==============================================================================
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 4, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-9919
PSC INC.
(Exact name of Registrant as Specified in Its Charter)
New York 16-0969362
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
675 Basket Road, Webster, New York 14580
(Address of principal executive offices) (Zip Code)
(716) 265-1600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the 12 months preceding (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
As of August 4, 1997, there were 11,200,689 shares of common stock outstanding.
===============================================================================
<PAGE>
Part II
Other Information
Item 6. Exhibits and Reports on Form 8-K
10.5 Amendment Three dated as of August 13, 1997 to the
Credit Agreement dated as of July 12, 1996, among
PSC Scanning, Inc., as Borrower, PSC Inc., the
financial institutions party thereto and Fleet Bank as
Initial issuing Bank and as Administrative Agent.
10.6 Amendment No. 3 to Securities Purchase Agreements and
Warrants dated as of August 18, 1997 among
PSC Inc., PSC Scanning, Inc. and the
Purchasers named in the Securities Purchase
Agreements.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PSC, Inc.
DATE: August 26, 1997 By: /s/ Robert C. Strandberg
Robert C. Strandberg
President and Chief Executive Officer
DATE: August 26, 1997 By: /s/ William J. Woodard
William J. Woodard
Vice President and Chief Financial Officer
DATE: August 26, 1997 By: /s/ Scott D. Deverell
Scott D. Deverell
(Principal Accounting Officer)
<PAGE>
Exhibit 10.5
AMENDMENT THREE TO
CREDIT AGREEMENT (WITH CONSENT)
THIS AMENDMENT THREE is dated as of August 13, 1997 and is made in
respect of the Credit Agreement dated as of July 12, 1996 and as amended and in
effect immediately prior to the date hereof (the "Credit Agreement") by and
among PSC SCANNING, INC., a Delaware corporation formerly known as SpectraScan,
Inc., which is successor by merger to PSC Acquisition, Inc., (the "Borrower"),
PSC INC. ("PSC"), the financial institutions party to the Credit Agreement (the
"Lender Parties"), FLEET BANK as the "Initial Issuing Bank", and FLEET BANK, as
administrative agent (the "Administrative Agent") under the Credit Agreement.
Statement of the Premises
The Borrower, PSC, the Lender Parties, the Initial Issuing Bank and the
Administrative Agent previously entered into the Credit Agreement and the First
Amendment to Credit Agreement dated as of September 27, 1996 and the Amendment
Two and Waiver dated as of July 4, 1997. The Borrower has requested that the
Lender Parties amend certain provisions in the Credit Agreement. The Lender
Parties are willing to do so upon certain conditions.
Statement of Consideration
Accordingly, in consideration of the premises, and under the authority
of Section 5-1103 of the New York General Obligations Law, the parties hereto
agree as follows.
Agreement
1. Defined Terms. The terms "this Agreement", "hereunder" and similar
references in the Credit Agreement shall be deemed to
refer to the Credit Agreement as amended hereby. Capitalized terms used and
not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement.
2. Amendment. Effective as of July 4, 1997, upon the satisfaction
of all conditions set forth in Section 4 hereof, the Credit
Agreement is hereby amended as follows:
2.1 Section 1.01 of the Credit Agreement is amended by adding the
definitions of "Adjusted EBITDA", "Adjusted Total Debt Ratio", "Second Quarter
'97 Charge" and "Stock Sale Proceeds", as follows:
"Adjusted EBITDA" means, for any period, the sum, determined
on a Consolidated basis, of (a) net income (or net loss) plus: (i) the
Second Quarter '97 Charge, less (ii) for each fiscal quarter through
the fiscal quarter ending December 31, 1998, that portion of the Second
Quarter '97 Charge actually paid during such period, less (iii) any
gain arising from a reversal of the Second Quarter '97 Charge, plus
(iv) on the fiscal quarter end date of December 31, 1998, the cash
balance of the Second Quarter '97 Charge which the Borrower has not yet
paid in cash but which the Borrower expects to incur, (b) interest
expense, (c) income tax expense, (d) depreciation expense and (e)
amortization expense in each case of PSC and its Subsidiaries,
determined in accordance with GAAP for such period.
