REVISED EXECUTION VERSION
FORBEARANCE, LOCK-UP AND VOTING AGREEMENT
This Forbearance, Lock-up and Voting Agreement (this "Agreement") is
made and entered into as of July 28, 1999 by and among GGS Holdings, Inc., a
Delaware corporation ("GGS"), Xxxx Graphic Systems, Inc., a Delaware corporation
("Xxxx"), Xxxx Realty L.L.C., a Delaware limited liability company ("Realty,"
together with GGS and Xxxx, the "Company"), Stonington Capital Appreciation 1994
Fund, LP, a Delaware limited partnership ("Stonington Fund"), Stonington
Financing III, LLC, a Delaware limited liability corporation ("Stonington LLC"
together with Stonington Fund, collectively, "Stonington"), Alliance Capital
Management L.P., ("Alliance"), Credit Suisse First Boston, ("CSFB"), Tri-Links
Investment Trust (Nomura) ("Nomura"), Xxxxxx Brothers, ("Xxxxxx") and Banc of
America Securities LLC, ("Banc of America," together with Alliance and CSFB,
Nomura and Xxxxxx collectively the "Consenting Holders") and Bankers Trust
Company and the other lenders to that certain Amended and Restated Multicurrency
Agreement dated January 29, 1998 (the "Credit Agreement") who are signatories to
this Agreement (collectively, the "Prepetition Lenders"). The Company,
Stonington, the Prepetition Lenders and the Consenting Holders are collectively
referred to herein as the "Parties" and individually as a "Party."
RECITALS
WHEREAS, the Company, Stonington Fund, the Prepetition Lenders and the
Consenting Holders have engaged in good faith negotiations with the objective of
reaching an agreement with regard to restructuring the 12% Senior Subordinated
Notes due 2006 issued by Xxxx (the "Old Subordinated Notes") under that certain
indenture dated October 15, 1996 between Xxxx and HSBC Bank USA, as successor
trustee thereunder (the "Old Subordinated Note Indenture") and the
recapitalization of the Company;
WHEREAS, the Company, Stonington, the Prepetition Lenders and the
Consenting Holders now desire to implement a financial restructuring (the
"Financial Restructuring") and in order to implement the Financial
Restructuring, the Company intends, subject to the terms and conditions of this
Agreement, to prepare and file a disclosure statement and plan of reorganization
(the "Plan") consistent with the terms set forth in this Agreement and the term
sheet attached hereto as Exhibit A (the "Term Sheet") implementing the terms of
the Financial Restructuring in a case (the "Chapter 11 Proceedings") filed under
chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"), and
the Company intends to use its best efforts to have such disclosure statement
approved and such Plan confirmed by the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), in each case as expeditiously as
possible under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure
(the "Bankruptcy Rules");
WHEREAS, the Consenting Holders own or control the aggregate principal
amount of Old Subordinated Notes as identified on the signature pages hereto and
the Prepetition Lenders own or control over 66 2/3% of the principal amount
under the Credit Agreement.
WHEREAS, in order to expedite the implementation of the Financial
Restructuring, the Prepetition Lenders are prepared, subject to the terms and
conditions of this Agreement, to vote their claims (as that term is defined in
the Bankruptcy Code) to accept the Plan.
WHEREAS, in order to expedite the implementation of the Financial
Restructuring, the Company intends to execute that certain Debtor-In-Possession
Multicurrency Credit Agreement and Amendment to Multicurrency Credit Agreement
(the "DIP Facility") dated as of July 28, 1999 to provide for financing to the
Company for use during the Chapter 11 Proceedings.
WHEREAS, in order to expedite the implementation of the Financial
Restructuring, the Company intends to execute that certain commitment
substantially in the form attached hereto as Exhibit B (the "Post-Confirmation
Commitment") to provide for financing to the Company after the Chapter 11
Proceedings.
WHEREAS, in order to expedite the Financial Restructuring, Stonington
LLC is prepared to commit and contribute, on the terms and subject to the
conditions of this Agreement, capital to the Company;
WHEREAS, in order to expedite the implementation of the Financial
Restructuring, Stonington Fund and each of the Consenting Holders is prepared to
commit, on the terms and subject to the conditions of this Agreement, to vote
their claims (as that term is defined in the Bankruptcy Code) or interests to
accept the Plan.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Xxxx, Stonington, the Prepetition Lenders and the Consenting Holders hereby
agree as follows:
1. FORBEARANCE BY CONSENTING HOLDERS. So long as this Agreement
shall remain in effect, each Consenting Holder hereby agrees to forebear (and
agrees to seek to cause the forbearance, including by giving all necessary
instructions permitted in accordance with the Old Subordinated Note Indenture to
the trustee under the Old Subordinated Note Indenture) from the exercise of any
rights or remedies it may have under the Old Subordinated Notes or the Old
Subordinated Note Indenture (the "Existing Note Agreements"), applicable law or
otherwise, with respect to any default in existence or arising under the
Existing Note Agreements during the period commencing on the date hereof and
ending on the date on which the Chapter 11 Proceedings are commenced (the
"Commencement Date").
2. FORBEARANCE BY PREPETITION LENDERS. So long as this Agreement
shall remain in effect, each Prepetition Lender hereby agrees to forebear (and
agrees to cause the forbearance, including by giving all necessary instructions
in accordance with the Credit Agreement to the agent under the Credit Agreement)
from the exercise of any rights or remedies it may have under the Credit
Agreement and all related documents (the "Existing Loan Agreements"), applicable
law or otherwise, with respect to any default in existence or arising under the
Existing Loan Agreements during the period commencing on the date hereof and
ending on the Commencement Date.
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3. VOTING. Each of the Consenting Holders and each Prepetition
Lender represents and warrants that, as of the date hereof, it is the beneficial
owner, and/or the investment adviser or manager for the beneficial owner (with
the power to vote and dispose of such claims on behalf of such beneficial owner)
of the principal amount of claims set forth on the schedule attached to its
signature page (for each such Party, the "Relevant Claims"). Each of the
Consenting Holders agrees for itself that, subject to the conditions that the
terms of the Plan and disclosure statement are the terms set forth in the Term
Sheet and subject to terms herein, including the provisions of section 10
herein, it shall timely vote its Relevant Claims (and not revoke or withdraw
such vote) to accept the Plan. Each Prepetition Lender agrees to timely vote its
Relevant Claims (and not revoke or withdraw such vote) to accept the Plan,
provided that the terms of the Plan and disclosure statement are the terms set
forth in the Term Sheet. Any Party hereto that is both a Prepetition Lender and
a Consenting Holder agrees that, subject to the condition that the terms of the
Plan and the disclosure statement are the terms set forth in the Term Sheet and
subject to terms herein, including the provisions of section 10 herein, each
such Party agrees to timely vote all its Relevant Claims as both a Prepetition
Lender and as a Consenting Holder to accept the Plan. Stonington agrees to
timely vote any claim (as that term is defined in the Bankruptcy Code) against
and any interest in the Company it owns or controls to accept the Plan; provided
that the terms of the Plan and disclosure statement are the terms set forth in
the Term Sheet. Each Party to this Agreement agrees not to elect on its ballot
to preserve any rights, if any, such Party may have that may be affected by the
releases provided for under the Plan.
4. STONINGTON LLC CONTRIBUTION. Subject to the terms of this
Agreement and provided that the terms of the plan and disclosure statement are
the terms set forth in the Term Sheet, Stonington LLC commits to make a capital
contribution of $50 million of cash to the Company on the effective date of the
Plan pursuant to the terms and conditions of the Term Sheet.
