SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): June 15, 1999
DANKA BUSINESS SYSTEMS PLC
(Exact name of registrant as specified in its charter)
UNITED KINGDOM 0-20828 98-0052869
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
11201 DANKA CIRCLE NORTH
ST. PETERSBURG, FLORIDA 33716
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 727-576-6003
<PAGE>
ITEM 5. OTHER EVENTS.
As of June 15, 1999, Danka Business Systems plc (the "Company")
entered into the Fifth Amendment to Credit Agreement (the "Fifth
Amendment") amending its multicurrency credit agreement (the
"Credit Agreement") with a consortium of international banks. On
July 13, 1999 the Sixth Amendment to Credit Agreement (the "Sixth
Amendment" and, with the Fifth Amendment, the "Amendments")
received the required approval of a majority in interest of the
lenders and amended the Credit Agreement, effective July 9, 1999.
The Credit Agreement has been amended to require minimum levels
of Adjusted Consolidated Net Worth, cumulative Consolidated
EBITDA and ratio of Consolidated EBITDA to interest expense (each
as defined therein). The Amendments continue through July 31,
2000 the waiver of compliance with the requirements of certain
other covenants that was waived in the waivers granted to the
Company by the bank lenders in October 1998 and February 1999.
See the Company's Current Report on Form 8-K dated February 26,
1999 for a description of the Credit Agreement and the prior
waivers.
Terms of the Amendments include an aggregate commitment by the
lenders of $995.6 million, effective July 9, 1999 through July
31, 2000. The Company paid a fee of $2.0 million related to the
execution of the Fifth Amendment and an additional payment equal
to $10.0 million is to be paid pursuant to the Sixth Amendment on
the earliest to occur of: (i) July 31, 2000, (ii) repayment of
all amounts due under the Credit Agreement, and (iii) sale of the
Company's outsourcing subsidiary, Danka Services International.
Payments of approximately $2.4 million, $4.7 million and $9.3
million become due on October 31, 1999, December 31, 1999 and
March 31, 2000, respectively, if any amounts remain outstanding
under the Credit Agreement at those dates. With respect to the
period from July 1, 1999 through September 30, 1999, the Company
will be required to pay a fee equating to 0.25% annual interest
on the average outstanding loans under the Credit Agreement if
the average outstanding loans exceed $650.0 million. During the
period from October 1, 1999 through December 31, 1999 this fee
will be increased to equate to 0.75% interest if the average
outstanding loans in that period exceed $650.0 million and 0.25%
if they do not. Those rates will increase to 1.25% and 0.50%,
respectively, during the period from January 1, 2000 to March 31,
2000 and to 1.50% and 0.75%, respectively, during the period from
April 1, 2000 through July 31, 2000.
In addition, the Sixth Amendment permits the Company to incur up
to $40 million of additional indebtedness at any one time to
third parties to finance the purchase of high volume digital
copiers and secure such loans with liens upon the financed
equipment.
The Company agreed in the Sixth Amendment to use its best efforts
to sell the assets or equity of Danka Services International at a
price not less than their fair market value and on commercially
reasonable terms, subject to prior approval of the sale by the
majority in interest of the bank lenders.
The Company is required to apply 60% of the first $200 million of
net proceeds of any asset dispositions received prior to October
31, 1999 to repayment of amounts due under the Credit Agreement,
to so apply 80% of the next $200 million of such net proceeds and
to so apply 90% of any additional net proceeds to the extent any
amounts are outstanding under the Credit Agreement. The Company
is required to make such repayments with 80% of such net proceeds
received after October 31, 1999 up to the excess of $400 million
over the aggregate net proceeds received on or before October 31,
1999 and 90% of any additional net proceeds received after
October 31, 1999. The lenders commitments under the Credit
Agreement will be reduced by the amount of all such repayments.
Copies of the Fifth Amendment and Sixth Amendment are filed as
Exhibits 4.16 and 4.17 hereto, respectively, and incorporated
herein by this reference. The summary of the Amendments above is
qualified in its entirety by reference to the complete terms and
conditions of the Amendments and the Credit Agreement (previously
filed by the Company) as amended thereby.
