Exhibit 10.1
 
WAIVER, CONSENT AND SECOND AMENDMENT
 
WAIVER, CONSENT AND SECOND AMENDMENT, dated as of November 3, 2009 (this
“Amendment”), to the Loan and Security Agreement, dated as of May 25, 2007 (the
“Loan Agreement”), among Del Global Technologies Corp. (“Del Global”), RFI
Corporation and Del Medical Imaging Corp. (collectively, the “Borrowers”) and
Capital One Leveraged Finance Corp., formerly known as North Fork Business
Capital Corporation (the “Lender”). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such terms in the
Loan Agreement.
 
WITNESSETH:
 
WHEREAS, the Borrowers and the Lender are parties to the Loan Agreement, under
which the Lender has agreed to make, and has made, Loans and other extensions of
credit and accommodations to the Borrowers on the terms and subject to the
conditions set forth therein; and
 
WHEREAS, the Borrowers have requested that the Lender agree, and the Lender has
agreed, (i) to waive Events of Default that have occurred and are continuing,
(ii) to consent to the Borrowers’ departure from complying with certain
provisions of the Loan Agreement and (iii) to amend certain provisions of the
Loan Agreement, each upon the terms and subject to the conditions set forth
herein.
 
NOW, THEREFORE, the Borrowers and the Lender agree as follows:
 
SECTION 1. Waivers. Effective as of the date hereof, subject to the satisfaction
of the conditions of effectiveness specified in Section 4 hereof, the Lender
hereby waives the Events of Default that have occurred and are continuing under
Section 9.1(b) of the Loan Agreement as a result of violations of Sections 8.1
and 8.2 of the Loan Agreement solely for the period ended July 31, 2009.
 
SECTION 2. Consents. Effective as of the date hereof, subject to the
satisfaction of the conditions of effectiveness specified in Section 4 hereof,
the Lender hereby consents to (i) the change of the Borrowers’ chief executive
office and principal place of business to 100 Pine-Aire Drive, Bay Shore, New
York 11706 and (ii) the sale of all or substantially all of the assets, the
liquidation or the dissolution of Del Medical Imaging Corp. in accordance with
applicable law.
 
SECTION 3. Amendments to the Loan Agreement. Effective as of the date hereof,
subject to the satisfaction of the conditions of effectiveness specified in
Section 4 hereof, the Loan Agreement is amended as follows:
 
(a)           Section 1.1 is amended as follows:
 
(i)           by amending and restating the following definitions:
 

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“Adjusted Earnings” means, for any period, with respect to Del Global and its
Subsidiaries on a consolidated basis but, without giving effect to the net
income of Villa Sistemi or any adjustments thereto (i) net income (as that term
is determined in accordance with GAAP) for such period, plus (ii) the amount of
depreciation and amortization of fixed and intangible assets deducted in
determining such net income for such period, plus (iii) all Interest Expense and
all fees for the use of money or the availability of money, including
commitment, facility and like fees and charges upon Indebtedness (including
Indebtedness to the Lender) paid or payable during such period, plus (iv)
provision for income tax expense during such period, less (v) provision for
income tax benefit during such period, plus (vi) non-recurring unusual or
extraordinary losses (including, without limitation, losses arising from the
Employment Dispute not to exceed $1,000,000 in the aggregate for all periods) as
classified in accordance with GAAP (or less any non-recurring or extraordinary
gains), plus (vii) expenses recorded as a result of the issuance of stock
options to employees or directors of Del Global, less (viii) the amount of all
gains (or plus the amount of all losses) realized during such period upon the
sale or other disposition of property or assets that are sold or otherwise
disposed of outside the ordinary course of business that is included in the
calculation of net income for such period.
 
“Maximum Amount of the Revolving Facility” means Three Million Dollars
($3,000,000).
 
“Pricing Increment” means (i) 2.00% per annum for Base Rate Advances and (ii)
4.50% per annum for LIBOR Rate Advances.;
 
(ii)           by deleting the definitions of “Fixed Charge Coverage Ratio,”
“Leverage Ratio” and “Specified Asset Value”; and
 
(iii)           by inserting the following new definitions in the appropriate
alphabetical order:
 
“Borrowing Base” has the meaning specified in Section 2.1(a).
 
