly and ratably to the holders of
Senior Indebtedness or their representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued according to the aggregate amounts remaining
unpaid on account of the Principal of, and premium, if any, and interest on,
such Senior Indebtedness, to the extent necessary to make payment in full and of
all Principal of, and premium, if any, and interest on Senior Indebtedness
remaining unpaid; and in the event that, notwithstanding the foregoing
provisions of this paragraph 2(d), or notwithstanding the provisions of
paragraph 2(b), any payment or distribution, whether in cash, property, stock or
obligations, shall be received by the holder of this Debenture before all
principal of, and premium, if any, and interest on, Senior Indebtedness is paid
in full in cash, or provision made as aforesaid for its payment, and, in the
case of a payment made notwithstanding the provisions of paragraph 2(b), after
written notices of the failure to comply with paragraph 2(b) has been given to
the Lender, such payment or distribution shall be ratably held for the benefit
of, and shall be ratably paid over or delivered to the holders of, Senior
Indebtedness remaining unpaid or unprovided for or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Indebtedness may have been issued,
as provided in the foregoing paragraphs 2(b) or 2(c), whichever is applicable,
for application to the payment of principal of, and premium, if any, and
interest on, such Senior Indebtedness until all principal of, and premium, if
any, and interest on, Senior Indebtedness shall be paid in full, after giving
effect to any concurrent payment or distribution, or provision therefor, to the
holder of such Senior Indebtedness.
(e) Subject to the payment in full of all Senior Indebtedness, the
Lender shall be subrogated to the rights of any holder of Senior Indebtedness to
receive payments or distributions until the Principal of, and interest on, this
Debenture shall be paid in full. For the purposes of such subrogation, no
payment or distribution received by any holder of Senior Indebtedness of cash,
securities or other property to which the Lender would have been entitled except
for this paragraph 2 shall, as between the Company and its creditors other than
the holders of Senior Indebtedness, on the one hand, and the Lender, on the
other, be deemed to be a payment or distribution by the Company to or on account
of Senior Indebtedness.
(f) No present or future holder of Senior Indebtedness shall be
prejudiced in its right to enforce subordination of this Debenture by any act or
failure to act on the part of the Company. The provisions of this paragraph 2
are for the purpose of defining the relative rights of the holders of Senior
Indebtedness, on the one hand, and the Lender, on the other hand, against the
Company and its property and nothing herein shall impair, as between the Company
Page 67 of 75
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<PAGE>
and the Lender, the obligation of the Company, which is unconditional and
absolute, to pay to the Lender the Principal hereof, and interest hereon, in
accordance with its terms and the provisions hereof; nor shall anything herein
prevent the Lender from exercising all rights, powers and remedies otherwise
permitted by applicable law or hereunder upon default hereunder subject to the
rights, if any, under this paragraph 2 of holders of Senior Indebtedness to
receive cash, property, stock or obligations otherwise payable or deliverable to
the Holder.
(g) No right of any present or future holder of any Senior
Indebtedness to enforce subordination, as herein provided, shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company; or any other agreement or instrument regardless of any knowledge
thereof any such holder may have or be otherwise charged with. Without limiting
the effect of the preceding paragraphs, any holder of Senior Indebtedness may,
at any time and from time to time, without the consent of or notice to any
Lender, without impairing or releasing any of the rights of any such holder of
Senior Indebtedness hereunder, upon or without any terms or conditions and in
whole or in part:
(i) change the manner, place or terms of payment, and/or
change or extend the time of payment of, renew or alter, and Senior Indebtedness
or any other liability of the Company to such holder, any security therefor, or
any liability incurred directly or indirectly in respect thereof, and the
provisions hereof shall apply to the Senior Indebtedness of the Company to such
holder as so changed, extended, renewed or altered;
(ii) as permitted by applicable law (including the Uniform
Commercial Code as then in effect in applicable jurisdictions in New York
State), sell, exchange, realize upon or otherwise deal with in any manner and in
any order any property by whomsoever at any time pledged or mortgaged to secure,
or howsoever securing, and Senior Indebtedness or any other liability of the
Company to such holder or any other liabilities incurred directly or indirectly
in respect thereof or hereof, and/or any offsets thereagainst;
(iii) exercise or refrain from exercising or release any
rights and/or remedies against the Company or others (including, without
limitation, any guarantor of Senior Indebtedness);
(iv) settle or compromise any Senior Indebtedness or any other
liability of the Company to such holder or any security therefor, or any
liability incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Company to creditors of the Company other
than such holder; and
(v) apply any sums by whomsoever paid and howsoever realized
to any liability or liabilities of the Company to such holder of the October
1996 Credit Agreement regardless of what liability or liabilities of the Company
to such holder remain unpaid.
