Amendment Nine and Consent and Waiver
To
Credit Agreement
This Amendment Nine and Consent and Waiver (this "Amendment") is dated as
of March 31, 2000 and is made in respect of the Credit Agreement dated as of
July 12, 1996 as amended and in effect immediately prior to the date hereof (the
"Credit Agreement") by and among PSC Scanning, Inc., a Delaware corporation
formerly known as SpectraScan, Inc., which is the successor by merger to PSC
Acquisition, Inc., (the "Borrower"), PSC Inc. ("PSC"), the financial
institutions party to the Credit Agreement (the "Lender Parties"), Fleet
National Bank (formerly known as Fleet Bank) as the "Initial Issuing Bank", and
Fleet National Bank, as administrative agent (the "Administrative Agent") under
the Credit Agreement.
Statement of the Premises
-------------------------
The Borrower, PSC, the Lender Parties, the Initial Issuing Bank and the
Administrative Agent have previously entered into the Credit Agreement and
various amendments thereto from time to time. The Borrower has requested that
the Lender Parties consent to a certain sale and lease-back transaction, waive
compliance with certain covenants in the Credit Agreement as affected by the
accounting treatment accorded to a recent court decision, and amend certain
other covenants in the Credit Agreement to reflect the current circumstances of
the Borrower.
Statement of Consideration
--------------------------
Accordingly, in consideration of the premises, and under the authority of
Section 5-1103 of the New York General Obligations Law, the parties hereto
agree as follows.
Agreement
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1. Defined Terms. The terms "this Agreement", "hereunder" and similar references
in the Credit Agreement shall be deemed to refer to the Credit Agreement as
amended hereby. Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to such terms in the Credit Agreement.
2. Amendment. Effective as of March 31, 2000, the Credit Agreement is hereby
amended as follows:
2.1 Section 1.01 of the Credit Agreement is amended by deleting the
definitions of Adjusted EBITDA, Adjusted Total Debt Ratio and Percon
Charge.
2.2 Section 1.01 of the Credit Agreement is amended by adding the
definitions of "2000 Acquisition and Restructuring Charge", "2000 Sale
Leaseback Prepayment", "2000 Sale Leaseback Transaction", "Disputed
Royalty Case", "Disputed Royalty Decision", "Final Decision", "Fixed
Charge Coverage Ratio", "Interest Coverage Ratio", "Normalized
Quarterly Provisional Charges for Disputed Royalty", "Proven
Performance Date", "Quarterly Provisional Charges for Disputed
Royalty", "Senior Debt Ratio", "Total Reserve for Disputed Royalty"
and "Undisputed Royalties", as follows:
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"2000 Acquisition and Restructuring Charge" means the one-time expense
determined in accordance with GAAP charged to the Consolidated Income
Statement in the first fiscal quarter of 2000 relating to the
acquisition of Percon Incorporated and restructuring by PSC and its
Subsidiaries in an amount not exceeding $2,300,000.
"2000 Sale Leaseback Prepayment" means the prepayment of any Borrowing
pursuant to Section 2.06(b)(ii) of the Credit Agreement by reason of
the 2000 Sale Leaseback Transaction.
"2000 Sale Leaseback Transaction" means a sale leaseback transaction
whereby certain of the facilities of the Borrower located in Xxxxxxx,
New York shall be sold and leased back to the Borrower under an
operating lease (not a Capitalized Lease) on terms approved by all
Lenders.
"Disputed Royalty Case" means the civil action in the United States
District Court, Western District of New York, numbered 96-CV-6152T,
entitled PSC Inc. v. Symbol Technologies, Inc.
"Disputed Royalty Decision" means the Decision and Order dated
February 8, 2000 issued by Xxx. Xxxxxxx X. Xxxxxxx in the Disputed
Royalty Case and any related order or judgment.
"Final Decision" means a final judgment or order entered into with
respect to the Disputed Royalty Decision for which: (i) PSC shall
agree to be bound; or (ii) no stay of enforcement shall be in effect
for a period of ten (10) consecutive days by reason of a pending
appeal otherwise.
