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EXHIBIT 4.13
[NationsBank Letterhead]
February 26, 1999
Danka Holding Company
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Re: Participation Agreement dated as of November 15, 1995, as amended (the
"Participation Agreement") among Danka Holding Company, as
Construction Agent ("Holding"), Holding, as Lessee, First Security
Bank N.A., as owner trustee (the "Owner Trustee"), NationsBank, N.A.,
as a Holder (the "Holder"), NationsBank, N.A., as Administrative Agent
and SunTrust Bank, Tampa Bay, as Co-Agent. Capitalized terms contained
herein and not otherwise defined shall have the meaning set forth in
the Participation Agreement.
Ladies and Gentlemen:
NationsBank, N.A., as Administrative Agent under the Participation Agreement
and Credit Agreement has received the waiver for the period March 1, 1999
through August 27, 1999 (and subject to further extensions as provided in the
attached letter), by the Majority Lenders of the violation of Section 8.3 of
that certain Credit Agreement dated as of December 5, 1996, as amended, among
Danka Business Systems PLC, Dankalux Sarl & Co. SCA, Danka Holding Company,
NationsBank, N.A. as Agent and the Lenders party thereto and the waiver of any
adverse affect resulting therefrom, subject to the terms and conditions set
forth in the letter dated February 26, 1999, from you, a copy of which is
attached hereto.
NATIONSBANK, N.A., as Administrative Agent
By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx
Vice President
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February 25, 1999
NationsBank, National Association, as Agent
000 Xxxxx Xxxxx Xxxxxx, XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Re: Participation Agreement dated as of November 15, 1995, as amended (the
"Participation Agreement") among Danka Holding Company, as
Construction Agent ("Holding"), Holding, as Lessee, First Security
Bank, N.A., as owner trustee (the "Owner Trustee"), NationsBank, N.A.,
as a Holder (the "Holder"), NationsBank, N.A., as Administrative
Agent and SunTrust Bank, Tampa Bay, as Co-Agent.
Ladies and Gentlemen:
Pursuant to the Participation Agreement and a Credit Agreement dated as of
November 15, 1995, as amended (the "Credit Agreement") among the Owner Trustee,
the several lenders party thereto (the "Lenders"), the Administrative Agent and
the Co-Agent, the Lenders and the Holder agreed to make loans and Holder
Advances to the Owner Trustee which would be used to acquire land and make
improvements thereon, which land and improvements are leased to Holding
pursuant to a Lease Agreement, dated as of November 15, 1995, as amended (the
"Lease Agreement") between the Owner Trustee and Holding. Capitalized terms
used herein without definition shall have the meaning set forth in the
Participation Agreement and the Credit Agreement.
Section 28.1(a) of the Lease Agreement incorporates by reference various
covenants contained in Article VII and Article VIII of that certain Credit
Agreement dated as of December 5, 1996, as amended (the "Existing Danka Credit
Agreement") among Danka Business Systems PLC ("Danka PLC"), Dankalux Sarl & Co.
SCA, Holding, the financial institutions party thereto and NationsBank N.A., as
agent and prohibits the waiver of compliance with such incorporated covenants
without the written consent of the Majority Lenders. Holding hereby requests
that the Agent Seek the written consent of the Majority Lenders to
non-compliance with Section 8.3 of the Existing Danka Credit Agreement and a
waiver of any adverse effect resulting thereby, such waiver to be effective as
of March 1, 1999, and for a period from March 1, 1999,
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through August 27, 1999 (as may be further extended, as provided herein, the
"Waiver Period").
Holding acknowledges and agrees that the consent of the Lenders, Owner
Trustee, Xxxxxx, Administrative Agent and Co-Agent to such waiver shall be
subject to the following terms and conditions.
1. During the Waiver Period the "Applicable Margin" shall be 2.10%.
2. Holding acknowledges and agrees that the Administration Agent has caused
its counsel to retain PricewaterhouseCoopers LLP as independent business
consultant (the "Consultant") to assess on behalf of the Administrative Agent,
its counsel and the Lenders and Holder, the operations, finances, and business
affairs of Danka Business Systems PLC ("Danka PLC") and its Subsidiaries and to
furnish a report of its findings and recommendations solely to the
Administrative Agent, its counsel and the Lenders and Holder. Xxxxxxx agrees to
pay all fees, costs, and expenses of the Consultant incurred in connection with
the performance by the Consultant of its duties described in this paragraph.
Holding shall, and shall cause all Subsidiaries, to cooperate fully and in a
timely manner with the Consultant including its agents and employees.