Page 68 of 75
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<PAGE>
(h) The terms and provisions of this paragraph 2 or any other
provisions hereof which relate to the subordination provided for in this
paragraph 2 or to the rights of the holders of Senior Indebtedness are hereby
made for the benefit of, and shall be enforceable by, such holders and their
successors and assigns and shall not be altered or affected by the provisions of
the October 1996 Credit Agreement or any modification or amendment thereof. Each
holder of Senior Indebtedness shall be deemed to have acquired Senior
Indebtedness in reliance on the covenants and provisions contained in this
paragraph 2. In the event of any inconsistence between the provisions of this
paragraph 2 and any other provision of this Debenture, the provisions of this
paragraph 2 shall govern and prevail. Unless the Senior Indebtedness is no
longer outstanding, no amendment shall be made to paragraph 2 hereof or this
sentence or which advances the maturity date or increases the rate of interest
payable with respect to the unpaid Principal amount of this Debenture or
otherwise affects any provision hereof which relates to the subordination
provided for in paragraph 2 or to the rights of holders of Senior Indebtedness,
without the prior written consent of the holders of Senior Indebtedness affected
thereby.
(i) No payment of Principal of, or interest on, this Debenture shall
be made prior to the scheduled date for payment set forth above in this
Debenture.
(j) Notwithstanding anything herein contained to the contrary, all
the provisions of this Debenture shall be subject to the provisions of this
paragraph 2, so far as the same may be applicable thereto.
3. The Company shall maintain or cause to be maintained a Debenture
Register (the "Debenture Register") at the Company's office in Rochester, New
York, or in Teterboro, New Jersey, as set forth above, listing the names and
addresses of all holders of this Debenture, now existing or hereafter arising.
4. The following events shall constitute Events of Default under this
Debenture:
(a) Any failure by the Company to perform any obligation, covenant
or agreement under this Debenture that is not cured within twenty (20) days
after Lender gives the Company written notice thereof;
(b) Financial difficulties of Company as evidenced by: any admission
in writing of inability to pay debts as they become due; the filing of a
voluntary or involuntary petition in bankruptcy, or under any chapters of the
Bankruptcy Code, or under any federal or state statute providing for relief of
debtors; making an assignment for the benefit of creditors; or the appointment
of a receiver or trustee for all or a major part of its property unless such
receiver or trustee is removed within ninety (90) days;
(c) The sale of all or substantially all of the assets of the
Company without the prior written consent of the Lender; and
Page 69 of 75
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<PAGE>
(d) If any representation or warranty made by the Company in this
Debenture is found to be false or subsequently violated during the term hereof.
5. Upon the occurrence of any Event of Default, and the giving of twenty
(20) days written notice thereof to Lender at 690 Portland Avenue, Rochester,
New York 14621, or such other address as the Lender may hereafter designate by
written notice to the Company, all amounts due and owing under this Debenture,
including all interest accrued on the Principal hereunder, shall, at Lender's
Option, immediately become due and payable without presentment, demand, protest,
or other notice of any kind. If this Debenture is referred to an attorney for
collection and/or satisfaction of the Company's obligations hereunder, the
Company agrees to pay and reimburse Lender for all such reasonable attorneys'
fees and other costs of collection as Lender shall have paid or shall have
become obligated to pay.
6. The Company shall furnish to Lender within three (3) days of placing
any portion of the Principal into certificates of deposit, a document listing
the institution issuing the certificates of deposit, the interest rate thereon,
the maturity date, and the account number thereof.
