SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT AND WAIVER
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND
WAIVER ("Amendment") is dated as of the 31st day of December, 1997, and entered
into among NU-KOTE HOLDINGS, INC., a Delaware corporation ("Holding"), NU-KOTE
INTERNATIONAL, INC., a Delaware corporation ("Company"), the Lenders signatory
hereto, BARCLAYS BANK PLC, in its capacity as documentation agent
("Documentation Agent") and NATIONSBANK OF TEXAS, N.A., a national banking
association, as administrative agent and collateral agent (in such capacities,
"Agent").
WITNESSETH:
WHEREAS, Holding, Company, Lenders, Documentation Agent and Agent entered
into a Second Amended and Restated Credit Agreement, dated as of July 31, 1997,
as amended by First Amendment to Second Amended and Restated Credit Agreement
dated as of November 28, 1997 (as amended, the "Credit Agreement");
WHEREAS, Holding and Company have requested that Lenders (i) defer the
mandatory $2,500,000 reduction in the commitments of the lenders to lend from
January 2, 1998, until April 1, 1998, (ii) waive during the period starting on
December 31, 1997, to April 2, 1998, inclusive (the "Waiver Period"), Holding
and the Company's failure to comply with certain financial covenants set forth
in the Credit Agreement, and (iii) consent to an asset sale and permit certain
proceeds of such asset sale to be retained by the Company for working capital
purposes; and
WHEREAS, Lenders and Agent have agreed to grant the request of Holding and
Company and to modify the Credit Agreement upon the terms and conditions set
forth below.
NOW, THEREFORE, for valuable consideration hereby acknowledged, Holding,
Company, Lenders, Documentation Agent and Agent agree as follows:
SECTION 1. Definitions. Unless specifically defined or redefined below,
capitalized terms used herein shall have the meanings ascribed thereto in the
Credit Agreement.
SECTION 2. Waivers. Subject to the terms and conditions hereof, Lenders
hereby waive, but only during the Waiver Period, the Specified Defaults
(hereinafter defined); provided, however, that Lenders' waiver of the Specified
Defaults and their rights and remedies as a result of the occurrence thereof
shall not constitute and shall not be deemed to constitute a waiver of any other
Event of Default, whether arising as a result of further violations of any
provision of the Credit Agreement previously violated by Holding or Company, or
a waiver of any rights and remedies arising as a result of such other Events of
Default. As used herein, "Specified Defaults" shall mean the failure of Holding
and Company to observe (i) the covenants set forth in Section 6.6A, Section
6.6B, Section 6.6C, Section 6.6E, and Section 6.6H of the Credit
Agreement for the fiscal quarter ended December 31, 1997, and (ii) the covenants
set forth in Section 6.6F and Section 6.6G for the months ended December 31,
1997, January 31, 1998, and February 28, 1998. At the end of the Waiver Period,
the waiver of the Specified Defaults will automatically terminate.
SECTION 3. Amendments to Credit Agreement. Subject to the terms and
conditions hereof, the provisions of the Credit Agreement enumerated below are
amended as follows:
(a) Section 2.4A(ii) of the Credit Agreement is amended to read as follows:
The Company shall, promptly on the date of receipt of any Net Cash Proceeds
from any Asset Sale, prepay an aggregate principal amount of the Revolving
Credit Loans or Eurocurrency Loans as elected by Requisite Lenders in an
amount equal to the amount of all such Net Cash Proceeds, with each such
prepayment constituting a permanent reduction in the Revolving Credit
Commitments or the Commitments of the Eurocurrency Lenders under the
Eurocurrency Credit Agreements (whichever is prepaid with such proceeds).
Each such prepayment of Eurocurrency Loans shall be accompanied by payment
of amounts sufficient to compensate the Eurocurrency Lenders for any loss,
cost, or expense incurred as a result of payment on a date other than the
last day of the Term (as defined in the Eurocurrency Credit Agreements) for
such Eurocurrency Loans.
