XXXXXXX AMERICAS CORPORATION
XXXXXXX EUROPE CONSOLIDATED INC.
XXXXXXX ASIA PACIFIC CORPORATION
C/X XXXXXXX TECHNOLOGY COMPANY, INC.
00 XXXXXXXX XXXXX
XXXXXXX, XX 00000
June 28, 2002
Fleet National Bank
Xxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
First Union National Bank
Mail Code - PA1246
000 Xxxxx Xxxxx Xxxxxx - 00XXX
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Ladies and Gentlemen:
This letter sets forth our agreements with respect to the obligations
described below of Xxxxxxx Americas Corporation, Xxxxxxx Europe Consolidated
Inc. and Xxxxxxx Asia Pacific Corporation (collectively, the "BORROWERS") and
Xxxxxxx Technology Company, Inc., Xxxxxxx Technology Corporation, Xxxxxxx
Consolidated Europe BV, Xxxxxxx Graphics Systems, Inc., Xxxxxxx Kansa
Corporation, Xxxxxxx German Capital Holding GmbH, Xxxxxxx Grafotec GmbH and
Xxxxxxx Japan Ltd. (the "GUARANTORS") to Fleet National Bank ("FLEET") and First
Union National Bank ("FIRST UNION", and together with Fleet, the "LENDERS").
Each of the Borrowers and the Guarantors (collectively, the "OBLIGORS")
acknowledges that they are unconditionally and jointly and severally indebted
(and contingently indebted, as the case may be) to the Lenders with respect to
their respective debts more particularly described on Exhibit A attached hereto
(collectively, the "INDEBTEDNESS") in the amounts set forth on Exhibit A, plus
interest accrued and accruing thereon and costs and expenses of collection,
including without limitation, attorneys' fees. Additionally, each of the
Obligors acknowledges that it has no defense, offset or counterclaim to its
obligations in respect of the Indebtedness and further that it has no other
claim whatsoever against Fleet (in its capacity either as Administrative Agent
(in such capacity, the "ADMINISTRATIVE AGENT") or as Lender) or First Union (in
its capacity either as Documentation Agent or as Lender) (in each case whether
arising in contract, tort or otherwise) with respect to, or arising out of, the
Indebtedness.
The Indebtedness of the Borrowers is described in and evidenced by,
among other things: (1) that certain Amended and Restated Credit Agreement,
dated as of January 28, 2002, by and among Borrowers, the Guarantors, the
Lenders, Fleet, as Administrative Agent, and First Union, as Documentation Agent
(as amended, modified, restated or otherwise supplemented from time to time, the
"CREDIT AGREEMENT"), (2) a Replacement Revolving Credit Note in favor of Fleet
in the amount of up to $8,500,000 dated as of January 28, 2002 (the "FLEET
REVOLVING LOAN NOTE"), (3) a Replacement Revolving Credit Note in favor of First
Union in the amount of up to $8,500,000 dated as of January 28, 2002 (the "FIRST
UNION REVOLVING LOAN NOTE", and together with the Fleet Revolving Loan Note, the
"REVOLVING LOAN NOTES"), (4) a Term Loan Note in favor of Fleet in the amount of
$2,000,000 dated as of January 28, 2002 (the "FLEET TERM LOAN NOTE"), (5) a Term
Loan Note in favor of First Union in the amount of $2,000,000 dated as of
January 28, 2002 (the "FIRST UNION TERM LOAN NOTE", and together with the Fleet
Term Loan Note, the "TERM LOAN NOTES"), and (6) a Hedging Agreement with Fleet
dated April 30, 2001. The Indebtedness of the Guarantors is described in and
evidenced by the guaranty agreements described in Exhibit A (collectively, the
"GUARANTY AGREEMENTS").
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Credit Agreement. Hereinafter, the Loan
Documents, the Hedging Agreement and this Agreement shall be referred to as the
"CREDIT AND FORBEARANCE DOCUMENTS").