"Adjusted Total Debt Ratio" means, at any date, the ratio of
the aggregate amount of Debt of PSC and its Subsidiaries on the last
day of the most recently completed fiscal quarter of PSC to
Consolidated Adjusted EBITDA for the most recently completed four
fiscal quarters of PSC; provided, however, that for purposes solely of
calculating the aggregate amount of Debt outstanding, the Working
Capital Advances shall be deemed to be outstanding in an aggregate
principal amount equal to the average principal amount outstanding over
the previous two full fiscal quarters.
"Stock Sale Proceeds" means the Net Cash Proceeds from the
proposed sale of shares of the Series A Convertible Preferred Stock of
PSC pursuant to the commitment dated August 5, 1997 issued by Romano
Volta to PSC.
"Second Quarter '97 Charge" means the charge to earnings taken
by the Borrower in its second fiscal quarter in 1997 in the aggregate
amount of $5,221,000 as a result of, among other things, the
resignation of L. Michael Hone and several other executives from
employment with PSC and its subsidiaries and affiliates, centralization
of research and development, reorganization of the domestic sales
force, downsizing of some foreign sales office staffs, discontinuance
of certain products, and consolidation of manufacturing.
2.2 Section 1.02 of the Credit Agreement is amended by adding the
following sentence at the end thereof:
All specified fiscal quarter end-dates in this Credit Agreement are
approximate and shall be deemed to refer to the actual fiscal quarter
end-dates of PSC and the Borrower, as applicable, most nearly occurring
on such specified dates.
2.3 The last sentence of Clause (ii) of Subsection (b) of Section 2.06
of the Credit Agreement is amended by adding the following at the end thereof:
<PAGE>
; provided, however, that the Stock Sale Proceeds shall be applied
first to the Working Capital Facility as set forth in clause (vi) below
and second, the balance, if any, ratably to the Term A Facility and the
Term B Facility and to the installments thereof in the order of
maturity.
2.4 Section 5.04 of the Credit Agreement is amended to read in
its entirety as follows:
FinancialCovenants. So long as any Advance shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, PSC will:
(a) Fixed Charge Coverage Ratio. Maintain at the end of each
fiscal quarter of PSC a ratio of (i) Consolidated Adjusted EBITDA for
the most recently completed four fiscal quarters of PSC, less Capital
Expenditures made during such period, less the aggregate amount of
federal, state, local and foreign taxes paid by PSC and its
Subsidiaries during such period to the (ii) sum of (w) cash interest
payable by PSC and its Subsidiaries on all Debt during such period plus
(x) cash rentals payable under Capitalized Leases during such period
plus (y) principal amounts of all Funded Debt payable, in each case, by
PSC and its Subsidiaries during such period, excluding payments or
prepayments of any Borrowing with the Stock Sale Proceeds other than
(and not excluding) payments scheduled to be due and payable during
such period, if any (without the application of Section 2.06(b)(ii)),
plus (z) the aggregate purchase price paid by PSC and its Subsidiaries
during such period to purchase capital stock of PSC as permitted by
Section 5.02(g), of not less than the ratio set forth below for such
period:
Four Fiscal Quarters Ending Ratio
9/30/97 1.15x
12/31/97 1.15x
3/31/98 1.15x
6/30/98 1.15x
9/30/98 1.15x
12/31/98 1.15x
3/31/99 and each period thereafter 1.25x
<PAGE>
(b) Adjusted Total Debt Ratio. Maintain at the end of
each fiscal quarter of PSC an Adjusted Total Debt Ratio
for such date of not more than the amount set forth below for such
period;
Four Fiscal Quarters Ending Ratio
9/30/97 4.25x
12/31/97 4.25x
3/31/98 3.75x
6/30/98 3.75x
9/30/98 3.75x
12/31/98 3.75x
3/31/99 and thereafter 3.25x
(c) Senior Debt to Adjusted EBITDA Ratio. Maintain at the end
of each fiscal quarter of PSC a ratio of Senior Debt of PSC and its
Subsidiaries outstanding on the last day of such fiscal quarter to
Consolidated Adjusted EBITDA for the most recently completed four
fiscal quarters of PSC of not more than the ratio set forth below for
such period:
Four Fiscal Quarters Ending Ratio
9/30/97 3.Ox
12/31/97 3.Ox
3/31/98 2.50x
6/30/98 2.50x
9/30/98 2.50x
12/31/98 2.25x
3/31/99 and thereafter 2.Ox
