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EXHIBIT 10
[Letterhead of USD]
December 29, 1999
Steel Partners II, L.P.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
Re: NONDISCRIMINATION AGREEMENT
Gentlemen:
By letter dated December 17, 1999, you have requested that US
Diagnostic Inc. (the "Company") consider making Section 203 of the Delaware
General Corporation Law ("Section 203") inapplicable to any potential "Business
Combination" (as defined in Section 203) with Steel Partners II, L.P. ("Steel
Partners" which term shall be deemed to include any affiliate (as defined in
Section 203) of Steel Partners) by virtue of the board of directors of the
Company approving the transaction by which Steel Partners becomes an "Interested
Stockholder" (as defined in Section 203) (such inapplicability being referred to
herein as the "Section 203 Approval"). In order to provide for the increased
flexibility that such inapplicability of Section 203 would provide yet retain
certain protections for the stockholders of the Company, by executing in the
space provided below, Steel Partners, in order to induce and conditioned upon
the Section 203 Approval, hereby agrees:
1. For period of three years after the date hereof, Steel Partners will
not, by itself or as part of a group (as such term is used for purposes of Rule
13d-5 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), become the direct or indirect record or beneficial owner of
more than 45% of the voting stock of the Company (a) without the prior written
consent of the board of directors of the Company including a majority of those
directors constituting Continuing Directors or (b) except by means of a Business
Combination or a tender offer not prohibited by paragraph 2 hereof. For purposes
of this agreement, "Continuing Directors" means persons who were (i) directors
of the Company on the date hereof ("Initial Directors") or (ii) directors whose
election or nomination was approved by a majority of the Initial Directors or
(iii) directors whose election or nomination was approved by a majority of the
directors described in clauses (i) or (ii) above. For purposes of this agreement
"beneficial ownership" shall be defined and calculated in accordance with
Section 13(d) of the Exchange Act, provided that a right to acquire voting stock
of the Company shall be deemed beneficial ownership of such voting stock
irrespective of whether such right is exerciseable within 60 days of any date as
of which such beneficial ownership is to be determined.
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2. That for a period of three years after the date it becomes an
Interested Stockholder, Steel Partners will not propose or engage in, or assist
any other person in proposing or engaging in, any Business Combination, whether
by means of a single transaction or a series of related transactions, involving
the Company (including, without limitation, a merger, consolidation, tender
offer for voting securities of the Company, or sale of assets from which the
Company generated more than 30% of its consolidated earnings before interest,
taxes, depreciation and amortization during the 12 month period commencing 15
months prior to the date any agreement with respect to such sale of assets is
entered into) which does not by its terms provide that all holders of a class of
the Company's capital stock shall receive the same type and amount of
consideration to the extent that any consideration is paid in any such
transaction or series of related transactions to any such holder in respect of
or upon such holder's shares of Company capital stock.
3. This agreement shall be solely for the benefit of and enforceable by
the parties hereto, provided, however, that in the event that a majority of the
board of directors of the Company no longer comprises Continuing Directors, this
agreement may be enforced by any Qualified Holder (as defined below) of the
Company's capital stock (and any such holders shall in such case be deemed third
party beneficiaries hereof), provided that such Qualified Holder shall have made
a good faith demand upon the board of directors of the Company to enforce this
agreement and such demand shall have been refused or not replied to for more
than 15 days after the receipt by the Company of such demand. For purposes of
this agreement, "Qualified Holder" means a person who has continuously held at
least 1000 shares of the Company's capital stock for a period of not less than
six months prior to the making of the demand described in the foregoing
sentence.
4. This agreement shall be construed in accordance with the laws of the
State of Delaware without regard to the principles of conflict of laws thereof.
5. Steel Partners agrees that remedies at law may be inadequate to
protect the Company and its stockholders against any actual or threatened breach
of this agreement by Steel Partners and, without prejudice to any other rights
and remedies otherwise available to the Company or such stockholders, you agree
that the Company shall be entitled to the remedy of specific performance and
other injunctive or equitable relief without proof of actual damages. Steel
Partners further agrees to waive any requirement for the securing or posting of
any bond in connection with such remedy, or, if such security or bond may not be
lawfully waived, it is agreed that such security or bond shall not exceed
$5,000.
6. The Company acknowledges that Steel Partners' agreements hereunder
are conditioned upon the Section 203 Approval being obtained no later than
January 31, 2000.
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If this agreement appropriately sets forth our mutual understanding,
please have it executed by a duly authorized officer of Steel Partners and upon
counter signature by the Company this agreement shall become binding upon each
of the parties hereto as of the date of such counter signature.
Very truly yours,
US DIAGNOSTIC INC.
Date: 1/6/00 By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
President and CEO
Agreed to and accepted:
STEEL PARTNERS II, L.P.
By: /s/ Xxxxxx Xxxxxxxxxxxx
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Its: GENERAL PARTNER
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