"Fixed Charge Coverage Ratio" means a ratio, measured at the end of
each fiscal quarter of PSC, of
(i) Consolidated EBITDA for the most recently completed four fiscal
quarters of PSC, less Consolidated Capital Expenditures made
during such period, less the aggregate amount of federal, state,
local and foreign income taxes paid by PSC and its Subsidiaries
during such period, plus, for all calculations on Dates of
Determination which precede the Final Decision, the Quarterly
Provisional Charges for Disputed Royalty expensed during each
quarter in such four quarter period (but for all calculations on
Dates of Determination subsequent to the Final Decision, no
Quarterly Provisional Charges for Disputed Royalty shall be
added); to
(ii) the sum of (a) cash interest payable by PSC and its Subsidiaries
on all Debt during such period plus (b) cash rentals payable
under Capitalized Leases during such period plus (c) the
aggregate amount of scheduled principal repayments made or
required to be made in respect of Funded Debt by PSC and its
Subsidiaries during such period, excluding mandatory prepayments
of principal made pursuant to (1) the 1999 Sale Leaseback
Prepayment, (2) the 2000 Sale Leaseback Prepayment, and (3)
Section 2.06(b)(i), plus (d) after the Proven Performance Date,
the aggregate amount of all cash dividends paid by PSC and
Borrower on capital stock during such period and the purchase
price paid by PSC and its Subsidiaries during such period to
purchase capital stock of PSC as permitted by Section 5.02(g).
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"Interest Coverage Ratio" means a ratio measured at the end of each
fiscal quarter of PSC of:
(i) Consolidated EBITDA for the most recently completed four fiscal
quarters of PSC, plus, for all calculations on Dates of
Determination which precede the Final Decision, the Quarterly
Provisional Charges for Disputed Royalty expensed during each
quarter in such four quarter period (but for all calculations on
Dates of Determination subsequent to the Final Decision, no
Quarterly Provisional Charges for Disputed Royalty shall be
added); to
(ii) Interest Expense of PSC and its Subsidiaries for such period.
"Normalized Quarterly Provisional Charges for Disputed Royalty" means,
for each fiscal quarter, severally: (i) through December 31, 1999, the
amount listed on Schedule IV to reflect the accounting normalization
attributable to each fiscal quarter of the Quarterly Provisional
Charges for Disputed Royalty; and (ii) after December 31, 1999, an
amount equal to the Quarterly Provisional Charges for Disputed
Royalty.
"Proven Performance Date" means the first fiscal quarter end date:
(i) which is subsequent to the Final Decision; and
(ii) as of which Borrower shall have been in full compliance with all
terms of the Credit Agreement for a minimum of four consecutive
fiscal quarters, which compliance shall be supported by financial
statements delivered pursuant to Section 5.03(c) or (d).
"Quarterly Provisional Charges for Disputed Royalty" means, for each
fiscal quarter, severally, the amount determined in accordance with
GAAP of the non-cash expense appearing on the Consolidated Income
Statements from time to time as a charge to earnings reflecting the
amount which may be payable in respect of such quarter's earnings
pursuant to the Disputed Royalty Decision (exclusive of any Undisputed
Royalties).
"Senior Debt Ratio" means a ratio, measured at the end of each fiscal
quarter of PSC, of
(i) Senior Debt of PSC and its Subsidiaries outstanding on the Date
of Determination; to
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(ii) Consolidated EBITDA for the most recently completed four fiscal
quarters of PSC, plus the Quarterly Provisional Charges for
Disputed Royalty in respect of such period, less, for all
calculations on Dates of Determination, the Normalized Quarterly
Provisional Charges for Disputed Royalty expensed during each
quarter in such four quarter period;
provided, however, that for the purposes solely of calculating
the aggregate principal amount of Senior Debt outstanding, the
Working Capital Advances shall be deemed to be outstanding in an
aggregate principal amount equal to the average principal amount
outstanding on the last two fiscal quarter end dates, including
the Date of Determination.
"Total Reserve for Disputed Royalty" means, at any Date of
Determination, the amount determined in accordance with GAAP appearing
on the Consolidated Balance Sheet as of such Date of Determination
reflecting the amount which may be payable pursuant to the Disputed
Royalty Decision.