Each of the Obligors acknowledges and affirms that the Borrowers are
currently in default of their respective obligations under the Credit Agreement
and the other Loan Documents as a result of its past and continuing failure to
comply with the covenant set forth in Section 6.1(b) of the Credit Agreement
(the "EXISTING COVENANT DEFAULT") and that, as a result of such default, (a) the
Lenders have the immediate and unrestricted right to, among other things,
request the Administrative Agent to terminate the Commitment, declare all
Obligations to be immediately due and payable and otherwise exercise any and all
rights and remedies available to them under the Loan Documents and/or at law and
in equity, and (b) Fleet, as counterparty under the Hedging Agreement, has the
immediate and unrestricted right to terminate the Hedging Agreement and
otherwise exercise any and all rights and remedies available to it under the
Hedging Agreement and/or at law and in equity. In addition, the Borrowers have
advised the Administrative Agent and the Lenders that they currently have no
ability, and do not anticipate having the ability, to satisfy their respective
Indebtedness to the Lenders under the Term Loan Notes on or before the Term Loan
Maturity Date (the "ANTICIPATORY DEFAULT").
In order to avoid the cost, expense and disruption which would result
from the Lenders' efforts to collect the Indebtedness and in order to allow the
Obligors sufficient time to obtain alternative financing for the purpose of
refinancing all of the Indebtedness, the Administrative Agent and the Lenders
are willing to forbear from collection of the Indebtedness until August 12, 2002
(the "FORBEARANCE PERIOD"); SUBJECT, HOWEVER, to the express agreements and
conditions set forth below and provided further that:
(1) except for the Existing Covenant Default and the Anticipatory
Default, no other
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default or event of default (howsoever defined) under or within the meaning of
any of the other Credit and Forbearance Documents, including without limitation,
a default under any other financial covenant set forth in the Credit Agreement,
shall occur or exist, it being further acknowledged and agreed that from and
after the date hereof all cure and/or grace periods and/or requirements for
prior notice or demand, if any, that must be provided to one or more of the
Obligors prior to an event being deemed a default or an event of default
(howsoever defined) under any of the Credit and Forbearance Documents are hereby
waived by each of the Obligors and are of no further force and effect;
(2) there shall be no further material adverse change in the business
or financial condition of any of the Obligors other than has been disclosed to
the Lenders, after the date hereof;
(3) there shall be no material adverse change in the value, extent or
condition of any of the Collateral or other property granted to the
Administrative Agent, on behalf of the Lenders, to secure any or all of the
Indebtedness (it being agreed and understood that the Indebtedness under the
Revolver Loan Notes may exceed the amount permitted by the sum of clauses (a),
(b), (c) (d) and (e) of the Borrowing Base by no more than $5,000,000 (the
"OVERADVANCE") and that if the Overadvance increases during the Forbearance
Period, such occurrence shall be deemed a material adverse change, a default
under this Agreement and grounds for immediate termination of the Forbearance
Period);
(4) each of the Obligors shall perform and comply with, as and when
required, TIME BEING OF THE ESSENCE in all respects, all of the respective
agreements, covenants and obligations set forth in the Credit and Forbearance
Documents;
(5) no party shall take any action against any of the Obligors or
against any of the Collateral or other property granted to the Administrative
Agent, on behalf of the Lenders, to secure any or all of the Indebtedness which
in the Lenders' sole judgment will have a material adverse impact upon the
Lenders' right or ability to repossess, attach or execute upon any of such
Collateral or other property;
(6) none of the Obligors shall make any assignment for the benefit of
creditors or similar action or be the subject, voluntarily or involuntarily, of
any bankruptcy, insolvency, reorganization or other similar proceeding; and
(7) none of the Obligors shall have misrepresented any material fact
to, or committed any fraud upon, the Administrative Agent and/or any of the
Lenders ((1), (2), (3), (4), (5), (6), and (7) being hereafter referred to
collectively as the "FORBEARANCE CONDITIONS").
I. AGREEMENTS, REPRESENTATIONS AND WARRANTIES.
A. The Obligors acknowledge that they have requested the Administrative
Agent and
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the Lenders to forbear from collection of the Indebtedness and that
such forbearance upon the terms set forth herein is satisfactory to each of them
and is in the best interest of the Obligors and the Lenders.