The Company also obtained a waiver, effective July 9, 1999
extending the waiver of its obligation to comply with the same
financial covenants of the Credit Agreement and any adverse
effect resulting from such non-compliance for a period from July
9, 1999 through July 31, 2000 as incorporated by reference into a
Participation Agreement, dated November 15, 1995, among Danka
Holding Company, as lessee, First Security Bank, N.A., as owner
trustee, NationsBank, N.A., as a holder, NationsBank, N.A., as
administrative agent and SunTrust Bank, Tampa Bay, as co-agent. A
portion of the Company's real estate has been financed under the
Credit Agreement dated November 15, 1995 among the parties to the
Participation Agreement and the other lenders which were party
thereto under tax retention operating leases. The terms of this
waiver include an obligation to provide cash collateral to secure
the loans made by the lenders under the November 15, 1995 Credit
Agreement, out of the net proceeds of sale of assets or divisions
by the Company by so providing 5% of the first $200,000,000.00 of
net proceeds and up to 2% of any additional net proceeds up to a
maximum pledge amount of $15,000,000.00.
Upon the execution of this waiver, the Company paid a waiver fee
of $127,500.00. Additional waiver fees are due as follows to the
extent that the commitments under the Participation Agreement are
at their current levels on the following dates: (a) on October
31, 1999, $127,500; (b) on December 31, 1999, $255,000, and (c)
on March 31, 2000, $510,000. Another waiver fee of $510,000 is
due on the earliest of (a) July 31, 2000, (b) the date on which
all amounts outstanding under the Loan pursuant to the
Participation Agreement shall be paid in full and the Commitments
of Lenders have terminated, or (c) the date of the closing of the
sale of Danka Services International.
A copy of the waiver is filed as Exhibit 4.18 hereto and
incorporated herein by this reference. The summary of the waiver
above is qualified in its entirety by reference to the complete
terms and conditions of the Waiver.
<PAGE>
ITEM 7: EXHIBITS
4.16. Fifth Amendment to Credit Agreement dated June 15,
1999, among Danka Business Systems PLC, Dankalux Sarl &
Co., SCA and Danka Holding Company, NationsBank, N.A.,
each other Bank signatory to the Credit Agreement and
NationsBank, N.A., as agent.
4.17. Sixth Amendment to Credit Agreement dated July 9, 1999,
among Danka Business Systems PLC, Dankalux Sarl & Co.,
SCA and Danka Holding Company, NationsBank, N.A., each
other Bank signatory to the Credit Agreement and
NationsBank, N.A., as agent.
4.18. Waiver letter dated July 9, 1999. with respect to
Participation Agreement, dated November 15, 1995,among
Danka Holding Company, as lessee, First Security Bank,
N.A., as owner trustee, Bank of America, N.A. f/k/a
NationsBank, N.A., as a holder, Bank of America, N.A.
f/k/a NationsBank, N.A., as administrative agent and
SunTrust Bank, Tampa Bay, as co-agent.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned hereunto duly authorized.
DANKA BUSINESS SYSTEMS PLC
By: /s/ David Berg
---------------------------------------
David Berg
Its: Vice President and General Counsel
Dated: July 15, 1999
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Fifth
Amendment") is made and entered into as of June 15, 1999 among
DANKA BUSINESS SYSTEMS PLC, a limited liability company
incorporated in England and Wales (Registered Number 1101386)
("Danka PLC"), DANKALUX SARL & CO. SCA, a Luxembourg company
("Dankalux"), and DANKA HOLDING COMPANY, a Delaware corporation
("Danka Holding") (Danka PLC, Dankalux and Danka Holding are
herein each a "Company" and collectively the "Companies"),
AMERICAN BUSINESS CREDIT CORPORATION, AMERITREND CORPORATION,
CORPORATE CONSULTING GROUP, INC., D.I. INVESTMENT MANAGEMENT,
INC., DANKA IMAGING DISTRIBUTION, INC., DANKA MANAGEMENT COMPANY,
INC., DANKA OFFICE IMAGING COMPANY, DYNAMIC BUSINESS SYSTEMS,
INC., HERMAN ENTERPRISES, INC. OF SOUTH FLORIDA, RYAN FUNDING
COMPANY, QUALITY BUSINESS, INC. (collectively with Danka Holding,
the "Grantors"), the entities listed on the signature pages
hereof as International Swing Line Borrowers (collectively the
"International Borrowers" and together with the Grantors and the
Companies, the "Danka Parties"), NATIONSBANK, NATIONAL
ASSOCIATION, a national banking association formerly known as
NationsBank, National Association (Carolinas), each other Bank
listed on the signature pages hereof (each individually, a "Bank"
and collectively, the "Banks"), and NATIONSBANK, NATIONAL
ASSOCIATION, in its capacity as agent for the Banks (in such
capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Companies, the Banks and the Agent have
entered into a Credit Agreement as of December 5, 1996, as