"Undisputed Royalties" means all liabilities determined in accordance
with GAAP payable by PSC or its Subsidiaries to Symbol Technologies,
Inc. or its affiliates pursuant to and under the contracts which are
the subject of the Disputed Royalty Case and which were not in dispute
in the Disputed Royalty Case (i.e., the flat rate or 3% of the Net
Sales Price of all Bar Code Readers sold under the "Spectra-Physics
license" as such term is used in the Disputed Royalty Decision).
2.3 Section 1.01 of the Credit Agreement is amended by changing the
definitions of "Applicable Margin", "Commitment Fee Percentage",
"Consolidated", "Debt", "EBITDA", "Excess Cash Flow", "Permitted
Liens", "Total Debt Ratio", and "Working Capital Commitment" to read
in their entirety, as follows:
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"Applicable Margin" means at any time and from time to time (a) from
March 31, 2000 and prior to August 1, 2000, 0.875% per year for Prime
Rate Advances and 2.500% per year for Eurodollar Rate Advances, and
(b) from and after August 1, 2000, a percentage per year determined by
reference to the Total Debt Ratio as set forth below:
Term Loan Facility
and Working Term Loan Facility and
Capital Facility Working Capital Facility
Total Debt Ratio Prime Rate Advances Eurodollar Rate Advances
Level I:
--------
a ratio equal to or greater than 1.125% 2.750%
4.0:1
Level II:
---------
a ratio equal to or greater than 0.875% 2.500%
3.5:1 but less than 4.0:1
Level III:
----------
a ratio equal to or greater than 0.625% 2.250%
3.0:1 but less than 3.5:1
Level IV:
---------
a ratio equal to or greater than
2.5:1 but less than 3.0:1 0.375% 2.00%
Level V:
--------
a ratio equal to or greater than
2.0:1 but less than 2.5:1 0.125% 1.750%
Level VI:
---------
a ratio equal to or greater than 0.000% 1.500%
1.5:1 but less than 2.0:1
Level VII:
----------
a ratio of less than 1.5:1 0.000% 1.250%
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The Applicable Margin for each Prime Rate Advance shall be determined
by reference to the ratio in effect from time to time and the
Applicable Margin for each Eurodollar Rate Advance shall be determined
by reference to the ratio in effect from time to time; provided,
however, that (A) no change in the Applicable Margin shall be
effective until three Business Days after the date on which the
Administrative Agent receives financial statements pursuant to Section
5.03(c) or (d) and a certificate of the chief financial officer of PSC
demonstrating such ratio and (B) if PSC has not submitted to the
Administrative Agent the information described in clause (A) of this
proviso as and when required under Section 5.03(c) or (d), as the case
may be, the Applicable Margin shall be at Level I for so long as such
information has not been received by the Administrative Agent.
"Commitment Fee Percentage" means at any time and from time to time
(a) from March 31, 2000 and prior to August 1, 2000, 0.500% per year
and (b) from and after August 1, 2000, a percentage per year
determined by reference to the Total Debt Ratio as set forth below:
Total Debt Ratio Commitment Fee Percentage
Level I:
--------
a ratio equal to or greater than 4.0:1 0.500%
Level II:
---------
a ratio equal to or greater than 3.5:1 but 0.500%
less than 4.0:1
Level III:
----------
a ratio equal to or greater than 3.0:1 but 0.500%
less than 3.5:1
Level IV:
---------
a ratio equal to or greater than 2.5:1 but
less than 3.0:1 0.375%
Level V:
--------
a ratio equal to or greater than 2.0:1 but
less than 2.5:1 0.375%
Level VI:
---------
a ratio equal to or greater than 1.5:1 but
less than 2.0:1 0.300%
Level VII:
----------
a ratio of less than 1.5:1 0.250%
; provided, however, that (A) no change in the Commitment Fee
Percentage shall be effective until three Business Days after the date
on which the Administrative Agent receives financial statements
pursuant to Section 5.03(c) or (d) and a certificate of the chief
financial officer of PSC demonstrating such ratio and (B) if PSC has
not submitted to the Administrative Agent the information described in
clause (A) of this proviso as and when required under Section 5.03(c)
or (d), as the case may be, the Commitment Fee Percentage shall be at
Level I for so long as such information has not been received by the
Administrative Agent.