5. RESTRICTION ON TRANSFER. Each of the Consenting Holders and
each Prepetition Lender hereby agrees that, so long as this Agreement shall
remain in effect, it shall not sell, transfer or assign any of its Relevant
Claims or any option thereon or any right or interest (voting or otherwise)
therein, unless the transferee thereof agrees in writing to be bound by all the
terms of this Agreement by executing a counterpart signature page of this
Agreement and the transferor promptly provides the Company with a copy thereof,
in which event the Company shall be deemed to have acknowledged that its
obligations to the Consenting Holders and the Prepetition Lenders hereunder
shall be deemed to constitute obligations in favor of such transferee, and the
Company shall confirm that acknowledgment in writing (but the transferor need
not wait for such confirmation prior to consummating such transfer). Stonington
Fund hereby agrees that, so long as this Agreement shall remain in effect, it
shall not sell, transfer or assign any claim against or interest in the Company,
without the prior written consent of each Party to this Agreement.
6. COMPANY AGREEMENTS. The Company hereby agrees to use its best
efforts to have the disclosure statement approved by the Bankruptcy Court, and
thereafter to use its best efforts to obtain an order of the Bankruptcy Court
confirming the Plan, in each case, as expeditiously as possible under the
Bankruptcy Code and the Bankruptcy Rules, and, consistent with the terms and
conditions set forth in the Term Sheet.
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7. SUPPORT OF THE PLAN. As long as this Agreement remains in
effect, each Party will (i) use its reasonable best efforts to obtain
confirmation of the Plan in accordance with the Bankruptcy Code as expeditiously
as possible and (ii) take all necessary and appropriate actions to achieve
confirmation including, upon approval of the disclosure statement, recommending
to the holders of impaired claims and interests that they vote to approve the
Plan. As long as this Agreement remains in effect, no Party shall (a) object to
confirmation of the Plan or otherwise commence any proceeding to oppose or alter
the Plan or any other reorganization related documents or agreements (the "Plan
Documents"), which shall include but not be limited to any documents or
agreements related to the DIP Facility and the Post-Confirmation Commitment to
the extent such documents conform to the terms hereof and of the DIP Facility
and Post-Confirmation Commitment, (b) vote for, consent to, support or
participate in the formulation of any other plan of reorganization or
liquidation proposed or filed or to be proposed or filed in any chapter 11 or
chapter 7 case commenced in respect of the Company, (c) directly or indirectly
seek, solicit, support or encourage any other plan, sale, proposal or offer of
dissolution, winding up, liquidation, reorganization, merger or restructuring of
the Company or any of its subsidiaries that could reasonably be expected to
prevent, delay or impede the successful restructuring of the Company as
contemplated by the Plan or the Plan Documents, (d) object to the disclosure
statement or the solicitation of consents to the Plan, or (e) take any other
action that is inconsistent with, or that would delay confirmation of, the Plan.
8. ACKNOWLEDGMENT. This Agreement is not and shall not be deemed
to be a solicitation for consents to the Plan. The acceptances of the Consenting
Holders, Stonington Fund and the Prepetition Lenders will not be solicited until
such Parties have received the disclosure statement and related ballot, as
approved by the Bankruptcy Court.
9. CONDITION PRECEDENT. It is a condition precedent to each
Party's obligations and agreements under this Agreement that the Company have
executed the DIP Facility and the Post- Confirmation Commitment.
10. TERMINATION OF AGREEMENT.
10.1 Each Consenting Holder and Stonington may terminate
its obligations hereunder and rescind its vote on the Plan (which vote shall be
null and void and have no further force and effect), but only if: (a) the Plan
provides or is modified to provide for a treatment to such party that is
different than the treatment described in the Term Sheet, provided that such
Party seeking to terminate the Agreement gives prior written notice thereof to
the Parties; (b) the Plan provides or is modified to provide for a treatment to
the holders of the Prepetition Lenders or the holders of general unsecured
claims that is materially more favorable than the treatment described in the
Term Sheet; or (c) the effective date of the Plan is not within 120 days from
the date the Company commences the Chapter 11 Proceedings. Each Prepetition
Lender may terminate its obligations hereunder and rescind any vote on the Plan
(which vote shall be null and void and have no further force and effect) by
giving prior written notice thereof to the Parties, but only if: (x) the Plan
provides or is modified to provide for a treatment to such party that is
different than the treatment described in the Term Sheet; (y) the Plan provides
or is modified to provide for
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a treatment to the holders of the Old Subordinated Notes or the holders of
general unsecured claims that is materially more favorable than the treatment
described in the Term Sheet; or (z) the effective date of the Plan is not within
120 days from the date the Company commences the Chapter 11 Proceedings. Nothing
in this Agreement shall affect or modify any right the lenders under the DIP
Facility have to terminate their obligations pursuant to the DIP Facility or any
right of the lenders under the Post-Confirmation Commitment have to terminate
their obligations pursuant to the terms of the Post-Confirmation Commitment,
provided, however, that any such termination of the DIP Facility or the
Post-Confirmation Commitment would entitle Stonington and the Consenting Holders
to terminate their obligations hereunder.
10.2 The Consenting Holders, Stonington and the
Prepetition Lenders shall each have the right to terminate this Agreement if a
Party, other than the Party seeking to terminate the Agreement, materially
breaches Sections 1 or 2 of this Agreement, and such material breach is not
remedied by the breaching party with the advice of the Company within 5 business
days from the date the Company receives a written notification from such
non-breaching Party that it is seeking to terminate the Agreement as a result of
the material breach, which shall be identified in such notification.
11. GOOD FAITH NEGOTIATION OF DOCUMENTS. Each Party hereby further
covenants and agrees to negotiate the definitive documents relating to the Plan
Documents, and the New Senior Subordinated Notes due in 2005 in good faith, in
any event, in all respects consistent with the Term Sheet.
12. REPRESENTATIONS AND WARRANTIES. Each of Xxxx, Stonington, each
Prepetition Lender and each of the Consenting Holders represents and warrants to
each other the following statements are true, correct and complete as of the
date hereof:
(a) CORPORATE POWER AND AUTHORITY. It has all requisite
corporate, partnership or LLC power and authority to enter into this
Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement.
(b) AUTHORIZATION. The execution and delivery of this
Agreement and the performance of its obligations hereunder have been
duly authorized by all necessary corporate, partnership or LLC action
on its part.
(c) NO CONFLICTS. The execution, delivery and performance
by it of this Agreement do not and shall not (i) violate any provision
of law, rule or regulation applicable to it or any of its subsidiaries
or its certificate of incorporation or bylaws or other organizational
documents or those of any of its subsidiaries or (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time
or both) a default under any material contractual obligation to which
it or any of its subsidiaries is a party.
(d) GOVERNMENTAL CONSENTS. The execution, delivery and
performance by it of this Agreement do not and shall not require any
registration or filing with,
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consent or approval of, or notice to, or other action to, with or by,
any federal, state or other governmental authority or regulatory body,
other than the approval of the Bankruptcy Court, in the case of the
Company.
(e) BINDING OBLIGATION. Subject to the provisions of
sections 1125 and 1126 of the Bankruptcy Code, this Agreement is the
legally valid and binding obligation of it, enforceable against it in
accordance with its terms.
13. FURTHER ACQUISITION OF CLAIMS. This Agreement shall in no way
be construed to preclude the Consenting Holders and Prepetition Lenders from
acquiring additional Claims. However, any such additional Claims so acquired
shall automatically be deemed to be Relevant Claims and to be subject to the
terms of this Agreement.
14. AMENDMENTS. This Agreement may not be modified, amended or
supplemented without the prior written consent of the Company, Stonington, each
Prepetition Lender and each of the Consenting Holders.
15. IMPACT OF APPOINTMENT TO CREDITORS COMMITTEE. If an official
committee of unsecured creditors or of holders of Old Subordinated Notes is
appointed by the United States Trustee in the Chapter 11 Proceedings, the
Company shall cooperate with the Consenting Holders in seeking to cause the
United States Trustee to appoint the Consenting Holders to be members of such
official committee pursuant to section 1102 of the Bankruptcy Code (but the fact
of such service on such committee shall not otherwise affect the continuing
obligations of such Consenting Holders under this Agreement or the validity or
enforceability of this Agreement). As long as this Agreement remains in effect,
the Consenting Holders agree not to seek the formation of any such committee.