(b) Section 2.4A(iii)(a) of the Credit Agreement is amended to read as follows:
On April 1, 1998, July 1, 1998, and October 1, 1998, prepay an aggregate
principal amount of the Revolving Credit Loans in the amount, if any,
necessary to reduce the sum of the aggregate principal amount of all
Revolving Credit Loans on such date plus the Letter of Credit Usage on such
date, to an amount which does not exceed the aggregate Revolving Credit
Commitments on such date. On each such date the Company shall also prepay
all accrued and unpaid interest on the principal amount so prepaid.
(c) Section 2.4E(ii) of the Credit Agreement is amended to read as follows:
In addition to the reductions specified in subsection 2.4E(i) above, the
Revolving Credit Commitments shall automatically and permanently reduce by
the amount of $5,000,000 on April 1, 1998, and the amount of $2,500,000 on
each of July 1, 1998, and October 1, 1998.
(d) Section 5.1 of the Credit Agreement is hereby amended to add thereto
subsection (xiii) to read as follows:
On or prior to January 27, 1998, a written analysis of the Company's core
business plan prepared by the Company.
(e) Section 5.6 of the Credit Agreement is amended to read as follows:
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Neither Holding, Company nor any Subsidiary shall enter into any agreement
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
(f) The preamble of Section 5.13 of the Credit Agreement is amended to read as
follows:
On or before December 15, 1997, and thereafter on or prior to twenty days
after Agent's request that the guarantees and/or Liens contemplated by
subsection (iii) below be provided (to the extent that same can be provided
in compliance with such subsection (iii) below), Holding and Company shall
deliver or cause to be delivered to Agent the following:
(g) Section 6.3(vi) of the Credit Agreement is amended to read as follows:
On and after December 31, 1997, through and including April 1, 1998,
Company and its Domestic Subsidiaries may not make further Investments in
(including intercompany loans to) or otherwise transfer funds or other
assets to Eurocurrency Borrowers for any purpose except for fundings to or
for the benefit of MIT if the prior written consent of Required Lenders to
such fundings has been obtained; furthermore (A) with respect to the
aggregate principal amount of all such Investments in all such Eurocurrency
Borrowers, Company or any such Domestic Subsidiary, as appropriate, shall
maintain a ledger recording all such Investments in and intercompany loans
made pursuant to this subsection 6.3(vi), and such ledger shall be
available for inspection at any Lender's request and (B) all intercompany
loans made pursuant to this subsection 6.3(vi) shall be evidenced by
promissory notes which shall be on terms and conditions satisfactory to
Agent, including collateral, and which shall be pledged and delivered to
Agent pursuant to the Collateral Documents;
(h) Section 6.3(vii) of the Credit Agreement is amended to read as follows:
On and after December 31, 1997, through and including April 1, 1998,
Company and its Domestic Subsidiaries may not make further Investments in
(including intercompany loans to) or otherwise transfer funds or other
assets to Latin American Subsidiaries for any purpose; furthermore (A) with
respect to the aggregate principal amount of all such Investments
outstanding on December 31, 1997, Company or any such Domestic Subsidiary,
as appropriate, shall maintain a ledger recording all such Investments in
and intercompany loans made pursuant to this subsection 6.3(vii) prior to
December 31, 1997, and such ledger shall be available for inspection at any
Lender's request and (B) all intercompany loans made pursuant to this
subsection 6.3(vii) shall be evidenced by promissory notes which shall be
on terms and conditions satisfactory to Agent, including collateral, and
which shall be pledged and delivered to Agent pursuant to the Collateral
Documents;
(i) Section 6.7B(ii)(E) of the Credit Agreement is amended to read as follows:
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no Asset Sale transactions involving assets located in the United States
may be made after December 31, 1997, other than the sale of the Components
Division of Future Graphics, Inc., under the terms set forth in that
certain Second Amendment to Second Amended and Restated Credit Agreement
and Waiver dated as of December 31, 1997, among Company, Agent, and the
others named therein;
(j) The proviso at the end of Section 6.8 of the Credit Agreement is amended to
read as follows:
provided that Company and its Subsidiaries may enter into sale/leaseback
arrangements if permitted by subsection 6.6 and subsection 6.7.
