FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 4, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______to _______
Commission file number: 0-17919
SURGICAL LASER TECHNOLOGIES, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1093148
------------------------------ ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
147 Keystone Drive
Montgomeryville, PA 18936
--------------------------------------
(Address of principal executive offices)
(Zip Code)
(215) 619-3600
--------------------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days
Yes (X) No ( )
On August 4, 1999 the registrant had outstanding 1,977,965 shares of
Common Stock, $.0l par value.
<PAGE>
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION: PAGE
ITEM 1. Financial Statements:
a. Condensed Consolidated Balance Sheets,
July 4, 1999 (unaudited) and January 3, 1999 3
b. Condensed Consolidated Statements of Operations
(unaudited) for the quarters ended July 4, 1999 and
June 28, 1998 4
c. Condensed Consolidated Statements of Operations
(unaudited) for the six months ended July 4, 1999 and
June 28, 1998 5
d. Condensed Consolidated Statements of Cash Flows
(unaudited) for the six months ended July 4, 1999 and
June 28, 1998 6
e. Notes to Condensed Consolidated Financial Statements
(unaudited) 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION:
ITEM 4. Submission of Matters to a Vote of Security Holders 12
ITEM 5. Other Information 12
ITEM 6. Exhibits and Reports on Form 8-K 13
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
<TABLE>
<CAPTION>
July 4, 1999 Jan. 3, 1999
ASSETS (Unaudited)
Current Assets:
<S> <C> <C>
Cash and cash equivalents (including restricted amounts of $45 and $100) $ 2,428 $ 2,938
Short-term investments 3,091 3,085
Accounts receivable, net of allowance for doubtful accounts of $524 and $138 1,165 1,437
Inventories 1,787 2,540
Other 98 437
-------- --------
Total current assets 8,569 10,437
Property and equipment, net 826 1,191
Property held for sale, net -- 4,339
Patents and licensed technology, net 515 544
Other assets 116 137
-------- --------
Total Assets $ 10,026 $ 16,648
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,883 $ 2,196
Accounts payable 462 763
Accrued liabilities 995 1,130
-------- --------
Total current liabilities 3,340 4,089
-------- --------
Long-term debt 79 3,965
Stockholders' equity:
Common stock, $.01 par value, 30,000 shares authorized,
1,978 shares issued and outstanding 20 20
Additional paid-in capital 33,033 33,033
Accumulated deficit (26,430) (24,438)
Deferred compensation (16) (21)
-------- --------
Total stockholders' equity 6,607 8,594
-------- --------
Total Liabilities and Stockholders' Equity $ 10,026 $ 16,648
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Quarter Ended:
July 4, 1999 June 28, 1998
<S> <C> <C>
Net sales $ 1,970 $ 2,284
Cost of sales 884 1,038
------- -------
Gross profit 1,086 1,246
------- -------
Operating expenses:
Selling, general and administrative 1,175 1,496
Product development 229 339
Non-recurring charges 1,440 --
------- -------
2,844 1,835
------- -------
Operating loss (1,758) (589)
Interest expense 134 150
Interest income (81) (87)
Other income (96) (125)
------- -------
Loss before income taxes (1,715) (527)
Provision for income taxes -- --
------- -------
Net loss ($1,715) ($ 527)
======= =======
Basic and diluted loss per share ($ 0.87) ($ 0.27)
======= =======
Shares used in calculating basic and diluted loss per share 1,978 1,978
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the Six Months Ended:
July 4, 1999 June 28, 1998
Net sales $ 4,232 $ 4,651
Cost of sales 1,855 2,079
------- -------
Gross profit 2,377 2,572
------- -------
Operating expenses:
Selling, general and administrative 2,546 3,031
Product development 457 617
Non-recurring charges 1,440 --
------- -------
4,443 3,648
------- -------
Operating loss (2,066) (1,076)
Interest expense 273 304
Interest income (153) (172)
Other income (194) (223)
------- -------
Loss before income taxes (1,992) (985)
Provision for income taxes -- 3
------- -------
Net loss ($1,992) ($ 988)
======= =======
Basic and diluted loss per share ($ 1.01) ($ 0.50)
======= =======
Shares used in calculating basic and
diluted loss per share 1,978 1,978
======= =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
For the Six Months Ended:
July 4, 1999 June 28, 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss ($1,992) ($ 988)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization 562 547
Imputed interest (8) (14)
Provision for bad debt 60 --
Non-recurring charges 1,440 --
(Increase) decrease in assets:
Accounts receivable (160) 475
Inventories 176 68
Other current assets 49 72
Other assets (16) 45
Increase (decrease) in liabilities:
Accounts payable (301) 321
Accrued liabilities (308) (253)
------- -------
Net cash (used in) provided by operating activities (498) 273
------- -------
Cash Flows From Investing Activities:
Purchase of short-term investments, net (6) (124)
Additions to property and equipment (28) (53)
Sale of property held for sale 4,237 --
Patent costs (16) (63)
Purchase of marketing agreement -- (30)
------- -------
Net cash provided by (used in) investing activities 4,187 (270)
------- -------
Cash Flows From Financing Activities:
Payments on long-term debt (277) (246)
Reduction in long-term debt on property held for sale (3,922) --
------- -------
Net cash used in financing activities (4,199) (246)
------- -------
Net decrease in cash and cash equivalents (510) (243)
Cash and Cash Equivalents, Beginning of Period 2,938 1,555
------- -------
Cash and Cash Equivalents, End of Period $ 2,428 $ 1,312
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Summary Financial Information and Results of Operations:
In the opinion of Surgical Laser Technologies, Inc. and Subsidiaries (the
"Company"), the accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles and with the regulations of the Securities and Exchange Commission
and contain all adjustments necessary to present fairly the financial position,
results of operations and cash flows for the interim periods presented.
Interim Financial Information:
While the Company believes that the disclosures presented are adequate to
prevent misleading information, it is suggested that the unaudited condensed
consolidated financial statements be read in conjunction with the audited
consolidated financial statements and notes included in the Company's Form 10-K
report for the fiscal year ended January 3, 1999, as filed with the Securities
and Exchange Commission. Interim results for the quarter and six months ended
July 4, 1999 are not necessarily indicative of the results to be expected for
the full year.
2. Supplemental Cash Flow Information:
There were no material income taxes paid for the six months ended July 4, 1999
and June 28, 1998. Interest paid for the six months ended July 4, 1999 and June
28, 1998 was $273,000 and $304,000, respectively.
3. Basic and Diluted Loss Per Share:
Basic and diluted loss per share have been computed under the guidelines of
Statement of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS
No. 128"). The Company had common stock options and common stock warrants
outstanding of 442,000 and 458,000 at July 4, 1999 and June 28, 1998,
respectively. The Company also had subordinated debt, which matured on July 30,
1999, convertible into 72,000 shares of common stock at July 4, 1999 and June
28, 1998. Due to the Company's net loss for the quarters ended July 4, 1999 and
June 28, 1998, the inclusion of these common share equivalents would have had an
anti-dilutive effect when calculating diluted earnings per share under SFAS No.
128 and, as a result, diluted earnings per share was equivalent to basic
earnings per share for those periods.
4. Sale of Property:
On June 30, 1999, the Company sold its property in Oaks, Pennsylvania for
$4,475,000, before settlement costs and brokers commissions. At the time of the
sale, the property had a cost basis of $6,472,000 and accumulated depreciation
of $2,235,000. In connection with the sale, the mortgages, having a balance at
June 30, 1999 of $3,922,000 were assumed by the buyer. The income statement
impact for the six months ended July 4, 1999 for the sale of this property was
immaterial.
5. Non-recurring Charges:
In the second quarter of 1999, the Company recorded a non-recurring charge of
$1,440,000. This non-recurring charge consisted of $719,000 in charges related
to the discontinuance of certain new product ventures, a $539,000 charge to
reserve for excess inventories and a $182,000 charge for severance and for
related costs associated with headcount reductions made in response to the
discontinuance of the new product ventures.
7
<PAGE>
6. Bank Borrowings:
At July 4, 1999, the Company had a $2,535,000 line of credit agreement with a
bank. Other than for a $17,510 letter of credit, there were no borrowings under
the line at July 4, 1999. The previously outstanding letter of credit in the
amount of $389,000 in favor of Montgomery County Industrial Development
Corporation ("MCIDC") under the terms of the Mortgage and Security Agreement for
the Company's property in Oaks, Pennsylvania expired with the sale of that
property on June 30, 1999 (see Note 4). Borrowings on the line are secured by
the Company's accounts receivable and inventories and bear interest at the
bank's prime rate plus 1/2%. The line expires on August 31, 1999. The Company is
currently in renewal discussions with its bank and does not foresee any events
that would cause a delay in the renewal. The Company's line of credit agreement
prohibits the declaration or payment of any dividends or distributions on any of
its capital stock without the prior written consent of the bank at any time
there are outstanding obligations to the bank. The line is subject to the
Company maintaining certain financial covenants, as defined, with which the
Company was in compliance at July 4, 1999.
7. Income Taxes:
No income tax provision was made for the six months ended July 4, 1999 due to
net losses incurred. The tax provision for the six months ended June 28, 1998,
was for state income taxes.
8. Business Segment and Geographic Data:
Effective January 3, 1999, SLT adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"). SFAS No. 131 requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments. SFAS No. 131 defines operating segments as "components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance".
SLT is engaged primarily in one business segment: the design, development,
manufacture and marketing of laser products and other instruments for medical
applications. SLT's customers are primarily hospitals and medical centers. For
the six months ended July 4, 1999 and June 28, 1998, SLT did not have material
net sales to any one individual customer.
SLT reported net sales in the following categories (in thousands of dollars):
For the Six Months Ended:
July 4, 1999 June 28, 1998
------------ -------------
Disposables and accessories $3,106 $3,237
Laser system sales, service and rental 1,126 1,414
------ ------
Total net sales $4,232 $4,651
====== ======
For the six months ended July 4, 1999 and June 28, 1998, there were no material
net sales attributed to an individual foreign country. Net sales by geographic
area were as follows (in thousands of dollars):
For the Six Months Ended:
July 4, 1999 June 28, 1998
------------ -------------
Domestic $3,764 $3,918
Foreign 468 733
------ ------
$4,232 $4,651
====== ======
8
<PAGE>
9. Inventories:
Inventories at July 4, 1999 and January 3, 1999 were as follows (in thousands
of dollars):
July 4, 1999 January 3, 1998
------------ -------------
Raw material and work-in-process $1,126 $1,691
Finished goods 661 849
------ ------
$1,787 $2,540
====== ======
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Balance Sheet Changes and Subsequent Event
In the second quarter of 1999, CorMedica Corporation, a company that had been
developing a new product for performing percutaneous transluminal endocardial
revascularization ("PTER(TM)"), for which SLT supplied holmium lasers and fiber
delivery systems, advised SLT that CorMedica had not timely achieved a key
development milestone necessary to receive further funding. As a result, SLT
does not anticipate further sales to CorMedica in connection with this
development project. The Company had net sales to CorMedica of $524,000 in the
second half of 1998.
Also, during the second quarter of 1999, in response to the discontinuance of
the CorMedica venture and certain other new product ventures, the Company
reassessed its manpower and inventory requirements. As a result of that
reassessment, certain adjustments were made (see the change in inventories and
non-recurring charge paragraphs below) intending to better align the Company's
cost structure and inventory value with current revenue expectations.
On June 30, 1999, the Company sold its property in Oaks, Pennsylvania (see Note
4 of Notes to Condensed Consolidated Financial Statements). The sale of the
property accounted for the decline in property held for sale, net, on the
balance sheet and also the decline in both current and long term debt, as the
related mortgage obligations were assumed by the buyer with the sale.
Inventories of $1,787,000 at July 4, 1999, declined by $753,000 or 30% from
inventories of $2,540,000 at January 3, 1999. This decline in inventory was
mainly attributable to a non-recurring charge of $539,000 recorded during the
second quarter of 1999 to reserve for excess inventories.
Subsequent to July 4, 1999, the Company's 8% subordinated notes matured. As a
result, on July 30, 1999, the Company paid $1,621,000 to the noteholders to
satisfy the remaining principal balance outstanding. The effect of that payment
reduced cash and the current portion of long term debt by $1,621,000 subsequent
to the July 4, 1999 Balance Sheet presented.
Results of Operations
Historically the Company has generated its net sales from positioning its
technology and products across a wide range of surgical specialties. In an
effort to attain more significant growth in sales, the Company redefined its
strategy for growth to include a specific focus in the surgical specialties of
Otolaryngology, Head and Neck surgery and Neurosurgery ("ENT and Neurosurgery").
In conjunction with this focused strategy, the Company has entered and will
continue to seek to enter into relationships with other companies to expand the
use of the Company's products in surgical specialties other than ENT and
Neurosurgery, and has sought and will continue to seek to utilize its strengths
in supplying other companies with products that draw on the Company's expertise
and competencies. While refocusing its strategy in ENT and Neurosurgery, the
Company will take these other actions in an effort to enhance sales and to
promote continued utilization of its products and services.