amended and supplemented by a First Amendment dated December 5,
1997, a Second Amendment dated July 28, 1998, a Third Amendment
dated as of December 31, 1998, a Fourth Amendment dated March 29,
1999, a Waiver Letter Agreement (the "October Waiver Letter
Agreement") dated as of October 20, 1998 and a Waiver Letter
Agreement dated February 18, 1999 (the "February Waiver Letter
Agreement" and, together with the October Waiver Letter
Agreement, the "Waiver Letter Agreements") (as further amended
hereby and as from time to time further amended, supplemented or
modified, the "Credit Agreement"), pursuant to which the Banks
agreed to make certain revolving credit, term loan and letter of
credit facilities available to the Companies; and
WHEREAS, pursuant to the October Waiver Letter
Agreement (i) the Agent and the Grantors entered into a Security
Agreement dated as of October 20, 1998 (the "Security
Agreement"), (ii) the Grantors executed and delivered a Guaranty
Agreement dated as of October 20, 1998 (the "Guaranty"), and
(iii) Danka Holding executed and delivered a Stock Pledge
Agreement Supplement dated as of October 20, 1998 (the "Stock
Pledge Agreement Supplement");
NOW, THEREFORE, in consideration of the mutual
covenants set forth herein and other good and sufficient
consideration, receipt of which is hereby acknowledged, the Danka
Parties and the Banks do hereby agree as follows:
1. Definitions. Any capitalized terms used herein
without definition shall have the meaning set forth in the Credit
Agreement. The term "Waiver Term" is defined in Section 6
hereof.
2. Amendment. Subject to the terms and conditions
set forth herein, the Credit Agreement is amended as follows:
(a) Section 1.1 is hereby amended by adding the
following clause before the period at the end
of the definition of "Applicable Margin":
"; provided, however, that (1)
notwithstanding the foregoing, during the Waiver
Term (as defined in the Fifth Amendment to Credit
Agreement dated as of June 15, 1999 (the "Fifth
Amendment')), the Applicable Margin for all Base
Rate Loans and Offshore Rate Loans shall be 2.00%,
and (2) the Companies shall pay to the Agent for
distribution to the Banks, promptly upon
calculation by the Agent of the actual Average
Outstandings for any period (or portion thereof in
existence prior to the repayment in full of all
Obligations) referred to on Schedule I attached to
the Fifth Amendment (an "Applicable Period")
(where the term "Average Outstandings" shall mean
the sum of the average daily outstanding principal
amounts of all Term Loan Outstandings and of all
Revolving Loan Outstandings during the Applicable
Period), a fee (the "Leverage Fee") equal to (A)
the actual Average Outstandings for the Applicable
Period, times (B) a fraction, the numerator of
which is the number of days in the Applicable
Period and the denominator of which is 360, times
(C) the number of basis points constituting the
Leverage Fee as determined by reference to such
Schedule I, using the applicable column thereof
based on the level of Average Outstandings for the
Applicable Period.
(b) Section 2.9(f) is hereby amended as follows:
(i) Clause (i) of Section 2.9(f) is
amended by deleting the "and" at the
end thereof;
(ii) Clause (ii) of Section 2.9 (f) is
amended by deleting the period at the
end thereof and replacing it with
";and"; and
(iii) A new clause (iii) is added after
clause (ii) of Section 2.9(f) as
follows:
"(iii) Notwithstanding the provisions of
clauses (i) and (ii) hereof, the Net Proceeds of
any sale, transfer or disposition of all or any
portion of Omnifax, DSI or International (as each
of such terms is defined in the February Waiver
Letter Agreement (as defined in the Fifth
Amendment)) shall be applied as provided in the
February Waiver Letter Agreement, except that any
such Net Proceeds shall be applied to reduce the
Term Loans Outstanding in inverse order of
maturity. In calculating the Net Proceeds of the
sale, transfer or disposition of DSI, any estimate
of taxes payable or other deductions in respect
thereof used in determining such Net Proceeds
shall be promptly recalculated when such estimated
amounts become actually determinable, and in the
event that the Net Proceeds of such transaction as
so actually calculated are higher than the
estimated amount thereof, the Companies shall
promptly pay to the Agent for distribution to the
Banks the portion of such Net Proceeds that would
have been additionally payable if such actual
amounts had initially been used instead of such
estimated amounts. The Companies shall fully
cooperate with PricewaterhouseCoopers, as advisors
to the Agent, and provide to them all requested
information to enable the prompt determination of
the actual amount of all such taxes payable or
other deductions."