(d) Interest Coverage Ratio. Maintain as of the end of each
fiscal quarter of PSC a ratio of (i) Consolidated Adjusted EBITDA for
the most recently completed four fiscal quarters of PSC to (ii)
Interest Expense of PSC and its Subsidiaries for such period of not
less than the ratio set forth below for such period:
<PAGE>
Four Fiscal Ouarters Ending Ratio
9/30/97 2.50x
12/31/97 2.50x
3/31/98 3.Ox
6/30/98 3.Ox
9/30/98 3.Ox
12/30/98 3.Ox
3/31/99 and thereafter 3.50x
"(e) Net Worth. Maintain at all times an excess of
Consolidated total assets over Consolidated total liabilities, in each
case, of the Borrower and its Subsidiaries of not less than (i) through
September 30, 1997, the sum of: (A) $13,000,000, plus (B) the amount of
the Stock Sale Proceeds, and (ii) after September 30, 1997, the sum of:
(A) $13,000,000, plus (B) 75% of Consolidated net income of PSC and its
Subsidiaries (determined exclusive of any gain or loss, net of the tax
effects thereof, recognized in connection with the sale of the stock of
TxCom) for the period after September 27, 1996 to and including each
date of determination computed on a cumulative basis for said entire
period, plus (C) the amount of any gain, net of the tax effects
thereof, recognized subsequent to September 27, 1996 in connection with
the sale of the stock of TxCom, plus (D) the amount of Stock Sale
Proceeds.
3. Consent to Sale of Stock. The Lender Parties hereby consent to the sale of
shares of the Series A Convertible Preferred Stock of PSC pursuant to the
commitment dated August 5, 1997 issued by Romano Volta to PSC.
4. Conditions Precedent to Effectiveness. This Amendment Three shall not become
effective unless and until:: (a) the holders of the Subordinated Debt shall have
entered into an amendment or waiver in substantially the form of Exhibit A
annexed hereto; and (b) the Borrower shall have paid to the Agent for the
account of each of the Lender Parties, pro-rata according to the amount of the
Commitment of each Lender Party, a fee equal to one-eighth of one percent of the
total amount of the Commitment.
5. Effect on the Credit Agreement. Except as specifically amended above, the
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed. The Borrower and PSC each acknowledge and agree that the Credit
Agreement (as amended by this Amendment) and each other Loan Document to which
each is a party is in full force and effect, that its Obligations thereunder and
under this Amendment are its legal valid and binding obligations enforceable
against it in accordance with the terms thereof and hereof, and it has no
defense, whether legal or equitable, setoff or counterclaim to the payment and
performance of such Obligations.
<PAGE>
6. Expenses. The Borrower shall pay promptly when billed all reasonable
out-of-pocket expenses of each of the Lender Parties and the Agent (including,
but not limited to, reasonable fees, charges and disbursements of counsel to
each of the Lender Parties and the Agent) incident to the preparation,
negotiation, execution, administration and enforcement of the this Amendment
Three and all documents and transactions required in connection with this
Amendment Three.
7. Execution in Counterparts and Effectiveness. This Amendment Three may be
executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which shall be deemed to be an original, and all
of which taken together shall constitute one and the same Amendment Three,
regardless of whether or not the execution by all parties shall appear on any
single counterpart. Delivery of an executed counterpart of a signature page to
this Amendment Three by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement. This Amendment Three will become
effective (subject to the condition precedent set forth in Section 4 above) when
the Administrative Agent shall have received counterparts of this Amendment
Three which, when taken together, bear the signatures of the Borrower, PSC, the
Administrative Agent and all of the Lenders.
8. Applicable Law. Pursuant to Section 5-1401 of the New York General
Obligations Law, the laws of the State of New York shall govern the validity,
construction, enforcement and interpretation of this Amendment Three in whole
without regard to any rules of conflicts-of-laws that would require the
application of the laws of any jurisdiction other than the State of New York.
