PSC INC.
PSC SCANNING, INC.
675 Basket Road
Webster, New York 14580
As of December 29, 2000
JOHN HANCOCK LIFE INSURANCE COMPANY (formerly
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 LIFE INSURANCE COMPANY
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South
Suite 800
Minneapolis, Minnesota 55401
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. 7 and Consent and Waiver Under Securities
Purchase Agreements
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:
1. Definitions; Background.
-----------------------
(a) Reference is hereby made to those certain Securities
Purchase Agreements dated July 12, 1996, as amended, modified and
supplemented by (i) Amendment No. 1 to Securities Purchase Agreements
dated October 10, 1996, (ii) Amendment No. 2 and Waivers Under
Securities Purchase Agreements dated as of July 4, 1997, (iii)
Amendment No. 3 to Securities Purchase Agreements and Warrants dated
August 18, 1997, (iv) Consent and Waiver Under Securities Purchase
Agreements and Warrants dated December 29, 1997, (v) Amendment No. 4,
Consent and Waiver Under Securities Purchase Agreements dated March 1,
1999, (vi) Amendment No. 5 and Consent Under Securities Purchase
Agreements dated December 20, 1999, (vii) Consent Under Securities
Purchase Agreements dated January 19, 2000, (viii) Amendment No. 6 and
Consent and Waiver Under Securities Purchase Agreements dated as of
March 31, 2000 and (ix) Waiver Under Securities Purchase Agreements
dated as of November __, 2000 (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.
(b) Capitalized terms used herein without definition have the
meanings ascribed to them in the Securities Purchase Agreements.
<PAGE>
2. Waivers; Amendments; Acknowledgment.
-----------------------------------
(a) Waiver of Past Defaults. The Companies have requested that
the holders of the Notes waive the Events of Default arising on account
of the Companies' failure to be in compliance as of September 30, 2000
with the financial covenants set forth in section 14.7(a) (Fixed Charge
Coverage Ratio), section 14.7(b) (Adjusted Consolidated Indebtedness
Ratio), section 14.7(c) (Senior Debt to Adjusted EBITDA Ratio) and
section 14.7(d) (Net Worth) (the "Financial Covenants"). On the basis
of the information provided to the holders of the Notes by the
Companies in connection herewith, and subject to the terms and
conditions hereof, such holders by their execution hereof agree to the
same.
(b) Amendments to Financial Covenants for December 31, 2000.
The Companies have requested that the holders of the Notes waive the
requirement that the Companies be in compliance as of December 31, 2000
with the Financial Covenants. On the basis of the information provided
to the holders of the Notes by the Companies in connection herewith,
and subject to the terms and conditions hereof, such holders by their
execution hereof agree to the same, provided that the Companies remain,
and the Companies do hereby agree to remain, at all times in compliance
with the terms of Amendment Ten to Bank Agreement (as defined below),
including, without limitation, the financial covenants set forth
therein, as the same may be supplemented from time to time. A true,
correct and complete copy of Amendment Ten to Bank Agreement is
attached hereto as Exhibit 2(b).
<PAGE>
(c) Acknowledgment as to Superior Indebtedness. The holders of
the Notes hereby acknowledge that obligations of the Companies incurred
in connection with the F/X Facility established under (and as defined
in) Amendment Ten to Bank Agreement are Superior Indebtedness under
(and as defined in) section 10 of the Securities Purchase Agreements
subject to the limitations set forth in such section 10, including
those set forth in the definition of the term "Superior Indebtedness".
3. Amendment to the Notes to Defer Certain Interest Payments. Each of
the Notes is hereby amended to provide that all interest accrued on the Notes
from and after September 30, 2000 to April 1, 2001 shall be paid on April 1,
2001 (and no payments of interest on the Notes shall be due on December 31, 2000
and March 31, 2001), and thereafter payments of interest due on the Notes shall
be payable on each March 31, June 30, September 30 and December 31, commencing
June 30, 2001. Upon the request of any holder of Notes, the Operating Company
shall deliver to such holder new Notes in exchange for those held by such holder
to reflect the foregoing. Exhibit 1(a)(i) to the Securities Purchase Agreements
is hereby amended to be in the form of Exhibit 3 attached hereto.