9
<PAGE>
Additionally, as part of this transition, the Company is exploring opportunities
to expand the utilization of its proprietary technologies by entering into
private label relationships with other companies to market products encompassing
the Company's core competencies under their product labeling.
Net sales for the quarter ended July 4, 1999 of $1,970,000 decreased $314,000 or
14% compared to the second quarter 1998 net sales of $2,284,000. For the six
months ended July 4, 1999, net sales were $4,232,000 compared to $4,651,000 in
the first six months of 1998, a decrease of $419,000 or 9%.
Net sales of disposables and related accessories declined $131,000 or 4% in the
first six months of 1999 from the first six months of 1998 due to the lower
level of Contact Laser Delivery System and Accessory sales primarily within the
urology market, which were offset, in part, by increases in sales within the ENT
and Neurosurgery markets where the Company is currently concentrating its sales
efforts, as well as sales increases of new products introduced in the fourth
quarter of 1998.
Net sales of Nd:YAG laser systems, service and rentals of $1,126,000 in the
first six months of 1999 declined $288,000 or 20% from the comparable period in
1998. This decline in laser systems, service and rentals was the result of a
decrease in service, rental and international laser system unit sales, offset in
part, by an increase in domestic laser unit sales, resulting primarily from the
Company's focus in the neurosurgery market.
Gross profits of $1,086,000 for the quarter ended July 4, 1999 decreased
$160,000 or 13% from the second quarter of 1998, while gross profits for the six
months ended July 4, 1999 of $2,377,000 decreased $195,000 or 8% from the first
six months of 1998. As a percentage of net sales, gross profit of 56% and 55%
was relatively consistent for the six months ended July 4, 1999 and June 28,
1998, respectively.
Operating expenses, excluding the non-recurring charge, for the second quarter
of 1999 were $1,404,000, a decrease of $431,000 or 24% from the second quarter
of 1998. For the first six months of 1999, operating expenses, excluding the
non-recurring charge, were $3,003,000 a decrease of $645,000 or 18% from the
first six months of 1998. This decrease was due primarily to personnel and other
expense reductions made for the purpose of bringing expenses more in line with
the sales revenue being generated.
Selling, general and administrative expenses were $1,175,000 in the second
quarter of 1999, a decrease of $321,000 or 22% from the comparable prior year
period. In the first six months of 1999, selling, general and administrative
expenses were $2,546,000 compared to $3,031,000 in the first six months of 1998,
a decrease of $485,000 or 16%. Reductions in personnel and associated expenses
accounted for a majority of the reduced spending level.
Product development expenses of $229,000 in the second quarter of 1999 decreased
by $110,000 or 32% from the comparable period in 1998. Product development
expenses of $457,000 in the first six months of 1999 decreased by $160,000 or
26% from the comparable period in 1998. This lower level of spending was
principally due to a decrease in laser system development consulting charges
associated with a discontinued new product venture (see non-recurring charge
below).
In the second quarter of 1999, the Company recorded a non-recurring charge of
$1,440,000. This non-recurring charge consisted of $719,000 in charges related
to the discontinuance of certain new product ventures, a $539,000 charge to
reserve for excess inventories and a $182,000 charge for severance and for
related costs associated with headcount reductions made in response to the
discontinuance of the new product ventures.
Other income was $194,000 in the first six months of 1999, a decrease of $29,000
from the comparable period in 1998. Other income primarily consists of facility
related income and expense items.
Net interest expense was $120,000 and $132,000 in the first six months of 1999
and 1998, respectively.
10
<PAGE>
Liquidity and Capital Resources
The Company had cash, cash equivalents and short-term investments of $5,519,000
at July 4, 1999. In addition, the Company currently has a $2,535,000 credit
facility with its bank. Other than one immaterial letter of credit, there were
no borrowings outstanding under the line of credit. Borrowings under the line
are secured by the Company's accounts receivable and inventories. The line is
subject to the Company maintaining certain financial covenants, as defined, with
which the Company was in compliance at July 4, 1999. The facility expires on
August 31, 1999. The Company is currently in renewal discussions with its bank
and does not foresee any events that would cause a delay in the renewal.
Net cash used in operating activities was $498,000 in the first six months of
1999 compared to cash provided by operating activities of $273,000 in the
comparable period in 1998. Excluding non-recurring charges, the comparative
decrease in the net loss was more than offset by a comparatively higher change
in the level of accounts receivable due to the timing of sales and liability
payments.
On June 30, 1999, the Company sold its property in Oak, Pennsylvania. The sale
resulted in an increase in cash provided by investing activities of $4,237,000,
which represented the net book value of the property at the time of sale and an
increase in cash used by financing activities of $3,922,000, which represented
the assumption of the mortgages on the property by the buyer at the time of
sale.
Excluding the sale of the property in Oaks, Pennsylvania, net cash used in
investing activities was $50,000 in the first six months of 1999 compared to net
cash used in investing activities of $270,000 in the first six months of 1998.
The comparable decrease in cash used in investing activities was caused by a
reduction in purchases of short-term investments and patent costs.
Excluding the sale of the property in Oaks, Pennsylvania, net cash used in
financing activities was $277,000 and $246,000 in the first six months of 1999
and 1998, respectively.
Management believes the Company's current cash position and available line of
credit will be sufficient to fund operations and meet commitments for long-term
debt, other commitments and contingencies and capital expenditures.
Management believes that inflation has not had a material effect on operations
for the periods presented.
The Company has analyzed its information technology systems for the "Year 2000"
compliance issues. Management believes that the "Year 2000" issue related to the
Company's hardware and software programs are not likely to result in any
material adverse disruptions in the Company's computer systems or its internal
business operations. The Company has purchased and implemented the latest
version of its operating software package to provide remediation for the "Year
2000" issue. The cost of this new software was $8,000.
The Company has analyzed and determined that the "Year 2000" issue related to
its non-information technology, such as its telephone and security system, are
not likely to result in any material disruption of its business operations.
The Company is currently in the process of evaluating its relationships with
third parties, such as banks, service providers and suppliers, with which the
Company has a direct and material relationship to determine whether they are
"Year 2000" compliant. The responses received to date from such third parties to
inquiries made by the Company indicate that these third parties either are or
expect to be compliant by the Year 2000.
Even assuming that all material third parties confirm that they are or expect to
be "Year 2000" compliant by December 31, 1999, it is not possible to state with
certainty that such parties will be so compliant, or that the operations of such
third parties will not be materially impacted by other parties with whom they
themselves have a material relationship, and who fail to timely become "Year
2000" compliant. Consequently, it is not possible to predict whether or to what
extent the "Year 2000" issues may have an adverse material impact on the Company
as
11
<PAGE>
a result of the impact of this issue on the operations of the third parties
with whom the Company has a material relationship. For example, the failure to
be "Year 2000" compliant by a bank with whom the Company has a material banking
relationship could cause significant disruption in the Company's ability to make
payments, deposit funds and make investments, which could have a material
adverse effect on the Company's financial condition.
The Company has not established a contingency plan in case of failure of its
information technology systems since it has implemented its new software system.
The Company will continually monitor its relationships with banks, service
providers and suppliers to ensure they expect to be "Year 2000" compliant. If
the Company learns that one of these third parties will not be "Year 2000"
compliant, the Company's contingency plan would include replacing such third
party.
Risk Factors
For information regarding certain risk factors that could cause actual results
to differ materially from those suggested in forward-looking statements
contained herein or otherwise made from time to time by the Company, reference
is made to the Company's Form 10-K, Item 7, "Risk Factors," for the fiscal year
ended January 3, 1999, which is incorporated herein by reference. The risk
factors described in such report continue to be applicable at July 4, 1999.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Stockholders on July 20, 1999. Sheldon M.
Bonovitz, Richard J. DePiano, Jay L. Federman, Vincenzo Morelli and W. Keith
Stoneback, the director nominees set forth in the Notice of Annual Meeting, were
elected to serve as directors. The following table provides the details of the
votes cast for each director nominee.
Nominee Votes For Withhold Authority
- ------- --------- ------------------
Sheldon M. Bonovitz 1,588,717 40,560
Richard J. DePiano 1,588,757 40,520
Jay L. Federman 1,588,717 40,560
Vincenzo Morelli 1,588,757 40,520
W. Keith Stoneback 1,588,717 40,560
Arthur Andersen LLP was ratified to serve as the Company's independent
accountants for the fiscal year ending January 2, 2000, with 1,547,899 votes
favoring ratification, 74,613 votes opposing and 6,765 votes abstaining.
Subsequent to election as Director, W. Keith Stoneback resigned his position as
President, Chief Executive Officer and Director of the Company, effective July
21, 1999. Michael R. Stewart was elected to succeed Mr. Stoneback as President,
Chief Executive Officer and Director to fill the vacancy created by Mr.
Stoneback's resignation.
ITEM 5. Other Information
Proposals of stockholders of the Company which are intended to be presented by
such stockholders at the 2000 Annual Meeting of Stockholders must be received by
the Company no later than February 17, 2000 in order that they may be included,
subject to compliance with applicable federal securities laws and regulations,
in the proxy statement and form of proxy relating to that meeting.
12
<PAGE>
In addition, the persons named as proxies on the form of proxy to be mailed in
connection with the solicitation of proxies on behalf of the Company's Board of
Directors for use at the 2000 Annual Meeting of Stockholders will be authorized
to vote in their discretion on any stockholder proposal not included in the
Company's Proxy Statement if the Company does not receive written notice of such
proposal by May 2, 2000. Such proxy holders' authority to vote in their
discretion on stockholder proposals as to which the Company does not receive
notice by May 2, 2000 will be determined in accordance with the rules of the
Securities and Exchange Commission.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits:
Exhibit Number Description of Exhibit
-------------- ----------------------
10.50 Termination of Lease, dated June 29, 1999 and
effective June 30, 1999, between the Company and
SLT Properties, Inc.
10.51 Assumption and Assignment Agreement, dated June 28,
1999 and effective June 30, 1999, among Montgomery
County Industrial Development Corporation,
Pennsylvania Industrial Development Authority,
Lenfest Oaks, Inc., and SLT Properties, Inc.
10.52 Assumption Agreement, dated June 28, 1999 and
effective June 30, 1999, among American United
Life Insurance Company, Montgomery County
Industrial Development Corporation, Lenfest
Oaks, Inc., SLT Properties, Inc. and the
Company.
10.53 Consent, Subordination and Assumption Agreement,
dated June 28, 1999, among Pennsylvania Industrial
Development Authority, Montgomery County Industrial
Development Corporation, Lenfest Oaks, Inc., Suburban
Cable TV Co. Inc., SLT Properties, Inc. and the
Company.
10.54 Termination of Assignment of Lease Agreement, dated
June 23, 1999 and effective June 30, 1999, among
Pennsylvania Industrial Development Authority, SLT
Properties, Inc. and the Company.
10.55 Termination of Sublease Agreement, dated June
29, 1999 and effective June 30, 1999, between
Suburban Cable TV Co. Inc. and the Company.
10.56* Severance Agreement, dated July 21, 1999,
between W. Keith Stoneback and the Company.
27 Financial Data Schedule, July 4, 1999.
* This exhibit represents a management contract or compensatory
plan or arrangement.
b. Reports on Form 8-K: none
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SURGICAL LASER TECHNOLOGIES, INC.
Date: August 12, 1999 By: /s/ Michael R. Stewart
------------------------
Michael R. Stewart
President and
Chief Executive Officer
Signing on behalf of the
Registrant and as principal
officer.
14
TERMINATION OF LEASE
THIS TERMINATION OF LEASE ("Termination") is dated as of the 29th day of
June, 1999, but is intended to be effective as of the 30th day of June, 1999
(the "Termination Date"), by and between SLT PROPERTIES, INC. ("Landlord"), and
SURGICAL LASER TECHNOLOGIES, INC. ("Tenant").
BACKGROUND
A. Landlord and Tenant entered into that certain Lease Agreement dated
September 21, 1991 (the "Lease"), wherein Landlord leased to Tenant certain
premises located at 200 Cresson Boulevard, Oaks, Upper Providence Township,
Montgomery County, Pennsylvania (the "Leased Premises").
B. Landlord and Tenant have agreed to terminate the Lease as of the
Termination Date pursuant to the terms and subject to the conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Termination of Lease. The Lease is and shall be terminated as of the
Termination Date. Lessor hereby terminates all of its right, title and interest
in and to the Lease, and Lessee hereby terminates all of its right, title and
interest in and to the Lease and the leasehold estate in the Leased Premises
created thereby, and the parties acknowledge, confirm and agree that they shall
have no further right or obligation to each other under the Lease.
2. Binding. This Termination shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
3. Governing Law. This Termination shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
have executed this Termination the day and year first above written.