9. Headings. The headings of this Amendment Three are for the purposes of
reference only and shall not limit or otherwise affect the meanings hereof.
IN WITNESS WHEREOF, the parties hereto have caused a counterpart of
this Amendment Three to be executed and delivered by their respective
representatives thereunto duly authorized, as of the date first above written.
PSC INC. PSC SCANNING, INC.
By: By:
Title: Vice President, Finance & Title: Vice President and Chief
Treasurer Financial Officer
<PAGE>
FLEET BANK, as Initial Issuing Bank FLEET BANK, as Administrative Agent
By: By:
Title: Title:
FLEET BANK CORESTATES BANK, N.A.
By: By:
Title: Title:
MANUFACTURERS & TRADERS KEY BANK NATIONAL
TRUST COMPANY ASSOCIATION
By: By:
Title: Title:
PILGRIM AMERICA PRIME RATE
SUMITOMO BANK TRUST
By: By:
Title: Title:
<PAGE>
Exhibit 10.6
PSC INC.
PSC SCANNING, INC.
675 Basket Road
Webster, New York 14580
August 18, 1997
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
200 Clarendon Street
Boston, Massachusetts 02117
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
LINCOLN NATIONAL INCOME FUND, INC.
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Ft. Wayne, Indiana 46802
SECURITY-CONNECTICUT CORPORATION
SECURITY-CONNECTICUT LIFE INSURANCE COMPANY
20 Security Drive
Avon, Connecticut 06001
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
c/o Alliance Capital Management L.P.
1345 Avenue of the Americas, 37th Floor
New York, New York 10105
Re: Amendment No. 3 to Securities Purchase Agreements and Warrants
Ladies and Gentlemen:
PSC INC., a New York corporation (the "Holding Company"), and PSC
SCANNING, INC., a Delaware corporation (formerly named SpectraScan, Inc.) and a
Wholly-Owned Subsidiary of the Holding Company (the "Operating Company") (the
Holding Company and the Operating Company are sometimes collectively referred to
herein as the "Companies" and each as a "Company"), jointly and severally agree
with you as follows:
<PAGE>
1. Definitions. Reference is hereby made to those certain Securities
Purchase Agreements dated July 12, 1996, as amended by Amendment No. 1 dated
October 10, 1996 and Amendment No. 2 and Waivers dated as of July 4, 1997 (as
the same may be amended, modified or supplemented from time to time, the
"Securities Purchase Agreements"), among the Holding Company, the Operating
Company and each of you. Capitalized terms used herein without definition have
the meanings ascribed to them in the Securities Purchase Agreements.
2. Amendments to the Securities Purchase Agreements.
(a) Section 7(c)(iii)(A) of the Securities Purchase Agreements
is hereby amended by deleting the term "Consolidated EBITDA" appearing
therein and inserting "Consolidated Adjusted EBITDA" in place thereof.
(b) Section 14.5(a)(v)(B) of the Securities Purchase
Agreements is hereby amended by deleting the term "Consolidated
Indebtedness Ratio" appearing therein and inserting "Adjusted
Consolidated Indebtedness Ratio" in place thereof.