16. DISCLOSURE OF INDIVIDUAL CONSENTING HOLDERS. Unless required
by applicable law or regulation, the Company shall not disclose any Consenting
Holder's holdings of Relevant Claims without the prior written consent of such
Consenting Holder; and if such announcement or disclosure is so required by law
or regulation, the Company shall afford the Consenting Holders a reasonable
opportunity to review and comment upon any such announcement or disclosure prior
to the Company's making such announcement or disclosure. The foregoing shall not
prohibit the Company from disclosing the approximate aggregate holdings of
Relevant Claims by the Consenting Holders as a group.
17. FEES AND EXPENSES. The Company shall pay the fees and expenses
of the financial and legal advisors for that certain informal committee formed
by certain Consenting Holders in accordance with the Company's respective
agreements with such firms. In addition, if any Party brings an action against
any other Party based upon a breach by such other Party of its obligations
hereunder, the prevailing Party shall be entitled to all reasonable expenses
incurred, including reasonable attorneys', accountants', and financial advisors'
fees in connection with such action.
18. GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York,
without regard to any conflicts of law provision which would require the
application of the law of any other
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jurisdiction. By its execution and delivery of this Agreement, each of the
Parties hereto hereby irrevocably and unconditionally agrees for itself that any
legal action, suit or proceeding against it with respect to any matter under or
arising out of or in connection with this Agreement or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding, may
be brought in the U.S. District Court for the Southern District of New York. By
execution and delivery of this Agreement, each of the Parties hereto hereby
irrevocably accepts and submits itself to the nonexclusive jurisdiction of each
such court, generally and unconditionally, with respect to any such action, suit
or proceeding. Notwithstanding the foregoing consent to New York jurisdiction,
upon the commencement of the Chapter 11 Proceedings, each of the Parties hereto
hereby agrees that the Bankruptcy Court shall have exclusive jurisdiction of all
matters arising out of or in connection with this Agreement.
19. SPECIFIC PERFORMANCE. It is understood and agreed by each of
the Parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any Party and each non-breaching Party shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy of any such breach.
20. HEADINGS. The headings of the sections, paragraphs and
subsections of this Agreement are inserted for convenience only and shall not
affect the interpretation hereof.
21. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of the Parties and their respective successors, assigns,
heirs, executors, administrators and representatives.
22. PRIOR NEGOTIATIONS. This Agreement, the Term Sheet, the Plan,
Plan Documents and the Post-Confirmation Commitment supersede all prior
negotiations with respect to the subject matter hereof.
23. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
24. NO THIRD-PARTY BENEFICIARIES. Unless expressly stated herein,
this Agreement shall be solely for the benefit of the Parties hereto and no
other person or entity shall be a third-party beneficiary hereof.
25. CONSIDERATION. It is hereby acknowledged by the Parties hereto
that no consideration shall be due or paid to the Consenting Holders, the
Prepetition Lenders or Stonington for their agreement to vote to accept the Plan
in accordance with the terms and conditions of this Agreement other than the
Company's agreement to use its best efforts to obtain approval of the disclosure
statement and best efforts to confirm the Plan in accordance with the terms and
conditions of this Agreement.
[REMAINDER OF THIS PAGE IS BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer as of the
date first above written.
GGS HOLDINGS, INC.
By:/s/ XX Xxxxxx XX
------------------------------------
Name: XX Xxxxxx XX
Title: EVP
XXXX GRAPHIC SYSTEMS, INC.
By:/s/ XX Xxxxxx XX
------------------------------------
Name: XX Xxxxxx XX
Title: EVP
XXXX REALTY L.L.C.
By:/s/ XX Xxxxxx XX
------------------------------------
Name: XX Xxxxxx XX
Title: EVP by Power of Attorney
STONINGTON CAPITAL APPRECIATION
1994 FUND, LP
By:/s/ Xxxxxx X. End
------------------------------------
Name: Xxxxxx X. End
Title: Partner
STONINGTON FINANCING III LLC
By:/s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
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ALLIANCE CAPITAL MANAGEMENT, L.P.
By:/s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
PRINCIPAL AMOUNT OF OLD SUBORDINATED NOTES OWNED
OR CONTROLLED
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BANK OF AMERICA SECURITIES LLC
By:/s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
PRINCIPAL AMOUNT OF OLD SUBORDINATED NOTES OWNED
OR CONTROLLED
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INSTRUMENT OF ACCESSION TO
FORBEARANCE, LOCK-UP AND VOTING AGREEMENT
(XXXX GRAPHIC SYSTEMS, INC.)
Each of the undersigned (a "Holder") holds 12% Senior Subordinated Notes due
2006 issued by Xxxx Graphic Systems, Inc., a Delaware corporation ("Xxxx"), in
the principal amount shown below next to such Holder's signature and hereby
agrees to become a party to and Consenting Holder under that certain
Forbearance, Lock-Up and Voting Agreement made and entered into as of July 28,
1999 by and among GGS Holdings, Inc., Xxxx, and certain other parties that are
affiliates of Xxxx or creditors of any of them (the "Forbearance Agreement").
This Instrument of Accession shall take effect and shall become a part of said
Forbearance Agreement upon its execution and its delivery to Xxxx by the
undersigned Holders.
Executed as of July 30, 1999.
CIGNA HIGH INCOME SHARES (the "Trust")
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Xxxx X. Xxxxxxxx, Vice President
Copies of the Master Trust Agreement establishing the Trust are on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this document is executed on behalf of the Trust by an officer of
the Trust as an officer of the Trust and not individually and that any
obligations of or arising out of this document are not binding upon any of
the Trustees, officers, shareholders, employees or agents of the Trust
individually, but are binding only upon the assets and property of the Trust.
CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY
CIGNA INSURANCE COMPANY
PACIFIC EMPLOYERS INSURANCE COMPANY
By: CIGNA Investments, Inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------------
Xxxx X. Xxxxxxxx, Managing Director
WASHINGTON SUBURBAN SANITARY COMMISSION EMPLOYEES
RETIREMENT PLAN
By: CIGNA Investments, Inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------------
Xxxx X. Xxxxxxxx, Managing Director
CIGNA CBO 1996-1
By: CIGNA Investments, Inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------------
Xxxx X. Xxxxxxxx, Managing Director
C0NNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------------
Xxxx X. Xxxxxxxx, Managing Director
CREDIT SUISSE FIRST BOSTON
By:/s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
PRINCIPAL AMOUNT OF OLD SUBORDINATED NOTES OWNED
OR CONTROLLED
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DLJ
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: XXXXXX XXXXX
Title: VICE PRESIDENT
PRINCIPAL AMOUNT OF OLD SUBORDINATED NOTES OWNED
OR CONTROLLED
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XXXXXX BROTHERS
By:/s/ [ILLEGIBLE]
------------------------------------
Name: [ILLEGIBLE]
Title: [ILLEGIBLE]
PRINCIPAL AMOUNT OF OLD SUBORDINATED NOTES OWNED
OR CONTROLLED
XXXXXXX XXXXX PHOENIX FUND, INC.
By: /s/ [ILLEGIBLE]
------------------------------------
Name: [ILLEGIBLE]
Title: Vice President
PRINCIPAL AMOUNT OF OLD SUBORDINATED NOTES OWNED
OR CONTROLLED
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TRI-LINKS INVESTMENT TRUST (NOMURA)
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Long Drive Management Trust
PRINCIPAL AMOUNT OF OLD SUBORDINATED NOTES OWNED
OR CONTROLLED
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LENDERS:
BANKERS TRUST COMPANY
By: /s/ [ILLEGIBLE]
------------------------------------
Title: [ILLEGIBLE]
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 6.0%.
BANK OF AMERICA, N.A.
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Managing Director
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 5%.
THE BANK OF NOVA SCOTIA
By: /s/ Pieter L Van Schaiok
------------------------------------
Title: Relationship Manager
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 4.5%.