SLT PROPERTIES, INC.
By: /s/ Davis Woodward
--------------------------------
Name: Davis Woodward
------------------------------
Title: Vice President
-----------------------------
SURGICAL LASER TECHNOLOGIES, INC.
By: /s/ Davis Woodward
--------------------------------
Name: Davis Woodward
------------------------------
Title: Vice President
-----------------------------
ASSUMPTION AND ASSIGNMENT AGREEMENT
THIS AGREEMENT is made this 28th day of June, 1999 and effective on June
30, 1999, by and among PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY of
Harrisburg, Pennsylvania (hereinafter "PIDA"), MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT CORPORATION, a non-profit corporation organized and existing under
the laws of the Commonwealth of Pennsylvania (the "Seller"), SLT PROPERTIES,
INC., a Delaware corporation, with an address of 147 Keystone Drive,
Montgomeryville, Pennsylvania 18936-9638 (the "Assignor") and LENFEST OAKS,
INC., a Pennsylvania corporation with an address of 200 Cresson Boulevard, P. O.
Box 989, Oaks, Pennsylvania 19456-0989 (the "Assignee");
WHEREAS, pursuant to an Installment Sale Agreement dated September 14,
1990, as amended and restated by an Amended and Restated Installment Sale
Agreement dated November 25, 1991 (collectively the "Installment Sale
Agreement"), Seller, is the legal owner and Assignor is the equitable owner of
certain premises known as Lot #2, Oaks Corporate Center, Egypt Road and Route
422, Upper Providence Township, Montgomery County, Pennsylvania, more
particularly described in Exhibit "A" attached hereto and made a part hereof by
reference (hereinafter the "Premises"); and
WHEREAS, Assignor and Assignee have entered into an Agreement of Sale dated
November 25, 1998, wherein Assignor has agreed to sell to Assignee, and Assignee
has agreed to purchase Assignor's equitable title to the Premises (as amended
the "Agreement of Sale"); and
WHEREAS, pursuant to the Installment Sale Agreement, Seller executed and
delivered its Note dated November 20, 1991 and delivered December 2, 1991 in the
original principal amount of Two Million Dollars ($2,000,000.00) hereinafter the
"PIDA Note") in favor of (PIDA which was secured by a Mortgage on the Premises
executed by Seller dated November 20, 1991 and delivered December 2, 1991 (the
"Second Mortgage") and;
WHEREAS, pursuant to the Installment Sale Agreement, Assignor agreed to
perform the obligations of the Seller under the PIDA Note and the Second
Mortgage; and
WHEREAS, Assignee wishes to accept and assume all obligations of Assignor
in the Installment Sale Agreement and the PIDA Note and the Second Mortgage, as
well as the Loan Agreement between Seller and PIDA dated November 20, 1991
delivered December 2, 1991 and effective as of November 25, 1991, the Assignment
of Installment Sale Agreement between Seller, Assignor and PIDA dated November
20, 1991, and delivered December 2, 1991, the Consent, Subordination and
Assumption Agreement between Seller, Assignor and PIDA dated December 2, 1991
(collectively the "Loan Documents"); and
WHEREAS, the Seller and PIDA wish to release Assignor from its obligations
under the Loan Documents (except that MCIDC does not release Assignor from
Assignor's rights, liabilities, responsibilities or obligations under the
Installment Sale Agreement) and permit Assignee to assume the rights and
obligations of Assignor under the Loan Documents;
NOW THEREFORE, for good and valuable consideration tbe receipt and
sufficiency of which is hereby acknowledged by all parties and intending to be
legally bound hereby, all parties agree as follows:
1. Assignor hereby grants, bargains, sells, assigns, transfers and sets
over unto Assignee and its heirs, personal representatives, successors and
assigns, all of the Assignor's right, title, and interest in, to and under the
Installment Sale Agreement.
2
<PAGE>
2. Assignee hereby assumes all liabilities and responsibilities and
obligations of Assignor under the Loan Documents arising from and after the
close of business on June 30, 1999, and agrees to be bound by any warrants of
attorney contained in the Loan Documents and the Installment Sale Agreement.
3. Seller and PIDA hereby consent to said assignment by Assignor and
assumption by Assignee and from the date hereof forever discharge and release
Assignor of all rights, liabilities, responsibilities or obligations under the
Loan Documents which arise after the close of business on June 30, 1999 (except
that MCIDC does not release Assignor from Assignor's rights, liabilities,
responsibilities or obligations under the Installment Sale Agreement). From the
close of business on June 30, 1999, Assignor forever discharges and releases
Seller and PIDA of all rights, liabilities, responsibilities and obligations
under the Assignment and Assumption Agreement, Installment Sale Agreement and
the Loan Documents.
4. Assignee hereby indemnifies Seller from any damages, fees, costs or
attorney's fees incurred by Assignee as a result of the transaction contemplated
herein.
5. Assignee has knowingly and voluntarily entered into this Agreement and
acknowledges that the ensuing Paragraph 6 sets forth a warrant of authority for
an attorney to confess judgment against Assignee. In granting this warrant of
attorney to confess judgment against Assignee, Assignee after reviewing the same
and being counseled by separate counsel of Assignee, hereby knowingly,
intentionally, voluntarily and unconditionally waives any and all rights that
Assignee has or may have to prior notice and an opportunity for hearing under
the respective constitutions and laws of the United States and the Commonwealth
of Pennsylvania
6. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER THE INSTALLMENT SALE
AGREEMENT OR ANY OF THE LOAN DOCUMENTS.
3
<PAGE>
OF ANY COURT OF RECORD IN PENNSYLVANIA OR ELSEWHERE TO APPEAR FOR AND CONFESS
JUDGMENT AGAINST ASSIGNEE FOR ALL AMOUNTS FOR WHICH ASSIGNEE MAY BE OR BECOME
LIABLE TO SELLER OR ITS ASSIGNEE UNDER THIS AGREEMENT AS EVIDENCED BY AN
AFFIDAVIT SIGNED BY AN OFFICER OF SELLER OR ITS ASSIGNEE, SETTING FORTH THE
AMOUNTS THEN DUE PLUS REASONABLE ATTORNEY FEES, WITH COSTS OF SUIT AND RELEASE
OF ERRORS. SUCH AUTHORITY SHALL NOT BE EXHAUSTED BY ANY ONE EXERCISE THEREOF BUT
JUDGMENT MAY BE CONFESSED AS AFORESAID FROM TIME TO TIME AS OFTEN AS THERE IS A
DEFAULT HEREUNDER AND A COPY OF THIS AGREEMENT SHALL BE HIS SUFFICIENT WARRANT,
7. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.
IN WITNESS WHEREOF, the parties have set their hands and seals this 28th
day of June, 1999.
ATTEST: ASSIGNOR:
SLT PROPERTIES, INC.
/s/ Craig K. Carra By: /s/ Davis Woodward
--------------------------- ------------------------------
Craig K. Carra, Ass't Sec'y Davis Woodward, Vice President
ASSIGNEE:
LENFEST OAKS, INC.
_______________________________ By: __________________________________
ATTEST: ASSIGNOR:
SLT PROPERTIES, INC.
_______________________________ By: __________________________________
ASSIGNEE:
LENFEST OAKS, INC.
/s/ Mark H. Fisher By: /s/ Maryann V. Bryla
--------------------------- --------------------------------
Mark H. Fisher Maryann V. Bryla
Assistant Secretary Vice President
[SIGNATURES CONTINUED ON FOLLOWING PAGE}
4
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT CORPORATION
___________________________ By: /s/ Carmen S. Italia, Jr., President
--------------------------------
Carmen S. Italia, Jr., President
PENNSYLVANIA INDUSTRIAL
DEVELOPMENT AUTHORITY (PIDA)
/s/ Evelyn Shepley By: /s/ Marguerite Harris
------------------- ---------------------
Evelyn Shepley Marguerite Harris
Assistant Secretary Administrator
5
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
ss
COUNTY OF MONTGOMERY :
On the 28th day of June A.D., 1999, before me, the subscriber, a Notary
Public, personnally appeared Davis Woodward, who acknowledges himself to be the
Vice President of SLT PROPERTIES, INC., a Delaware corporation, and that he, as
such officer, being authorized to do so, executed the foregoing instrument by
signing the name of the Corporation by himself as and for the act and deed of
said Corporation for the uses and purposes therein contained and that he
desires the same might be recorded as such.
IN WITNESS WHEREOF, I have hereunto set my official hand and seal.
/s/ Patricia A. Moriarty
--------------------
Notary Public
Notary Seal
Patricia A. Moriarty, Notary Public
Montgomery Twp., Montgomery County
My Commission Expires May 20, 2002
6
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
ss
COUNTY OF MONTGOMERY :
On the 29th day of June A.D., 1999, before me, the subscriber, a Notary
Public, personally appeared Maryann V. Bryla, who acknowledges herself to be
the Vice President of LENFEST OAKS, INC., a Pennsylvania corporation, and that
she, as such officer, being authorized to do so, executed the foregoing
instrument by signing the name of the Corporation by herself as and for the act
and deed of said Corporation for the uses and purposes therein contained and
that she desires the same might be recorded as such.
IN WITNESS WHEREOF, I have hereunto set my official hand and seal.
/s/ Julie B. Duffy
--------------
Notary Public
Notary Seal
Julie B. Duffy, Notary Public
Upper Providence Twp., Montgomery County
My Commission Expires Oct. 22, 2001
7
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
ss
COUNTY OF MONTGOMERY :
On the 28th day of June A.D., 1999, before me, the subscriber, a Notary
Public, personally appeared CARMEN S. ITALIA, JR., who acknowledges himself to
be the President of MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT CORPORATION, and
that he, as such officer, being authorized to do so, executed the foregoing
instrument by signing the name of the Corporation by himself as and for the act
and deed of said Corporation for the uses and purposes therein contained and
that he desires the same might be recorded as such.
IN WITNESS WHEREOF, I have hereunto set my official hand and seal.
/s/ Deborah A. Mader
----------------
Notary Public
Notary Seal
Deborah A. Mader, Notary Public
Upper Gwynedd Twp., Montgomery County
My Commission Expires Oct. 8, 2001
8
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
ss
COUNTY OF DAUPHIN :
On the 28th day of June A.D., 1999, before me, the subscriber, a Notary
Public, personally appeared MARGUERITE HARRIS, who acknowledges herself to be
the Administrator of PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY, and that
she, as such officer, being authorized to do so, executed the foregoing
instrument by signing the name of the Corporation by herself as and for the act
and deed of said Corporation for the uses and purposes therein contained and
that she desires the same might be recorded as such.
IN WITNESS WHEREOF, I have hereunto set my official hand and seal.
/s/ Heather L. Hinton
-----------------
Notary Public
Notary Seal
Heather L. Hinton, Notary Public
City of Harrisburg, Dauphin County
My Commission Expires Jan. 6, 2003
10
<PAGE>
EXHIBIT "A"
ALL THAT CERTAIN tract of land situate in the Township of Upper Providence,
County of Montgomery, Commonwealth of Pennsylvania, as shown on Final
Subdivision Plan prepared for Acorn Development Corporation (Sheet 1 of 1) by
Pennoni Associates, Inc., Consulting Engineers, 1611 Arch Street, Philadelphia,
Pennsylvania 19103 and Yerkes Associates, Inc., 101 Charles Street, Box 1080,
Bryn Mawr, Pennsylvania 19101 recorded on September 11, 1990 in the Office of
the Recorder of Deeds in and for Montgomery County in Plan Book A-52, page 198,
bounded and described as follows, to wit:
BEGINNING at a point in the title line of Mill Road, said point being located
North 06 degrees 37 minutes 54 seconds West 509.00 feet from the intersection of
said title line with the centerline of Cresson Boulevard (50 feet wide); thence
extending along said title line of Mill Road North 06 degrees 37 minutes 54
seconds West 394.00 feet to a point in line of lands of Burl L. and Geraldine
Collins; thence extending along said lands the following 02 courses and
distances: (1) North 73 degrees 16 minutes 45 seconds East 216.79 feet to a
point; (2) North 06 degrees 37 minutes 55 seconds West 135.95 feet to a point in
the Southeasterly title line of Egypt Road, S.R. 46062-2; thence extending along
said title line North 80 degrees 10 minutes 00 seconds East 68.97 feet to a
point in the centerline of Cresson Boulevard, thence extending along said
centerline the following 03 dimensions: (1) South 39 degrees 00 minutes 00
seconds East 146.56 feet to a point of curvature; (2) extending along the arc of
a circle curving to the right, having a radius of 225.00 feet, the arc distance
of 131.55 feet to a point of tangency; (3) crossing a 25 foot wide storm
easement South 05 degrees 30 minutes 00 seconds East 323.16 feet to a point in
line of Lot No. 3; thence extending along said Lot South 83 degrees 22 minutes
06 seconds West 389.29 feet to the point and place of BEGINNING.