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"Consolidated" means, when used in conjunction with any defined term
or any accounting term, such defined term or accounting term as
applied to PSC and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all Obligations of such Person
for the deferred purchase price of property or services (other than
trade payables not overdue by more than 60 days incurred in the
ordinary course of such Person's business and trade payables that are
being contested in good faith), (c) all Obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments,
(d) all Obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), excluding
operating leases, (e) all Obligations of such Person as lessee under
Capitalized Leases (without double counting such Obligations in the
computation of "Debt"), (f) all Obligations, contingent or otherwise,
of such Person under acceptance, letter of credit or similar
facilities, (g) all Obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any
capital stock of or other ownership or profit interest in such Person
or any other Person or any warrants, rights or options to acquire such
capital stock, valued, in the case of Redeemable Preferred Stock, at
the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, (h) all Obligations of such Person
in respect of Hedge Agreements, (i) all Debt of others referred to in
clauses (a) through (h) above or clause (j) below guaranteed directly
or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (i) to pay
or purchase such Debt or to advance or supply funds for the payment or
purchase of such Debt, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Debt or to
assure the holder of such Debt against loss, (iii) to supply funds to
or in any other manner invest in the debtor (including any agreement
to pay for property or services irrespective of whether such property
is received or such services are rendered) or (iv) otherwise to assure
a creditor against loss, and (j) all Debt referred to in clauses (a)
through (i) above of another Person secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to
be secured by) any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Debt;
provided however that (A) for the purposes of Section 5.02(b) of the
Agreement, Debt shall not be deemed to include amounts payable to
Xxxxxx X. Xxxxxx pursuant to and in accordance with the GEO/GAP Term
Sheet, and (B) for all purposes, Debt shall not be deemed to include
amounts which may be payable pursuant to the Disputed Royalty Decision
until it becomes a Final Decision (and then such amount shall not be
double counted as Debt).
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EBITDA" means, for any period, the sum, determined on a Consolidated
basis, of (a) net income (or net loss) plus: (i) the 2000 Acquisition
and Restructuring Charge (which is taken only in the first fiscal
quarter in 2000), less (ii) that portion of the 2000 Acquisition and
Restructuring Charge actually paid within such period, less (iii) any
gain arising from a reversal of the 2000 Acquisition and Restructuring
Charge, and, less (iv) on the fiscal quarter end date of December 31,
2000, the balance of the 2000 Acquisition and Restructuring Charge
which the Borrower has not paid in cash; (b) interest expense; (c)
income tax expense; (d) depreciation expense; and (e) amortization
expense in each case of PSC and its Subsidiaries, determined in
accordance with GAAP for such period; less, however, the Excluded
Leaseback Gain, if any, accruing during such period and plus the loss
on sale of assets, if any, incurred by the 2000 Sale Leaseback
Transaction; provided further that if the period for which EBITDA is
being computed includes any or all of the fiscal quarters ending on or
about March 31, 1999, June 30, 1999, September 30, 1999 and December
31, 1999, EBITDA shall be calculated by using the Pro Forma EBITDA for
each such fiscal quarter in such period.