“Borrowing Base Certificate” has the meaning specified in Section 7.1(k)(vii)
 
“Eligible Inventory” means only such Inventory of RFI located in the United
States consisting of raw materials or finished goods, which is free from any
claim of title or Lien in favor of any Person (other than Liens in favor of the
Lender) and with respect to which no event has occurred and no condition exists
which could reasonably be expected to impair substantially RFI’s ability to use
or sell such Inventory in the ordinary course of its business and which the
Lender, in its sole discretion, shall deem eligible to serve as collateral for
Advances or Letters of Credit, based on such considerations as the Lender may
deem appropriate from time to time and less any such reserves as the Lender, in
its sole discretion, may require, including, without limitation, reserves for
special order goods. No Inventory of RFI shall be Eligible Inventory unless the
Lender has a perfected first priority Lien thereon. The value of Eligible
Inventory shall be computed at the lower of cost (computed on a “first in, first
out” basis) or market. Any Inventory of RFI that is not in the control or
possession of RFI and is covered by a warehouse receipt, a bill of lading or
other document of title shall in no event be Eligible Inventory unless such
warehouse receipt, bill of lading or document of title is in the name of or held
by the Lender. No Inventory of RFI shall be Eligible Inventory unless (i) it is
located on property owned by RFI; or (ii) it is located on property leased by
RFI or in a contract warehouse which is subject to a Collateral Access Agreement
executed by the lessor or contract warehouseman, as the case may be, and
segregated or otherwise separately identifiable from goods of others, if any,
stored on the premises. No Inventory of RFI shall be Eligible Inventory if it is
in transit or it is consigned to or from RFI. In addition, and without
limitation of the foregoing, the Lender may treat any Inventory as ineligible
if:
 
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(a)           it is not owned solely by RFI or RFI does not have sole and good,
valid and marketable title thereto; or
 
(b)           it is packing or shipping materials or maintenance supplies; or
 
(c)           it is goods returned or rejected by RFI’s customer; or
 
(d)           it (i) is excess (as so reserved by RFI from time to time or as
otherwise determined by the Lender) or (ii) is obsolete, defective, damaged,
slow moving or unmerchantable, or (iii) is samples or inventory on hand which is
used for promotional and other sales activities, or (iv) does not otherwise
conform to the representations and warranties contained in the Loan Documents;
or
 
(e)           it is repossessed, attached, seized, made subject to a writor
distress warrant, levied upon or brought within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors; or
 
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(f)           it is goods acquired by RFI in or as part of a “bulk” transfer or
sale of assets and such acquisition is not consummated in the ordinary course of
business unless RFI has complied with all applicable bulk sales or bulk transfer
laws in connection with such acquisition.
 
“Eligible Receivables” means and includes only those unpaid Receivables of RFI,
without duplication, which (i) arise out of a bona fide sale of goods or
rendition of services of the kind ordinarily sold or rendered by RFI in the
ordinary course of its business, (ii) are made to a Person competent to contract
therefor who is not an Affiliate or an employee of RFI and is not controlled by
an Affiliate of RFI, (iii) are not subject to renegotiation or redating, (iv)
are free and clear of any Lien in favor of any Person other than Liens in favor
of the Lender and Liens permitted under clause (iii) of Section 7.2(i) and (v)
mature as stated in the invoice or other supporting data covering such sale or
services. No Receivable of RFI shall be an Eligible Receivable (i) unless the
Lender has a perfected first priority Lien thereon, (ii) if it is more than
ninety days past the date of the original invoice therefor or more than sixty
days past its due date or (iii) unless the delivery of the goods or the
rendition of the services giving rise to such Receivable has been completed. The
Lender may treat any Receivable as ineligible if:
 
(a)           any warranty contained in this Agreement or in any other Loan
Document with respect to such Receivable or in any assignment or statement of
warranties or representations relating to such Receivable delivered by RFI to
the Lender has been breached or is untrue in any material respect or RFI is not
in compliance with all applicable laws with respect to such Receivable; or
 
(b)           the account debtor or any Affiliate of the account debtor has
disputed liability, has or has asserted a right of setoff or has made any claim
with respect to any other Receivable due from such account debtor or Affiliate
to RFI, to the extent of the amount of such dispute or claim, or the amount of
such actual or asserted right of setoff, as the case may be; or
 
(c)           the account debtor or any of its assets or any Affiliate of the
account debtor or any of its assets is the subject of an Insolvency Event or, in
the sole discretion of the Lender, is likely to become the subject of an
Insolvency Event, unless such account debtor or Affiliate has been provided with
a debtor in possession credit facility pursuant to Section 364 of the Bankruptcy
Code or a similar arrangement reasonably acceptable to the Lender; or
 
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(d)           the account debtor or any Affiliate of the account debtor has
called a meeting of its creditors to obtain any general financial accommodation;
or
 
(e)           the account debtor is also a supplier to or creditor of RFI, to
the extent of the aggregate amount owed by RFI to the account debtor; or
 