BARCLAYS BANK PLC
By: /s/ Xxxx Xxxxxx
------------------------------------
Xxxx Xxxxxx Director
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 4 1/2%.
BEAR, XXXXXXX & CO., INC.
By: /s/ Xxxx X. McBernoti
------------------------------------
Title: Senior Managing Director
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 4.95%.
CIBC INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: Executive Director
CIBC World Markets
Corp., As Agent
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro
Rata Share of Loans thereunder as of the date hereof is 5%.
CREDIT AGRICOLE INDOSUEZ
By: /s/ [ILLEGIBLE]
------------------------------------
Title: First Vice President
--------------------------------------
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Vice President
--------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 5.475%.
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: /s/ [ILLEGIBLE]
------------------------------------
Title: SVP
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro
Rata Share of Loans thereunder as of the date hereof is 5.475%.
DRESDNER BANK AC, NEW YORK AND GRAND
CAYMAN BRANCHES
By: /s/ Xxxxxxx X. Madder
------------------------------------
Title: Vice President
------------------------------------
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Title: Vice President
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro
Rata Share of Loans thereunder as of the date hereof is 5.475%.
The First National Bank Of Chicago
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Vice President
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 5.8125%.
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Senior Vice President
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 3%.
LASALLE NATIONAL BANK
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Vice President
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 5.0%.
XXXXXX COMMERCIAL PAPER INC.
By: /s/ [ILLEGIBLE]
------------------------------------
Title: SVP - Authorized Signatory
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 4.5%.
NATIONAL WESTMINSTER BANK PLC
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Manager
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 4.95%.
TRI-LINKS INVESTMENT TRUST
(NOMURA), by Wilmington Trust Company as
Owner Trustee
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Financial Services Officer
------------------------------------
With respect to that certain Amended and Restated Multicurrency Credit Agreement
dated as of January 29, 1998 among the parties thereto, this Lender's Pro Rata
Share of Loans thereunder as of the date hereof is 9.5%.
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FINAL RESTRUCTURING PROPOSAL
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TREATMENT OF CLAIMS AND INTERESTS UNDER THE PRE-NEGOTIATED PLAN
The Pre-Negotiated Plan will classify and provide treatment for claims
against and interests in Xxxx Graphic Systems, Inc. and certain of its
subsidiaries (collectively "Xxxx" or the "Company") generally as described
below. Claims in each such class will be satisfied in full by the delivery of
the consideration described below on the effective date of the Transaction
(the "Effective Date").
BT REVOLVING
CREDIT FACILITY: On the Effective Date, the $200 million Bankers Trust
("BT"), Revolving Credit Facility will be converted to a $50
million Tranche B Revolving Credit Facility and a $150
million Term Facility described on the attached Exhibit A.
The Tranche B Revolving Credit Facility and the Term
Facility will be secured by second priority liens on all of
the Company's assets (other than those subject to the
existing Mortgages) and will be guaranteed by GGS Holdings,
Inc. ("Holdings"), and that guarantee will be secured by
second priority liens on substantially all the assets of
Holdings.
MORTGAGES: The Mortgages will be either reinstated or the Company will
deliver the mortgaged property to the mortgagee in complete
satisfaction of the outstanding indebtedness secured thereby.
SUB-NOTES: On the Effective Date, the outstanding principal amount of
the 12% Senior Subordinated Notes due 2006 (the "Sub-Notes")
including all accrued and unpaid interest thereon, will be
converted into:
(i) $112.5 million of New Senior Subordinated Notes
issued by Holdings; and
(ii) 3,250,000 shares of Restructured Common Stock,
representing 32.5% of primary equity ownership subject
to dilution from the Management Equity plan.
NEW SENIOR
SUBORDINATED
NOTES: The New Senior Subordinated Notes will be unsecured
obligations of Holdings and will mature six years from the
Effective Date, (2005). For the first two years following
the Effective Date, the New Senior Subordinated Notes will
bear interest at 12.25% per annum, payable semi-annually via
the issuance of additional New Senior Subordinated Notes.
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FINAL RESTRUCTURING PROPOSAL
-------------------------------------------------------------------------------
Thereafter interest shall be payable in cash (with the
first cash interest payment to be paid beginning the 30th
month after the Effective Date).
The New Senior Subordinated Notes are callable, in whole
or in part, at any time by the Company at a purchase price
equal to 103.5% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase.
In the event that there is a Change of Control at an
enterprise value in excess of $600 million, the New Senior
Subordinated Noteholders shall have the right to cause the
Company to purchase the New Senior Subordinated Notes at a
purchase price equal to 107.0% of the principal amount
thereof plus accrued and unpaid interest, if any, to the
date of purchase.
The New Senior Subordinated Notes will be subordinated to
Holdings' guaranties of the New Revolving Credit Facilities
and all other Senior Debt of Holdings to the same extent as
the Sub-Notes and will be otherwise issued by Holdings on
terms and conditions substantially similar to those
applicable to the Sub-Notes.
GENERAL UNSECURED
CLAIMS: Unless expressly provided otherwise, all undisputed
general unsecured claims will be paid over 9 months after
the Effective Date.
HOLDINGS EQUITY: Existing Holdings equity holders will receive no
distribution on account of the existing Holdings Common
Stock.
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FINAL RESTRUCTURING PROPOSAL
-------------------------------------------------------------------------------
MANAGEMENT
EQUITY: The management equity shall dilute all holders of
Restructured Common Stock on a pro rata basis and therefore
all ownership percentages provided in this term sheet are
subject to dilution from the management equity plan. The
following specific terms have been mutually agreed upon as
follows:
- $2.5 million of Restricted Stock will be granted on the
Effective Date to certain members of management, which
represents approximately 3.3% (excluding restricted
shares) of the $75 million equity base. The restricted
stock will vest over a 2-3 year period.
- A restricted stock option package equal to 10% of the
outstanding primary shares (excluding restricted shares)
shall be issued to certain members of management (for a
total of $7.5 million in options based on a $75 million
equity base). The options are exercisable at fair market
value with vesting periods from 1-4 years, with 1/2
vesting based on time and 1/2 vesting based on
performance. No more than 80% (or 8% of the outstanding
primary shares excluding restricted shares) of the
restricted stock options will be granted on the Effective
Date, with the remaining 20% (or 2% of the outstanding
primary shares excluding restricted shares) reserved for
future grants.
- Severance and retention payments of up to $4.3 million
over 3 years from the Effective Date.
- Stonington will guarantee Xxx Xxxxxxx'x 1999 bonus in
an amount up to $1.2 million.
DIP FACILITY: A $50 million debtor-in-possession financing facility (the
"DIP Facility") shall be funded by Stonington Partners, Inc.
("Stonington") in the amount of $25 million and certain
lenders party to the BT Revolving Credit Facility in the
amount of $25 million. Stonington and the members of the
lender group shall be entitled to the payment of fees and the
reimbursement of expenses in connection with their
respective participation in the DIP Facility. However, on
the Effective Date upon consummation of the Transaction,
Stonington shall contribute its DIP fees to the restructured
Company's capital.
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FINAL RESTRUCTURING PROPOSAL
-------------------------------------------------------------------------------
PLAN FUNDING:
Two sources will provide the new liquidity necessary to stabilize
the restructured Company: (i) a $50 million cash capital contribution
made by Stonington (or an affiliate) and (ii) the New Revolving Credit
Facility (described below).
STONINGTON CAPITAL
CONTRIBUTION: Stonington (or an affiliate) will make a cash capital
contribution of $50 million plus any fees accrued in
connection with the aforementioned DIP Facility, to the
reorganized Company on the Effective Date (the "Capital
Contribution"). In exchange for the Capital Contribution,
Stonington will receive 6,750,000 shares of Restructured
Common Stock, representing 67.5% of primary equity ownership
subject to dilution from the Management Equity plan.
Additional tax and other analysis is necessary to determine
whether the best vehicle for the Capital Contribution is
Holdings or another Stonington affiliate.
