[LETTERHEAD]
June 1, 1999
XX. XXXXX XXXXXXX
Vice President Business Development
BELL & XXXXXX
0000 Xxx Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Re: TAB PRODUCTS COMPANY
Ladies and Gentlemen:
Reference is made to the note agreement dated as of March 20, 1992 by
and between Tab Products Company (the "Company") and The Prudential Insurance
Company of America ("Prudential") and to the note agreement dated as of
October 7, 1993 between the Company and Prudential (collectively referred to
as the "Agreements"). Please be advised that upon the receipt of $6,625,000
in immediately available funds at account number 00000-00000 at Bank of
America wired as indicated on the following page, the Agreements shall be
amended so as to eliminate therefrom any prohibition on the proposed sale of
assets to you by the Company. The foregoing shall be effective only if the
referenced amount is received in such account on or before June 4, 1999.
Sincerely,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Xxxxxx X. Xxxxx
--------------------
Its: Vice President
--------------------
WIRING INSTRUCTIONS:
Bank of America
Routing: ABA #000000000
Account Number 1497-83982
For further credit to:
Account Name: Tab Products
Account Number: 14934-00003
[PRUDENTIAL LETTERHEAD]
May 28, 1999
TAB PRODUCTS CO.
TAB CANADA LIMITED
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Note Agreement between Tab Products Co. (the
"Company") and The Prudential Insurance Company of America ("Prudential")
dated as of (i) March 20, 1992 (the "1992 Agreement"), pursuant to which the
Company issued and sold and Prudential purchased the Company's 8.73% Senior
Notes due March 20, 2001 in the principal amount of $15,000,000 and (ii)
October 7, 1993 (the "1993 Agreement"), pursuant to which the Company issued
and sold and Prudential purchased the Company's 6.90% Senior Guaranteed Notes
due September 20, 2002. The 1992 Agreement and the 1993 Agreement are
together referred to as the "Agreements," and each is an "Agreement."
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the applicable Agreement.
Pursuant to the request of the Company and the provisions of paragraph
11C of each Agreement, Prudential and the Company agree with respect to each
Agreement as follows:
1. Paragraph 6C of each Agreement is amended by deleting the reference
therein to "$2,000,000" and substituting therefor a reference to
"$4,000,000".
2. Paragraphs 6F and 6G are deleted in their entirety from each
Agreement.
3. Paragraph 6L of each Agreement is hereby amended and restated in
its entirety as follows:
"6L. FIXED CHARGE COVERAGE. Permit its Fixed Charge Coverage
Ratio calculated at the end of each fiscal quarter commencing with
the fiscal quarter ending May 30, 1994, on the basis of the
consolidated results of operations of the Company and its
Subsidiaries, to be less than (A) 1.15 from May 30, 1994 through
and including May 30, 1997; (B) 1.00 from May 31, 1997 through
February 28, 1998; (C) 1.15 from March 1, 1998 through February 28,
1999; and (D) .50 at all times thereafter"
TAB PRODUCTS CO.
TAB CANADA LIMITED
May 28, 1999
Page 2
4. Paragraph 6M of each Agreement is hereby amended and restated in
its entirety as follows:
"6M. TOTAL LIABILITIES. Permit the ratio of (i) Total Liabilities
to (ii) Consolidated Tangible Net Worth to exceed at any time (A)
during the period from June 1, 1995 through May 30, 1996, 1.60; (B)
during the period June 1, 1996 through February 28, 1999, 1.35 and
(C) thereafter, 1.75."
5. Clause (xvi) of paragraph 7A of each Agreement is amended and
restated in its entirety as follows:
"(xvi) (a) the Canada Guaranty, for any reason other than
satisfaction in full of the obligations of the Company guaranteed
thereunder, ceases to be in full force and effect or is declared
null and void, or the validity or enforceability thereof is
contested in a judicial proceeding, or the Guarantor denies that it
has any further liability under the Canada Guaranty, or the
Guarantor shall default in the performance or observance of any of
its obligations under the Canada Guaranty, and such default shall
not have been cured or waived within 30 days or (b) the Control
Agreement, for any reason other than payment in full of the Notes
and all other amounts due under this Agreement, ceases to be in
full force and effect or is declared null and void, or the validity
or enforceability thereof is contested in a judicial proceeding, or
the Company asserts it has no liability thereunder or the Company
or Bank of America NT&SA (or any successor) defaults in the
performance or observance of any of its obligations thereunder and
such default has not been cured or waived;"
6. Paragraph 10B of each Agreement is amended by adding thereto the
following defined term.