3. Holding shall furnish to the Administrative Agent, the Lenders and the
Holder as soon as practicable but in any event within thirty (30) days of the
end of each calendar month, commencing with the calendar month ending January
31, 1999, the monthly consolidated balance sheet and consolidated statements of
earnings and cash flow of Danka PLC and its Subsidiaries, certified in writing
by any representative authorized to provide the certificates required by Section
7.1(c) of the Credit Agreement to have been prepared in accordance with GAAP in
a manner consistent with past practices of Danka PLC, and to the best knowledge
of such signatory to be true, correct, and complete in all material respects,
subject to routine audit adjustments.
4. During the Waiver Period (i) Danka PLC shall not pay any dividends or make
any distributions, (ii) neither Danka PLC nor any of its Subsidiaries shall make
any Acquisitions, and (iii) neither Danka PLC nor any of its Subsidiaries will
make any investments except as otherwise agreed to by the Banks under the
Existing Danka Credit Agreement.
5. Holding shall deposit with Holder 5% of the first $200,000,000.00 in "Net
Proceeds" that are payable to Holding or any subsidiary or affiliate of Holding
(collectively, a "Danka Party") from the sale of any Danka Party (including, but
not limited to those divisions or subsidiaries commonly known as "Omnifax,"
"DSI," and "International") or any of their capital assets as collateral for the
Loan and up to 2% of any "Net Proceeds" that are payable to any Danka Party of
subsequent sales of any Danka Party (including, but not limited to those
divisions or subsidiaries commonly known as "Omnifax," "DSI," and
"International") or any of their capital assets (collectively the "Sale
Proceeds") up to a maximum pledge amount of $15,000,000.00.
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The term "Net Proceeds" shall have the meaning as defined in the Existing Danka
Credit Agreement prior to (and Net Proceeds shall include) any payments
contemplated or required by any previous or subsequent amendment to the
Existing Danka Credit Agreement or any amendment to any security (or similar)
agreement related to the Existing Danka Credit Agreement. Such Net Proceeds
shall be held in a cash collateral account bearing interest at a market rate
at the Administrative Agent and shall be pledged as additional collateral for
the Loan. To the extent that any assets of a Danka Party are sold and Sale
Proceeds are used to reduce the principal balance of the Loan in accordance
with the Lease Agreement, the collateral required by this paragraph shall be
reduced by an amount that is equal to the percentage of principal reduction on
the Loan. For example, if the principal amount of the Loan is reduced from
$50,000,000.00 to $45,000,000.00, the amount of the required cash collateral
pursuant to this paragraph shall be reduced from $15,000,000.00 to
$13,500,000.00.
6. The amount of funds that can be advanced under the Credit Agreement with
respect to the Roosevelt Corporate Center III that is located in the St.
Petersburg, Florida (the "Project"), shall be limited to $4,485,261.00. Any
additional advances with respect to the Project shall be at the sole discretion
of the Lenders.
7. The Commitments of Lenders are hereby reduced from $58,200,000.00 to
$51,000,000.00.
8. Holding shall use its best efforts to (i) modify the Lease Agreement and
the Mortgage Instrument so that the parking facility at the Project is
encumbered by such documents and (ii) provides the Lenders evidence that any
additional property that is included in the Lease Agreement and the Mortgage
Instrument is not subject to any other liens or encumbrances. No advances will
be made with respect to the Project until all items required by this paragraph
have been provided to and approved by the Lenders.
9. Holding shall use its best efforts to provide Holder all documents or
items that are required in the January 14, 1999 letter from Xxxxx Xxxxxxxxx to
Xxxxx Xxxxxx, a copy of which is attached hereto. No advances will be made with
respect to the Project until all items required by this paragraph have been
provided to and approved by the Lenders.
10. In addition to the provisions of Section 5 hereof, Holding shall pay to
Holder an amount equal to the Termination Value with respect to such property
for any property to be released from the Operative Documents and Holder,
Lenders and Administrative Agent consent to the release of such property and
payment of the Termination Value upon such release notwithstanding any other
requirements of the Operative Documents. For purposes of this waiver letter,
"Termination Value" shall mean the amount funded by Lenders against such
property or properties being released plus a pro rata share of all other costs
advanced by Lenders for such property or properties being released.
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11. The Waiver Period shall be automatically extended to a date that is the
same as the waiver extension date agreed to by the Lenders under the Existing
Danka Credit Agreement, which date may not be beyond December 27, 1999, except
as permitted by the Banks under the Existing Danka Credit Agreement (including a
waiver thereunder) for any regulatory review.