"Excess Cash Flow" means for any period the sum of (i) EBITDA of PSC
and its Subsidiaries for such period plus (ii) the aggregate amount of
all non-cash charges deducted in arriving at EBITDA plus (iii) if
there was a net increase in Consolidated Current Liabilities of PSC
and its Subsidiaries during such period, the amount of such net
increase plus (iv) if there was a net decrease in Consolidated Current
Assets (excluding cash and Cash Equivalents) of PSC and its
Subsidiaries during such period the amount of such net decrease less
(v) the aggregate amount of scheduled principal repayments made or
required to be made in respect of Funded Debt by PSC and its
Subsidiaries during such period, excluding mandatory prepayments of
principal made pursuant to (1) the 1999 Sale Leaseback Prepayment, (2)
the 2000 Sale Leaseback Prepayment, and (3) Section 2.06(b)(i), less
(vi) Capital Expenditures of PSC and its Subsidiaries less (vii) the
aggregate amount of all federal, state, local and foreign income taxes
paid by PSC and its Subsidiaries during such period less (viii) the
aggregate amount of interest paid on any Funded Debt of PSC and its
Subsidiaries during such periods less (ix) the aggregate amount of all
non-cash credits included in arriving at such EBITDA less (x) if there
was a net decrease in Consolidated Current Liabilities of PSC and its
Subsidiaries during such period, the amount of such net decrease less
(xi) if there was a net increase in Consolidated Current Assets
(excluding cash and Cash Equivalents) of PSC and its Subsidiaries
during such period the amount of such increase; provided further,
however, that all computations of Consolidated Current Assets and
Consolidated Current Liabilities for the fiscal year ending December
31, 1999 shall be made using the Pro-Forma Balance Sheet annexed
hereto as Schedule V.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) Liens for taxes, assessments and
governmental charges or levies not yet due and payable; (b) Liens
imposed by law, such as materialmen's, mechanics', carriers',
workmen's and repairmen's Liens and other similar Liens arising in the
ordinary course of business securing obligations that are not overdue
for a period of more than 30 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or
to secure public or statutory obligations; (d) Permitted Encumbrances,
and (e) Liens created pursuant to the 1999 Sale Leaseback Transaction
and the 2000 Sale Leaseback Transaction.
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"Total Debt Ratio" means, on any Date of Determination, the ratio of
(A) the aggregate amount of Total Reserve for Disputed Royalty and all
Debt of PSC and its Subsidiaries on the last day of the most recently
completed fiscal quarter of PSC (without double counting in the event
that Debt shall include the amount payable in respect of the Final
Decision) to (B) Consolidated EBITDA for the most recently completed
four fiscal quarters of PSC, plus the Quarterly Provisional Charges
for Disputed Royalty expensed during each quarter in such four quarter
period, less the Normalized Quarterly Provisional Charges for Disputed
Royalty in respect of such four quarter period; provided, however,
that for purposes solely of calculating the aggregate amount of Debt
outstanding, the Working Capital Advances shall be deemed to be
outstanding in an aggregate principal amount equal to the average
principal amount outstanding on the last two fiscal quarter end dates,
including the Date of Determination.
2.4 The last sentence of Subsection (c) of Section 2.01 of the Credit
Agreement is amended to read in its entirety, as follows:
Within the limits of each Working Capital Lender's Unused Working
Capital Commitment in effect from time to time, the Borrower may
borrow under this Section 2.01(c), prepay pursuant to Section 2.06(a)
and reborrow under this Section 2.01(c), up to an aggregate principal
amount outstanding not exceeding at any time the sum of $50,000,000
less the Total Reserve for Disputed Royalty so long as the Disputed
Royalty Decision remains substantially effective and until the Final
Decision.
2.5 The first sentence of Subparagraph (i) of Subsection (b) of Section
2.06 of the Credit Agreement is amended by adding the following
proviso at the end thereof: "; provided, however, that no such
prepayment shall be made for the Fiscal Year ending December 31, 1999.
2.6 Subsection (c) of Section 5.02 of the Credit Agreement is amended to
read in its entirety, as follows:
(c) Lease Obligations. Create, incur, assume or suffer to exist, or
permit any of their respective Subsidiaries to create, incur,
assume or suffer to exist, any obligations as lessee (i) for the
rental or hire of real or personal property in connection with
any sale leaseback transaction excluding the 1999 Sale Leaseback
Transaction and the 2000 Sale Leaseback Transaction, or (ii) for
the rental or hire of real or personal property of any kind under
leases or agreements to lease, including Capitalized Leases and
operating leases pursuant to the 1999 Sale Leaseback Transaction
and the 2000 Sale Leaseback Transaction having an original term
of one year or more that would cause the direct and contingent
liabilities of PSC and its Subsidiaries, on a Consolidated basis,
in respect of all such obligations (as described in this clause
(ii)) to exceed an aggregate amount of $5,000,000 payable in any
period of 12 consecutive months.