NEW REVOLVING
CREDIT FACILITY: In addition to the $50 million Tranche B Facility and $150
million Term Facility, the Company would obtain from certain
lenders party to the BT Revolving Credit Facility, a $50
million Tranche A Revolving Credit Facility.
The Tranche A Revolving Credit Facility will be on terms
and conditions set forth on Exhibit A. The Tranche A
Revolving Credit Facility will be secured by first priority
liens on all of the Company's assets (other than those
subject to the existing Mortgages) and will be guaranteed by
Holdings and that guarantee will be secured by first priority
liens on substantially all the assets of Holdings.
REGISTRATION RIGHTS
AND LISTING OF
SECURITIES: The Restructured Common Stock and the New Senior
Subordinated Notes will be subject to customary demand and
piggy back registration rights for the benefit of certain of
their holders to the extent the resale of such securities is
not exempt from registration under Federal Securities Law by
Section 1145 of the Bankruptcy Code.
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FINAL RESTRUCTURING PROPOSAL
-------------------------------------------------------------------------------
GOVERNANCE/
BYLAWS: Reorganized Holdings will have a nine-person board of
directors consisting of the following persons: two
management directors; two independent directors; three
Stonington directors and two directors appointed by the
Informal Committee of the holders of the 12% Senior
Subordinated Notes due 2006 (the "Committee") having
qualifications reasonably comparable to the existing
independent directors.
FEES AND EXPENSES: All out-of-pocket fees and expenses incurred by the
Committee, BT, the Company and Stonington, including the
fees and expenses of each party's respective advisors will
be paid by the Company. Stonington shall not be entitled
to the payment of a transaction or management fee in
connection with the restructuring or a management fee
following the Effective Date.
ADDITIONAL PROVISIONS OF THE TRANSACTION
LOCK-UP AND
FORBEARANCE
AGREEMENTS: Upon agreement among the Company, the Committee,
Stonington and the DIP Lender regarding the terms of the
Transaction and the interim/DIP financing commitment, the
Company, Stonington, and each member of the Committee shall
enter into formal Lock-up and Forbearance Agreements. The
Lock-up and Forbearance Agreements shall, among other
things, indicate the signatories' support for, and their
intention to vote in favor of, the Pre-negotiated Plan and
provide that if a signatory sells some or all of its
Sub-Notes or existing Holdings common stock, the transferee
of such Sub-Notes or existing common stock shall be bound
by the Lock-up and Forbearance Agreement. The Lock-up and
Forbearance Agreements shall be subject to a termination
date 120 days after the filing of a Petition.
Notwithstanding the foregoing, a minimum of 66 2/3% in
dollar amount of the currently outstanding Sub-Notes shall
be required to sign the Lock-up and Forbearance Agreements.
RELEASES: The Transaction shall include a full discharge and release
of liability in favor of the Company, Stonington, BT and
certain lenders party to the BT Revolving Credit Facility,
the Committee and each member of the Committee and each of
their respective affiliates, principals, employees, agents,
-------------------------------------------------------------------------------
FINAL RESTRUCTURING PROPOSAL
-------------------------------------------------------------------------------
officers, directors, and professionals, from: (i) any and
all claims and causes of action arising prior to the
Effective Date (other than those that expressly survive
under the terms of the Transaction) and (ii) any and all
claims arising from the actions taken or not taken in
connection with the Transaction, and, if necessary, the
Pre-negotiated Plan and the proposed bankruptcy filing.
NOTEHOLDERS'
COMMITTEE'S
PROFESSIONAL
FEES: The Plan of Reorganization will provide that the
Engagement Letters of the professionals to the ad hoc
committee of Noteholders will be assumed.
CONDITIONS TO
EFFECTIVENESS: The Effective Date will be subject to the satisfaction of
the following conditions:
(i) The Company will have obtained a final non-appealable
order confirming the Pre-negotiated Plan on the terms
set forth herein;
(ii) The Company will have obtained and closed the
Tranche A New Revolving Credit Facility;
(iii) Stonington will have made the Capital Contribution; and
(iv) All actions, documents and agreements necessary to
implement the Pre-negotiated Plan shall have been
effected or executed.
July___, 1999
GGS Holdings, Inc.
Xxxx Graphic Systems, Inc.
Xxxx Graphic Systems Limited
Xxxx Systemes Graphiques Nantes X.X.
Xxxx Graphic Systems Japan Corporation
c/x Xxxx Graphic Systems, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx, Chief Financial Officer
Re: BANK FACILITIES FOR XXXX GRAPHIC SYSTEMS, INC., XXXX
GRAPHIC SYSTEMS LIMITED, XXXX SYSTEMES GRAPHIQUES NANTES
S.A. AND XXXX GRAPHIC SYSTEMS JAPAN CORPORATION
Gentlemen:
You have advised us that GGS Holdings, Inc., a Delaware
corporation ("HOLDINGS"), Xxxx Graphic Systems, Inc., a Delaware corporation
("COMPANY"), and Xxxx Realty, L.L.C., a Delaware limited liability company
("XXXX REALTY"; and together with Holdings and Company, the "DEBTOR
ENTITIES"), will file voluntary petitions for relief under the United States
Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware on July ____, 1999 (the "PETITION DATE"), whereby the Debtor
Entities shall be reorganized (the "REORGANIZATION") pursuant to a plan of
reorganization (the "PLAN") containing the terms set forth in Exhibit A to
that certain Lock-up and Forebearance Agreement dated as of July ____, 1999
by and among Company, Stonington Capital Partners, Inc. or affiliates thereof
("STONINGTON"), certain holders of Company's 12% Senior Subordinated Notes
due 2006 (the "SENIOR SUBORDINATED NOTES"), and the Prepetition Lenders (as
defined below).
We understand that Company, Xxxx Graphic Systems Limited, an
English corporation ("XXXX UK"), Xxxx Systemes Graphiques Nantes S.A., a
French SOCIETE ANONYME ("XXXX FRANCE"), and Xxxx Graphic Systems Japan
Corporation, a Japanese corporation ("XXXX JAPAN"; and together with Company,
Xxxx UK and Xxxx France, the "BORROWERS"), (i) are party to that certain
Amended and Restated Multicurrency Credit Agreement (the "EXISTING CREDIT
AGREEMENT"), dated as of January 29, 1998, as amended to date, with certain
financial institutions party thereto (the "PREPETITION LENDERS"), and Bankers
Trust Company, as administrative agent, and (ii) will enter into that certain
Debtor-in-Possession Multicurrency Credit Agreement with certain financial
institutions party thereto (the "DIP LENDERS") and Amendment to Multicurrency
Credit Agreement with Prepetition Lenders (collectively, the "DIP CREDIT
AGREEMENT"), and Bankers Trust Company, as agent. We understand that in
connection with the Reorganization, (1) Stonington will contribute not less
than $50 million in new cash common equity in Holdings (the "STONINGTON
EQUITY CONTRIBUTION"), (2) Company will convert
its approximately $200 million indebtedness under the Existing Credit
Agreement into the Term Loan Facility (as defined below) and the Tranche B
Revolving Credit Facility (as defined below), and (3) restructure the Senior
Subordinated Notes.