B. Each of the Obligors represents and warrants to the Administrative
Agent and the Lenders that: (1) it has the requisite corporate power to enter
into this Agreement and the transactions contemplated herein, and has taken all
necessary corporate action to authorize this Agreement and the transactions
contemplated herein; and (2) the Credit and Forbearance Documents to which it is
a party constitute the legal, valid and binding obligations of each Borrower,
enforceable against it in accordance with their respective terms.
C. So long as the Forbearance Conditions are and continue to be
satisfied, the Administrative Agent and the Lenders agree to forbear from
collection of the Indebtedness until the termination or expiration of the
Forbearance Period. The Obligors acknowledge and agree that upon (a) the failure
of any of the Forbearance Conditions to be satisfied or continue to be
satisfied, including without limitation, any failure by the Borrowers to
continue to make interest or any other payments required under any of the Credit
Documents when due and payable (other than principal payments required under the
Term Loan Notes), or (b) the expiration of the Forbearance Period: (a) all
Indebtedness and other sums due by each of the Obligors to the Lenders under the
Credit and Forbearance Documents shall automatically and immediately be due and
payable without notice or demand of any kind, (b) the Obligors, or any one of
them, shall immediately deposit with the Administrative Agent, as cash
collateral, an amount, in immediately available funds, equal to the aggregate
amount available for drawing under the Dresdner Letter of Credit (as defined
below), and (c) the Administrative Agent, on behalf of the Lenders, and/or any
of the Lenders shall have the immediate and unrestricted right to exercise,
without notice or demand, any and all rights and remedies available to them
under the Credit and Forbearance Documents and at law or in equity.
D. Notwithstanding anything to the contrary contained in the Credit
Agreement or any of the other Credit Documents, the Obligors acknowledge and
agree that effective on the date hereof: (1) the Borrowers shall have no further
ability to request, and the Lenders shall have no further obligation to make,
any further Revolving Credit Loans; PROVIDED, HOWEVER, that the Lenders agree
that Fleet, as Issuing Lender, shall be permitted to extend the expiry date of
that certain Standby Letter of Credit, No. CS1280278, dated July 9, 2001, for
the benefit of Dresdner Bank, AG in the face amount of Euro 3,000,000 (the
"DRESDNER LETTER OF CREDIT") to August 12, 2002, (2) the Applicable Margin for
each outstanding LIBOR Rate Loan shall be or continue to be 4.75% and the
Applicable Margin for each outstanding Base Rate Loan shall be or continue to be
2.50% (it being agreed and understood, however, that upon the termination or
expiration of the Forbearance Period, the Lenders shall have the right, in
addition to any other rights or remedies they may have, to increase the interest
rates applicable to the then outstanding Loans to the default rates described in
Section 2.10(b) of the Credit Agreement, without notice or demand of any kind),
and (3) the Letter of Credit Fee shall be an amount equal to 4.75%.
E. In consideration of and as a material inducement to the Lenders to
enter into this
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Agreement, the Borrowers acknowledge and agree to pay to the Lenders on the date
hereof a nonrefundable fee (which shall be in addition to, and not in lieu of,
any other fees which the Borrowers are required to pay to the Administrative
Agent, the Lenders and/or the Issuing Lender under the Credit Documents) equal
to $50,000.
F. As a further inducement to the Administrative Agent and the Lenders
to enter into this agreement, effective as of the date hereof, the Obligors do
each hereby release, acquit and forever discharge the Administrative Agent, each
of the Lenders, their respective representatives, subsidiaries, affiliates,
officers, directors, agents, employees, servants, and attorneys, and the
respective personal representatives, successors and assigns of any and all of
them (collectively, the "RELEASED LENDER PARTIES"), from and against any and all
claims (including without limitation, any so-called "lender liability" claims or
defenses), demands, debts, actions, causes of action, suits, contracts,
agreements, obligations, accounts, defenses, offsets against any of the
Indebtedness or other obligations of any of the Obligors and liabilities of any
kind or character whatsoever, known or unknown, suspected or unsuspected, in
contract or in tort, at law or in equity, including without implied limitation,
such claims and defenses as fraud, mistake, failure of consideration and duress,
which any of the Obligors and/or anyone claiming by or through any of them ever
had, now has, or might hereafter have against any of the Released Lender Parties
for or by reason of any matter, cause or thing whatsoever occurring from the
beginning of time through the end of the Forbearance Period which relates to, in
whole or in part, directly or indirectly: (i) any of the Indebtedness, (ii) any
of the Credit Documents; (iii) any of the Collateral or other property granted
to the Administrative Agent, on behalf of the Lenders, as security for any of
the Indebtedness; or (iv) the administration of any of the Indebtedness or
conduct of any of the Released Lender Parties. In addition, the Obligors each
agree not to commence, join in, assist, prosecute or participate in any suit or
other proceeding against any of the Released Lender Parties relating directly or
indirectly to any of the foregoing matters or otherwise contrary to the
provisions set forth above.