CONTAINING 4.147 acres of land, more or less.
BEING Lot 2 as shown on the above mentioned Plan
PARCEL NUMBER: 61-00-01208-14-4.
BEING the same premises which Oaks Associates, a Pennsylvania Limited
Partnership by Indenture dated September 14, 1990 and recorded in the Office of
the Recorder of Deeds in and for the County of Montgomery in Deed Book 4958 Page
199, granted and conveyed unto Montgomery County Industrial Development
Corporation, a Pennsylvania Non-Profit Corporation.
Prepared By and After Recording Return To:
Jay B. Williams
Senior Counsel
American United Life
Insurance Co.
One American Square,
P.O. Box 368
Indianapolis, IN 46204
ASSUMPTION AGREEMENT
THIS AGREEMENT, made this 28th day of June, 1999, by end between American
United Life Insurance Company, with an address at One American Square, P.O. Box
368, Indianapolis, Indiana 46206 ("Mortgagee"), SLT Properties, Inc. a Delaware
Corporation with an address at 147 Keystone Drive, Montgomeryville, Pennsylvania
18936-9638 ("SLTP"), Surgical Laser Technologies, Inc., a Delaware Corporation,
with an address of 147 Keystone Drive Montgomeryville, Pennsylvania 18936-9638
("SLT") and Montgomery County Industrial Development Corporation, a Pennsylvania
non-profit corporation with an address at 420 West Germantown Pike, East
Norriton, Pennsylvania 19403 ("MCIDC")(MCIDC, SLTP, and SLT being referred to
hereinafter as "Original Borrower"), and Lenfest Oaks, Inc, a Pennsylvania
Corporation with an address at 200 Cresson Boulevard, Oaks, Pennsylvania
19456-0989 ("New Borrower").
WITNESSETH:
WHEREAS, Original Borrower is indebted to Mortgagee under a certain promissory
note dated August 16, 1991 in the principal amount of Three Million Four
Hundred Thousand Dollars ($3,400,000) (the "Note"), which Note is secured by an
Indenture of Mortgage of even date "therewith executed by SLTP and MCIDC and
recorded at Mortgage Book 6760, Page 166 in the Office of the Recorder of Deeds
of Montgomery County, Pennsylvania (hereinafter the "Mortgage"); and
WHEREAS, the Mortgage is a first lien upon the real estate described in Exhibit
A (which is attached hereto and incorporated herein by reference) and all
improvements located thereon (the "Mortgaged Property"); and
WHEREAS, the repayment of the Note is further secured by that certain
Assignment of Rents and Leases dated August 16, 1991 executed by SLTP and MCIDC
and recorded at Deed Book 4987 Page 44 in the aforesaid Office (hereinafter the
"Assignment"); and
WHEREAS, SLTP has requested to transfer SLTP's equitable interest in the
Mortgaged Property to New Borrower and Mortgagee has consented upon
satisfaction of certain terms and conditions including the condition that New
Borrower shall become fully liable for repayment of the Note and performance of
all of Original Borrower's obligations under the Note, the Mortgage and the
Assignment; and
WHEREAS, SLTP is, contemporaneously with the execution of this Agreement, and
subject to the Mortgage, selling and conveying to New Borrower SLTP's equitable
interest in the Mortgaged Property; and
<PAGE>
WHEREAS, in consideration of these premises, to induce Mortgagee to consent to
such transfer and for other valuable consideration, the receipt of which is
acknowledged, New Borrower is willing to (i) assume all obligations for
repayment of all sums due under the Note, the Mortgage, and the Assignment; (ii)
personally assume all other obligations of SLT and SLTP under the Note, the
Mortgage and the Assignment; such assumption having been agreed to by and
between Original Borrower and New Borrower as part consideration for the
conveyance as aforesaid of the Mortgaged Property by SLTP to New Borrower; and
WHEREAS, Original Borrower and New Borrower represent to Mortgagee that there
is no second mortgage or other subsequent lien now outstanding against the
Mortgaged Property, other than that certain Mortgage dated December 2, 1991
executed by MCIDC in favor of Pennsylvania Industrial Development Authority
(the "PIDA Mortgage") and that the lien of the Mortgage is a valid, first and
subsisting lien upon said Mortgaged Property.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and the receipt of the assumption fee and processing fee in the
amount of Thirty Thousand One Hundred Eight Dollars and 52/100 ($30,108.52), and
upon the express conditions that the lien of the Mortgage is a valid, first and
subsisting lien upon said Mortgaged Property and that the execution of this
agreement will not impair the lien of the Mortgage and that, other than the PIDA
Mortgage there is no existing mortgage or other lien subsequent to the lien of
the Mortgage held by Mortgagee, it is hereby agreed as follows:
1. New Borrower hereby covenants, promises and agrees: (a) to pay the Note at
the times, in the manner and in all respects as therein provided, (b) to
perform each and every of the covenants, agreements and obligations of SLTP
and/or SLT in the Note, Mortgage and in the Assignment to be performed therein,
at the time, in the manner and in all respects as therein provided, and (c) to
be bound by each and every term and provision of the Note, the Assignment and
the Mortgage as though said Note, Assignment and Mortgage had originally been
made, executed and delivered by New Borrower, this agreement recognizing,
however, the reduction, if any, of the principal amount of the Note and the
payment of interest thereon to the extent of payments made by Original Borrower
or for its account prior to the date of execution of this Agreement. The
principal balance of the Note as of June 30, 1999 is Two Million Eight Hundred
Ten Thousand Eight Hundred Fifty One and 76/100 Dollars ($2,810,851.76).
2. That all of the Mortgaged Property shall remain in all respects subject to
the lien, charge or encumbrance of the Mortgage, and nothing contained herein
shall affect or be construed to affect the lien, charge or encumbrance of the
Mortgage or the priority thereof over other liens, charges encumbrances or
conveyances.
3. Notwithstanding anything to the contrary contained herein, this Agreement
shall not affect or impair any representation in regard to and/or warranty of
title heretofore made by the Original Borrower, all of which shall remain in
force and inure to the benefit of the Mortgagee and any insurer of the title to
said property or the lien of the Mortgage thereon.
4 Except as provided in Section 3 above, Mortgagee hereby agrees to release,
remise and discharge SLTP and SLT from all obligations and liabilities
hereafter arising under the Note, the Mortgage, the Assignment and all other
documents executed by SLT or SLTP in connection with the Note.
-2-
<PAGE>
Mortgagee shall contemporaneously with the execution hereof by all parties
return to SLT and SLTP (a) that certain Guaranty Agreement dated August 16, 1991
executed by SLT marked "canceled" and (b) that certain Security and Pledge
Agreement and Certificate of Deposit dated September 12, 1991 between SLTP and
Mortgagee marked "canceled", (c) the $100,000 certificate of deposit given to
Mortgagee in connection with such Security and Pledge Agreement, and (d) that
certain Tenant Agreement dated September 12, 1991 among SLT and SLTP and
Mortgagee marked "canceled". It being understood that Mortgagee shall have a
right to seek enforcement of any of the above instruments due to any violation
of the Note, Mortgage, and Assignment arising before the transfer provided
herein.
5. This Agreement may be executed in separate counterparts, each of which, when
executed and delivered, shall constitute an original document, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, Original Borrower, New Borrower & Mortgagee have executed
this Agreement as of the date first written above.
New Borrower: Lenfest Oaks, Inc., a Pennsylvania corporation
By: /s/ Maryann V. Bryla
-----------------------------------------
Printed Name: Maryann V. Bryla
-------------------------------
Title: Vice President
--------------------------------------
Attest:
/s/ Mark H. Fisher
- --------------------------
Assistant Secretary
Original Borrower: SLT Properties, Inc., a Delaware corporation
By: /s/ Davis Woodward
-----------------------------------------
Printed Name: Davis Woodward
-------------------------------
Title: Vice President
--------------------------------------
Attest:
/s/ Craig K. Carra
- --------------------------
Craig K. Carra,
Assistant Secretary
-3-
<PAGE>
Original Borrower: Surgical Laser Technologies, Inc.,
a Delaware corporation
By: /s/ Davis Woodward
-----------------------------------------
Printed Name: Davis Woodward
-------------------------------
Title: Vice President
--------------------------------------
Original Borrower: Montgomery County Industrial Development
Corporation, a Pennsylvania non-profit
corporation
By: /s/ Carmen S. Italia, Jr.
-----------------------------------------
Printed Name: Carmen S. Italia, Jr.
-------------------------------
Title: President
--------------------------------------
Attest:
- ------------------------
Mortgagee: AMERICAN UNITED LIFE INSURANCE COMPANY:
By: /s/ Steven Holland
-----------------------------------------
Printed Name: Steven Holland
-------------------------------
Title: Vice President
--------------------------------------
Attest:
/s/ Dorothy J. Bowman
- ---------------------------------
Secretary
STATE OF PENNSYLVANIA )
)SS:
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me, a Notary Public in and
for said County and State on this day by Maryann V. Bryla known to me to be the
person whose name is subscribed hereon, who being duly sworn by me, stated upon
oath that she is the Vice President of LENFEST OAKS, INC. and acknowledged
that she signed and sealed the foregoing instrument for the purposes therein
expressed as the act and deed of LENFEST OAKS, INC. Witness my hand and
official seal this 29th day of June, 1999.
/s/ Julie B. Duffy
--------------------------------
Notary Public
(Seal)
My Commission Expires: October 22, 2001
----------------
My County of Residence: Montgomery County
-----------------
-4-
<PAGE>
STATE OF PENNSYLVANIA)
)SS:
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me, a Notary Public in and
for said County and State on this day by Davis Woodward known to me to be the
person whose name is subscribed hereon, who being duly sworn by me, stated upon
oath that he is the Vice President of SLT PROPERTIES, INC. and acknowledged that
he signed and sealed the foregoing instrument for the purposes therein expressed
as the act and deed of SLT PROPERTIES, INC.
Witness my hand and official seal this 28th day of June, 1999.
/s/ Patricia A. Moriarty
--------------------
Notary Public
My Commission Expires: MAY 20, 2002
My County of Residence: CHESTER
STATE OF PENNSYLVANIA)
)SS:
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me, a Notary Public in and
for said County and State on this day by Davis Woodward known to me to be the
person whose name is subscribed hereon, who being duly sworn by me, stated upon
oath that he/she is the Vice President of Surgical Laser Technologies, Inc. and
acknowledged that he/she signed and sealed the foregoing instrument for the
purposes therein expressed as the act and deed of Surgical Laser Technologies,
Inc.
Witness my hand and official seal this 28th day of June, 1999.
/s/ Patricia A. Moriarty
--------------------
Notary Public
My Commission Expires: MAY 20, 2002
My County of Residence: CHESTER
-5-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA)
)SS:
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me, a Notary Public in and
for said County and State on this day by Carmen S. Italia, Jr., known to me to
be the person whose name is subscribed hereon, who being duly sworn by me,
stated upon oath that he is the President of MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT CORPORATION and acknowledged that he signed and sealed the foregoing
instrument for the purposes therein expressed as the act and deed of MONTGOMERY
COUNTY INDUSTRIAL DEVELOPMENT CORPORATION.
Witness my hand and official seal this 28th day of June, 1999.
/s/ Deborah A. Mader
--------------------
Notary Public
My Commission Expires:
My County of Residence: BUCKS
STATE OF INDIANA)
)SS:
COUNTY OF MARION)
The foregoing instrument was acknowledged before me, a Notary Public in and for
said County and State on this day by Steven T. Holland, known to me to be the
person whose name is subscribed hereon, who being duly sworn by me, stated upon
his oath that he is the Vice President of American United Life Insurance Company
and acknowledged that he signed and sealed the foregoing instrument for the
purposes therein expressed as the act and deed of American United Life Insurance
Company.
Witness my hand and official seal this 28th day of June, 1999.
