AGREEMENT
THIS AGREEMENT (the "Agreement") is made this 31st day of
August, 1999.
R E C I T A L S
WHEREAS, Health-Chem Corporation (the "Company") issued its
10.375% Convertible Subordinated Debentures (the "Debentures")
due April 15, 1981 between the Company and Bankers Trust Company,
as trustee (the "Trustee").
WHEREAS, the Company defaulted on the Debentures by failing to
make the principal payment due on the Debentures on April 15, 1999.
WHEREAS, Health-Chem's subsidiaries include HS Protective
Fabrics Corp., Herculite Products, Inc., Hercon Environmental
Corporation, Transderm Laboratories Corp., Hercon Laboratories
Corporation and Aberdeen Research Corp. (collectively with the
Company, the "Companies").
WHEREAS, the Debentures are in default and representatives of
the Companies have met with Debentureholders on several occasions
and requested the holders thereof to refrain from action to enforce
the Indenture and provide the Companies with an opportunity to sell
assets and utilize these assets to pay down their remaining debt.
WHEREAS, after payment of outstanding debt to IBJ Whitehall
Business Credit Corp. the only material debt of the Companies
remaining is the balance of the amounts due and owing under the
Indenture.
WHEREAS, the sale of the assets of two of the Company's
subsidiaries, Herculite Products, Inc. and Hercon Environmental
Corporation pursuant to an agreement dated July 20, 1999 was
consummated on August 19, 1999 (the "Asset Sale").
WHEREAS, part of the proceeds from the Asset Sale have been
used to establish an escrow fund in the amount of $550,000 (the
"Escrow Fund") to be held by Xxxxxx & Xxxxx LLP, as escrow agent.
WHEREAS, the Companies have informed the Trustee that they
have no material assets other than those of Transderm Laboratories
Corporation ("Transderm").
WHEREAS, representatives of the Companies believe that it
would be in the best interests of the Debenture holders to continue
to refrain from action to collect on the Debentures.
WHEREAS, representatives of the Companies have further stated
they believe it would be in the best interests of Debenture holders
to permit the Companies to consider various possible arrangements
for carrying on the remaining business of Transderm, or, only if
necessary, effecting a sale of the Transderm assets.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, do hereby agree as follows:
1. The Companies will provide the Trustee for the benefit of
the amounts payable under the Indenture with timely material
information that is public with respect to material transactions
relating to their remaining business, and material non-public
information under a suitable, mutually acceptable confidentiality
agreement between the Companies and the Trustee.
2. The Companies agree that the Debentures should be paid out
of the proceeds of any remaining assets and that they will exercise
their best efforts to effect a repayment plan to pay the Debentures
at the earliest practicable date.
3. The Companies agree that pending the effectuation of a
repayment plan or repayment of all amounts due under the Indenture,
they will not make any payments to insiders, provided that insiders
can be paid salaries and benefits due to them, and can receive
payment on their Debentures in the same manner and to the same
extent as all other holders of Debentures, and the Companies will
give the Trustee not less than two business days' notice (by fax
or hand delivery) before engaging in any extraordinary
transactions.
4. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving
effect to any choice of law or conflicting provision or rule
(whether of the State of New York or any other jurisdiction) that
would cause the laws of any jurisdiction other than the State of
New York to be applied.
5. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
HEALTH-CHEM CORPORATION
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
HS PROTECTIVE FABRICS CORP.
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
HERCULITE PRODUCTS, INC.
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the
Board
HERCON ENVIRONMENTAL CORPORATION
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the
Board
TRANSDERM LABORATORIES CORP.
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
HERCON LABORATORIES CORPORATION
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
ABERDEEN RESEARCH CORP.
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
BANKERS TRUST COMPANY,
as Indenture Trustee
By: /s/Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: Vice President
10-K EXHIBIT 10.22