Bankers Trust Company ("BTCo") and certain of the Prepetition
Lenders (the "TRANCHE A LENDERS") are pleased to confirm that they are
willing to provide the up to $50 million Tranche A Revolving Credit Facility
(as defined below). The commitments of BTCo and each Tranche A Lender are set
forth next to such institution's name on the signature pages hereof. The
Tranche A Revolving Credit Facility will be documented with the senior bank
credit facilities (described below) refinancing the Existing Credit
Agreement. Such senior bank credit facilities will consist of a term loan
facility of up to $150 million (the "TERM LOAN FACILITY"), a tranche A
revolving credit facility of up to $59 million (the "TRANCHE A REVOLVING
CREDIT FACILITY") and a tranche B revolving credit facility of up to $50
million (the "TRANCHE B REVOLVING CREDIT FACILITY"; and together with the
Tranche A Revolving Credit Facility, the "REVOLVING CREDIT FACILITIES"), with
a sublimit for letters of credit to be agreed upon and a sublimit for swing
line loans to be agreed upon (such Revolving Credit Facilities and the Term
Loan Facility being collectively herein referred to as the "BANK
FACILITIES"). BTCo will act as agent for the Lenders (in such capacity, the
"AGENT"). The Bank Facilities will mature four years after the date on which
the Bank Facilities become effective (the "CLOSING DATE"). Certain of the terms
of each of the Bank Facilities are set forth in the Summary of Terms attached
hereto as ANNEX A (the "TERM SHEET"). You hereby agree that no other agents,
co-agents or arrangers will be appointed, no other titles will be awarded
and no compensation (other than as expressly set forth in the Term Sheet and
accompanying fee letters) will be paid in connection with the Bank Facilities
unless and you and we shall so agree.
You have advised us that the $150 million in proceeds from the
Term Loan Facility and the $50 million in proceeds from the Tranche B
Revolving Credit Facility will be used to refinance the Existing Credit
Agreement and to pay fees and expenses in connection with the Reorganization,
and the $50 million in proceeds from the Stonington Equity Contribution will be
used to refinance the DIP Credit Agreement. You have further advised us that
the Tranche A Revolving Credit Facility will be used to provide for the
working capital requirements and other corporate purposes of Borrowers and
their subsidiaries. No borrowings will be made by the Tranche A Lenders to
Borrowers under the Tranche A Revolving Credit Facility on the Closing Date.
The commitments of BTCo and the Tranche A Lenders to provide the
financings described in this letter are subject to (1) no material adverse
changes from the Petition Date until the effective date of the Plan in the
business, operations, properties, assets, liabilities, condition (financial
or otherwise) or prospects of Holdings, Borrowers and their respective
subsidiaries, as determined by us in our sole discretion, and (2) the Plan
becoming effective within 120 days after the Petition Date. In addition, the
commitments of BTCo and the Tranche A Lenders are subject to the accuracy and
completeness of the Information and the Projections described in the
immediately succeeding paragraph, and the satisfaction of the conditions set
forth in the Term Sheet, including, without limitation, the completion of
definitive documentation relating to the Bank Facilities satisfactory in all
respects to the Agent and the Tranche A Lenders.
You hereby represent that, based on your review and analysis, to
your knowledge (a) all information, other than Projections (as defined
below), which has been or is hereafter made available to BTCo or the other
Tranche A Lenders by you and any of your representatives
2
in connection with the transactions contemplated hereby (the "Information")
is (or will be, in the case of Information made available after the date
hereof) complete and correct in all material respects and does not (or will
not, as the case may be) contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained
therein not materially misleading in light of the circumstances under which
such statements were or are made, and (b) all financial projections
concerning Borrowers and their subsidiaries that have been or are hereafter
made available to BTCo or the other Tranche A Lenders by you or any of their
representatives in connection with the transactions contemplated hereby (the
"Projections") have been (or will be, in the case of Projections made available
after the date hereof) prepared in good faith based upon reasonable
assumptions. You agree to supplement the Information and the Projections from
time to time until the closing date so that the representation and warranty in
the preceding sentence is correct on the closing date. In arranging the Bank
Facilities, BTCo has used and relied on the Information and the Projections
without independent verification thereof. The representations and covenants
contained in this paragraph shall remain effective until a definitive
financing agreement is executed and thereafter the disclosure representations
contained herein shall be superseded by those contained in such definitive
financing agreement.
You shall pay the reasonable costs and expenses (including the
reasonable fees and expenses of counsel to BTCo, reasonable professional fees
of consultants and other experts and reasonable out-of-pocket expenses of
BTCo, including without limitation syndication expenses) arising in
connection with the preparation, execution and delivery of this letter and
the definitive financing agreements and the syndication of the Bank Facilities.
You further agree to indemnify and hold harmless each of the Tranche A
Lenders (including BTCo) and each director, officer, employee, agent,
attorney and affiliate thereof (each an "indemnified person") from and
against any losses, claims, damages, liabilities or other expenses to which a
Tranche A Lender or such indemnified persons may become subject, insofar as
such losses, claims, damages, liabilities (or actions or other proceedings
commenced or threatened in respect thereof) or other expenses arise out of or
in any way relate to or result from your actions or any of your respective
affiliates in connection with the Reorganization, any of the statements
contained in this letter or relating to the extension of the financing
contemplated by this letter, or any use or intended use of the proceeds of
any of the loans and other extensions of credit contemplated by this letter,
and to reimburse each of the Tranche A Lenders and each indemnified person
for any reasonable legal or other expenses incurred in connection with
investigating, defending or participating in any such investigation,
litigation or other proceeding (whether or not any such investigation,
litigation or other proceeding involves claims made between you or any third
party and such Tranche A Lender or any such indemnified person, and whether
or not such Tranche A Lender or any such indemnified person is a party to any
investigation, litigation or proceeding out of which any such expenses
arise); PROVIDED, HOWEVER, that the indemnity contained herein shall not
apply to the extent that such losses, claims, damages, liabilities or other
expenses result from the gross negligence or willful misconduct of such
Tranche A Lender or indemnified person. The obligations to indemnify each
Tranche A Lender and such indemnified persons and to pay such legal and other
expenses shall remain effective until the initial funding under a definitive
financing agreement and thereafter the indemnification and expense
reimbursement obligations contained herein shall be superseded by those
contained in such definitive financing agreement. Neither BTCo nor any other
Tranche A Lender shall be responsible or liable to any other party or any
other person for consequential damages which may be alleged as a result of
this letter. The foregoing provisions of this paragraph shall be in addition
to any rights that any Tranche A Lender or any indemnified person may have at
common law or otherwise.
3
In connection with the services to be provided hereunder by
BTCo, BTCo may employ the services of its affiliates, including without
limitation BT Securities Corporation. BTCo may share with such affiliates,
and such affiliates may share with BTCo, any information concerning Holdings,
Borrowers or any of their subsidiaries; PROVIDED that BTCo and such
affiliates agree to hold any non-public information confidential in
accordance with their respective customary policies relating to non-public
information. Any such affiliate so employed (and its directors, officers,
employees, agents, attorneys and affiliates) shall be entitled to all of the
benefits afforded to BTCo hereunder.
You further acknowledge that BTCo and its affiliates may be
providing or proposing to provide debt financing, equity capital or other
services (including financial advisory services) to other companies in
respect of which you or your affiliates may have conflicting interests
regarding the transactions described herein and otherwise. BTCo and its
affiliates will not use confidential information obtained from you or any of
your affiliates by virtue of the transactions contemplated by this letter or
their other relationships with you and your affiliates in connection with the
performance by BTCo or its affiliates of service for such other companies,
and BTCo and its affiliates will not furnish any such information to such
other companies. You also acknowledge that BTCo has no obligation to use any
confidential information obtained from such other companies in connection
with the transactions contemplated by this letter, or to furnish any such
confidential information to you or any of your affiliates.
Our offer will terminate on July ___, 1999, unless on or before
that date you sign and return an enclosed counterpart of this letter. The
Tranche A Revolving Credit Facility referred to herein shall in no event be
available unless the Plan shall have become effective within 120 days after
the Petition Date.
This letter agreement shall be governed by and construed in
accordance with the internal laws of the State of New York. This letter
agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.
[Remander of page intentionally left blank]
4
We appreciate having been given the opportunity by you to be
involved in this transaction.
Very truly yours,
BANKERS TRUST COMPANY
By:
------------------------------
Title:
---------------------------
5
AGREED AND ACCEPTED
this ___ day of July, 1999
GGS HOLDINGS, INC.
By:
--------------------------
Title:
-----------------------
XXXX GRAPHIC SYSTEMS, INC.