7. The Company shall be responsible to pay all Lender's legal fees and
related expenses arising from or relating to this Debenture within five (5) days
of receipt of a bill from Lender for the same. The Company shall, be deemed to
be in receipt of such bill two (2) days after certified mailing, return receipt
requested.
8. This Debenture shall not be modified or amended without the prior
written consent of the Lender.
9. The Company and the Lender agree that this Debenture shall be
interpreted and construed according to the laws of the State of New York.
IN WITNESS WHEREOF, on the 19th day of February, 1997, the Company has
caused this Second Amended and Restated 8% Subordinated Debenture due January
31, 1998 - No. 2, to be executed in its corporate name by its President, its
corporate seal to be impressed hereon, and attested by its Secretary or
Assistant Secretary.
DELTA DATA NET, INC.
By: /s/ John DeVito
---------------------------
John DeVito, President
Attest:
/s/ Michael McCusker
- ---------------------
Assistant Secretary
Page 70 of 75
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<PAGE>
SUBORDINATED GUARANTY
Delta Computec Inc., the parent of Delta Data Net, Inc., hereby
irrevocably, absolutely and unconditionally guarantees the full and prompt
payment obligations of Delta Data Net, Inc., pursuant to the Second Amended and
Restated 8% Subordinated Debenture due January 31, 1998, including, without
limitation, the payment of Principal, interest, fees, costs and expenses. This
is a Guaranty of payment and not of collection. This Guaranty is also
subordinated to Senior Indebtedness in accordance with the provisions of the
Second Amended and Restated 8% Subordinated Debenture due January 31, 1998.
Attest: DELTA COMPUTEC INC.
/s/ Michael McCusker By: /s/ John DeVito
- -------------------- ------------------------
Assistant Secretary John DeVito, President
CONSENT AND ACCEPTANCE
The Lender, Joanne M. Lobozzo, for value received, receipt of which is
acknowledged, hereby accepts and agrees to the foregoing Seconded Amended and
Restated 8% Subordinated Debenture due January 31, 1998 - No. 2, in replacement
of the originally issued 8% Subordinated Debenture due October 28, 1995, and in
further replacement of the Amended and Restated 8% Subordinated Debenture due
January 31, 1998. Further, Lender ratifies and affirms the Intercreditor
Agreement between Lobozzo and National Canada Finance Corp. dated October 10,
1996. Lender affirms that this Consent and Acceptance is given, and the Second
Amended and Restated 8% Subordinated Debenture due January 31, 1998, is
accepted, in order, in part, to induce Lender to waive certain non-compliance
under the October 1996 Credit Agreement.
Dated: February 19, 1997 LENDER
/s/ Joanne M. Lobozzo
---------------------------
Joanne M. Lobozzo
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On this ___ day of February, 1997, before me personally came Joanne M.
Lobozzo, to me known and known to me to be the same person described in and who
executed the within instrument and she duly acknowledged to me that she executed
the same.
______________________________
Notary Public
Page 71 of 75
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<PAGE>
FIRST
AMENDED AND RESTATED
PROMISSORY NOTE
$2,550,000.00 February 20, 1997
For value received, DELTA COMPUTEC INC. and DELTA DATA NET, INC.,
each of which is a New York corporation with its principal office at 690 Huyler
Street, Teterboro, New Jersey 07608 (collectively, "Borrower"), jointly and
severally promise to pay to the order of JOSEPH M. LOBOZZO II and JOANNE M.
LOBOZZO (collectively, "Lender") on or before April 30, 1997 ("Maturity Date"),
in lawful money of the United States of America, at Lender's office located at
690 Portland Avenue, Rochester, New York 14621 or, at Lender's option, at such
other place as may be designated from time to time by the Lender the principal
sum of Two Million Five Hundred Fifty Thousand and 00/100 Dollars
($2,550,000.00), or, if less, the aggregate unpaid principal amount of all loans
("Loans") made by the Lender under an Amended and Restated Credit Agreement
between the Borrower and the Lender, Amendment No. 4 thereto (as amended
heretofore, and as it may hereafter be amended, the "Agreement") of even date
herewith, as the same may be amended or supplemented from time to time, together
with interest thereon.