4. Conditions Precedent to Effectiveness. The provisions of this
Letter Agreement shall be effective as of the date first specified above at such
time as each of the following conditions shall have been fulfilled:
(a) The Companies shall have paid in immediately available
funds an advance to the holders of the Notes (for the professional fees
of the holders of the Notes which the Companies are obligated to pay
under section 21 of the Securities Purchase Agreements) in an aggregate
amount equal to $100,000 (the "Advance"), which amount shall be paid to
the clients' funds account of Choate, Hall & Stewart, special counsel
to the holders of the Notes, in accordance with the following
instructions:
Bank: Citizens Bank of Massachusetts
ABA#: 0115-0012-0
For Credit To: Choate, Hall & Stewart Account #110781-249-3
Reference: 2003532-0002 (C. Glerum/B. Lee).
The parties hereto agree that upon payment in cash in full of the
Advance (which amount is not refundable under any circumstance), the
Companies shall no longer be obligated under section 21 of the
Securities Purchase Agreements to reimburse the holders of the Notes
for professional fees incurred prior to April 1, 2001 in connection
with the restructuring of the credit facility established pursuant to
the Securities Purchase Agreements, but in no other respect are any of
the terms or provisions of section 21 of the Securities Purchase
Agreements modified hereby.
(b) The Companies shall have delivered an executed copy of the
Tenth Amendment and Waiver dated as of December 29, 2000 (the
"Amendment Ten to Bank Agreement"), among the Holding Company, the
Operating Company, the financial institutions party thereto, Fleet
National Bank (formerly known as Fleet Bank), as Initial Issuing Bank,
and Fleet National Bank, as administrative agent, which must be in form
and substance satisfactory to you.
<PAGE>
5. Additional Reports, etc. The Companies hereby agree to furnish to
you the same reports and information as they furnish to the Banks and at the
same time, including, without limitation, all of the same prepared by Policano &
Manzo and Raymond James & Associates and all of the same required by the terms
of Amendment Ten to Bank Agreement. The Companies do further agree to afford to
the holders of the Notes and their counsel and other professional
representatives the same access to the properties, assets, books, records,
employees and agents of the Companies and their Subsidiaries and the same
cooperation as is afforded to the Banks, pursuant to the terms of Amendment Ten
to Bank Agreement or otherwise.
6. Ratification, etc.
(a) The Companies represent and warrant 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 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 immediate 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 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.
7. Payment of Special Waiver Fee. The Companies shall pay to the
holders of the Notes in cash on April 1, 2001 a non-refundable special waiver
fee in the aggregate amount of $75,000, which amount shall be shared among the
holders of the Notes in proportion to the respective aggregate principal amount
of the Notes held by each holder.
8. 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.
<PAGE>
9. 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.
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<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 Lazerdata Corporation)
By: __________________________________
(Title)
<PAGE>
GEO LABS, INC.
By: __________________________________
(Title)
GAP TECHNOLOGIES, INC.
By: __________________________________
(Title)
PERCON INCORPORATED
By: __________________________________
(Title)
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<PAGE>
The foregoing is hereby accepted and agreed to:
JOHN HANCOCK LIFE INSURANCE COMPANY
(formerly John Hancock Mutual
Life Insurance Company)
By: _____________________________
(Title)
<PAGE>
The foregoing is hereby accepted and agreed to:
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: _______________________________
(Title)
<PAGE>
The foregoing is hereby accepted and agreed to:
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.
Its Attorney-in-Fact
By: ___________________________
(Title)
<PAGE>
The foregoing is hereby accepted and agreed to:
LINCOLN NATIONAL INCOME FUND, INC.
By: _______________________________
(Title)
<PAGE>
The foregoing is hereby accepted and agreed to:
SECURITY-CONNECTICUT LIFE
INSURANCE COMPANY
By: _______________________________
(Title)
<PAGE>
The foregoing is hereby accepted and agreed to:
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: _______________________________
(Title)
<PAGE>
Exhibit 2(b)
Amendment Ten to Bank Agreement
<PAGE>
Exhibit 3
Form of Note