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2.7 Subsection (g) of Section 5.02 of the Credit Agreement is amended to
read in its entirety, as follows:
(g) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its capital
stock or any warrants, rights or options to acquire such capital
stock, now or hereafter outstanding, return any capital to its
stockholders as such, make any distribution of assets, capital
stock, warrants, rights, options, obligations or securities to
its stockholders as such or issue or sell any capital stock or
any warrants, rights or options to acquire such capital stock, or
permit any of its Subsidiaries to do any of the foregoing or
permit any of its Subsidiaries to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of the
Borrower or any warrants, rights or options to acquire such
capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, except
that after the Proven Performance Date the following actions may
be taken if, after giving effect to each such action, PSC and the
Borrower shall be in full compliance with all terms, conditions
and covenants of this Agreement: (i) PSC may declare and pay
dividends and distributions payable only in common stock of PSC,
(ii) a Foreign Subsidiary may declare and pay dividends and
distributions to PSC, provided that the Secured Parties shall
have a perfected first priority security interest in the property
comprising such dividends or distribution and (iii) PSC may
acquire shares of its common stock for an aggregate purchase
price during the period from the date hereof through the
Termination Date not to exceed $12,000,000, provided that, at the
time of such acquisition and immediately after giving effect
thereto, (x) the excess of Consolidated total assets over
Consolidated total liabilities shall not be less than $44,000,000
and (y) no Default shall have occurred and be continuing.
2.8 Subsection (a) of Section 5.04 of the Credit Agreement is amended to
read in its entirety, as follows:
(a) Fixed Charge Coverage Ratio. Maintain at the end of each fiscal
quarter of PSC a Fixed Charge Coverage Ratio of not less than (i)
1.15 to 1.00 for each fiscal quarter ending in 2000, and (ii)
1.25 to 1.00 thereafter.
2.9 Subsection (b) of Section 5.04 of the Credit Agreement is amended to
read in its entirety, as follows:
(b) Total Debt Ratio. Maintain at the end of each fiscal quarter of
PSC a Total Debt Ratio of not more than the following ratios set
forth below for the corresponding Dates of Determination:
Dates of Determination Ratio
3/31/00 3.75 to 1.00
6/30/00 4.25 to 1.00
9/30/00 4.00 to 1.00
12/31/00 3.75 to 1.00
3/31/01 and thereafter 3.25 to 1.00
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2.10 Subsection (c) of Section 5.04 of the Credit Agreement is amended to
read in its entirety, as follows:
(c) Senior Debt Ratio. Maintain at the end of each fiscal quarter of
PSC a Senior Debt Ratio of not more than the following ratios set
forth below for the corresponding Dates of Determination:
Dates of Determination Ratio
3/31/00 2.75 to 1.00
6/30/00 3.10 to 1.00
9/30/00 2.90 to 1.00
12/31/00 2.50 to 1.00
3/31/01 and thereafter 2.00 to 1.00
2.11 Subsection (d) of Section 5.04 of the Credit Agreement is amended to
read in its entirety, as follows:
(d) Interest Coverage Ratio. Maintain as of the end of each fiscal
quarter of PSC an Interest Coverage Ratio of ratio of not less
than the following ratios set forth below for the corresponding
Dates of Determination:
Dates of Determination Ratio
3/31/00 3.50 to 1.00
6/30/00 3.50 to 1.00
9/30/00 3.25 to 1.00
12/31/00 3.25 to 1.00
3/31/01 and thereafter 3.50 to 1.00
2.12 Subsection (e) of Section 5.04 of the Credit Agreement is amended to
read in its entirety, as follows:
(e) Net Worth. Maintain at all times an excess of Consolidated total
assets over Consolidated total liabilities, in each case, of the
Borrower and its Subsidiaries of not less than the sum of: (A)
$47,000,000, plus (B) 75% of Consolidated net income for each
fiscal quarter of PSC and its Subsidiaries, on a cumulative
basis, with no deduction for losses of any quarter, for the
period after December 31, 1999 to and including each quarter end
date.
2.13 Schedule III and Schedule IV to the Agreement shall be in the forms of
Schedule III and Schedule IV attached hereto.