(c) Section 14.7 of the Securities Purchase Agreements is
hereby amended to read in its entirety as follows:
"14.7. Certain Financial Covenants. The Companies will, and will cause
their respective Subsidiaries to:
(a) Fixed Charge Coverage Ratio. Maintain at the end of each fiscal
quarter of the Holding Company specified below in this section 14.7(a) a ratio
of (i) (x) Consolidated Adjusted EBITDA for the most recently completed four
fiscal quarters of the Holding Company less (y) the sum of (A) Consolidated
Capital Expenditures made during such period plus (B) the aggregate amount of
federal, state, local and foreign taxes paid by the Holding Company and its
Subsidiaries during such period to (ii) the sum of (w) cash interest payable by
the Holding Company and its Subsidiaries on Consolidated Indebtedness during
such period, plus (x) cash rentals payable under Capital Leases during such
period, plus (y) principal amounts of Consolidated Funded Debt and Current Debt
payable by the Holding Company and its Subsidiaries during such period,
excluding payments or prepayments of Funded Debt and/or Current Debt under the
Bank Credit Agreement with the Stock Sale Proceeds other than (and not
excluding) payments scheduled to be due and payable during such period, if any
(without the application of Section 2.06(b)(ii) of the Bank Credit Agreement),
plus (z) the aggregate purchase price paid by the Holding Company and its
Subsidiaries during such period to purchase Common Stock of the Holding Company
of not less than the ratio set forth below for such period:
<PAGE>
Four Fiscal Quarters Ending Ratio
9/30/97 1.01
12/31/97 1.01
3/31/98 1.01
6/30/98 1.01
9/30/98 1.01
12/31/98 1.01
3/31/99 and the last day of
each fiscal quarter thereafter 1.15x
(b) Adjusted Consolidated Indebtedness Ratio. Maintain at the end of
each fiscal quarter of the Holding Company specified below in this section
14.7(b) an Adjusted Consolidated Indebtedness Ratio for such date of not more
than the ratio set forth below for such period:
Four Fiscal Quarters Ending Ratio
9/30/97 4.75x
12/31/97 4.75x
3/31/98 4.25x
6/30/98 4.25x
9/30/98 4.25x
12/31/98 4.25x
3/31/99 and the last day of
each fiscal quarter thereafter 3.75x
(c) Senior Debt to Adjusted EBITDA Ratio. Maintain at the end of each
fiscal quarter of the Holding Company specified below in this section 14.7(c) a
ratio of (i) Consolidated Senior Debt outstanding on the last day of such fiscal
quarter to (ii) Consolidated Adjusted EBITDA for the most recently completed
four fiscal quarters of the Holding Company, of not more than the ratio set
forth below for such period:
Four Fiscal Quarters Ending Ratio
9/30/97 3.50x
12/31/97 3.50x
3/31/98 3.00x
6/30/98 3.00x
9/30/98 3.00x
12/31/98 2.75x
3/31/99 and the last day of
each fiscal quarter thereafter 2.50x
<PAGE>
(d) Net Worth. Maintain at all times an excess of Consolidated Total
Assets over Consolidated Total Liabilities of not less than (i) through
September 30, 1997, the sum of: (A) $13,000,000, plus (B) the amount of the
Stock Sale Proceeds, and (ii) after September 30, 1997, the sum of: (A)
$13,000,000, plus (B) 50% of positive Consolidated Net Income (without
adjustment for any loss and determined exclusive of any gain or loss, net of the
tax effects thereof, recognized in connection with the sale of the stock of
TxCom) for the period after September 27, 1996 to and including each date of
determination computed on a cumulative basis for said entire period, plus (C)
the amount of any gain, net of the tax effects thereof, recognized subsequent to
September 27, 1996 in connection with the sale of the stock of TxCom, plus (D)
the amount of Stock Sale Proceeds."
(d) Section 15.1 of the Securities Purchase Agreements is hereby
amended to add the following definitions in appropriate alphabetical order:
""Adjusted Consolidated Indebtedness Ratio" shall mean, at any date,
the ratio of Consolidated Indebtedness on the last day of the most recently
completed fiscal quarter of the Holding Company to Consolidated Adjusted EBITDA
for the most recently completed four fiscal quarters of the Holding Company,
provided that, for purposes solely of calculating Consolidated Indebtedness on
any day, the Working Capital Advances (as defined in the Bank Credit Agreement)
shall be deemed to be outstanding in an aggregate principal amount equal to the
average principal amount thereof outstanding during the two full fiscal quarters
of the Holding Company then ended."
""Adjusted EBITDA" of any Person shall mean, for any period, the Net
Income of such Person for such period (plus (w) the Second Quarter '97 Charge
minus (x) for each fiscal quarter through the fiscal quarter ending December 31,
1998, that portion of the Second Quarter '97 Charge actually paid during such
period minus (y) any gain arising from a reversal of the Second Quarter '97
Charge plus (z) on the fiscal quarter end date of December 31, 1998, the cash
balance of the Second Quarter '97 Charge which the Operating Company has not yet
paid in cash but which the Operating Company expects to incur), after restoring
thereto amounts deducted for (a) Interest Charges, (b) taxes in respect of
income and profits, and (c) amortization and depreciation, in each case
determined in accordance with GAAP, excluding, in the case of the fiscal quarter
in which the Acquisition is consummated, any restructuring charge taken by the
Holding Company and its Subsidiaries in connection with the Acquisition."