(f)           the sale or rendition of services is to an account debtor outside
the United States or Canada, unless it is on letter of credit, acceptance or
other terms acceptable to the Lender; or
 
(g)           fifty percent (50%) or more of the accounts of any account debtor
and its Affiliates to RFI are unpaid more than ninety days past the date of the
original invoices therefor or more than sixty days past due; or
 
(h)           the account debtor is the United States of America or any
department, agency or instrumentality thereof and such Receivable would cause
Eligible Receivables from the United States of America or any department, agency
or instrumentality thereof to exceed $250,000, unless RFI assigns its right to
payment under such Receivable to the Lender as collateral hereunder in full
compliance with (including, without limitation, the filing of a written notice
of the assignment and a copy of the assignment with, and receipt of
acknowledgment thereof by, the appropriate contracting and disbursing offices
pursuant to) the Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727;
41 U.S.C. § 15); or
 
(i)           to the extent such Receivable would cause more than 25% of
Eligible Receivables to be payable by the same account debtor; or
 
(j)           the Lender believes, in its sole discretion, that collection of
such Receivable is insecure or that such Receivable may not be paid by reason of
the account debtor’s inability or unwillingness to pay.
 
(b)           Section 2.1(a) is amended by:
 
(i)           deleting “150% of the Specified Asset Value” and substituting
therefor the sum of (i) 85% of the amount of Eligible Receivables, (ii) 40% of
the value of Eligible Inventory and (iii) 60% of the fair market value of the
Property secured by the Mortgage as determined by the Lender in its sole
discretion from time to time (the “Borrowing Base”)”; and
 
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(ii)           adding the following sentence at the end thereof: “The Lender, at
any time in the exercise of its reasonable discretion, may (A) establish and
increase or decrease reserves against Eligible Receivables and Eligible
Inventory, (B) reduce the advance rates against Eligible Receivables and
Eligible Inventory, or thereafter increase such advance rates to any level equal
to or below the advance rates previously in effect and (C) impose additional
restrictions (or eliminate the same) to the standards of eligibility set forth
in the definitions of “Eligible Receivables” and “Eligible Inventory.”
 
(c)           Section 2.1(b) is amended by inserting after “as amended” the
following “amended and restated,”.
 
(d)           Section 2.5(a)(i)(A) is amended by deleting “150% of the Specified
Asset Value” and substituting therefor “the Borrowing Base”.
 
(e)           Section 4.5 is amended by adding at the end thereof the following:
“for each month through December 1, 2009 and in the amount of $16,000 for each
month thereafter”.
 
(f)           Section 7.1(k) is amended by adding the following new subsection
at the end thereof:
 
“(vii) Borrowing Base Certificates. Monthly (or more frequently as the Lender
may from time to time request), not later than the second Business Day of each
month (or the second Business Day following such request), a certificate,
substantially in the form of Exhibit H (a “Borrowing Base Certificate”), (i)
detailing the Eligible Inventory and the Eligible Receivables, containing a
calculation of availability and reflecting all sales, collections, and debit and
credit adjustments, as of the last day of (or for) the preceding month (or such
shorter period, as the case may be), and (ii) evidencing the fair market value
of the Property secured by the Mortgage as of the last day of (or for) the
preceding month (or such other date or period as the Lender may designate),
which shall be prepared by the chief financial officer of RFI and certified by
such officer.”
 
(g)           Section 8.1 is amended and restated as follows:
 
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“SECTION 8.1 Adjusted Earnings. The Adjusted Earnings for any period set forth
below shall not be less than the amount set forth below opposite such period:
 
Period
Minimum
Adjusted Earnings
   
November 1, 2009 through January 31, 2010
$215,000
   
November 1, 2009 through April 30, 2010
585,000”

(h)           Sections 8.2(a) and 8.3 are deleted.
 
(i)           Sections 8.4 and 8.5 are renumbered as Sections 8.2 and 8.3,
respectively. Section 9.1(b) is amended by deleting “, 8.3, 8.4”.
 
(k)           Section 11.1 is amended by deleting
 
“Del Global Technologies Corp.
11550 West King Street
Franklin Park, Illinois 60131
Telecopy: (847) 510-0423
Attn.: Mr. Mark A. Zorko”
 
and substituting therefor
 
“Del Global Technologies Corp.
50B North Gary Avenue
Roselle, Illinois 60172
Telecopy: (847) 510-0423
Attn.: Mr. Mark A. Zorko”
 
(1)           Exhibit C is amended and restated in the form of Annex I hereto.
 
(m)           A new Exhibit H is added in the form of Annex II hereto.
 
