Exhibit 10.1
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
WAIVER AND AGREEMENT
Senior Secured Notes and Secondary Notes
Due March 31, 2006
Dated as of December 20, 2001
To the Holders of the Senior Secured
Notes and Secondary Notes of
Franklin Electronic Publishers,
Incorporated Named in the
Attached Schedule I
Ladies and Gentlemen:
Reference is made to the Note Purchase Agreement dated as of March 27,
1997 among Franklin Electronic Publishers, Incorporated (the "Company") and each
of the Purchasers named in Schedule A thereto (as amended by the First Amendment
dated as of April 15, 1999 and the Second Amendment and Consent (the "Second
Amendment") dated as of December 7, 1999, the "Note Agreement") pursuant to
which the Company issued $40,000,000 aggregate principal amount of its 7.71%
Senior Notes due March 31, 2007 (the "Original Notes"). You are referred to
herein individually as a "Holder" and collectively as the "Holders." Capitalized
terms used and not otherwise defined in this Waiver and Agreement (the "Waiver")
shall have the meanings ascribed to them in the Note Agreement.
Pursuant to the Second Amendment, the Original Notes were replaced with
$24,000,000 aggregate principal amount of adjustable rate Senior Secured Notes
due March 31, 2006 (the "Notes"). Also, as permitted by the Second Amendment,
the Company has issued $404,499.91aggregate principal amount of Secondary Notes
in payment of interest.
The Company is not in compliance with the Interest Coverage and Fixed
Charge Ratio covenants contained in Sections 10.8 and 10.9 of the Note Agreement
and expects to continue to be in noncompliance with such covenants. The Company
has requested that the Holders waive such noncompliance and permit the Company
to make certain prepayments under the Note Agreement at par, without a
Make-Whole Amount. The Holders are willing to grant such a waiver and accept
such prepayment on the terms and conditions herein.
In consideration of the premises and for good and valuable consideration,
the receipt and sufficiency of which are acknowledged, the Company and the
Holders agree as follows:
1. WAIVER
1.1. Waiver of Event of Default. The Holders waive the Default or Event of
Default under the Note Agreement resulting from the Company's failure to comply
during the fiscal quarters ending September 30, 2001, December 31, 2001 and
March 31, 2002 with the Interest Coverage covenant contained in Section 10.8 of
the Note Agreement and the Fixed Charge covenant contained in Section 10.9 of
the Note Agreement; provided, however, that such waiver shall terminate
automatically and without further notice or action by or on behalf of the
Holders if the payments required by Section 2 below are not made when due.
1.2. Limitation on Waiver. This waiver is limited to its terms and shall
not constitute a waiver of any other term, condition, representation or covenant
under the Note Agreement or any of the other agreements, documents or
instruments executed and delivered in connection therewith.
2. PAYMENTS
2.1. Prepayment in Full in March, 2002. On or prior to March 31, 2002, the
Company will prepay, in cash, one hundred percent (100%) of the unpaid principal
amount of the Notes at par, plus accrued interest (without the payment of any
Make-Whole Amount or prepayment penalty) and any other obligations with respect
to the Note Agreement.
2.2. Payment of Fees. Immediately upon receipt of a statement therefor,
the Company shall pay all reasonable fees and expenses of special counsel to the
Holders.
3. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES
3.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement
to comply with each of the covenants, agreements and provisions of the Note
Agreement and the Notes except as expressly modified by this Waiver.
3.2. Note Agreement. The Company represents and warrants that, subject to
the effectiveness of this Waiver, the representations and warranties contained
in the Note Agreement are true and correct as of the date hereof, except for
such changes, facts, transactions and occurrences that have arisen since
December 7, 1999 in the ordinary course of business and such other matters as
have been previously disclosed in writing by the Company to the Holders.
3.3. No Default or Event of Default. After giving effect to the
transactions contemplated hereby, there will exist no Default or Event of
Default.
3.4. Authorization. The execution, delivery and performance by the Company
of this Waiver have been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable. Each of the
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Note Agreement and this Waiver constitutes the legal, valid and binding
obligations of the Company, enforceable against it in accordance with its
respective terms, without defense, counterclaim or offset.
3.5. Consent. The Company has obtained the written consent of the Banks
under the New Credit Agreement to the Company's execution and delivery of and
performance of its obligations under this Waiver, and no Default or Event of
Default will exist or occur with respect to such New Credit Agreement by reason
of this Waiver.
4. EFFECTIVE DATE
4.1. Consent of Requisite Holders. This Waiver shall become effective upon
the execution by the Holders of 100% of the aggregate principal amount of the
Notes outstanding.
4.2. Partial Prepayment in 2001. On or prior to December 31, 2001, the
Company shall have prepaid, in cash, (a) eighty percent (80%) of the unpaid
principal amount of the Notes at par, plus accrued interest (without the payment
of any Make-Whole Amount or prepayment penalty), and (b) one hundred percent
(100%) of the unpaid principal amount of the Secondary Notes at par, plus
accrued interest (without the payment of any Make-Whole Amount or prepayment
penalty). Such prepayment shall be allocated in accordance with the provisions
of Section 8.3 of the Note Agreement.
5. MISCELLANEOUS
5.1. Ratification. Except to the extent modified hereby, the terms and
provisions of the Note Agreement, including the representations and warranties
contained therein, shall remain in full force and effect and are ratified,
confirmed, remade and approved in all respects as of the date hereof.
5.2. Binding Effect. This Waiver shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto.
5.3. Governing Law. This Waiver shall be governed by and construed in
accordance with New York law.
5.4. Counterparts. This Waiver may be executed in any number of
counterparts, each executed counterpart constituting an original, but altogether
only one instrument.
5.5. Effect of Breach. The Company agrees that a breach of its
representations, warranties or obligations hereunder shall be an Event of
Default under the Note Agreement.
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If you are in agreement with the foregoing, please sign the accompanying
counterpart of this Waiver and return it to the Company, whereupon the foregoing
shall become a binding agreement between you and the Company upon satisfaction
of the conditions set forth in Section 4 of this Waiver.
FRANKLIN ELECTRONIC PUBLISHERS,
INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Executive Vice President
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The foregoing is hereby agreed
to as of the date thereof.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Title: Its Authorized Representative
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JEFFERSON PILOT FINANCIAL
INSURANCE COMPANY, Successor by
merger to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LIFE INSURANCE COMPANY OF
AMERICA
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
-----------------------------------
Title: Vice President
-----------------------------------
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PACIFIC LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Title: Assistant Vice President
--------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Title: Assistant Secretary
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SCHEDULE I
Outstanding Principal Amount
---------------------------------------------
Name of Holder Senior Secured Notes Secondary Notes
-------------- -------------------- ---------------
The Northwestern Mutual Life Insurance Company $ 5,500,000 $222,474.95
Jefferson Pilot Financial Insurance Company 2,500,000 101,124.98
Pacific Life Insurance Company 2,000,000 80,899.98
----------- -----------
Total $10,000,000 $404,499.91
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