""Second Quarter '97 Charge" shall mean the charge to earnings taken by
the Operating Company in its second fiscal quarter in 1997 in the aggregate
amount of $5,221,000 as a result of, among other things, the resignation of L.
Michael Hone and several other executives from employment with the Holding
Company and its Subsidiaries and Affiliates, centralization of research and
development, reorganization of the domestic sales force, downsizing of some
foreign sales office staffs, discontinuance of certain products and
consolidation of manufacturing."
<PAGE>
""Stock Sale Proceeds" shall mean the cash proceeds (net of reasonable
and customary fees and expenses incurred in connection therewith and actually
paid to unaffiliated third parties) from the proposed sale of shares of the
Series A Convertible Preferred Stock of the Holding Company pursuant to the
commitment dated August 5, 1997 issued by Romano Volta to the Holding Company."
(e) Section 15.1 of the Securities Purchase Agreements is
hereby further amended by revising the definition of the various terms
using the word "Consolidated" which appears beginning on page 51 and
continuing to page 52 to insert (i) "Consolidated Adjusted EBITDA
[14.7]" at the beginning thereof, (ii) "Adjusted EBITDA" immediately
before "EBITDA, Funded Debt" and (iii) "Consolidated Adjusted EBITDA
or" immediately before "Consolidated Net Income" appearing in the
proviso therein.
(f) Section 15.1 of the Securities Purchase Agreements is
hereby further amended by deleting the definitions of "Consolidated
Indebtedness Ratio" and "EBITDA" appearing therein.
(g) Section 15.3(a) of the Securities Purchase Agreements
is hereby amended by adding the following sentence at the end thereof:
"All specified fiscal quarter end dates in this Agreement are approximate and
shall be deemed to refer to the actual fiscal quarter end dates of the Holding
Company and/or the Operating Company, as applicable, most nearly occurring on
such specified dates."
3. Amendment to the Warrants to Reduce Exercise Price and Extend
Exercise Period. Each of the Warrants is hereby amended to provide that the
Exercise Price thereof is reduced from $9.48 to $8.00 per share (such Exercise
Price being subject to further adjustment as provided in the Warrants) and that
the Exercise Period therefor terminates at 5:00 p.m. Boston time on September
15, 2006. The Holding Company hereby certifies that since July 12, 1996 no event
has occurred which, under the terms of the Warrants, requires an adjustment to
the Exercise Price or to the number or kind of securities issuable upon exercise
thereof.
4. Consent to and Acknowledgment of Issuance of Series A
Preferred Stock and Amendments to Bank Credit Agreement.
(a) Each of you hereby waives any breach of sections 11.6
and/or 14.16(a) of the Securities Purchase Agreements arising solely on
account of the sale of shares of Series A Convertible Preferred Stock
of the Holding Company pursuant to and upon the terms set forth in the
commitment letter (and the term sheet attached thereto) dated August 5,
1997 from Romano Volta to the Holding Company, a copy of which is
attached hereto as Exhibit A.
<PAGE>
(b) Each of you hereby acknowledges that section 14.16(c) of
the Securities Purchase Agreements permits the amendment of the Bank
Credit Agreement as provided for in that certain Amendment Three to
Credit Agreement (With Consent) dated as of August 13, 1997, among the
Holding Company, the Operating Company, the financial institutions
party thereto, Fleet Bank, as Initial Issuing Agent, and Fleet Bank, as
administrative agent, substantially in the form attached hereto as
Exhibit B.