(k) Section 8.13 of the Credit Agreement is amended to read as follows:
(A) Except as otherwise permitted by subsection 6.7B(i), Holding shall
cease to own and control 100% of the common stock and 100% of the voting
power of Company entitled to vote for an election of the board of directors
of Company; or (B) individuals who on February 24, 1995 were members of the
board of directors of Holding (together with any new directors whose
election to such board of directors or whose nomination for election by the
stockholders of Holding was approved by a vote of a majority of the
directors then still in office who were either directors on February 24,
1995 or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of such board of
directors then in office; or (C) a "person" or "group" (within the meaning
of Section 13(d) of the Exchange Act), becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 30% of the total
issued and outstanding common stock of Holding; or (D) on or after December
15, 1997, the Company shall fail to retain management resources reasonably
satisfactory to Requisite Lenders, for the purpose of facilitating the
restructuring of Holding and its Subsidiaries, which management resources
shall be subject solely to Holding and Company's direction and authority;
SECTION 4. Consent to Sale of Components Division of Future Graphics, Inc.
and Retention of Certain Net Cash Proceeds Thereof. Subject to the terms and
conditions hereof, Lenders hereby consent to the sale of the Components Division
of Future Graphics, Inc., so long as the gross cash proceeds thereof are not
less than $1,000,000, all liabilities due and owing in connection with the
business to which such assets relate are assumed by the purchaser thereof, such
sale occurs on or before January 31, 1998, and such sale is otherwise upon terms
reasonably satisfactory to Agent and heretofore disclosed to Lenders. Lenders
furthermore consent to the retention by the Company of such cash proceeds for
use by the Company as working capital notwithstanding the provisions of Section
2.4A of the Credit Agreement.
SECTION 5. Releases. In consideration of Lenders' agreements herein and
certain other good and valuable consideration, Holding and Company each hereby
expressly acknowledge
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and agree that neither of them has any setoffs, counterclaims, adjustments,
recoupments, defenses, claims or actions of any character, whether contingent,
non-contingent, liquidated, unliquidated, fixed, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, known or unknown, against
any Lender, Documentation Agent or Agent or any grounds or cause for reduction,
modification or subordination of the Obligations or any liens or security
interests of any Lender or the Collateral Agent. To the extent Holding or
Company may possess any such setoffs, counterclaims, adjustments, recoupments,
claims, actions, grounds or causes, each of Holding and Company hereby waives,
and hereby releases each Lender, Documentation Agent and Agent from, any and all
of such setoffs, counterclaims, adjustments, recoupments, claims, actions,
grounds and causes, such waiver and release being with full knowledge and
understanding of the circumstances and effects of such waiver and release and
after having consulted counsel with respect thereto.
SECTION 6. Conditions Precedent. This Amendment shall not be effective
until all proceedings of Company taken in connection herewith and the
transactions contemplated hereby shall be satisfactory in form and substance to
Documentation Agent, Agent and Lenders, and each of the following conditions
precedent shall have been satisfied:
(a) All fees and expenses, including legal and other professional fees
and expenses incurred on or prior to the date of this Amendment by Agent or
any Lender, including, without limitation, the fees and expenses of U.S.
and foreign counsel and title insurance expenses, shall have been paid to
the extent that same have been billed.
(b) Agent and each Lender shall have received each of the following,
in form and substance satisfactory to Agent, Lenders and Agent's counsel in
their sole and absolute discretion:
(1) a certificate of Holding and Company certifying (i) as to
the accuracy, after giving effect to this Amendment, of the
representations and warranties set forth in Section 4 of the Credit
Agreement, the other Loan Documents and in this Amendment, and (ii)
that there exists no Potential Event of Default or Event of Default,
after giving effect to this Amendment, and the execution, delivery and
performance of this Amendment will not cause a Potential Event of
Default or Event of Default; and
(2) such other documents, instruments, and certificates, in form
and substance reasonably satisfactory to Lenders, as Lenders shall
deem necessary or appropriate in connection with this Amendment and
the transactions contemplated hereby, including without limitation
copies of resolutions of the boards of directors of each of Holding
and Company authorizing the transactions contemplated by this
Amendment.