3. Future Consent And Waiver To 2000 Sale Leaseback. If all of the Lender
Parties shall (in the future, when the term sheet for the 2000 Sale Leaseback
shall have been presented to the Lender Parties for approval) consent (in
writing) to the 2000 Sale Leaseback, then: (i) no additional fee shall be
charged by the Lenders solely for such consent, (ii) the Lenders shall have
waived the right to deem the 2000 Sale Leaseback to be a violation of
Subsections (a), (b), (c) and (d) of Section 5.02 or a Default or Event of
Default under the Credit Agreement by reason of noncompliance with such
Sections, and (iii) the Agent shall release any Lien created under the Loan
Documents on the assets subject to the 2000 Sale Leaseback; provided and on the
condition that all of the Net Cash Proceeds to be received by the Borrower from
the 2000 Sale Leaseback shall be paid directly to the Agent and applied as a
prepayment of the Term Loan Facility pursuant to Section 2.06(b)(ii). In the
event and to the extent that such prepayment would result in a prepayment of a
Eurodollar Rate Advance on a date other than the last day of the corresponding
Interest Period, the Agent shall hold such prepayment in an account until such
last day and shall effect the prepayment on such last day. No approval by the
Lender Parties of the 2000 Sale Leaseback shall be implied by this Amendment.
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4. Other Waivers. The undersigned Lender Parties hereby waive noncompliance with
Subsection (d) of Section 5.03 as of March 30, 2000 (the 90th day after the end
the Fiscal Year ending on December 31, 1999); provided (i) that PSC and the
Borrower shall fully comply with Subsection (d) of Section 5.03 on or before the
tenth day following the day on which this Amendment shall have become effective
in accordance with Section 5 below, and (ii) that the information contained in
the financial statements to be delivered pursuant to Subsection (d) of Section
5.03 for the fiscal year end of December 31, 1999 shall not vary from the
financial information delivered to the Lenders under the PSC's letter of March
15, 2000. The undersigned Lender Parties also hereby waive noncompliance with
Subsection (a) of Section 5.04 of the Credit Agreement as of December 31, 1999.
5. Conditions Precedent to Effectiveness. This Amendment shall not become
effective unless and until: (a) the holders of the Subordinated Debt shall have
made such consents and amendments in respect of all Subordinated Debt Documents
as shall be necessary (collectively, the "Current SubDebt Amendment") to (i)
preserve, after giving effect to this Amendment, the relative differences
between the financial levels required pursuant to the financial covenants in the
Credit Agreement and the corresponding financial covenants in the Subordinated
Debt Documents which were in effect prior to Amendment Eight to the Credit
Agreement dated as of January 19, 2000 (and in furtherance of the agreement by
PSC, the Borrower and the holders of the Subordinated Notes pursuant to Section
3 of the letter agreement dated January 18, 2000 among PSC, the Borrower and
such holders); (ii) cause the financial covenants in the Subordinated Debt
Documents to be calculated in a manner identical to the financial covenants in
the Credit Agreement (as amended by this Amendment); (iii) consent to this
Amendment; and (iv) confirm that the Obligations of the Loan Parties under the
Loan Documents constitute "Superior Indebtedness" as defined in the Subordinated
Debt Documents; (b) the Required Lenders shall have granted their written
consent to the Current SubDebt Amendment; (c) the Borrowers shall have furnished
to the Administrative Agent all such confirmations, supporting documents and
opinions of counsel as the Administrative Agent may specify; (d) the Borrower
shall have paid to the Agent for the account of each of the Lender Parties,
pro-rata according to the amount of the total Commitments of each Lender Party,
a fee equal to the sum of one-half of one percent (0.50%) of the amount of total
Commitments of all Lender Parties; and (e) all post closing items to be
completed by the Borrower in respect of Amendment Eight to the Credit Agreement
dated as of January 19, 2000 shall have been completed.
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6. Effect on the Credit Agreement. Except as specifically amended above, the
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed. The Borrower and PSC each acknowledge and agree that the Credit
Agreement (as amended by this Amendment) and each other Loan Document to which
each is a party is in full force and effect, that its Obligations thereunder and
under this Amendment are its legal, valid and binding obligations enforceable
against it in accordance with the terms thereof and hereof, and it has no
defense, whether legal or equitable, setoff or counterclaim to the payment and
performance of such Obligations.