/s/ Elizabeth A. Chamberlain
------------------------
Notary Public
My Commission Expires: AUGUST 31, 2006
My County of Residence: Johnson
-6-
<PAGE>
EXHIBIT "A"
ALL THAT CERTAIN tract of land situate in the Township of Upper Providence,
County of Montgomery, Commonwealth of Pennsylvania, as shown on Final
Subdivision Plan prepared for Acorn Development Corporation (Sheet 1 of 1) by
Pennoni Associates, Inc., Consulting Engineers, 1611 Arch Street, Philadelphia,
Pennsylvania 19103 and Yerkes Associates, Inc., 101 Charles Street, Box 1080,
Bryn Mawr, Pennsylvania 19101 recorded on September 11, 1990 in the Office of
the Recorder of Deeds in and for Montgomery County in Plan Book A-52, page 198,
bounded and described as follows, to wit:
BEGINNING at a point in the title line of Mill Road, said point being located
North 06 degrees 37 minutes 54 seconds West 509.00 feet from the intersection of
said title line with the centerline of Cresson Boulevard (50 feet wide); thence
extending along said title line of Mill Road North 06 degrees 37 minutes 54
seconds West 394.00 feet to a point in line of lands of Burl L. and Geraldine
Collins; thence extending along said lands the following 02 courses and
distances: (1) North 73 degrees 16 minutes 45 seconds East 216.79 feet to a
point; (2) North 06 degrees 37 minutes 55 seconds West 135.95 feet to a point in
the Southeasterly title line of Egypt Road, S.R 46062-2; thence extending along
said title line North 80 degrees 10 minutes 00 seconds East 68.97 feet to a
point in the centerline of Cresson Boulevard; thence extending along said
centerline the following 03 dimensions: (1) South 39 degrees 00 minutes 00
seconds East 146.56 feet to a point of curvature; (2) extending along the arc of
a circle curving to the right, having a radius of 225.00 feet, the arc distance
of 131.55 feet to a point of tangency; (3) crossing a 25 foot wide storm
easement South 05 degrees 30 minutes 00 seconds East 323.16 feet to a point in
line of Lot No. 3; thence extending along said Lot South 83 degrees 22 minutes
06 seconds West 389.29 feet to the point and place of BEGINNING.
CONTAINING 4.147 acres of land, more or less.
BEING Lot 2 as shown on the above mentioned Plan.
PARCEL NUMBER: 61-00-01208-14-4.
BEING the same premises which Oaks Associates, a Pennsylvania Limited
Partnership by Indenture dated September 14, 1990 and recorded in the Office of
the Recorder of Deeds in and for the County of Montgomery in Deed Book 4958 Page
199, granted and conveyed unto Montgomery County Industrial Development
Corporation, a Non-Profit Corporation.
CONSENT, SUBORDINATION AND
ASSUMPTION AGREEMENT
WHEREAS, by an Amended and Restated Installment Sale Agreement dated
November 25, 1991 (the "Installment Sale Agreement"), MONTGOMERY COUNTY
INDUSTRIAL DEVELOPMENT CORPORATION, a Pennsylvania non-profit corporation
organized and existing under and by virtue of the laws of the Commonwealth of
Pennsylvania, (the "Borrower") agreed to sell to SLT PROPERTIES, INC., a
Delaware corporation, (the "Old Beneficial Owner") certain premises situate in
Montgomery County, Pennsylvania, as more particularly described on Exhibit A
attached hereto and made a part hereof (the "Premises"), subject to the lien of
a certain second mortgage from Borrower to THE PENNSYLVANIA INDUSTRIAL
DEVELOPMENT AUTHORITY ("PIDA"), dated November 20, 1991 and delivered December
2, 1991, and recorded in the Office of the Recorder of Deeds of Montgomery
County, Pennsylvania, in Mortgage Book 6791, page 198 (the "Mortgage"), which
Mortgage secures a loan in the original principal amount of Two Million Dollars
($2,000,000) from PIDA to the Borrower (the "Loan"), evidenced by a note dated
November 21, 1991 and delivered December 2, 1991 (the "Note"); and
WHEREAS, the Borrower on behalf of the Old Beneficial Owner requested (the
"Request") that PIDA approve (1) the assumption of the Mortgage by LENFEST OAKS,
INC., (the "New Beneficial Owner") an affiliate of SUBURBAN CABLE TV CO. INC.,
(the "New Industrial Occupant") a Pennsylvania corporation, the New Beneficial
Owner and (2) the leasing of the Premises to the New Industrial Occupant; and
WHEREAS, the PIDA Board at its meeting held January 6, 1999, approved the
Request provided that, inter alia, Lenfest Communications, Inc., guarantee the
prompt payment of the Note together with all interest, costs, fees, and charges
related thereto, as more specifically set forth in the Note and the Mortgage;
and
WHEREAS, the principal balance and the amount of the Loan to be assumed is
$1,111,887.42 plus accrued interest in the amount of $2,779.72 (effective June
30, 1999) for a total outstanding balance of $1,114,667.14; and
WHEREAS, the New Beneficial Owner has examined the Mortgage and consents
thereto and desires to assume and agrees to pay the Mortgage.
NOW, THEREFORE, in consideration of the PIDA Board Approval and for other
good and valuable consideration the receipt of which is hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
1. The New Beneficial Owner and the New Industrial Occupant do hereby
consent for themselves, their successors and assigns, to the Mortgage, and the
New Beneficial Owner and the New Industrial Occupant further agree that whatever
right, title and interest which they, their successors and assigns may have in
and to the Premises shall be and the same are hereby expressly made subject and
subordinate to the lien of the Mortgage.
2. (a) The New Beneficial Owner and the New Industrial Occupant for
themselves, their successors and assigns: (i) do hereby assume all the
obligations of the Borrower under the Note and the Mortgage arising from and
after
<PAGE>
the Effective Date (as defined below) and agree to make payments in accordance
with and to perform all the terms and conditions of the Note and the Mortgage
arising from and after the Effective Date; (ii) consent and agree that their
liability to pay and perform in accordance with the terms of the Note and the
Mortgage shall continue until the Loan, together with any and all interest,
penalty and costs thereon, is paid in full and all obligations are performed;
and (iii) assume and covenant to perform any and all obligations, promises and
covenants of the Borrower contained in the Note and the Mortgage arising from
and after the Effective Date.
(b) The New Beneficial Owner covenants to give prompt notice to PIDA of the
occurrence of any default under the Installment Sale Agreement either on its
part or on the part of tbe Borrower.
(c) The New Beneficial Owner covenants that it has not prepaid and shall
not prepay the sums to be paid by it to the Borrower under the Installment Sale
Agreement, in whole or in part without the prior written consent of PIDA.
(d) The New Beneficial Owner covenants that, upon request, it shall make
the payments referred to in subparagraph (a)(i) above directly to PIDA.
3. The New Beneficial Owner and the New Industrial Occupant represent and
warrant that they have the power and authority to make the assumptions,
covenants, and agreements referred to in paragraph 2 above, and that the
officers of the New Beneficial Owner and the New Industrial Occupant who have
executed this Agreement are duly authorized so to do and to acknowledge the same
on their behalf by virtue of the authority conferred upon them by resolution
duly adopted by the Boards of Directors of the New Beneficial Owner and the New
Industrial Occupant, further, that the New Beneficial Owner and the New
Industrial Occupant have complied in every respect with all laws and agreements
applicable to the increase of their indebtedness as the same may be related to
its undertaking herein set forth.
4. The provisions of this Agreement shall be in addition to those of any
other agreement to which PIDA is a party relating to the Loan including, without
limitation, the Note and the Mortgage. All of such provisions shall be construed
as complementary to each other. Nothing contained herein shall prevent PIDA from
enforcing any and all of such provisions in accordance with their respective
terms.
5. From time to time, thc New Beneficial Owner and the New Industrial
Occupant will execute and deliver to PIDA such additional documents as PIDA may
reasonably require to carry out the terms of this Agreement.
6. The New Beneficial Owner and the New Industrial Occupant covenant that
they shall not discriminate against any employee or against any applicant for
employment because of race, religion, color, national origin, sex or age
including, but not limited to, employment upgrading, demotion or transfer,
recruitment or recruitment advertising, layoff or termination, rate of pay or
other forms of compensation, and selection for training, including
apprenticeship.
7. The New Beneficial Owner and the New Industrial Occupant covenant that
the Premises shall at all times be in compliance with all applicable
governmental regulations, including but not limited to, all antipollution
regulations and standards.
2
<PAGE>
8. The New Beneficial Owner and the New Industrial Occupant agree that
their use of the Premises shall at all times be restricted to those uses
authorized by the Pennsylvania Industrial Development Authority Act, Act No. 537
of 1956, Pub. L No. 1609, as amended.
9. The New Beneficial Owner and the New Industrial Occupant covenant that
they will neither sell, lease, assign or otherwise transfer their rights in the
Premises, in whole or in part, directly or indirectly, without the prior written
approval of PIDA, and any unauthorized sale, lease, assignment or transfer shall
be void. Should any portion of the Premises be leased to unrelated third-party
interests after consent by PIDA, PIDA shall receive fifty percent (50%) of the
gross subrentals as a prepayment on the Loan, payable annually. The failure of
PIDA at any time or times to enforce its rights under such provisions, strictly
in accordance with the same, shall not be construed as having created a custom
in any way or manner contrary to specific provisions of this Agreement or as
having in any way or manner modified or waived the same. All rights and remedies
of PIDA are cumulative and concurrent and the exercise of one right or remedy
shall not be deemed a waiver or release of any other right or remedy.
10. PIDA shall have the right at all times to enforce the provisions of
this Agreement in strict accordance with the terms hereof, notwithstanding any
conduct or custom on the part of PIDA in refraining from so doing at any time or
times. The failure of PIDA at any time or times to enforce its rights under such
provisions, strictly in accordance with the same, shall not be construed as
having created a custom in any way or manner contrary to specific provisions of
this Agreement or as having in any way or manner modified or waived the same.
All rights and remedies of PIDA are cumulative and concurrent and the exercise
of one right or remedy shall not be deemed a waiver or release of any other
right or remedy.
l1. The substantive laws of the Commonwealth of Pennsylvania shall govern
the construction of this Agreement and the rights and remedies of PIDA and the
New Beneficial Owner.
12. This Agreement shall inure to the benefit of, and shall be binding
upon, the respective successors and permitted assigns of PIDA, the New
Beneficial Owner and the New Industrial Occupant. The New Beneficial Owner has
no right to assign any of its rights or obligations hereunder or under the
Installment Sale Agreement without the prior written consent of PIDA, and any
such assignment without the prior written consent of PIDA shall be void.
13. This Agreement may be amended only with the prior written consent of
PIDA and the New Beneficial Owner and the New Industrial Occupant.
14. Any notices or consents required or permitted by this Agreement shall
be in writing and shall be deemed delivered if delivered in person or if sent by
certified mail, postage prepaid, return receipt requested, or telegraph, as
follows, unless such address is changed by written notice hereunder:
3
<PAGE>
(a) If to the New Beneficial Owner:
LENFEST OAKS, INC.
200 Cresson Boulevard, P.O. Box 989
Oaks,Pennsylvania 19456-0989
Attention: General Counsel
(b) If to the New Industrial Occupant:
SUBURBAN CABLE TV CO. INC.
200 Cresson Boulevard, P.O. Box 989
Oaks, Pennsylvania 19456-0989
Attention: General Counsel
(c) If to PIDA:
THE PENNSYLVANIA INDUSTRIAL
DEVELOPMENT AUTHORITY
Room 480, Forum Building
Harrisburg, Pennsylvania 17120
Attention: Executive Director
Notice shall be effective on delivery if delivered in person or on the
third business day following mailing if mailed.
15. If any provision of this Agreement shall be held invalid under any
applicable laws, such invalidity shall not affect any other provision of this
Agreement that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
16. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute but one and the same instrument.
17. This Agreement is intended to take effect as an instrument under seal.
18. The New Beneficial Owner and the New Industrial Occupant are referred
to as Contractor in Exhibits B, C, D and E.
19. This Agreement shall be effective as of the close of business on June
30, 1999 (the "Effective Date").
20. From and after the Effective Date, PIDA agrees to release, remise and
discharge Old Beneficial Owner and SURGICAL LASER TECHNOLOGIES, INC. (the "Old
Industrial Occupant") from any and all liabilities and obligations under the
Note, the Mortgage and all other documents executed by Old Beneficial Owner
and/or Old Industrial Occupant in connection with the Loan. PIDA agrees to
deliver to Old Industrial Occupant its Guaranty and Surety Agreement dated
December 2, 1991 marked "cancelled."
4
<PAGE>
IN WITNESS WHEREOF, the parties, intending to be legally bound hereby, has
caused this Consent, Subordination and Assumption Agreement to be executed on
its behalf by the undersigned duly authorized officers and its corporate seal to
be affixed hereto this 28th day of June, 1999.
ATTEST: MONTGOMERY COUNTY INDUSTRIAL
DEVELOPMENT CORPORATION
By /s/ Carmen S. Italia
---------------------- --------------------
Secretary President
(CORPORATE SEAL)
ATTEST: LENFEST OAKS, INC.
/s/ Samuel W. Morris By /s/ Maryann V. Bryla
---------------- --------------------
Secretary Vice President
(CORPORATE SEAL)
ATTEST: SUBURBAN CABLE TV CO. INC.
/s/ Samuel W. Morris By /s/ Maryann V. Bryla
---------------- --------------------
Secretary Treasurer
(CORPORATE SEAL)
ATTEST: SLT PROPERTIES, INC.
/s/ Craig K. Carra By /s/ Davis Woodward
-------------- ------------------
Assistant Secretary Vice President
(CORPORATE SEAL)
ATTEST: SURGICAL LASER TECHNOLOGIES, INC.