(c) All accrued and unpaid interest on the Revolving Credit Loans and
the Eurocurrency Loans through and including December 31, 1997, shall have
been paid in full.
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SECTION 7. Representations and Warranties; Ratifications. Holding and
Company represent and warrant to Lenders, Documentation Agent and Agent that (a)
this Amendment constitutes their legal, valid, and binding obligations,
enforceable in accordance with the terms hereof (subject as to enforcement of
remedies to any applicable bankruptcy, reorganization, moratorium, or other laws
or principles of equity affecting the enforcement of creditors' rights
generally), (b) there exists no Potential Event of Default or Event of Default
under the Credit Agreement after giving effect to this Amendment, (c) their
representations and warranties set forth in the Credit Agreement and other Loan
Documents are true and correct on the date hereof after giving effect to this
Amendment, (d) they have complied with all agreements and conditions to be
complied with by them under the Credit Agreement and the other Loan Documents by
the date hereof after giving effect to this Amendment, and (e) the Credit
Agreement, as amended hereby, and the other Loan Documents remain in full force
and effect. Except as expressly modified by this Amendment, the terms and
provisions of the Credit Agreement and the other Loan Documents are ratified and
confirmed and shall continue in full force and effect. Except as provided
herein, this Amendment shall not constitute an amendment or waiver of any terms
and provisions of the Credit Agreement and other Loan Documents nor a waiver of
the rights of the Lenders, Documentation Agent and Agent to insist upon
compliance with each term, covenant, condition or provision of the Credit
Agreement and other Loan Documents.
SECTION 8. Expenses of Lenders. Holding and Company hereby jointly and
severally agree to pay on demand all reasonable costs and expenses incurred by
Agent or any Lender, including costs and fees of counsel to Agent or any Lender
and other professional fees and expenses, in connection with the preparation,
negotiation, review and execution of this Amendment and the other Loan Documents
executed pursuant hereto and any and all amendments, modifications and
supplements thereto. Holding and Company hereby confirm their obligation to pay
promptly the costs and expenses for which they are obligated pursuant to Section
10.3 of the Credit Agreement.
SECTION 9. Further Assurances. Holding and Company shall execute and
deliver such further agreements, documents, instruments, and certificates in
form and substance satisfactory to Agent, as Agent or any Lender may deem
necessary or appropriate in connection with this Amendment.
SECTION 10. Consents of Eurocurrency Borrowers and Eurocurrency Lenders.
Each Eurocurrency Borrower and Eurocurrency Lender by its execution below
consents and agrees to this Amendment and agrees that the Eurocurrency Credit
Agreement or Eurocurrency Credit Agreements to which it is a party are and shall
continue to be in full force and effect and are hereby ratified and confirmed in
all respects except that, upon the effectiveness of and on and after the date of
this Amendment each reference to the Credit Agreement, "thereunder", "thereof"
or words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended by this Amendment. Each
Eurocurrency Borrower agrees that the collateral described in the Eurocurrency
Security Documents to which it is a party shall continue
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to secure the payment of the indebtedness therein described.
SECTION 11. Counterparts. This Amendment and the other Loan Documents may
be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought. Telecopies of
signatures shall be binding and effective as originals.
SECTION 12. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
HOLDING AND COMPANY EACH HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY
JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT, EQUITY, OR OTHERWISE)
ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY
RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE
SITTING WITHOUT A JURY.