"'CONTROL AGREEMENT' shall mean that certain account control
agreement dated as of May 28, 1999, by and among the Company, The
Prudential Insurance Company of Agreement and Bank of America
NT&SA, pursuant to which the Company has pledged the subject
deposit account (which has been initially funded with $6,625,000 of
cash) as collateral for the Notes and certain other notes."
7. Each Agreement is further amended by adding thereto new paragraphs
12A and 12B as follows:
"12A GRANT OF SECURITY INTEREST. The Company hereby grants to The
Prudential Insurance Company of America, together with its
successors, assigns, and transferees, a security interest in the
Company's deposit account no 14934-00003 (the "Account") with Bank
of America NT&SA, together
TAB PRODUCTS CO.
TAB CANADA LIMITED
May 28, 1999
Page 3
with the financial assets (as such term is defined in Division 8 of
the Uniform Commercial Code of the State of California) and other
assets from time to time in said account and the proceeds thereof,
to secure all of the Company's obligations under the Notes and this
Agreement (including, without limitation, principal, interest yield
maintenance amounts and premiums, fees and expenses), as well as
all obligations arising under or in connection with another note
agreement between the Company and The Prudential Insurance Company
of America."
"12B. DIRECTION TO RELEASE FUNDS FROM ACCOUNT. In connection with
each required principal prepayment of the Notes, Prudential agrees
that promptly following its confirmation of receipt and payment of
such account it will provide its consent to Bank of America NT&SA
to release to the Company from the Account such prepaid principal
amount, provided that no Event of Default then exists under the
Agreement."
The foregoing amendments shall not be effective until the Company and
Bank of America NT&SA have executed and delivered to Prudential the Control
Agreement in the form attached hereto as an exhibit and there has been
deposited into the account referenced therein $6,625,000 in cash.
If you agree with the foregoing, please sign below and return a copy of
this letter to the undersigned. Upon such execution, this letter shall
become a binding agreement between the Company and Prudential amending the
1992 Agreement and the 1993 Agreement in the manner and to the extent herein
provided, subject to satisfaction of the condition precedent set forth above.
Except as otherwise set forth herein, the 1992 Agreement and the 1993
Agreement shall each continue unmodified and in full force and effect.
Very truly yours,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ Xxxxxx X. Xxxxx
---------------------
Vice President
TAB PRODUCTS CO.
TAB CANADA LIMITED
May 28, 1999
Page 4
Accepted and Agreed:
TAB PRODUCTS CO.
By: /s/ Xxxxx X. Xxxxx
----------------------
Its: SVP Operations & CFO
----------------------
The undersigned, as a guarantor of the 6.90% Notes pursuant to its Guaranty
thereof dated October 7, 1993, expressly agrees with and consents to the
amendments set forth in this letter and confirms that its Guaranty remains in
full force and effect as originally executed and is expressly reaffirmed
hereby.
TAB CANADA LIMITED
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Its: Secretary & Treasurer
----------------------
ACCOUNT CONTROL AGREEMENT
May 28, 1999
THIS ACCOUNT CONTROL AGREEMENT ("Agreement") is entered into by THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Creditor"), whose address is c/o
Prudential Capital Group, Four Embarcadero Center, Suite 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, TAB PRODUCTS COMPANY, a Delaware corporation ("Debtor")
whose address is 0000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000, and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association ("Depository Institution") whose address is 000 Xxxxxx Xxxxxx,
0xx Xxxxx, Xxxx Xxxx, XX 00000.
RECITALS:
1. Depository Institution and Debtor have entered into a customer
agreement (as from time to time amended, supplemented restated or modified,
the "Customer Agreement"), pursuant to which Depository Institution has
established its deposit account number 14934-00003 in the name of Debtor with
an initial aggregate investment in the amount of $6,625,000 (the "Account");
2. Debtor and Creditor have entered into a Note Agreement, dated as
of March 20, 1992, and a Note Agreement, dated as of October 7, 1993 (each as
amended, including without limitation, by the Amendment Letter, dated as of
the date hereof, pursuant to which Xxxxxx has granted in favor of Creditor a
security interest in the Account, the money and other property from time to
time in said account and proceeds thereof, and as the same from time to time
may be further amended, supplemented, restated or modified, individually a
"Note Agreement" and collectively the Note Agreements); and
3. Creditor, Debtor and Depository Institution are entering into
this Agreement to provide for the control of the Account and to perfect the
security interest of Creditor in the Account as more fully described in the
Note Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. THE ACCOUNT. Depository Institution hereby represents
and warrants to Creditor and Debtor that (i) the Account has been established
in the name of Debtor as recited above, (ii) the Customer Agreement, the
property contained in the Account are valid and legally binding obligations
of Depository Institution, and (iii) except for the claims and interest of
Creditor and of Debtor in the Account, Depository Institution does not know
of any claim to or interest in the Account or in any property carried therein.