(n)           Schedule 6.1(b) is amended and restated in the form of Annex III
hereto.
 
SECTION 4. Conditions of Effectiveness. This Amendment shall become effective
when, and only when, the Lender shall have received (a) counterparts of this
Amendment, duly executed by the Borrowers, (b) a second amended and restated
revolving credit note in the maximum principal amount of $3,000,000, duly
executed by each Borrower, (c) payment of an amendment fee in the amount of
$75,000, which shall be deemed fully earned when paid and shall be
non-refundable, and (d) payment of the costs and expenses (including, without
limitation, reasonable attorneys’ fees) incurred by the Lender in connection
with this Amendment.
 
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SECTION 5. Representations and Warranties of teh Borrowers. Each Borrower
represents and warrants as follows:
 
(a)           Such Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York or Delaware, as the
case may be, and is qualified to do business under the laws of such other
jurisdictions in which its failure to so qualify could have a Material Adverse
Effect.
 
(b)           The execution, delivery and performance by such Borrower of this
Amendment (i) are within such Borrower’s corporate powers, have been duly
authorized by all necessary corporate action and do not contravene (A) such
Borrower’s Governing Documents, (B) any Requirement of Law or (C) any Material
Contract and (ii) will not result in or require the creation or imposition of
any Lien upon or with respect to any property now owned or hereafter acquired by
such Borrower.
 
(c)           No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for the due
execution, delivery and performance by such Borrower of this Amendment.
 
(d)           This Amendment and the Loan Agreement as amended hereby constitute
the legal, valid and binding obligations of such Borrower enforceable against
such Borrower in accordance with their respective terms except as enforceability
may be limited by (i) bankruptcy, insolvency or similar laws affecting
creditors’ rights generally and (ii) general principles of equity.
 
(e)           Except as specified in Schedule 6.1(r) to the Loan Agreement,
there is no pending or, to the best of such Borrower’s knowledge after due
inquiry, threatened litigation, contested claim, investigation, arbitration or
governmental proceeding by or against such Borrower before any court,
Governmental Authority or arbitrator which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect or which purports
to affect the legality, validity or enforceability of this Amendment or the Loan
Agreement as amended hereby.
 
(f)           Except as specified in Section 1 hereof, no Default has occurred
and is continuing.
 
SECTION 6. Reference to and Effect on the Loan Agreement.
 
(a)           On and after the date hereof, each reference in the Loan Agreement
to “this Agreement,” “hereunder,” “hereof,” “herein” and words of like import.
and each reference in the other Loan Documents to the Loan Agreement shall mean
and be a reference to the Loan Agreement as amended hereby.
 
(b)           Except as specifically waived, consented to or amended above, (i)
the Loan Agreement and each other Loan Document shall remain in full force and
effect and are hereby ratified and confirmed by each of the parties hereto and
(ii) the Lender shall not be deemed to have waived any rights or remedies it may
have under the Loan Agreement, any other Loan Document or applicable law.
 
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(c)           The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of or an amendment
to any right, power or remedy of the Lender under any of the Loan Documents, or
constitute a waiver of or an amendment to any provision of any of the Loan
Documents.
 
SECTION 7. Costs and Expenses. The Borrowers agree to pay, on demand, all
reasonable out-of-pocket costs and expenses incurred by the Lender in connection
with the preparation, negotiation and execution of this Amendment (including,
without limitation, the reasonable fees and expenses of counsel to the Lender).
 
SECTION 8. Counterparts; Telecopied Signatures. This Amendment may be executed
in counterparts and by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. This Amendment may be
executed and delivered by telecopier or other electronic means with the same
force and effect as if the same were a fully executed and delivered original
manual counterpart.
 
SECTION 9. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT,
WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY
THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS
OF THE STATE OF NEW YORK.
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
 

 
DEL GLOBAL TECHNOLOGIES CORP.
     
By:
/s/ Mark Zorko
   
Name:
Mark Zorko
   
Title:
Chief Financial Officer

 
RFI CORPORATION
     
By:
/s/ Mark Zorko
   
Name:
Mark Zorko
   
Title:
Chief Financial Officer

 
DEL MEDICAL IMAGING CORP.
     
By:
/s/ Mark Zorko
   
Name:
Mark Zorko
   
Title:
Chief Financial Officer

 
CAPITAL ONE LEVERAGED FINANCE CORP., formerly known as NORTH FORK BUSINESS
CAPITAL CORPORATION
     
By:
/s/ Robert R. Wallace
   
Name:
Robert R. Wallace
   
Title:
Senior Vice President

 

 
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