(c) Clause (ii) of Section 8.3 is hereby amended
to delete the phrase "At any time on or after the
Effective Date," at the beginning thereof and replace
it with the following:
"At any time during the Waiver Term, the
Adjusted Consolidated Net Worth of Danka PLC and its
Subsidiaries to be less than $275,000,000, and
thereafter at any time,".
(d) Section 8.3 is hereby amended to add new
clauses (iv) and (v) after clause (iii) thereof to read
as follows:
"(iv) (A) The cumulative Consolidated
EBITDA of Danka PLC and it Subsidiaries (a) for
the two fiscal quarters ending September 30, 1999,
to be less than $85,520,000, (b) for the three
fiscal quarters ending December 31, 1999, to be
less than $139,680,000 and (c) for the four fiscal
quarters ending March 31, 2000 and each four
fiscal quarters ending thereafter, to be less than
$196,800,000 and (B) the portion of the cumulative
Consolidated EBITDA that is attributable to the
division(s) or business unit(s) of the Companies
commonly referred to as of the date of the Fifth
Amendment as "International" (a) for the two
fiscal quarters ending September 30, 1999, to be
less than $8,552,000, (b) for the three fiscal
quarters ending December 31, 1999, to be less than
$13,968,000 and (c) for the four fiscal quarters
ending March 31, 2000 and each four fiscal
quarters ending thereafter, to be less than
$19,680,000; provided, however, that in making the
calculation of Consolidated EBITDA for the fiscal
quarter ending June 30, 1999, the Consolidated
EBITDA attributable to the division(s) or business
unit(s) of the Companies commonly referred to as
of the date of the Fifth Amendment as "DSI" shall
be included.
(v) The ratio for any period of (A)
Consolidated EBITDA for such period, to (b)
interest expense for such period, in each case of
Danka PLC and its Subsidiaries (a) as at September
30, 1999 for the two fiscal quarters then ending
to be less than 2.00 to 1.00, (b) as at December
31, 1999 for the three fiscal quarters then ending
to be less than 2.00 to 1.00, (c) as at March 31,
2000 for the four fiscal quarters then ending to
be less than 2.00 to 1.00, (d) as at June 30, 2000
for the four fiscal quarters then ending to be
less than 2.00 to 1.00 and (e) as at the end of
any fiscal quarter ending on or after September
30, 2000 for the four fiscal quarters then ending
to be less than 2.00 to 1.00; provided, however,
that in making the calculation of Consolidated
EBITDA for the fiscal quarter ending June 30,
1999, the Consolidated EBITDA attributable to the
division(s) or business unit(s) of the Companies
commonly referred to as of the date of the Fifth
Amendment as "DSI" shall be included."
(e) Section 8.8 is hereby amended as follows:
(i) Clause (b) of Section 8.8 is amended
by deleting the word "or" at the end
thereof;
(ii) Clause (c) of Section 8.8 is amended
by deleting the period at the end
thereof and replacing it with ";or";
and
(iii) A new clause (d) is added after clause
(c) of Section 8.8 as follows:
"(d) Such sale, transfer or disposition is
the sale, transfer or disposition of the
division(s) or business unit(s) of the Companies
commonly referred to as of the date of the Fifth
Amendment as "DSI" substantially in accordance
with the terms and conditions described on Exhibit
A attached to the Fifth Amendment."
3. Limitation on Aggregate Amount of Revolving Loans
Outstanding and Term Loan Outstandings.
Notwithstanding any other provision of the
Credit Agreement, (i) prior to the earlier of July 15, 1999 and
the closing of any sale, transfer or disposition of the
division(s) of business unit(s) of the Companies commonly
referred to as of the date hereof as "DSI" ("DSI Sale"), the
outstanding principal amount of all Revolving Loan Outstandings,
Term Loan Outstandings and International Swing Line Loans shall
not exceed the amount thereof permitted by the Credit Agreement
(prior to the amendment thereof pursuant to this Fifth
Amendment), and (ii) thereafter, the outstanding principal amount
(including, without limitation, the face amount of all
outstanding Letters of Credit) of all Revolving Loan
Outstandings, Term Loan Outstandings and International Swing Line
Loans shall not exceed $750,000,000.