This Note shall bear interest from the date hereof until maturity
(whether by acceleration or otherwise) on the balance of principal hereof from
time to time unpaid at a rate per annum equal to 1 3/4% in excess of the Prime
Rate, as defined below. After maturity (whether by acceleration or otherwise)
this Note shall bear interest on the unpaid principal hereof at a rate per annum
equal to 3 3/4% in excess of the Prime Rate; provided, however, in no event
shall the rate of interest on this Note exceed the maximum rate authorized by
applicable law. Interest shall be calculated on the basis of one three hundred
sixtieth (1/360th) of the rate hereon for each calendar day such balance of
principal is unpaid, which will result in a higher effective annual rate.
Interest shall be payable monthly on the first day of each month, commencing
November 1, 1996 until the Maturity Date and on the date the principal balance
hereof is paid in full. The rate of interest on this Note shall change
simultaneously with a corresponding change in the Prime Rate. The "Prime Rate"
means the highest prime rate published from time to time in the "Money Rates"
column of the Wall Street Journal or any successor to such publication.
The Lender shall inscribe on a schedule attached to this Note, and
any continuations thereof, all Loans and payments made on account of principal
hereof and the dates thereof. Each such inscription shall be prima facie
evidence of facts so set forth. No failure by the Lender to make, and no error
by the Lender in making, such inscription shall affect the undersigned's
obligation to repay when due all sums advanced under this Note.
No failure by the Lender hereof to exercise, and no delay in
exercising, any right or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by
Page 72 of 75
<PAGE>
the holder of any right or power hereunder preclude any other right or power.
The rights and remedies of the holder as herein specified are cumulative and not
exclusive of any other rights or remedies which the holder may otherwise have.
No modification, rescission, waiver, release or amendment of any
provision of this Note shall be made except by a written agreement subscribed by
duly authorized officers of the Borrower and the Lender.
Reference is hereby made to the Agreement for provisions with
respect to prepayment, collateral and rights of acceleration of the principal
hereof on the occurrence of certain events.
Borrower agrees to pay all reasonable costs and expenses incurred by
the holder in enforcing this Note or in collecting the indebtedness evidenced
hereby, including, without limitation, if the holder retains counsel for any
such purpose, reasonable attorneys' fees and expenses.
Borrower hereby waives diligence, presentment, protest and demand,
and also notice of protest, demand, dishonor and nonpayment of this Note.
This Note shall be construed under and governed by the internal laws
of the State of New York in effect from time to time without regard to
principles of conflicts of laws.
The obligations of the undersigned under this Note are joint and
several.
THIS NOTE IS ISSUED IN ORDER TO AMEND, RESTATE AND EVIDENCE AND TO
BE A SUBSTITUTE FOR, BUT NOT TO BE A PAYMENT, SATISFACTION, CANCELLATION OR A
NOVATION OF A PORTION OF THE INDEBTEDNESS EVIDENCED BY THE AMENDED AND RESTATED
PROMISSORY NOTE DATED OCTOBER 10, 1996 FROM THE BORROWER TO JOSEPH M. LOBOZZO II
(THE "SUPERSEDED NOTE"), WHICH SUPERSEDED NOTE WAS ASSIGNED, IN PART, TO THE
LENDER; PROVIDED, HOWEVER, THAT THE SUBSTITUTION OF THIS FIRST AMENDED AND
RESTATED NOTE FOR THE SUPERSEDED NOTE DOES NOT EXTINGUISH THE INDEBTEDNESS
EVIDENCED BY THE SUPERSEDED NOTE OR ANY PORTION THEREOF AND THE LIABILITIES OF
THE BORROWER THEREUNDER AND HEREUNDER ARE CONTINUOUS.
DELTA COMPUTEC INC.
By: /s/ John DeVito
-----------------------
Name: John DeVito
Title: President
Page 73 of 75
-2-
<PAGE>
DELTA DATA NET, INC.
By: /s/ John DeVito
-----------------------
Name: John DeVito
Title: President
Page 74 of 75
-3-
<PAGE>
SCHEDULE
Principal Amount Date Payments Additional Loans Balance
$2,265,461.10 February 19, 1997 $2,265,461.10
Page 75 of 75