/s/ Davis Woodward By /s/ Davis Woodward
-------------- ------------------
Secretary Vice President
(CORPORATE SEAL)
5
<PAGE>
ATTEST: PENNSYLVANIA INDUSTRIAL DEVELOPMENT
AUTHORITY
/s/ Carolyn L. Hoouer By /s/ Marguerite Harris
------------------- ---------------------
Assistant Secretary Administrator
(CORPORATE SEAL)
COMMONWEALTH OF PENNSYLVANIA:
:SS
COUNTY OF DAUPHIN :
ON THIS the 28th day of June 1999, before me, the undersigned officer,
personally appeared Marguerite Harris, who acknowledged herself to be the
Administrator of The Pennsylvania Industrial Development Authority, a public
body corporate and politic, and that she as such Administrator being authorized
to do so, executed the foregoing instrument for the purpose therein contained by
signing the name of The Pennsylvania Industrial Development Authority by herself
as Administrator.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Earlyn C. Deardorff
-------------------
Notary Public
My Commission Expires: March 14, 2002
[GRAPHIC OMMITTED]
5a
<PAGE>
COMMONWEALTH OP PENNSYLVANIA:
:ss
COUNTY OF MONTGOMERY :
ON THIS, the 29th day of June, 1999, before me, the undersigned officer,
personally appeared Maryann V. Bryla, who acknowledged herself to be the Vice
President of Lenfest Oaks, Inc., a corporation and the within named New
Beneficial Owner, and that she as such Vice President being authorized to do so,
executed the foregoing instrument for the purpose therein contained by signing
the name of the corporation by herself as Vice President.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Julie B. Duffy
--------------
Notary Public
My Commission Expires: Oct. 22, 2001
[GRAPHIC OMMITTED]
COMMONWEALTH OP PENNSYLVANIA:
:ss
COUNTY OF MONTGOMERY :
ON THIS, the 28th day of June, 1999, before me, the undersigned officer,
personally appeared Carmen S. Italia, Jr., who acknowledged himself to be the
President of Montgomery County Industrial Development Corporation, a corporation
and the within named Borrower, and that he as such President being authorized to
do so, executed the foregoing instrument for the purpose therein contained by
signing the name of the corporation by himself as President.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Deborah A. Mader
----------------
Notary Public
My Commission Expires: Oct. 8, 2001
[GRAPHIC OMMITTED]
6
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
:ss
COUNTY OF MONTGOMERY :
ON THIS, the 28th day of June, 1999, before me, the undersigned officer,
personally appeared Davis Woodward, who acknowledged him/herself to be the Vice
President of Surgical Laser Technologies, Inc., a Delaware corporation, and that
he/she as such officer being authorized to do so, executed the foregoing
instrument for the purpose therein contained by signing the name of the
corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Patricia A. Moriarty
--------------------
Notary Public
My Commission Expires: 5/20/02
[GRAPHIC OMMITTED]
COMMONWEALTH OP PENNSYLVANIA:
:ss
COUNTY OF MONTGOMERY :
ON THIS, the 28th day of June, 1999, before me, the undersigned officer,
personally appeared Davis Woodward, who acknowledged him/herself to be the Vice
President of SLT Properties, Inc., a corporation, and that he/she as such
officer being authorized to do so, executed the foregoing instrument for the
purpose therein contained by signing the name of the corporation by him/herself
as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Patricia A. Moriarty
--------------------
Notary Public
My Commission Expires: 5/20/02
[GRAPHIC OMMITTED]
7
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
:ss
COUNTY OF MONTGOMERY :
ON THIS, the 29th day of June, 1999, before me, the undersigned officer,
personally appeared Maryann V. Bryla, who acknowledged him/herself to be the
Treasurer of Suburban Cable TV Co. Inc., a corporation, and that he/she as such
officer being authorized to do so, executed the foregoing instrument for the
purpose therein contained by signing the name of the corporation by him/herself
as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Julie B. Duffy
--------------
Notary Public
My Commission Expires: Oct. 22, 2001
[GRAPHIC OMMITTED]
Certificate of Residence of PIDA
I hereby certify that the precise residence and complete post office
address of The Pennsylvania Industrial Development Authority is: 480 Forum
Building, c/o Department of Commerce, Harrisburg, Pennsylvania 17120.
-------------------------------------
Claude J. Lewis, Deputy Chief Counsel
Attorney for PIDA
RECORDED in the Office for the Recording of Deeds, in and for the County of
Montgomery, in ________ Book Volume _________, page ___________.
-------------------------------------
(Title)
8
<PAGE>
EXHIBIT "A"
ALL THAT CERTAIN tract of land situate in the Township of Upper Providence,
County of Montgomery, Commonwealth of Pennsylvania as shown on Final Subdivision
Plan prepared for Acorn Development Corporation (Sheet 1 of 1) by Pennoni
Associates, Inc., Consulting Engineers, 1611 Arch Street, Philadelphia
Pennsylvania 19103 and Yerkes Associates, Inc., 101 Charles Street, Box 1080,
Bryn Mawr, Pennsylvania 19101 recorded on September 11, 1990 in the Office of
the Recorder of Deeds in and for Montgomery County in Plan Book A-52, page 198,
bounded and described as follows, to wit:
BEGINNING at a point in the title line of Mill Road, said point being located
North 06 degrees 37 minutes 54 seconds West 509.00 feet from the intersection of
said title line with the centerline of Cresson Boulevard (50 feet wide); thence
extending along said title line of Mill Road North 06 degrees 37 minutes 54
seconds West 394.00 feet to a point in line of lands of Burl L. and Geraldine
Collins; thence extending along said lands the following 02 courses and
distances: (1) North 73 degrees 16 minutes 45 seconds East 216.79 feet to a
point; (2) North 06 degrees 37 minutes 55 seconds West 135.95 feet to a point in
the Southeasterly title line of Egypt Road, S.R. 46062-2; thence extending along
said title line North 80 degrees 10 minutes 00 seconds East 68.97 feet to a
point in the centerline of Cresson Boulevard; thence extending along said
centerline the following 03 dimensions: (1) South 39 degrees 00 minutes 00
seconds East i46.56 feet to a point of curvature; (2) extending along the arc of
a circle curving to the right, having a radius of 225.00 feet, the arc distance
of 131.55 feet to a point of tangency; (3) crossing a 25 foot wide storm
easement South 05 degrees 30 minutes 00 seconds East 323.16 feet to a point in
line of Lot No. 3; thence extending along said Lot South 83 degrees 22 minutes
06 seconds West 389.29 feet to the point and place of BEGINNING.
CONTAINING 4.147 acres of land, more or less.
BEING Lot 2 as shown on the above mentioned Plan.
PARCEL NUMBER: 61-00-01208-14-4.
BEING the same premises which Oaks Associates, a Pennsylvania Limited
Partnership by Indenture dated September 14, 1990 and recorded in the Office of
the Recorder of Deeds in and for the County of Montgomery in Deed Book 4958 Page
199, granted and conveyed unto Montgomery County Industrial Development
Corporation, a Pennsylvania Non-Profit Corporation.
9
<PAGE>
EXHIBIT "B"
NONDISCRIMINATION CLAUSE
During the term of this contract, Contractor agrees as follows:
1. Contractor shall not discriminate against any employee, applicant for
employment, independent contractor or any other person because of race, color,
religious creed, ancestry, national origin, age or sex. Contractor shall take
affirmative action to insure that applicants are employed, and that employees or
agents are treated during employment, without regard to their race, color,
religious creed, handicap, ancestry, national origin, age or sex. Such
affirmative action shall include, but is not limited to: employment, upgrading,
demotion or transfer, recruitment or recruitment advertising; layoff or
termination; rates of pay or other forms of compensation; and selection for
training. Contractor shall post in conspicuous places, available to employees,
agents, applicants for employment and other persons, a notice to be provided by
the contracting agency setting forth the provisions of this nondiscrimination
clause.
2. Contractor shall in advertisements or requests for employment placed by
it or on its behalf, state that all qualified applicants will receive
consideration for employment without regard to race, color, religious creed,
handicap, ancestry, national origin, age, or sex.
3. Contractor shall send each labor union or workers' representative with
which it has a collective bargaining agreement or other contract or
understanding, a notice advising said labor union or workers' representative of
its commitment to this nondiscrimination clause. Similar notice shall be sent to
every other source of recruitment regularly utilized by Contractor.
4. It shall be no defense to a finding of noncompliance with this
nondiscrimination clause that Contractor had delegated some of its employment
practices to any union, training program or other source of recruitment which
prevents it from meeting its obligations. However, if the evidence indicates
that the Contractor was not on notice of tbe third-party discrimination or made
a good faith effort to correct it, such factor shall be considered in mitigation
in determining appropriate sanctions.
5. Where the practices of a union or of any training program or other
source of recruitment will result in the exclusion of minority group persons, so
that Contractor will be unable to meet its obligations under this
nondiscrimination clause, Contractor shall then employ and fill vacancies
through other nondiscriminatory employment procedures.
6. Contractor shall comply with all state and federal laws prohibiting
discrimination in hiring or employment opportunities. In the event of
Contractor's noncompliance with the nondiscrimination clause of this contract or
with any such laws, this contract may be terminated or suspended, in whole or in
part, and Contractor may be declared temporarily ineligible for further
Commonwealth contracts, and other sanctions may be imposed and remedies invoked.
7. Contractor shall furnish all necessary employment documents and records
to, and permit access to its books, records and accounts by, the contracting
agency for purposes of investigation to ascertain compliance with the provisions
of this clause. If Contractor does not possess documents or records reflecting
the necessary information requested, it shall furnish such information on
reporting forms supplied by the contracting agency.
8. Contractor shall actively recruit minority subcontractors and women
subcontractors or subcontractors with substantial minority representation among
their employees.
9. Contractor shall include the provisions of this nondiscrimination clause
in every subcontract, so that such provisions will be binding upon each
subcontractor.
10
<PAGE>
10. Contractor obligations under this clause are limited to the
Contractor's facilities within Pennsylvania or, where the contract is for
purchase of goods manufactured outside of Pennsylvania, the facilities at which
such goods are actually produced.
11
<PAGE>
Revised 2/96
EXHIBIT "C"
CONTRACTOR RESPONSIBILITY PROVISIONS
1. The Contractor certifies that it is not currently under suspension or
debarment by the Commonwealth, any other state, or the federal government, and
if the Contractor cannot so certify, then it agrees to submit along with the
bid/proposal a written explanation of why such certification cannot be made.
2. If the Contractor enters into any subcontracts or employs under this
contract any subcontractors/individuals who are currently suspended or debarred
by the Commonwealth or the federal government or who become suspended or
debarred by the Commonwealth or federal government during the term of this
contract or any extensions or renewals thereof, the Commonwealth shall have the
right to require the Contractor to terminate such subcontracts or employment.
3. The Contractor agrees to reimburse the Commonwealth for the reasonable
costs of investigation incurred by the Offiee of Inspector General for
investigations of the Contractor's compliance with terms of this or any other
agreement between the Contractor and the Commonwealth which result in the
suspension or debarment of the Contractor. Such costs shall include, but not be
limited to, salaries of investigators, including overtime; travel and lodging
expenses; and expert witness and documentary fees. The Contractor shall not be
responsible for investigative costs for investigations which do not result in
the Contractor's suspension or debarment.
4. The Contractor may obtain the current list of suspended and debarred
contractors by contacting the:
Department of General Services
Office of Chief Counsel
603 North Office Building
Harrisburg, PA 17125
Telephone No. (717) 783-6472
Fax No. (717) 787-9138
12
<PAGE>
Revised 6/96
EXHIBIT "D"
CONTRACTOR INTEGRITY PROVISIONS
1. Definitions.
a. Confidential information means information that is not public knowledge,
or available to thc public on request, disclosure of which would give an unfair,
unethical, or illegal advantage to another desiring to contract with the
Commonwealth.
b. Consent means written permission signed by a duly authorized officer or
employee of the Commonwealth, provided that where the material facts have been
disclosed, in writing, by prequalification, bid, proposal, or contractual terms,
the Commonwealth shall be deemed to have consented by virtue of execution of
this Agreement.
c. Commonwealth means the Commonwealth of Pennsylvania Acting by and
Through its Department of Community and Economic Development and any agencies
and instrumentalities of the Commonwealth of Pennsylvania for which the
Department of Community and Economic Development provides staff services
(including without limitation the Pennsylvania Industrial Development Authority,
Pennsylvania Economic Development Financing Authority, Pennsylvania Energy
Development Authority, and Pennsylvania Minority Business Development
Authority).
d. Contractor means the individual or entity that has entered into an
agreement with the Commonwealth, assumed the obligations of another to repay
moneys to the Commonwealth, or is the intended beneficiary of, and has knowingly
received benefits under, an agreement between the Commonwealth and a financial
intermediary or educational institution, including directors, officers,
partners, managers, key employees, and owners of more than a 5% interest.
e. Financial Interest means:
(1) ownership of more tban a 5% interest in any business; or
(2) holding a position as an officer, director, trustee, partner,
employee, or the like, or holding any position of management.
f. Gratuity means any payment of more than nominal monetary value in the
form of cash, travel, entertainment, gifts, meals, lodging, loans,
subscriptions, advances, deposits of money, services, employment, or contracts
of any kind.