SECTION 2. NO WITHDRAWALS AFTER RECEIPT OF NOTICE OF EXCLUSIVE
CONTROL. Debtor shall not, and Depository Institution shall not permit, the
withdrawal or payment of any amount deposited in the account or proceeds
thereof from the Account other than interest earned by debtor from time to
time in respect of amounts in the Account. Subject in all cases to the
immediately preceding sentence, until such time as Depository Institution
shall have received a Notice of Exclusive Control (as such term is defined in
Section 4 below), Depository Institution shall comply with the instructions
and directions ("Entitlement Orders") of Debtor. After Depository
Institution receives a Notice of Exclusive Control, notwithstanding the
provisions of Section 3 below, Depository Institution shall (i) neither
accept nor comply with any Entitlement Order from Debtor with respect to the
Account or withdrawing any amounts deposited therein assets from the Account
nor deliver any such property (including interest) to Debtor
1.
without the specific prior written consent of Creditor, and (ii) comply with
Entitlement Orders originated by Creditor concerning the Account without
further consent by Xxxxxx.
SECTION 3. PRIORITY OF LIEN. Depository Institution hereby
acknowledges that it has received notice of the existence of the Note
Agreements and of the security interest of Creditor in the Account and
recognizes the security interest granted therein to Creditor by Xxxxxx.
Depository Institution hereby waives and releases all liens, encumbrances,
claims and rights of setoff it may have against the Account or any property
carried in the Account or any credit balance in the Account and agrees that,
except for payment of its customary fees and commission pursuant to the
Customer Agreement, it will not assert any such lien, encumbrance, claim or
right against the Account or any amounts in the Account or any credit balance
in the Account. Depository Institution will not agree with any third party
that Depository Institution will comply with Entitlement Orders concerning
the Account originated by such third party without the prior written consent
of Creditor and Debtor.
SECTION 4. CONTROL. Except as otherwise provided in Sections 2 and
3 above, Depository Institution shall follow the instructions of Debtor, or
its authorized representatives, and comply with Entitlement Orders concerning
the Account from Debtor, or its authorized representatives, until such time
as Creditor delivers a written notice to Depository Institution which states
that (a) an Event of Default (as such term is defined in either Note
Agreement) has occurred and is continuing and (b) that Creditor is thereby
exercising exclusive control over the Account. Such notice may be referred
to herein as the "Notice of Exclusive Control." After Depository Institution
receives a Notice of Exclusive Control, it will immediately cease complying
with Entitlement Orders concerning the Account originated by Debtor or its
representatives and will immediately comply solely with the Entitlement
Orders concerning the Account originated by Creditor or its representatives.
SECTION 5. LIMITATION OF RESPONSIBILITY OF DEPOSITORY INSTITUTION.
Except for permitting a withdrawal or payment in violation of Section 2
above, Depository Institution shall have no responsibility or liability to
Creditor for making withdrawals of parts or all of the amounts held in the
Account at the instruction of Debtor, or its authorized representatives,
which are received by Depository Institution before Depository Institution
receives a Notice of Exclusive Control. Depository Institution shall have no
responsibility or liability to Debtor for complying with a Notice of
Exclusive Control or complying with Entitlement Orders concerning the Account
originated by Creditor. Depository Institution shall have no independent
duty to investigate or make any determination as to whether an Event of
Default exists, and shall comply with a Notice of Exclusive Control. Neither
this Agreement nor either Note Agreement imposes or creates any obligation or
duty of Depository Institution other than those expressly set forth herein.