SECTION 13. GOVERNING LAW. (A) THIS AGREEMENT AND ALL LOAN DOCUMENTS
SHALL BE DEEMED CONTRACTS MADE UNDER THE LAWS OF TEXAS AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF TEXAS, EXCEPT TO THE
EXTENT (1) FEDERAL LAWS GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF ALL OR ANY PART OF THIS AGREEMENT AND ALL LOAN DOCUMENTS OR
(2) STATE LAW GOVERNS UCC COLLATERAL INTERESTS FOR PROPERTIES OUTSIDE THE STATE
OF TEXAS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, HOLDING AND COMPANY EACH
AGREES THAT THE COURTS OF TEXAS WILL HAVE JURISDICTION OVER PROCEEDINGS IN
CONNECTION HEREWITH.
(b) HOLDING AND COMPANY EACH HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL
PROCESS UPON IT. IN ADDITION, HOLDING AND COMPANY EACH AGREES THAT SERVICE OF
PROCESS MAY BE MADE UPON IT BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO IT AT ITS ADDRESS DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON RECEIPT BY IT. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 14. ENTIRE AGREEMENT. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS AMENDMENT
SHALL CONSTITUTE A LOAN DOCUMENT.
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[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, this Amendment is executed as of the date first set
forth above.
Holding: NU-KOTE HOLDING, INC.
By:
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Name:
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Title:
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Company: NU-KOTE INTERNATIONAL, INC.
By:
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Name:
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Title:
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Agent: NATIONSBANK OF TEXAS, N.A.,
By:
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Name: Xxxxxxx X. Xxxxxxxxxxx, XX
Title: Senior Vice President
Documentation Agent: BARCLAYS BANK PLC
By:
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Name:
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Title:
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Lenders and Eurocurrency NATIONSBANK OF TEXAS, N.A.
Lenders:
By:
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Name: Xxxxxxx X. Xxxxxxxxxxx, XX
Title: Senior Vice President
BARCLAYS BANK PLC
By:
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Name:
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Title:
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ABN AMRO BANK, N.V.
By:
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Name:
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Title:
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By:
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Name:
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Title:
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COMMERZBANK AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By:
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Name:
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Title:
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By:
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Name:
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Title:
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CREDIT LYONNAIS, NEW YORK BRANCH
By:
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Name:
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Title:
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BRANCH DEUTSCHE BANK, A.G., NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By:
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Name:
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Title:
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By:
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Name:
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Title:
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FIRST AMERICAN NATIONAL BANK
By:
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Name:
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Title:
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THE FIRST NATIONAL BANK OF CHICAGO
By:
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Name:
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Title:
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SOCIETE GENERALE
By:
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Name:
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Title:
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CONSENTED AND AGREED TO BY EUROCURRENCY BORROWERS:
PELIKAN SCOTLAND LIMITED
By:
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Name:
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Title:
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PELIKAN PRODUKTIONS AG
By:
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Name:
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Title:
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PELIKAN HARDCOPY (INTERNATIONAL) AG
By:
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Name:
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Title:
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CONSENT
Each of the undersigned, as Guarantors under a "Subsidiary Guaranty" and as
grantors under one or more "Subsidiary Security Documents" (as such terms are
defined in the Credit Agreement referred to in the foregoing Amendment), each
hereby consents and agrees to the foregoing Amendment and agrees that (i) each
Subsidiary Guaranty and Subsidiary Security Document is and shall continue to be
in full force and effect and is hereby ratified and confirmed in all respects
except that, upon the effectiveness of and on and after the date of such
Amendment each reference to the Credit Agreement, "thereunder", "thereof" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended by such Amendment, and (ii) the
collateral described in the Subsidiary Security Documents shall continue to
secure the payment of the indebtedness therein described.
FUTURE GRAPHICS, INC.
By:
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Name:
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Title:
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INTERNATIONAL COMMUNICATION
MATERIALS, INC.
By:
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Name:
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Title:
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NU-KOTE IMAGING INTERNATIONAL, INC.
By:
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Name:
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Title:
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NU-KOTE IMPERIAL, LTD.
By:
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Name:
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Title:
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The undersigned Barclays Bank PLC executes this Amendment for the purpose
of agreeing to all provisions thereof save and except Section 2 thereof.
BARCLAYS BANK PLC
By:
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Name:
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Title:
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