4. Acknowledgment; Release.
(a) The Companies and the Grantors acknowledge
that they have no existing defense, counterclaim, offset, cross-
complaint, claim or demand of any kind or nature whatsoever that
can be asserted to reduce or eliminate all or any part of any of
their respective liability to pay the full indebtedness
outstanding under the terms of the Credit Agreement and any other
documents which evidence, guaranty or secure the Obligations.
The Companies and the Grantors hereby release and forever
discharge the Agent, the International Swing Line Banks, the
Banks and all of their officers, directors, employees, attorneys,
consultants and agents from any and all actions, causes of
action, debts, dues, claims, demands, liabilities and obligations
of every kind and nature, both in law and in equity, known or
unknown, whether matured or unmatured, absolute or contingent.
(b) The International Swing Line Borrowers
acknowledge that they have no existing defense, counterclaim,
offset, cross-complaint, claim or demand or any kind or nature
whatsoever that can be asserted to reduce or eliminate all or any
part of their respective liability to pay the full indebtedness
owed by any of them under the terms of the International Swing
Line Agreement or any separate facility which has been made
available to any of them by any International Swing Line Bank or
a Designated Local Lender (as defined in the International Swing
Line Agreement) and any agreements related thereto. The
International Swing Line Borrowers hereby release and forever
discharge the Agent, the International Swing Line Banks and the
Designated Local Lenders (as defined in the International Swing
Line Agreement) and all of their officers, directors, employees,
attorneys, consultants and agents from any and all actions,
causes of action, debts, dues, claims, demands, liabilities and
obligations of every kind and nature, both in law and in equity,
known or unknown, whether matured or unmatured, absolute or
contingent.
5. Waiver Extension Fees; Expenses. Promptly upon the
execution of this Fifth Amendment by the Majority Banks, the
Danka Entities shall pay to the Agent for distribution to the
Banks a waiver extension fee equal to 1/4% of the Banks'
aggregate Commitments then in effect (after reduction for the
actual (or expected) Net Proceeds of the DSI Sale and the
$18,750,000 principal payment of the Term Loan Outstandings due
July 1, 1999). In the event that at any of the following dates
the Companies shall not have paid all Obligations in full and
terminated all Revolving Loan Commitments and Term Loan
Commitments of the Banks, the Danka Entities shall pay to the
Agent for distribution to the Banks a waiver extension fee
calculated as follows: (i) on October 31, 1999, equal to 1/4% of
the Banks' aggregate Commitments then in effect, (ii) on
December 31, 1999, equal to 1/2% of the Banks' aggregate
Commitments then in effect and (iii) on March 31, 2000, equal to
1% of the Banks' aggregate Commitments then in effect. The Danka
Entities agree promptly to pay or reimburse the members of the
Steering Committee of Banks for such members' reasonable expenses
(including the reasonable fees and expenses of outside counsel
for each member of the Steering Committee) incurred in connection
with the Credit Agreement and the other Loan Documents.
6. Effectiveness; Extension of Waiver. This
Fifth Amendment shall become effective as of the date hereof upon
(a) receipt by the Agent of an executed copy of this Fifth
Amendment (which may be signed in counterparts and may be
received by facsimile transmission) signed by the Danka Parties
and the Majority Banks and (b) payment by the Danka Entities of
the waiver extension fee provided for in the first sentence of
Section 5 hereof. The waiver of the enforcement of the financial
covenants contained in Section 8.3 of the Credit Agreement, as
provided in the Waiver Letter Agreements, shall continue in
effect throughout the Waiver Term; provided, however, that,
notwithstanding the foregoing (i) such waiver shall not impair
the effectiveness of the provisions of this Fifth Amendment,
including, without limitation, Section 2(c) and (d) hereof, and
the provisions of Section 8.3 of the Credit Agreement modified or
added hereby shall, as so modified or added, be in full force and
effect during the Waiver Term (and the provisions of Section
7.1(c) of the Credit Agreement shall be applicable thereto) and
(ii) such waiver shall terminate and be of no further force or
effect in the event that the closing of the DSI Sale shall not
occur on or before July 15, 1999 (it being agreed that any fees
paid pursuant to Section 5 hereof shall be non-refundable in all
circumstances once paid, including, without limitation, upon any
termination of the waiver as aforesaid). The "Waiver Term" shall
be the period commencing upon the effectiveness of this Fifth
Amendment and ending on July 15, 2000. The provisions of
Sections 8 and 12 of the February Waiver Letter Agreement shall
continue in effect during the Waiver Term as if the phrase
"Waiver Period" used therein was replaced with the phrase "Waiver
Term" as defined herein.