SECTION 6. INDEMNITY. The Debtor shall at all times indemnify and
hold harmless the Depository Institution (and Depository Institution's
directors, officers, employees and agents) from and against any and all
claims, actions and suits arising out of the terms of this Agreement or the
Note Agreements, or the compliance of the Depository Institution with the
terms thereof, and from and against any and all liabilities, losses, damages,
costs, charges, counsel fees and disbursements and other expenses of every
nature and character arising by reason of same, except to the extent that
such arises from the Depository Institution's gross negligence or willful
misconduct.
SECTION 7. TAX REPORTING. All items of income, gain, expense and
loss recognized in the Account shall be reported to the Internal Revenue
Service and all state and local taxing authorities under the name and
taxpayer identification number of Debtor.
2.
SECTION 8. CUSTOMER AGREEMENT. This Agreement supplements the
Customer Agreement between Debtor and Depository Institution. In the event
of a conflict between this Agreement and the Customer Agreement, the terms of
this Agreement will prevail. Regardless of any provision in the Customer
Agreement, the State of California shall be deemed to be the Depository
Institution's location for the purposes of this Agreement and the perfection
and priority of Creditor's security interest in the Account.
SECTION 9. TERMINATION. The rights and powers granted herein to
Creditor have been granted in order to perfect its security interest in the
Account, are powers coupled with an interest and will neither be affected by
the bankruptcy of Debtor nor by the lapse of time. The obligations of
Depository Institution under Sections 2, 3 and 4 above shall continue in
effect until the security interest of Creditor in the Account has been
terminated pursuant to the terms of the Note Agreement and Creditor has
notified Depository Institution of such termination in writing, which
Creditor agrees to do promptly upon request of Debtor following such
termination. Upon receipt of such notice the obligations of Depository
Institution under Sections 2, 3 and 4 above with respect to the operation and
maintenance of the Account after the receipt of such notice shall terminate,
Creditor shall have no further right to originate Entitlement Orders
concerning the Account and Depository Institution may take such steps as
Debtor may request to vest full ownership and control of the account in
Debtor, including, but not limited to, transferring all of the property
deposited or contained in the Account to another deposit account in the name
of Debtor or its designee.
SECTION 10. THIS AGREEMENT. This Agreement, the schedules and
exhibits hereto and the agreements and instruments required to be executed
and delivered hereunder set forth the entire agreement of the parties with
respect to the subject matter hereof and supersede and discharge all prior
agreements (written or oral) and negotiations and all contemporaneous oral
agreements concerning such subject matter and negotiations. There are no
oral conditions precedent to the effectiveness of this Agreement.
SECTION 11. AMENDMENTS. No amendment, modification or termination
of this Agreement or waiver of any right hereunder shall be binding on any
party hereto unless it is in writing and is signed by the party to be charged.
SECTION 12. SEVERABILITY. If any term or provision set forth in
this Agreement shall be invalid or unenforceable, the remainder of this
Agreement, or the application of such terms or provisions to persons or
circumstances, other than those to which it is held invalid or unenforceable,
shall be construed in all respects if such invalid or unenforceable term or
provision were omitted.
SECTION 13. SUCCESSOR. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective successors or assigns.
SECTION 14. RULES OF CONSTRUCTION. In this Agreement, words in the
singular number include the plural, and in the plural include the singular;
words of the masculine gender include the feminine and the neuter, and when
the sense so indicates words of the neuter gender may refer to any gender and
the word "or" is disjunctive but not exclusive. The captions and section
numbers appearing in this Agreement are inserted only as a matter of
convenience. They do not define, limit or describe the scope or intent of
the provisions of this Agreement.
SECTION 15. NOTICE. Any notice, request, or other communication
required or permitted to be given under this Agreement shall be in writing
and deemed to have been properly given when delivered
3.
in person, or when sent by telefacsimile or other electronic means and
electronic confirmation of error-free receipt is received or two days after
being sent by certified or registered United States mail, return receipt
requested, postage prepaid, addressed to the party at the address set forth
next to such parties' name at the heading of this Agreement. Any party may
change its address for notices in the manner set forth above.
SECTION 16. COUNTERPARTS. This Agreement may be executed in any
number counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing and
delivering one or more counterparts.
SECTION 17. CHOICE OF LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of California.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
CREDITOR
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By /s/ Xxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-------------------------------
DEBTOR
TAB PRODUCTS COMPANY
By /s/ Xxxxx X. Xxxxx
-----------------------------------
Title: SVP Operations & CFO
-------------------------------
DEPOSITORY INSTITUTION
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Title: Vice President
-------------------------------
4.