G. By their signatures below, the Guarantors acknowledge and consent to
the accommodations being granted by the Administrative Agent and the Lenders
hereunder, and further acknowledge and agree that the Guaranty Agreements remain
in full force and effect and continue to apply to the Indebtedness, including
without limitation, the Indebtedness as modified by this Agreement.
H. The Obligors jointly and severally agree to pay all costs and
expenses incurred by the Administrative Agent and each of the Lenders, including
without limitation, reasonable attorneys' fees, in connection with this
Agreement and the transactions contemplated herein. Nothing herein shall be
construed to limit the Obligors' obligation to pay fees, costs and expenses
pursuant to the terms of the Credit and Forbearance Documents.
I. The Obligors acknowledge that this Agreement is the result of good
faith negotiations, that each of them has carefully considered all of their
respective alternatives and that they have entered into this Agreement without
duress or coercion of any kind.
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J. This Agreement and the other Credit and Forbearance Documents
constitute the entire understanding and agreement among the parties hereto and
supersede any prior or contemporaneous written or oral understanding with
respect to the subject matter hereof. Except as expressly modified herein, the
Credit and Forbearance Documents remain unmodified and in full force and effect
in accordance with their terms.
K. Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
of this Agreement.
L. This Agreement may not be modified in any manner, except by written
agreement signed by all parties hereto.
M. No course of dealing heretofore or hereafter between the Obligors,
or any one of them, and the Administrative Agent and the Lenders, or any one of
them, or any failure or delay on the part of the Administrative Agent and/or the
Lenders in exercising any rights or remedies under this Agreement or existing by
law shall operate as a waiver of any right or remedy of the Administrative Agent
and/or the Lenders with respect to the Indebtedness, and no single or partial
exercise of any right or remedy hereunder shall operate as a waiver or
preclusion to the exercise of any other rights or remedies the Administrative
Agent and/or the Lenders may have in regard to the Indebtedness.
N. This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
O. This Agreement and the other Credit and Forbearance Documents, and
all transactions, assignments and transfers hereunder and thereunder, and all
the rights of the parties, shall be governed as to validity, construction,
enforcement and in all other respects by the laws of the State of Connecticut
(without regard to its conflicts of law provisions).
If the foregoing is in accordance with your agreement, please indicate
the same by signing below. If this Agreement is not executed fully and delivered
to each of the parties hereto by no later than June 28, 2002, this Agreement
shall not become effective and shall be deemed null and void and of no force or
effect.
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Very truly yours,
XXXXXXX AMERICAS CORPORATION
By
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXXXX EUROPE CONSOLIDATED INC.
By
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXXXX ASIA PACIFIC CORPORATION
By
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXXXX TECHNOLOGY COMPANY, INC.
By
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President, CFO & Treasurer
XXXXXXX TECHNOLOGY CORPORATION
By
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
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XXXXXXX GRAPHIC SYSTEMS, INC.
By
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXXXX KANSA CORPORATION
By
-------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Secretary
XXXXXXX EUROPE CONSOLIDATED BV
By
-------------------------------------------
Name: Henricus X. X. Xxxxxxxxxx
Title: Director
By
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director
XXXXXXX GERMAN CAPITAL HOLDING GMBH
By
-------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Geschaftsfuhrer
XXXXXXX GRAFOTEC GMBH
By
-------------------------------------------
Name: Xxxx X. Xxxxx, Xx.
Title: Geschaftsfuhrer
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XXXXXXX - JAPAN LTD.
By
-------------------------------------------
Name: Xxxx X. Xxxxx, Xx.