7. Entire Agreement. This Fifth Amendment sets forth
the entire understanding and agreement of the parties hereto in
relation to the subject matter hereof and supersedes any prior
negotiations and agreements among the parties relative to such
subject matter.
8. Deemed Amendment of Other Loan Documents; Full
Force and Effect. To the extent necessary to give effect to the
provisions hereof, the International Swing Line Agreement and
Security Agreement shall be deemed amended and supplemented by
the terms hereof. Except as hereby specifically amended,
modified or supplemented, the Credit Agreement and all other Loan
Documents are hereby confirmed and ratified in all respects and
shall remain in full force and effect according to their
respective terms.
9. Counterparts. This Fifth Amendment may be
executed in any number of counterparts (including, without
limitation, counterparts sent by facsimile transmission), each of
which shall be deemed an original as against any party whose
signature appears thereon, and all of which shall together
constitute one and the same instrument.
10. Governing Law. This Fifth Amendment shall in all
respects be governed by the laws and judicial decisions of the
State of Florida.
11. Enforceability. Should any one or more of the
provisions of this Fifth Amendment be determined to be illegal or
unenforceable as to one or more of the parties hereto, all other
provisions nevertheless shall remain effective and binding on the
parties hereto.
12. Authorization. This Fifth Amendment (including
the provisions of Exhibit A and Schedule I hereto) has been duly
authorized, executed and delivered by the parties hereto and
constitutes a legal, valid and binding obligation of the parties
hereto, except as may be limited by general principles of equity
or by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors'
rights generally.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
<PAGE>
WITNESS: DANKA BUSINESS SYSTEMS PLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
DANKA HOLDING COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
DANKALUX SARL & CO. SCA
BY: DANKALUX SARL, COMMANDITE
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
AMERICAN BUSINESS CREDIT CORPORATION
AMERITREND CORPORATION
CORPORATE CONSULTING GROUP, INC.
D.I. INVESTMENT MANAGEMENT, INC.
DANKA IMAGING DISTRIBUTION, INC.
DANKA MANAGEMENT COMPANY, INC.
DANKA OFFICE IMAGING COMPANY
DYNAMIC BUSINESS SYSTEMS, INC.
HERMAN ENTERPRISES, INC. OF SOUTH FLORIDA
RYAN FUNDING COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
INTERNATIONAL SWINGLINE BORROWERS
DANKA CHILE COMERCIAL LTDA
DANKA DO BRASIL LIMITADA
DANKA MEXICANA S DE RL DE CV
DANKA DE PANAMA S.A.
DANKA DE COLOMBIA
PUERTO RICO DANKA INC.
DANKA DE VENEZUELA S.A.
DANKA AUSTRALIA PTY LIMITED &
DANKA NEW ZEALAND LIMITED
DANKA OFFICE IMAGING (JAPAN)
DANKA PHILIPPINES INC.
DANKA FRANCE S.A.R.L.
DANKA FRANCE SA
DANKA OFFICE PRODUCTS B.V.
DANKA OFFICE IMAGING GMBH,
DANKA DEUTSCHLAND GMBH,
DANKA DISTRIBUTION GMBH,
DANKA DEUTSCHLAND HOLDING GMBH
DANKA OFFICE PRODUCTS B.V.
DANKA ITALIA S.P.A., BASSILLICHI INFOTEC
S.P.A., DANKA S.P.A. & DANKA OFFICE
IMAGING S.P.A.