2. The Contractor shall take no action in violation of state or federal
laws, regulations, or other requirements that govern contracting with the
Commonwealth.
3 Ihe Contractor shall not, in connection with this or any other agreement
with the Commonwealth, directly or indirectly offer, confer, or agree to confer
any pecuniary benefit on anyone as consideration for the decision, opinion,
recommendation, vote, other exercise of discretion, or violation of a known
legal duty by any officer or employee of the Commonwealth.
4 The Contractor shall not, in connection with this or any other agreement
with the Commonwealth, directly or indirectly offer, give, or agree to promise
to give to anyone any gratuity for the benefit of or at the direction or request
of any officer or employee of the Commonwealth.
5. Except with the consent of the Commonwealth, the Contractor shall not
have a financial interest in any other contractor, subcontractor, or supplier
providing services, labor, or material on this project.
13
<PAGE>
6. The Contractor, upon being informed that any violation of these
provisions has occurred or may occur, shall immediately notify the Commonwealth
in writing.
7. The Contractor, by execution of this Agreement and by the submission of
any bills or invoices for payment pursuant thereto, certifies and represents
that he has not violated any of these provisions.
8. The Contractor, upon the inquiry or request of the Inspector General of
the Commonwealth or any of that official's agents or representatives, shall
provide, or if appropriate, make promptly available for inspection or copying,
any information of any type or form relevant to the Contractor's compliance with
this Agreement (including without limitation these provisions relating to
Contractor integrity). Such information shall be retained by the Contractor for
a period of three years beyond the termination of the contract unless provided
by law.
9. For violation of any of the above provisions, the Commonwealth may
declare an event of default hereunder, subject to applicable notice and cure
provisions, and debar and suspend the Contractor from doing business with the
Commonwealth, including without limitation participation in its financial
assistance programs. These rights and remedies are cumulative, and the use or
nonuse of any one shall not preclude the use of all or any other. These rights
and remedies are in addition to those the Commonwealth may have under law,
statute, regulation, or otherwise.
14
<PAGE>
EXHIBIT "E"
AMERICANS WITH DISABILITIES ACT PROVISIONS
During the term of this contract, the Contractor agrees as follows:
1. Pursuant to federal regulations promulgated under the authority of The
Americans With Disabilities Act, 28 C.F.R ss.35.101 et seq., the Contractor
understands and agrees that no individual with a disability shall, on the basis
of the disability, be excluded from participation in this contract or from
activities provided for under this contract. As a condition of accepting and
executing this contract, the Contractor agrees to comply with the "General
Prohibitions Against Discrimination," 28 C.F.R. ss.35.130, and all other
regulations promulgated under Title II of The Americans With Disabilities Act
which are applicable to the benefits, services, programs, and activities
provided by the Commonwealth of Pennsylvania through contracts with outside
contractors.
2. The Contractor shall be responsible for and agrees to indemnify and hold
harmless the Commonwealth of Pennsylvania from all losses, damages, expenses,
claims, demands, suits, and actions brought by any party against the
Commonwealth of Pennsylvania as a result of the Contractor's failure to comply
with the provisions of paragraph 1 above.
15
TERMINATION OF ASSIGNMENT OF LEASE AGREEMENT
THIS AGREEMENT, made this 23rd day of June, 1999 and effective June 3O,
1999, by and between SLT PROPERTIES, INC. ("Assignor"), SURGICAL LASER
TECHNOLOGIES, INC. (the "Industrial Occupant") and THE PENNSYLVANIA INDUSTRIAL
DEVELOPMENT AUTHORITY ("PIDA").
Basis of Agreement
A. By Assignment of Lease Agreement dated December 2, 1991 (the "Assignment
of Lease Agreement"), which was recorded in Montgomery County Deed Book 4993,
Page 838, Assignor agreed to assign to PIDA all of its rights, title and
interest in a Lease Agreement between Assignor and Industrial Occupant for the
lease of that certain premises known as Tax Parcel Number 61-00-01208-14-4, as
more particularly described in Exhibit "A" attached hereto and made a part
hereof to Industrial Occupant.
B. Assignor and PIDA have agreed to terminate the Assignment of Lease
Agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties agree
that:
1. The Assignment of Lease Agreement is hereby canceled and annulled, and
from and after the date hereof shall be completely void and have no further
force and effect whatsoever.
2. This instrument may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed the day and year first above written.
Attest: SLT PROPERTIES, INC.
/s/ Davis Woodward By: /s/ Michael R. Stewart
-------------- ----------------------
Davis Woodward Michael R. Stewart
Secretary Vice President
Attest: PENNSYLVANIA INDUSTRIAL
DEVELOPMENT AUTHORITY
/s/ Evelyn Shepley By: /s/ Marguerite Harris
-------------- ----------------------
Evelyn Shepley Marguerite Harris
Assistant Secretary Administrator
CONSENT
Surgical Laser Technologies, Inc. hereby consents to the Termination of
Assignment of Lease Agreement as hereinabove described.
Attest: SURGICAL LASER TECHNOLOGIES, INC.
/s/ Davis Woodward By: /s/ Michael R. Stewart
-------------- ----------------------
Davis Woodward Michael R. Stewart
Secretary Vice President
3
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
ss
COUNTY OF MONTGOMERY :
On the 23rd day of June A.D., 1999, before me, the undersigned officer,
personally appeared Michael R. Stewart, who acknowledged himself/herself to be
the Vice President of SLT PROPERTIES, INC., and that he/she, as such Vice
President, being authorized to do so, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by
himself/herself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Patricia A. Moriarty
--------------------
Notary Public
Notarial Seal
Patricia A. Moriarty, Notary Public
Montgomery Twp., Montgomery County
My Commission Expires May 20, 2002
Member, Pennsylvania Association of Notaries
4
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
ss
COUNTY OF MONTGOMERY :
On the 28th day of June A.D., 1999, before me, the undersigned officer,
personally appeared Marguerite Harris, who acknowledged herself to be the
Administrator of THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY, and that
she, as such Officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by herself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ HEATHER L. HINTON
-----------------
Notary Public
Notarial Seal
HEATHER L. HINTON, Notary Public
City of Harrisburg, Dauphin County
My Commission Expires Jan. 6, 2003
5
<PAGE>
COMMONWEALTH OF PENNSYLVANIA:
ss
COUNTY OF MONTGOMERY :
On the 23rd day of June A.D., 1999, before me, the undersigned officer,
personally appeared Michael R. Stewart, who acknowledged himself to be the Vice
President of SURGICAL LASER TECHNOLOGIES, INC., and that he, as such Vice
President, being authorized to do so, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by himself as
Vice President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Patricia A. Moriarty
--------------------
Notary Public
Notarial Seal
Patricia A. Moriarty, Notary Public
Montgomery Twp., Montgomery County
My Commission Expires May 20, 2002
Member, Pennsylvania Association of Notaries
6
<PAGE>
EXHIBIT "A"
ALL THAT CERTAIN tract of land situate in the Township of Upper Providence,
County of Montgomery, Commonwealth of Pennsylvania, as shown on Final
Subdivision Plan prepared for Acorn Development Corporation (Sheet 1 of 1) by
Pennoni Associates, Inc., Consulting Engineers, 1611 Arch Street, Philadelphia,
Pennsylvania 19103 and Yerkes Associates, Inc., 101 Charles Street, Box 1080,
Bryn Mawr, Pennsylvania 19101 recorded on September 11, 1990 in the Office of
the Recorder of Deeds in and for Montgomery County in Plan Book A-52, page 198,
bounded and described as follows, to wit:
BEGINNING at a point in the title line of Mill Road, said point being located
North 06 degrees 37 minutes 54 seconds West 509.00 feet from the intersection of
said title line with the centerline of Cresson Boulevard (50 feet wide); thence
extending along said title line of Mill Road North 06 degrees 37 minutes 54
seconds West 394.00 feet to a point in line of lands of Burl L. and Geraldine
Collins; thence extending along said lands the following 02 courses and
distances: (1) North 73 degrees 16 minutes 45 seconds East 216.79 feet to a
point; (2) North 06 degrees 37 minutes 55 seconds West 135.95 feet to a point in
the Southeasterly title line of Egypt Road, S.R 46062-2; thence extending along
said title line Norlh 80 degrees 10 minutes 00 seconds East 68.97 feet to a
point in the centerline of Cresson Boulevard; thence extending along said
centerline the following 03 dimensions: (1) South 39 degrees 00 minutes 00
seconds East 146.56 feet to a point of curvature; (2) extending along the arc of
a circle curving to the right, having a radius of 225.00 feet, the arc distance
of 131.55 feet to a point of tangency; (3) crossing a 25 foot wide storm
easement South 05 degrees 30 minutes 00 seconds East 323.16 feet to a point in
line of Lot No. 3; thence extending along said Lot South 83 degrees 22 minutes
06 seconds West 389.29 feet to the point and place of BEGINNING.
CONTAINING 4.147 acres of land, more or less.
BEING Lot 2 as shown on the above mentioned Plan.
PARCEL NUMBER: 61-00-01208-14-4.
BEING the same premises which Oaks Associates, a Pennsylvania Limited
Partnership by Indenture dated September 14, 1990 and recorded in the Office of
the Recorder of Deeds in and for the County of Montgomery in Deed Book 4958 Page
199, granted and conveyed unto Montgomery County Industrial Development
Corporation, a Pennsylvania Non-Profit Corporation.
SUBLEASE TERMINATION AGREEMENT
THIS SUBLEASE TERMINATION AGREEMENT (this "Agreement") is dated as of the
29th day of June, 1999, but is intended to be effective as of the close of
business on the 30th day of June, 1999 (the "Termination Date"), by and between
SURGICAL LASER TECHNOLOGIES, INC., a Delaware corporation ("Sublandlord") and
SUBURBAN CABLE TV CO. INC., a Pennsylvania corporation ("Subtenant").
BACKGROUND:
A. Pursuant to that certain Lease Agreement dated September 12, 1991
between SLT Properties, Inc. ("Landlord"), as lessor, and Sublandlord, as
lessee, Sublandlord leased from Landlord certain premises known as 200 Cresson
Boulevard, Oaks, Upper Providence Township, Montgomery County, Pennsylvania (the
"Premises").
B. Sublandlord and Subtenant are parties to a certain Sublease dated March
21, 1996 (as amended, the "Sublease), wherein Sublandlord subleased to
Subtenant the Premises.
C. Landlord joined with Sublandlord in the Sublease to grant to Subtenant
an option to purchase the Premises upon the terms and conditions set forth in
the Sublease.
D. To effectuate the exercise of the aforementioned option to purchase,
Landlord and Lenfest Oaks, Inc. ("Buyer") entered into that certain Agreement
of Sale dated November 25, 1998 (the "Sale Agreement") pursuant to which
Landlord has agreed to sell and convey the Premises to Buyer, and Buyer has
agreed to purchase and accept the Premises from landlord, subject to the terms
and conditions set forth in the Sale Agreement
E. Both Tenant and Subtenant assented to the Sale Agreement
F. Sublandlord and Subtenant have now agreed to terminate the Sublease to
facilitate the sale of the Premises from Landlord to Buyer, subject to the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Termination of Sublease. Sublandlord and Subtenant hereby tenninate the
Sublease as of the Termination Date with the same force and effect as if the
Termination Date was the Expiration Date.
2. Sublease Expenses. On the Termination Date, Sublandlord shall pay to
Subtenant the sum of $8,750.00 in full settlement of its obligations under that
certain letter agreement dated December 3, 1997 between Sublandlord and
Subtenant, which such letter agreement amended the Sublease.
3. Release bv Sublandlord. In consideration of Subtenant agreeing to
terminate the Sublease as of the Termination Date, and except as otherwise set
forth in this Agreement, Sublandlord hereby remises, releases, acquits,
satisfies and forever discharges Subtenant, its affiliates, successors, assigns,
officers, directors and employees, of and from all claims, causes of action,
liabilities, covenants, contracts, agreements, promises and obligations of
Sublandlord whatsoever in law or in equity arising under or in connection with
the Sublease except to the extent that any of the foregoing arise from or are
related to any indemnification or other obligation under the
<PAGE>
Sublease which by its nature or by the express terms of the Sublease survives
the termination of the Sublease.