Title: Representative Director
REVIEWED AND AGREED TO:
FLEET NATIONAL BANK,
as Administrative Agent and Lender
By
--------------------------------
Name: X. Xxxxxxx Xxxxxx, Jr.
Title: Senior Vice President
FIRST UNION NATIONAL BANK,
as Lender
By
--------------------------------
Name: Xxxxxxxxx X. Xxxxx
Title: Senior Vice President
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Exhibit A
1. A revolving loan extended by the Lenders to the Borrowers in the
principal amount of up to $17,000,000 in accordance with the terms and
conditions of, and as evidenced by (a) the Credit Agreement, (b) the Revolving
Loan Notes, and (c) the other Credit Documents executed and/or delivered in
connection with the aforesaid revolving loan, pursuant to which the Borrowers
are legally and validly indebted to the Lenders (excluding Letter of Credit
Obligations) in the aggregate principal amount as of June 28, 2002 of
$12,650,000.
2. (a) A Standby Letter of Credit, No. CS1280278, dated July 9, 2001,
for the benefit of Dresdner Bank, AG in the face amount of Euro 3,000,000, in
accordance with the terms and conditions of, and as evidenced by (i) an
Application and Agreement for Standby Letter of Credit, dated July 5, 2001, and
(ii) the other Credit Documents executed and/or delivered in connection with the
aforesaid letter of credit, pursuant to which the Borrowers are legally and
validly contingently indebted to the Issuing Lender in the principal amount as
of June 28, 2002 of Euro 3,000,000.
(b) A Standby Letter of Credit, No. XX0000000, dated August 3, 2001,
for the benefit of First Treetops LP, in the face amount of $124,292, in
accordance with the terms and conditions of, and as evidenced by (i) an
Application and Agreement for Standby Letter of Credit, dated August 3, 2001,
and (ii) the other Credit Documents executed and/or delivered in connection with
the aforesaid letter of credit, pursuant to which the Borrowers are legally and
validly contingently indebted to the Issuing Lender in the principal amount as
of June 28, 2002 of $124,292.
3. A term loan extended by the Lenders to the Borrowers in the original
principal amount of $4,000,000 in accordance with the terms and conditions of,
and as evidenced by (a) the Credit Agreement, (b) the Term Loan Notes, and (c)
the other Credit Documents executed and/or delivered in connection with the
aforesaid term loan, pursuant to which the Borrowers are legally and validly
indebted to the Lenders in the aggregate principal amount as of June 28, 2002 of
$4,000,000.
4. Debt evidenced by a Hedging Agreement by and among one or more of
the Borrowers and Fleet.
5. The Parent Guarantee dated as of October 31, 2000 by Xxxxxxx
Technology Company, Inc in favor of the Administrative Agent, for the benefit of
the Lenders, pursuant to which Xxxxxxx Technology Company, Inc has
unconditionally and jointly and severally guaranteed the payment and performance
of any and all of the Obligations.
6. The Subsidiaries Guarantee dated as of October 31, 2000 by Xxxxxxx
Technology Corporation, Xxxxxxx Graphics Systems, Inc. and Xxxxxxx Kansa
Corporation in favor of the Administrative Agent, for the benefit of the
Lenders, pursuant to which Xxxxxxx Technology Corporation, Xxxxxxx Graphics
Systems, Inc. and Xxxxxxx Kansa Corporation has each unconditionally and jointly
and severally guaranteed the payment and performance of any and all
of the Obligations.
7. The Subsidiaries Guarantee dated December 21, 2000 by Xxxxxxx Japan
Ltd. in favor of the Administrative Agent, for the benefit of the Lenders,
pursuant to which Xxxxxxx Japan Ltd. has unconditionally and jointly and
severally guaranteed the payment and performance of any and all of the
Obligations.
8. The Subsidiaries Guarantee dated December 21, 2000 by Xxxxxxx German
Capital Holding GmbH and Xxxxxxx Grafotec GmbH in favor of the Administrative
Agent, for the benefit of the Lenders, pursuant to which Xxxxxxx German Capital
Holding GmbH and Xxxxxxx Grafotec GmbH has each unconditionally and jointly and
severally guaranteed the payment and performance of any and all of the
Obligations.
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