By:
--------------------------
Title:
-----------------------
XXXX GRAPHIC SYSTEMS LIMITED
By:
--------------------------
Title:
-----------------------
XXXX SYSTEMES GRAPHIQUES NANTES S.A.
By:
--------------------------
Title:
-----------------------
XXXX GRAPHIC SYSTEMS JAPAN CORPORATION
By:
--------------------------
Title:
-----------------------
6
ANNEX A
DRAFT
CONFIDENTIAL FOR DISCUSSION
PURPOSES ONLY
(NOT A COMMITMENT)
AND NOT INTENDED
TO COVER ALL ISSUES
TERM SHEET
FOR $250 MILLION
SENIOR SECURED FACILITIES
BORROWERS: Xxxx Graphic Systems Inc., ("Company"), Xxxx Graphic
Systems Limited ("Xxxx UK"), Xxxx Systems Graphiques
Nantes S.A. ("Xxxx France") and Xxxx Graphic Systems Japan
Corporation ("Xxxx Japan") (collectively, the
"Borrowers"). Separate facilities to be established for
Company, Xxxx UK, Xxxx France and Xxxx Japan, as per
structure for Existing Credit Agreement.
GUARANTORS: GGS Holdings, Inc., ("Holdings") and Company's domestic
subsidiaries with respect to all U.S. and foreign
borrowings; Company with respect to all foreign borrowings.
LENDERS: Bankers Trust Company (the "Agent"), as agent, and the
Prepetition Lenders.
COMMITMENT AND Two senior secured revolving credit facilities in an
AVAILABILITY: aggregate amount up $100 million (the "Revolving Credit
Facilities"), such aggregate amount to be allocated
between (a) a Tranche A Revolving Credit Facility in the
aggregate amount of $50 million (the "Tranche A Revolving
Credit Facility") and (b) a Tranche B Revolving Credit
Facility in the aggregate amount of $50 million (the
"Tranche B Revolving Credit Facility"). Up to an amount to
be agreed of the Revolving Credit Facilities will be
available in the form of a swing line (with swing line loans
to be converted to loans under the Tranche A or Tranche B
Revolving Credit Facility as provided in "Borrowing
Priority") and up to an amount to be agreed will be
available in the form of letters of credit.
A senior secured term loan facility in an amount of $150
million (the "Term Loan Facility"; and together with the
Revolving Credit Facilities, the "Bank Facilities").
The Prepetition Lenders commitments in the Tranche B
Revolving Credit Facility and the Term Loan Facility to be
equal to their
7
commitment percentages under the Existing Credit
Agreement. The commitments in the Tranche A Revolving
Credit Facility will be offered to the Prepetition Lenders
based on their prepetition commitments, and to the extent
undersubscribed, to be offered to Prepetition Lenders
interested in participating in excess of their prepetition
commitments.
MATURITY: Borrowings are to be repaid on the date (the "Maturity
Date") which is 4 years from the effective date of a plan
of reorganization of Company and Holdings.
USE OF PROCEEDS: Proceeds of loans and letters of credit under the Bank
Facilities to be used to (i) refinance the obligations of
Borrowers and their subsidiaries under the Existing Credit
Agreement and the DIP Credit Agreement and (ii) fund
working capital requirements of Company and its
subsidiaries.
COLLATERAL AND Advances and guaranty obligations under the Bank Facilities
PRIORITY: to be secured as follows:
(i) U.S. borrowings under the Tranche A Revolving
Credit Facility (and Company's guarantee of
foreign borrowings under the Tranche A Revolving
Credit Facility) by a first priority lien on all
assets of Holdings and Company, except that U.S.
borrowings to be secured by a lien only on 66% of
the stock of the foreign subsidiaries and no
foreign assets;
(ii) foreign borrowings under the Tranche A Revolving
Credit Facility (x) secured by a first priority
lien on all assets of the foreign Borrower and (y)
guaranteed by Company and Holdings;
(iii) U.S. borrowings under Tranche B Revolving Credit
Facility and Term Loan Facility (and Company's
guarantee of foreign borrowings under Tranche B
Revolving Credit Facility and Term Loan Facility)
by a second priority lien on all assets of Company
and Holdings, except that U.S. Borrowings to be
secured by a lien only on 66% of the stock of the
foreign subsidiaries and no foreign assets; and
(iv) foreign borrowings under Tranche B Revolving
Credit Facility and Term Loan Facility (y) secured
by second priority lien on all assets of the
foreign Borrower and (z) guaranteed by Company and
Holdings.
To effect such liens securing the Bank Facilities,
Holdings, Borrowers and subsidiary guarantors shall
execute and deliver to the Agent all security agreements,
financing statements, deeds of
8
trust, mortgages and other documents and instruments
as are necessary to grant first and second priority
perfected security interest in and lien upon all
such property of Holdings, Borrowers and subsidiary
guarantors, subject to customary permitted liens to
be agreed upon.
Negative pledge on all assets of Holdings, Borrowers
and their subsidiaries, subject to exceptions to be
agreed upon.
BORROWING BASE: Advances under Revolving Credit Facilities subject
to borrowing base to be agreed.
BORROWING PRIORITIES: Revolving loans shall be made from drawings on the
Tranche B Revolving Credit Facility first, and
thereafter from drawings on the Tranche A Revolving
Credit Facility.
VOLUNTARY PREPAYMENTS: The Bank Facilities may be prepaid in whole or in
part without premium or penalty (Offshore Rate loans
prepayable only on the last days of related interest
periods and if such Offshore Rate loans are prepaid
on other than on the last day of the relevant
interest period, then the applicable Borrower shall
be responsible for reimbursement of Lenders'
redeployment costs) and the Lenders' commitments
relative thereto reduced or terminated upon such
notice and in such amounts as may be agreed upon.
Such voluntary payments to be applied set forth in
"Mandatory Prepayments" below.
MANDATORY PREPAYMENTS: The loans shall be prepaid from the following:
(a) 100% of the net cash proceeds of all
non-ordinary course asset sales, other dispositions
of property by Company and its subsidiaries and any
settlement proceeds (including those from current
trade action), subject to limited exceptions to be
agreed upon and with a provision to allow
reinvestment of asset sale proceeds subject to
limitations on amount and during a period to be
agreed, in each case payable no later than the first
business day following the date of receipt;
(b) 100% of the net cash proceeds received under any
casualty insurance maintained by Company or any of
its subsidiaries or as a result of the taking of any
assets of Company or any of its subsidiaries
pursuant to the power of eminent domain or
condemnation, in each case payable not later than
the first business day following the date of receipt;
(c) 100% of the net cash proceeds of issuance of
equity or debt securities by Company and its
subsidiaries, subject to limited
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exceptions to be agreed upon, in each case payable
no later than the first business day following the
date of receipt;
(d) 100% of proceeds received from any pension plan
reversion, in each case payable upon receipt; and
(e) Commencing in Year 3, 75% of annual Excess Cash
Flow (to be defined) which percentage will be
subject to reduction in increments to be agreed upon
based on the achievement by Borrowers of performance
standards to be agreed upon;
The above described shall be applied first to repay
outstandings under the Tranche A Revolving Credit
Facility, then to amounts outstandings under the
Tranche B Revolving Credit Facility, then to repay
amounts outstandings under the Term Loan Facility.
SCHEDULED COMMITMENT Maximum availability under the Tranche A Revolving
REDUCTIONS: Credit Facility shall be $50 million until through
the 30 month anniversary of the Closing Date, on
which date the commitment shall be reduced by
$6,250,000, and there after the commitment shall be
reduced by an additional $6,250,000 each quarter.
AMORTIZATION OF TERM Under the Term Loan Facility, principal payments of
LOAN: $5 million shall be due quarterly in Year 4.
INTEREST RATES AND FEES: See attached Annex I.
LETTER OF CREDIT Applicable Adjusted Offshore Rate margin (as set
CHARGES: forth in Annex I) per annum on standby letters of
credit.
BTCo's standard processing, amendment and
administrative charges.