4. Release by Subtenant. In consideration of Sublandlord agreeing to
terminate the Sublease as of the Termination Date and paying to Subtenant the
sum of $8,750.00 as more particularly described in Section 2 above, Subtenant
hereby remises, releases, acquits, satisfies and forever discharges Sublandlord,
its affiliates, successors, assigns, officers, directors and employees, of and
from all claims, causes of action, liabilities, covenants, contracts,
agreements, promises and obligations of Subtenant whatsoever in law or in equity
arising under or in connection with the Sublease, except to the extent that any
of the foregoing arise from or are related to any indemnification or other
obligation under the Sublease which by its nature or by the express terms of the
Sublease survives the termination of the Sublease.
5. Binding Effect. The obligations and rights set forth in this Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective heirs, legal representatives, successors and assigns.
6. Amendment and Modification. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof, and shall
not be amended, modified or supplemented unless by an agreement in writing
signed by the party against whom enforcement is sought.
7. Headings. The headings of this Agreement are for convenience of
reference only and shall not in any way be utilized to construe or interpret the
agreement of the parties.
8. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts. Each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute one and the same agreement.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day and year first above written.
SUBLANDLORD:
SURGICAL LASER TECHNOLOGIES, INC.
By: /s/ Davis Woodward
---------------------------------------
Name: Davis Woodward
-------------------------------------
Title: Vice President
------------------------------------
SUBTENANT:
SUBURBAN CABLE TV CO. INC.
By: /s/ Maryann V. Bryla
---------------------------------------
Name: Maryann V. Bryla
-------------------------------------
Title: Treasurer
------------------------------------
SEVERANCE AGREEMENT
This Severance Agreement is made as of this 21st day of July, 1999 by and
between W. Keith Stoneback, an individual residing in Pennsylvania (the
"Employee"), and Surgical Laser Technologies, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Company and the Employee are currently parties to an
Employment Agreement dated August 5, 1996 (the "Employment Agreement") pursuant
to which the Employee serves as President and Chief Executive Officer of the
Company; and
WHEREAS, the Employee has given notice to the Company that he is resigning
as President, Chief Executive Officer and a director of the Company, effective
as of the date hereof; and
WHEREAS, in consideration of Employee assisting the Company in the
transition to a new President and Chief Executive Officer, and of the other
promises made by Employee hereby, the Company agrees to compensate the Employee
in accordance with the terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Resignation of Employee. The Employee hereby resigns as President, Chief
Executive Officer and as a director of the Company, as a member of the Executive
and any other committee of the Company's Board of Directors on which he may now
serve, and as an officer and director of any subsidiary or affiliate of the
Company, effective immediately. The Company and the Employee agree that through
December 31, 1999 the Employee shall make himself available to the Company at
reasonable times to perform such advisory duties as are from time to time
reasonably requested of him by the President and Chief Executive Officer who
shall succeed him. The foregoing duties shall include without limitation such
duties as are necessary to assist in the transition to the new President and
Chief Executive Officer and assisting in various ongoing litigation involving
the Company. Employee shall use reasonable efforts at reasonable times to
fulfill his obligations hereunder as best as possible to the extent that doing
so does not conflict with his efforts to secure new employment or consulting
opportunities or the fact that he has secured new employment or obtained
consulting contracts.
<PAGE>
2. Compensation.
-------------
a. From the date hereof through December 31, 1999 (the "Severance
Period"), the Company shall continue to pay the Employee his base salary of
S225,000 per annum (less applicable deductions), at the same time and in
the same amounts as if the Employee had remained as an Employee of the
Company. During the Severance Period, the Company shall continue to provide
at no cost to Employee fringe benefits contemplated by Sections 7.2 (other
than gas and oil expenses), 7.4, 7.5, 7.6 and 8 of the Employment Agreement
to which the Employee was entitled immediately prior to the date hereof,
the remaining provisions of Sections 5 and 7 being terminated effective as
of the date hereof. The Employee shall not be entitled to receive any
incentive cash bonus for the current fiscal year, Section 6 being hereby
terminated by Employee and the Company.
b. Effective as of January 1, 2000, the Employee shall be entitled, by
notice given to the Company on or before December 1, 1999, to take over the
payments and ownership of the insurance policy or policies with respect to
his insurance benefits described in Sections 7.4, 7.6 and 8 of the
Employment Agreement to the extent that the then-existing terms of such
policies permit or do not prohibit him from doing so. The Company shall
also make available to Employee from the date hereof through June 30, 2001
COBRA coverage to the extent the Company is permitted to do so.
c. Set forth on Exhibit A attached hereto is a summary of Employee's
options to purchase shares of the Company's Common Stock. The Company and
the Employee hereby agree that, in accordance with the agreements pursuant
to which such options were granted, effective as of the date hereof, the
number of such options that shall be exercisable shall be as set forth on
Exhibit B attached hereto, and such options shall remain exercisable until
October 20, 1999.
3. Release.
--------
a. In consideration of the execution of this Agreement by the Employee
and the Company, the Employee, on his behalf and all persons claiming by,
through and under him including, without limitation, each and every
dependent, heir, executor and administrator, together with his agents,
successors, assigns and legal representatives (collectively the "Employee
Parties"), hereby waive, remise, release, settle and forever discharge the
Company and its subsidiaries and joint venturers (the "Companies"), their
respective affiliates, parents, subsidiaries and divisions, and any current
or former director, officer, agent, employee or stockholder of the
Companies, together with their agents, successors, assigns and legal
representatives (collectively the "Company Parties") from any and all
claims, sums of money, fees, compensation, counterclaims, crossclaims,
rights, demands, losses, damages, trespasses, bonds, executions,
liabilities, suits, actions and causes of action against the Company
Parties and each of them that any of the Employee Parties, joindy or
severally, ever had, now has or may have, in law or in equity, of every
nature or
-2-
<PAGE>
description, whether known or unknown, suspected or unsuspected, foreseen
or unforeseen, actual or potential, which exist as of the date of this
Agreement or arise in connection with thc Employee's resignation as
President, Chief Executive Officer and as a director or the termination of
his employment as contemplated by this Agreement, in each case in whole or
in part as a result of any act or omission in connection with the
Employee's employment with any of the Companies and his resignation from
such employment, including, without limitation by reason of specification,
Tide VII of the Civil Rights Act of 1964, as amended, the Pennsylvania
Human Relations Act, the Age Discrimination in Employment Act, the Employee
Retirement Income Security Act, as amended, the Fair Labor Standards Act,
the Americans with Disabilities Act, any other human relations or similar
ordinance, any state statute or local ordinance similar to the foregoing
federal acts, Pennsylvania wage payment law or other federal or state law,
including any claim of alleged discrimination, defamation, slander, libel,
invasion of privacy, breach of employment contract, breach of implied
covenant of good faith and fair dealing, intentional or negligent
infliction of emotional distress or wrongful discharge, up to the date of
this Agreement.
b. In consideration of the execution of this Agreement by the Employee
and the Company, the Companies hereby waive, remise, release, settle and
forever discharge the Employee Parties from any and all claims, sums of
money, fees, compensation, counterclaims, crossclaims, rights, demands,
losses, damages, trespasses, bonds, executions, liabilities, suits, actions
and causes of action against the Employee Parties and each of them that any
of the Company Parties, jointly or severally, ever had, now has or may
have, in law or in equity, of every nature or description, whether known or
unknown, suspected or unsuspected, foreseen or unforeseen, actual or
potential, which exist as of the date of this Agreement or arise in
connection with the Employee's resignation as President, Chief Executive
Officer and as a director or the termination of his employment as
contemplated by this Agreement, in each case in whole or in part as a
result of any act or omission in connection with the Employee's employment
with any of the Companies and his resignation from such employment.
c. The releases contained in Section 3(a)-(b) hereof shall not apply
to any claims that either party hereto may have against the other arising
out of such party's performance under this Agreement.
4. No Wrongdoing. Each party denies any wrongdoing or liability whatsoever
to the other party hereto, and the execution of this Agreement by each party
hereto does not constitute an admission of any liability whatsoever to the other
party hereto under statutory or common law.
5. Advice of Counsel. Thc Employee acknowledges that the Company advised
him to consult with an attorney prior to executing this Agreement and that he
has not sought the advice of counsel in reviewing and executing this Agreement.
The Employee further acknowledges that he has read this Agreement and
understands all of its terms and that his execution of this Agreement has not
been induced by any representations, statements,
-3-
<PAGE>
warranties or agreements other than those expressed or referred to herein. The
Employee acknowledges that he has executed this Agreement knowingly and
voluntarily, with ful1 knowledge of its significance.
6. Review Period. The Employee acknowledges that the Company has advised
him that he has 21 days from receipt of this Agreement to consider it. In the
event the Employee signs this Agreement before the expiration of the twenty-one
day review period, he explicitly agrees hereby to waive the opportunity to use
the full review period. The provisions of Sections 2(c) and 3 of this Agreement
shall become effective seven days following the date of the Employee's signature
unless the Company shall have actually received, within such seven-day period,
written notice from the Employee of his revocation of the agreements set forth
in such Section 2(c) and 3.
7. Entire Agreement. This Agreement sets forth the entire agreement between
the Employee and the Company and, except as and to the extent specifically
referenced herein, supersedes all prior agreements or understandings between the
Employee and any of the Companies, including without limitation, the Employment
Agreement; provided, however, that the provisions of Sections 12-14 shall
survive the termination of the Employment Agreement in accordance with the terms
thereof and that, for purposes of this Agreement, the references in Section 13
of the Employment Agreement to "a period of one (1) year following termination
of employment in accordance with this Agreement" shall mean a period extending
through December 31, 2000. In the event of any inconsistency betwesen the terms
of this Severance Agreement and the terms of the Employment Agreement, the terms
of this Severance Agreement shall govern.
8. Unenforceability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause performance of this Agreement to be
unreasonable.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
10. Successors and Assigns. This Agreement shall not be assignable by
either party without the prior written consent of the other party hereto, except
that the Company may assign its rigts and obligations hereunder to any successor
in interest to all or substantially all of the Company's business. This
Agreement shall inure to tbe benefit of and be binding upon the successors and
permitted assigns of the Company and the legal representatives, permitted
assigns and heirs of the Employee.
-4-
<PAGE>
11. Arbitration. Except as provided in Section 14 of the Employment
Agreement, which survives the execution of this Agreement as provided in Scction
7 hereof, any controversy or claim arising out of or relating to this Agreement,
or the breach hereof, shall be settled by arbitration in Philadelphia,
Pennsylvania, in accordance with the laws of the Commonwealth of Pennsylvania by
three arbitrators, one of whom shall be appointed by the Company, one by the
Employee and the third of whom shall be appointed by the first two arbitrators.
If either party fails to select an arbitrator within 30 days after written
notice of demand for arbitration from the other, the other party may have such
arbitrator appointed by the American Arbitration Association. If the first two
arbitrators cannot agree on the appointment of a third arbitrator within 30 days
after their selection, then the third arbitrator shall be appointed by the
American Arbitration Association. The arbitration shall be conducted in
accordance with the rules of the American Arbitration Association. Judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction hereof. In the event that it shall be necessary or desirabIe for
the Company and/or the Employee to retain legal counsel and/or incur other costs
and expenses in connection with the enforcement of any or all of either party's
rights under this Agreement, each party shall bear its own costs and expenses in
connection with the enforcement of its rights (including the enforcement of any
arbitration award in court), regardless of the final outcome.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shal1 be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Severance Agreement
as of the day and year first above written.
SURGICAL LASER TECHNOLOGIES; INC.
By: /s/ Michael R. Stewart
----------------------
/s/ W. Keith Stoneback
----------------------
W. Keith Stoneback
-5-
<PAGE>
EXHIBIT A
Number of Number
Grant Date Shares* Vested* Price
- ---------- --------- ------- --------
8/12/96 60,000 40,000 $10.3125
1/23/98 10,000 3,333 $ 7.03125
* The number of shares subject to options has been adjusted to reflect the
reverse stock split that occurred in January 1999.
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JULY 4, 1999 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE SIX MONTHS ENDED JULY 4, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
FINANCIAL DATA SCHEDULE (UNAUDITED)
(In thousands, except per share data)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-END> JUL-04-1999
<CASH> 2,428
<SECURITIES> 3,091
<RECEIVABLES> 1,689
<ALLOWANCES> (524)
<INVENTORY> 1,787
<CURRENT-ASSETS> 8,569
<PP&E> 6,771
<DEPRECIATION> (5,945)
<TOTAL-ASSETS> 10,026
<CURRENT-LIABILITIES> 3,340
<BONDS> 1,962
0
0
<COMMON> 20
<OTHER-SE> 6,587
<TOTAL-LIABILITY-AND-EQUITY> 10,026
<SALES> 4,232
<TOTAL-REVENUES> 4,232
<CGS> 1,855
<TOTAL-COSTS> 1,855
<OTHER-EXPENSES> 3,721
<LOSS-PROVISION> 722
<INTEREST-EXPENSE> 120
<INCOME-PRETAX> (1,992)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,992)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,992)
<EPS-BASIC> (1.01)
<EPS-DILUTED> (1.01)
</TABLE>