12. Holding will pay all reasonable legal, inspector and appraisal costs of
each Lender and all travel costs and expenses of each Lender in connection
herewith.
13. Holding shall pay to the Administrative Agent for the benefit of the
Lenders and Holder a waiver fee of $200,000.00
14. Holding shall at its expense, permit and fully cooperate with the
Administrative Agent and its representatives in a review and evaluation of all
assets of Holding and its Subsidiaries located in the United States.
15. Danka PLC shall have received from the required lenders under such credit
agreement a waiver of compliance with the financial covenants set forth in the
Existing Danka Credit Agreement dated December 5, 1996 among Danka PLC, Dankalux
Sarl & Co., SCA, Holding NationsBank, N.A., as agent and the lenders party
thereto.
16. Holding acknowledges and agrees that it has no existing defense,
counterclaim, offset, claim or demand in respect of the transaction described
herein and hereby releases the Lenders, Owner Trustee, Holder, Administrative
Agent and Co-Agent from any claims, causes of action or other liabilities
arising in connection with this transaction. Holding further acknowledges and
agrees that the total amount of principal indebtedness (including Loans and
Xxxxxx Advances), outstanding in connection with the tax retention operating
lease financing is $46,564,739.00.
17. Holding shall cooperate fully with Xxxxxx and the Administrative Agent in
their efforts to examine, evaluate, or appraise the Properties, including
providing reasonable access to the Properties, plans, specifications,
construction papers, contractors, subcontractors, books and records relating to
the Properties.
18. Holding shall deliver to the Administrative Agent a marketing plan within
60 days of the date hereof which delineates any proposed marketing of the
Properties by Holding. Holding shall then use its best efforts to implement such
marketing plan and to sell Properties in accordance with such marketing plan to
reduce the principal balance of the Loan.
19. Holding shall deliver to the Administrative Agent prior to any request for
advance, a schedule of proposed additional draws during the Waiver Period which
schedule shall be acceptable to the Administrative Agent and Majority Lenders,
in their sole discretion , and at the time of any such subsequent advances the
Administrative Agent shall have received all documents required by Credit
Agreement and Operative Agreements, including a draw request and a progress
report for all Properties then
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under construction, which drew request and progress payments shall be
acceptable to the Administrative Agent and Majority Lenders.
20. Within five Business Days of the date hereof, all domestic subsidiaries of
Holding which have guaranteed payment of indebtedness under the Existing Danka
Credit Agreement and have not delivered a guaranty of payment of obligations of
Holding under the Lease Agreement, shall deliver a guaranty.
21. Holding has not entered and shall not enter into any further sublease of
any of the Properties to any Person other than a Danka Party. Holding shall not
be entitled to substitute any new Properties for any existing Properties.
22. The provisions of this document supersede any provisions of the Credit
Agreement, the Participation Agreement or any Other Operative Agreement to the
extent they are inconsistent.
Holding further acknowledges and agrees that any breach during the Waiver
Period in the timely performance, observance, or fulfillment of any of the terms
or conditions stated above shall constitute an Event of Default under the Lease
Agreement and unless the Majority Lenders shall otherwise agree in writing,
shall terminate the effectiveness of any waiver obtained by the Administrative
Agent from the Lenders pursuant to this request. Holding further acknowledges
and agrees that nothing contained herein is intended to or shall limit any of
the provisions of the Participation Agreement, Lease Agreement or any Operative
Agreement as currently in effect, except as expressly stated herein and except
that, should the Administrative Agent obtain the waiver of Section 8.3 of the
Existing Danka Credit Agreement requested hereby, the enforcement of such
provisions shall be waived during the Waiver Period as well as any adverse
effect resulting therefrom subject to full and timely compliance with the terms
and conditions of such waiver stated above.
Very truly yours,
DANKA HOLDING COMPANY
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chairman
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The undersigned Guarantors hereby consent to the foregoing and hereby
confirm their guaranty of payment of obligations arising under the tax retention
operating lease transaction.
AMERICAN BUSINESS CREDIT
CORPORATION
AMERITREND CORPORATION
CORPORATE CONSULTING GROUP, INC.
D.I. INVESTMENT MANAGEMENT, INC.
DANKA IMAGING DISTRIBUTION, INC.
DANKA MANAGEMENT COMPANY, INC.
DANKA OFFICE IMAGING COMPANY
(Successor by merger to Danka Corporation)
DANKA PLC
KIS IMAGING SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Director
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DANKA BUSINESS SYSTEMS PLC
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Director
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