Letter of credit drawings to be reimbursed by
Company on the date honored by the Agent.
CONDITIONS OF INITIAL To include, among other things, requirements that:
EXTENSION OF CREDIT:
(a) the definitive documentation evidencing the Bank
Facilities (the "Definitive Financing Documents")
shall be prepared by counsel to the Agent
satisfactory to the Agent and the Lenders in all
respects;
(b) the Plan of Reorganization containing the
essential terms(1) set forth in the Lock-up Agreement
dated ___ (the "Plan") shall have
---------------------------
(1) Which terms shall provide for no debt at the operating Company level other
than the Facilities and certain debt permitted by the Credit Agreement.
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been confirmed by the Bankruptcy Court, and the
Bankruptcy Court Order confirming the Plan shall be
in form and substance acceptable to the Lenders;
(c) the Plan shall have become effective within 120
days of the Petition Date;
(d) $50 million in equity shall be contributed by
Stonington Partners;
(e) delivery of satisfactory legal opinions and
certificates;
(f) payment of fees and expenses;
(g) grant of first or second, as applicable,
priority security interests in all collateral;
(h) no more than $200 million outstanding under the
Existing Credit Agreement on the Closing Date;
(i) financial information conditions;
(j) with respect to the Tranche A Facility, no
material adverse change from the Petition Date to
the effective date of the Plan of Reorganization in
the business, operations, properties, assets,
liabilities, condition (financial or otherwise) or
prospects of Company and its subsidiaries, taken as
a whole; and
(k) all documents required to be delivered under the
Definitive Financing Documents, including customary
legal opinions, corporate records, documents from
public officials and officers' certificates, shall
have been delivered.
CONDITIONS TO ALL The conditions to all borrowings will include
BORROWINGS: requirements relating to prior written notice of
borrowing, in the case of revolving loans, borrowing
base availability, the accuracy of representations
and warranties, and the absence of any default or
potential event of default, and will otherwise be
customary and appropriate for financings of this
type.
REPRESENTATIONS AND Customary and appropriate, including without
WARRANTIES: limitation due organization and authorization,
enforceability, financial condition, no material
adverse changes, title to properties, liens,
litigation, payment of taxes, no material adverse
agreements, compliance with laws, employee benefit
liabilities, environmental liabilities, perfection
and priority of liens securing the Bank Facilities,
and full disclosure.
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AFFIRMATIVE COVENANTS: Affirmative covenants customary for transactions of
this type, including (subject to usual materiality
and reasonableness requirements), without
limitation, covenants that each Borrower shall:
(a) Maintain its corporate existence;
(b) Pay taxes;
(c) Maintain its properties;
(d) Permit inspections;
(e) Comply with laws;
(f) Maintain current financial records in accordance
with GAAP;
(g) Customary reporting requirements, including
quarterly and monthly reports;
(h) Environmental disclosure;
(i) Maintain insurance in amounts, on terms and with
specified insurers, all satisfactory to the Agent
NEGATIVE COVENANTS: Negative covenants customary for transactions of
this type, including (subject to usual materiality
and reasonableness requirements), without
limitation, covenants that Xxxx and each guarantor
shall not:
(a) Merge or consolidate with any other entity,
transfer or otherwise dispose of assets other than in
the ordinary course or make any fundamental changes
in its corporate structure;
(b) Create or permit to exist any lien or
encumbrance on any asset, except as permitted by the
Agreement;
(c) Incur or permit to exist any indebtedness or
contingent obligations except as specifically
permitted by the Agreement;
(d) Exceed specified capital expenditure levels;
(e) Engage in sale-lease back transactions;
(f) Make restricted junior payments (dividends,
redemptions and payments on subordinated debt);
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(g) Make investments except as specifically
permitted by the Agreement;
(h) financial covenants to be agreed.
EVENTS OF DEFAULT: Events of Default customary for transactions of this
type, including, without limitation:
(a) Non-payment of interest or mandatory prepayments
within 5 days of date due;
(b) Breach of any covenant and failure to cure
within 30 days (with respect to curable defaults);
(c) Incorrectness of representations and warranties;
(d) Cross default to material indebtedness;
(e) Material judgments;
(f) ERISA events; and
(g) Change of Control.
VOTING: Amendments and waivers of the Credit Agreement and
the other definitive documentation will require the
approval of Lenders holding more than 50% of the
commitments under the Bank Facilities (the "Required
Lenders"), except that (i) amendments to the Tranche
A Revolving Credit Facility only must be approved
only by a majority of the holders of a majority in
amount of the tranche A revolving loan commitments,
(ii) amendments to the Tranche B Revolving Credit
Facility only must be approved by a majority of the
holders of a majority in amount of the tranche B
revolving loan commitments, (iii) amendments to the
Term Loan Facility only must be approved by holders
of a majority in amount of the term loan
commitments, and (iv) the consent of each Lender
adversely affected thereby shall be required with
respect to certain customary matters.
MISCELLANEOUS: All costs and expenses (including fees and expenses
of legal counsel, accountants and other
professional advisors to the Agent) arising in
connection with the preparation, execution and
delivery of this term sheet and definitive loan
documents, the review of the collateral and the
transactions contemplated hereby shall be paid by
the Borrowers.
Borrowers will indemnify the Lenders and their
directors, officers, employees, agents, attorneys
and affiliates for any loss, claim,
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damage or liability arising out of or relating to the
Bank Facilities, or the use of proceeds thereof in
accordance with customary indemnification provisions.
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ANNEX I
INTEREST RATES: The interest rates under the Facilities will be as
follows:
FROM THE CLOSING DATE THROUGH THE 30 MONTH
ANNIVERSARY OF THE CLOSING DATE:
At the Borrower's option, (1) Adjusted Offshore Rate
plus the 3.75% or (2) Adjusted Base Rate plus 2.75%.
FROM 30 MONTH ANNIVERSARY OF THE CLOSING DATE
THROUGH THE 36 MONTH ANNIVERSARY OF THE CLOSING DATE:
At the Borrower's option, (1) Adjusted Offshore Rate
plus 4.00% or (2) Adjusted Base Rate plus 3.00%
FROM THE 36 MONTH ANNIVERSARY OF THE CLOSING DATE
THROUGH MATURITY:
At the Borrower's option, (1) Adjusted Offshore Rate
plus 4.75% Margin or (2) Adjusted Base Rate plus
3.75%.
All swingline loans shall bear interest at Adjusted
Base Rate plus applicable margin
ALL FACILITIES
The Borrower may elect interest periods of 1, 2, 3
or 6 months for Adjusted Offshore Rate borrowings.
As used herein, the terms "Adjusted Base Rate" and
"Adjusted Offshore Rate" shall have meanings
customary and appropriate for financings of this
type, and the basis for calculating accrued interest
and the interest periods for loans bearing interest
at the Offshore Rate shall be customary and
appropriate for financings of this type.
Calculation of interest shall be on the basis of
actual days elapsed in a year of 360 days (or 365
or 366 days, as the case may be, in the case of
Adjusted Base Rate loans based on the Prime Rate)
and interest shall be payable at the end of each
interest period and, in any event, at least every 3
months.
DEFAULT RATE: Overdue principal, interest and other amounts will
bear interest at the otherwise applicable interest
rate plus 2% per annum.
COMMITMENT FEES: A commitment fee of 0.5% on the undrawn portion of
the commitment of each lender under the Revolving
Credit Facilities
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will commence to accrue on the Closing Date and will
be payable quarterly in arrears and upon the
termination of such Lender's commitment; PROVIDED
that for purposes of calculating the commitment fee,
outstanding swingline loans shall be considered to
be undrawn commitments.
FACILITY FEES: 6.5% of maximum commitment for Tranche A Revolving
Credit Facility.
AGENT FEE: $500,000 for Year 1 ($250,000 payable on the Closing
Date, $250,000 payable on the 6 month anniversary of
the Closing Date); $100,000 per year for Years 2, 3
and 4
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