5. No Default, Representations and Warranties, etc.
(a) The Companies represent and warrant that, except as
otherwise modified by (i) the Holding Company's (A) Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, including all
exhibits and appendices thereto, (B) Quarterly Report on Form 10-Q for
the quarter ended April 4, 1997, and (C) Current Report on Form 8-K
filed with the Commission on May 7, 1997, true, correct and complete
copies of which have been furnished to you , (ii) the projections
referred to on Exhibit B attached to Amendment No. 2 and Waivers to
Securities Purchase Agreements dated as of July 4, 1997, and (iii) the
information delivered to the Purchasers on June 11, 1997, which is
attached to Amendment No. 2 and Waivers to Securities Purchase
Agreements dated as of July 4, 1997 as Exhibit C, the representations
and warranties contained in the Securities Purchase Agreements and the
other Operative Documents are in all material respects correct on and
as of the date hereof as if made on such date (except to the extent
affected by the consummation of transactions permitted by the
Securities Purchase Agreements) and that, after giving effect to the
provisions of this Letter Agreement, no Default or Event of Default
exists.
(b) The Companies each ratify and confirm the Securities
Purchase Agreements (as amended hereby) and each of the other Operative
Documents to which each is a party and agree that each such agreement,
document and instrument is in full force and effect, that its
obligations thereunder and under this Letter Agreement are its legal,
valid and binding obligations enforceable against it in accordance with
the terms thereof and hereof and that it has no defense, whether legal
or equitable, setoff or counterclaim to the payment and performance of
such obligations.
(c) The Companies agree that (i) if any default shall be made
in the performance or observance of any covenant, agreement or
condition contained in this Letter Agreement or in any agreement,
document or instrument executed in connection herewith or pursuant
hereto or (ii) if any representation or warranty made by the Companies
herein or therein shall prove to have been false or incorrect on the
date as of which made, the same shall constitute an Event of Default
under the Securities Purchase Agreements and the other Operative
Documents and, in such event, you and each other holder of any of the
Notes shall have all rights and remedies provided by law and/or
provided or referred to in the
<PAGE>
Securities Purchase Agreements and the other Operative Documents. The
Companies further agree that this Letter Agreement is an Operative
Document and all references thereto in the Securities Purchase
Agreements and in any other of the other Operative Documents shall
include this Letter Agreement.
6. Payment of Transaction Costs. The Companies shall pay all
reasonable fees and disbursements incurred by you in connection herewith,
including, without limitation, the reasonable fees, expenses and disbursements
of your special counsel.
7. Governing Law. This Letter Agreement, including the validity hereof
and the rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
New York without giving effect to any choice of law or conflicts of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.
8. Miscellaneous. The headings in this Letter Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof. This Letter Agreement embodies the entire agreement and understanding
among the parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof. In case any provision in this Letter
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. This Letter Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts but all such
counterparts shall together constitute but one and the same instrument.
[The remainder of this page is intentionally left blank.]
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart hereof, whereupon this Letter
Agreement shall become a binding agreement under seal among the parties hereto.
Please then return one of such counterparts to the Companies.
Very truly yours,
PSC INC.
By:____________________________
(Title)
PSC SCANNING, INC.
By: _____________________________
(Title)
Each of the undersigned (a) acknowledges and assents to the terms and
provisions of the foregoing Letter Agreement and (b) ratifies and confirms each
of the Operative Documents to which it is a party and agrees that each such
Operative Document is in full force and effect, that its obligations thereunder
are its legal, valid and binding obligations enforceable against it in
accordance with the terms thereof and that it has no defense, whether legal or
equitable, setoff or counterclaim, to the payment and performance of such
obligations.
INSTAREAD CORPORATION
By:____________________________
(Title)
PSC AUTOMATION, INC.
(formerly named Laserdata
Corporation)
By: _____________________________
(Title)
<PAGE>
LASERDATA HOLDINGS, INC.
By:_____________________________
(Title)
PSC S.A., INC.
By:_____________________________
(Title)
PSC SCANNING SYSTEMS, INC.
By:_____________________________
(Title)
The foregoing is hereby accepted and agreed to:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: _____________________________
(Title)
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: _______________________________
(Title)
<PAGE>
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.
Its Attorney-in-Fact
By: ___________________________
(Title)
LINCOLN NATIONAL INCOME FUND, INC.
By: _____________________________
(Title)
RELIASTAR FINANCIAL CORP., as successor
to Security-Connecticut Corporation
By: _______________________________
(Title)
SECURITY-CONNECTICUT LIFE
INSURANCE COMPANY
By: _______________________________
(Title)
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: _______________________________
(Title)
