[NATIONSBANK LETTERHEAD]
July 9, 1999
Danka Holding Company
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx
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"), Bank of America, N.A. f/k/a
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:
Bank of America, N.A. f/k/a NationsBank, N.A., as Administrative
Agent under the Participation Agreement and Credit Agreement has
received the waiver for the period from the date hereof through
July 31, 2000 by the Majority Lenders of certain amendments to
Article VIII 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, Bank of America,
N.A. f/k/a NationsBank, N.A as Agent and the Lenders party
thereto and the waiver of any adverse effect resulting therefrom,
subject to the terms and conditions set forth in the letter dated
July 9, 1999, from you, a copy of which is attached hereto.
BANK OF AMERICA, N.A. f/k/a
NATIONSBANK, N.A., as Administrative Agent
By:_________________________________
XxXxxx X. Xxxx, III
Senior Vice President
July 9, 1999
Bank of America, N.A. f/k/a 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"), Bank of America, N.A.
f/k/a NationsBank, N.A., as a Holder (the "Holder"),
Bank of America, N.A. f/k/a 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 or otherwise modified by waiver agreement (the
"Existing Danka Credit Agreement") among Danka Business Systems
PLC ("Danka PLC"), Dankalux Sarl & Co. SCA, Holding, the
financial institutions party thereto and Bank of America, N.A.
f/k/a NationsBank, N.A., as agent and prohibits the waiver of
compliance with, or any amendments to, 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 certain amendments to Article VIII of
the Existing Danka Credit Agreement and a waiver of any adverse
effect resulting thereby, such waiver to be effective as of July
9, 1999, and for a period from July 9, 1999, through July 31,
2000 (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
as follows: 2.35% from the date hereof through September 30,
1999; 2.85% from October 1, 1999, through December 31, 1999;
3.35% from January 1, 2000, through March 31, 2000; and 3.60%
from April 1, 2000, through July 31, 2000. However, if during
the Waiver Period, Holding sells the Roosevelt Corporate Center
III located in St. Petersburg, Florida, and pays the Termination
Value associated with the Project (the "Project"), the Applicable
Margin will be fixed for the remainder of the Waiver Period at
the rate applicable when the Termination Value is paid after a
sale of the Project. The Applicable Margin shall be applicable
to all Eurodollar Loans and shall also be added to the Base Rate
for all Base Rate Loans during the Waiver Period.
2. 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 June 30, 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 certification 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.
3. 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.
4. Holding shall deposit with the Administrative Agent 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.
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 maximum pledge amount described 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 maximum pledge amount
pursuant to this paragraph shall be reduced from $15,000,000.00
to $13,500,000.00.
5. The amount of funds that can be advanced under the Credit
Agreement with respect to the Project shall be limited to
$200,000.00. Any advances over the $200,000 previously mentioned
with respect to the Project shall be at the sole discretion of
the Lenders.
6. The Commitments of Lenders have been reduced from
$58,200,000.00 to $51,000,000.00 pursuant to a waiver letter
agreement dated February 25, 1999, which letter was accepted by
Administrative Agent on February 26, 1999 (the "February 1999
Waiver Letter").
7. Holding agrees that all amounts outstanding under the Loan
shall be due and payable on the Original Maturity Date or the
date on which all amounts outstanding under the Existing Danka
Credit Agreement are paid in full, whichever occurs first and the
Lenders hereby consent to such prepayment of such amounts.
8. In addition to the provisions of Section 4 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.
9. 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.
10. Upon the execution of this letter, Holding shall pay to the
Administrative Agent for the benefit of the Lenders and Holder a
waiver fee of $127,500.00. In addition, Holding shall pay to the
Administrative Agent for the benefit of the Lenders and Holding
additional waiver fees calculated as follows: (a) on October 31,
1999, a waiver fee equal to one-quarter percent (0.25%) of the
Commitments on such date; (b) on December 31, 1999, a waiver fee
equal to one-half percent (0.50%) of the Commitments on such
date, and (c) on March 31, 2000, a waiver fee equal to one
percent (1.0%) of the Commitments on such date.
11. 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.
12. 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
$51,300,106.32.
13. 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.
14. Holding shall deliver to the Administrative Agent a
marketing plan within 30 days of the date hereof which delineates
any proposed marketing of and each listing agreement related to
the Project by Holding. Holding shall then use its best efforts
to implement such marketing plan and to sell the Project in
accordance with such marketing plan to reduce the principal
balance of the Loan. Holding shall deliver to Administrative
Agent on a monthly basis, a report in a form acceptable to
Administrative Agent, which report details the status of the
marketing efforts concerning the Project.
15. 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 advance 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 under
construction, which draw request and progress payments shall be
acceptable to the Administrative Agent and Majority Lenders.
16. 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.
17. 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, except that Holding may sublease to Xerox
Corporation the property located at 0000 Xxxxxx Xxxx, Xxxxxx,
Xxxxx (the "Austin Property") for a term not to extend beyond
July 31, 2001. If Holder subleases the Austin Property to Xerox
Corporation, Holder shall promptly assign its rights under the
sublease as additional collateral for the Loan under terms
acceptable to Lenders. Holding shall not be entitled to
substitute any new Properties for any existing Properties
18. Holding agrees to use its best efforts to close a sale (the
"DSI Sale") of the assets or equity of the division(s) or
business unit(s) of the companies affiliated with Holding and
commonly referred to as of the date hereof as "DSI" at a price
not less than their fair market value and on commercially
reasonable sale terms.
19. Upon the effectiveness of this document, the Lenders shall
have fully earned and become entitled to receive a waiver fee in
the amount of $510,000.00, such fee to be paid by Holding to the
Administrative Agent for distribution to the Lenders on the
earliest of (a) July 31, 2000, (b) the date on which all amounts
outstanding under the Loan shall be paid in full and the
Commitments of Lenders have terminated, or (c) the date of the
closing of the DSI Sale. The waiver fee required by this
paragraph is in addition to the waiver fees required by paragraph
10 above.
20. 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. The
terms of this document supersede and replace any prior waiver
letters from Holding to the Lenders, including, but not limited
to, the waiver letter dated February 25, 1999, that was accepted
by Administrative Agent on February 26, 1999, and all such prior
wavier letters shall no longer be in force or effect.
21. This document extends to the amendments to Article VIII of
the Existing Danka Credit Agreement that are evidenced by the
Sixth Amendment to Credit Agreement dated as of July 9, 1999 (the
"Sixth Amendment"), and does not extend to any other future
amendments, modifications or waivers of any of the provisions of
Article VIII of the Existing Danka Credit Agreement, the Credit
Agreement or the Lease Agreement.
22. This document shall become effective as of the date hereof
upon (a) receipt by the Administrative Agent of an executed copy
of this document (which may be signed in counterparts and may be
received by facsimile transmission) signed by Holding and the
undersigned Guarantors, (b) receipt by Administrative Agent of a
copy of the fully executed Sixth Amendment, (c) the payment by
Holding to Administrative Agent of the waiver fee of $127,500.00
required by paragraph 10 hereof, and (d) Holding shall have
executed the Assignment of Deposit Account concerning the cash
collateral that is required by paragraph 4 hereof, Holding shall
have executed a UCC-1 Financing Statement concerning such
account, and Holding shall deposit $135,000.00 in such account
arising from the sale of Xxxxxxx _________.
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 consent of the Majority Lenders to the amendments to Article
VIII 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:_____________________________
Name:___________________________
Title:__________________________
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:_____________________________
Name:___________________________
Title:__________________________
DANKA BUSINESS SYSTEMS PLC
By:_____________________________
Name:___________________________
Title:__________________________