7. Expenses. The Borrower shall pay promptly when billed all reasonable
out-of-pocket expenses of each of the Lender Parties and the Agent (including,
but not limited to, reasonable fees, charges and disbursements of counsel to
each of the Lender Parties and the Agent) incident to the preparation,
negotiation, execution, administration and enforcement of the this Amendment and
all documents and transactions required in connection with this Amendment.
8. Execution in Counterparts and Effectiveness. This Amendment may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall constitute one and the same Amendment, regardless of
whether or not the execution by all parties shall appear on any single
counterpart. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment. This Amendment will become effective (subject to
the terms of Section 5 above) when the Administrative Agent shall have received
counterparts of this Amendment which, when taken together, bear the signatures
of the Borrower, PSC, the Administrative Agent and all of the Lenders.
9. Applicable Law. Pursuant to Section 5-1401 of the New York General
Obligations Law, the laws of the State of New York shall govern the validity,
construction, enforcement and interpretation of this Amendment in whole.
10.Headings. The headings of this Amendment are for the purposes of reference
only and shall not limit or otherwise affect the meanings hereof.
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IN WITNESS WHEREOF, the parties hereto have caused a counterpart of this
Amendment to be executed and delivered by their respective representatives
thereunto duly authorized, as of the date first above written.
PSC Inc. PSC Scanning, Inc.
By: By:
Title: Vice President, Chief Financial Title: Vice President
Officer & Treasurer
Fleet National Bank, As Initial Fleet National Bank, As
Issuing Bank Administrative Agent
By: By:
Title: Title:
Fleet National Bank The Chase Manhattan Bank
By: By:
Title: Title:
Manufacturers & Traders Key Bank National
Trust Company Association
By: By:
Title: Title:
Citizens Bank of Massachusetts HSBC Bank USA
By: By:
Title: Title:
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Schedule III
------------
ProForma EBITDA
PSC Inc./Percon, Inc. Consolidated
(000's)
Q1 1999 Q2 1999 Q3 1999 Q4 1999
------- ------- ------- -------
Net Income/(Loss) 2,704 4,245 4,754 (546)
Interest Expense 2,101 1,878 1,770 1,709
Income Tax Expense 1,499 2,742 2,554 (160)
Depreciation Expense 1,719 1,731 1,877 1,881
Amortization Expense 1,887 1,858 1,868 1,682
------- ------- ------- -------
EBITDA 9,910 12,454 12,823 4,566
================================================================================
Schedule IV
-----------
Normalized Quarterly Provisional Charges for Disputed Royalty
Q1 1999 Q2 1999 Q3 1999 Q4 1999
------- ------- ------- -------
1,378 1,121 1,514 1,753
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Schedule V
----------
PSC Inc. and Percon Incorporated
Consolidated ProForma Balance Sheet
As of December 31, 1999
(000's)
Current Assets:
Cash and Cash Equivalents $ 9,746
Accounts Receivable, Net 44,400
Inventories, Net 26,999
Prepaid Expenses and Other 3,795
---------
Total Current Assets 84,940
Property, Plant and Equipment 55,244
Accumulated Depreciation (26,468)
---------
28,776
Deferred Tax Assets 20,952
Intangible and Other Assets 124,126
Accumulated Amortization (27,476)
---------
96,650
---------
Total Assets $ 231,318
=========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-Term Debt $ 16,384
Accounts Payable 22,826
Accrued Expenses 10,200
Accrued Payroll and Commissions 6,428
---------
Total Current Liabilities 55,838
Long-Term Debt, less current maturities 116,112
Accrued Provision for Disputed Royalties 6,400
Other Long-Term Liabilities 1,635
Shareholders' Equity:
Preferred Stock 1
Common Shares/ Additional PIC 71,964
Retained Earnings (18,065)
Accumulated Other Comprehensive Income (1,210)
Less: Treasury Shares (1,357)
---------
Total Shareholders' Equity 51,333
---------
Total Liabilities and Shareholders' Equity $ 231,318
=========
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