DANKA HOLDINGS BV, DANKA EUROPE BV,
DANKA DISTRIBUTION BV (FKA INFOTEC
EUROPE BV), INFOTEC NEDERLAND BV,
DANKA GROUP BV, DANKA SERVICES
INTERNATIONAL BV, DANKA OFFICE
PRODUCTS BV, INFOTEC PARTICIPATIE BV,
AND DANKA NEDERLAND BV
DANKA OFFICE PRODUCTS BV
DANKA BUSINESS SYSTEMS PLC,
DANKALUX SARL & CO. SCA &
DANKA HOLDING COMPANY
By:______________________________________
Name: F. Mark Wolfinger
Title: Director
<PAGE>
QUALITY BUSINESS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONSBANK, N.A., as Agent and Issuing
Bank
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONSBANK, N.A., as a Bank (Trade)
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONSBANK, N.A., as a Bank
By:_____________________________________
Name:___________________________________
Title:__________________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
International Swing Line Bank
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE BANK OF NOVA SCOTIA
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE BANK OF NEW YORK
By:_____________________________________
Name:___________________________________
Title:__________________________________
CREDIT LYONNAIS NEW YORK BRANCH
By:_____________________________________
Name:___________________________________
Title:__________________________________
CIBC INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
PNC BANK, KENTUCKY, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
FIRST UNION NATIONAL BANK
By:_____________________________________
Name:___________________________________
Title:__________________________________
SUN TRUST BANK, TAMPA BAY
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE FUJI BANK AND TRUST COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
ABN AMRO BANK N.V.
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
PARIBAS
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
DEUTSCHE BANK AG
New York Branch and/or Cayman Island
Branch
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
HIBERNIA NATIONAL BANK
By:_____________________________________
Name:___________________________________
Title:__________________________________
ISTITUTO BANCARIO SAN PAOLO
DI TORINO - ISTITUTO MOBILIARE
ITALIANO SPA
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
LLOYDS BANK PLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE SUMITOMO BANK, LIMITED
By:_____________________________________
Name:___________________________________
Title:__________________________________
BANCA COMMERCIALE ITALIANA
New York Branch
By:_____________________________________
Name:___________________________________
Title:__________________________________
AMSOUTH BANK OF FLORIDA
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
BANK OF TOKYO-MITSUBISHI, LTD.,
ATLANTA AGENCY
By:_____________________________________
Name:___________________________________
Title:__________________________________
BANKERS TRUST COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE DAI-ICHI KANGYO BANK, LIMITED
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONAL AUSTRALIA BANK LIMITED
ACN 004044937
By:_____________________________________
Name:___________________________________
Title:__________________________________
SANWA BANK LIMITED
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE TOKAI BANK LIMITED, NEW YORK BRANCH
By:_____________________________________
Name:___________________________________
Title:__________________________________
WACHOVIA BANK OF GEORGIA, N.A.
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONAL WESTMINSTER BANK PLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
BANCA NAZIONALE DEL LAVORO S.p.A. -
LONDON BRANCH
By:_____________________________________
Name:___________________________________
Title:__________________________________
CREDIT AGRICOLE INDOSUEZ
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
STATE STREET BANK AND TRUST COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE CHASE MANHATTAN BANK
By:_____________________________________
Name:___________________________________
Title:__________________________________
LAZARD BROTHERS & CO., LIMITED
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
EXHIBIT A
SUMMARY OF TERMS OF TRANSACTION AGREEMENT
Summary: The transaction values the DSI business at an
enterprise value of $330 million, for which Danka
will receive $301.5 million in cash and will
retain $27.3 million in preferred equity and $1.2
million in common equity in DSI. Specifically,
Danka will sell to an entity controlled by
Schroder Ventures ("Holdings") 90% of the common
equity and 80% of the preferred equity of a
current Danka subsidiary (the "Company") which, at
the closing, will own, through its own
subsidiaries (the "New Subsidiaries"), the DSI
business. Danka Office Imaging Company will
retain preferred equity and common equity of the
Company, as described above. The form of the
transaction is complicated, and has been designed
to accomplish (a) Schroder's objective to use
recapitalization accounting and (b) Danka's desire
to have the transaction treated for tax purposes
as a sale of assets.
Proceeds: Proceeds will be distributable to Danka's banks as
follows:
-- Net cash proceeds: $330 million enterprise
value, less (a) $27.3 million for the
retained preferred equity (the retained
common equity being treated as current
proceeds); (b) $3.0 million in retained
obligations (employee bonuses); (c) the
amount of the Kodak receivable at closing
(see below; estimated to be $8 million); (d)
fees and expenses estimated at $8.0 million;
and (e) direct taxes of $10.0 million =
$273.7 million.
-- Banks receive 60% of the first $197.3 million
($200 million less the $2.7 million in
proceeds from the Ulysses sale, already
applied), or $118.4 million, plus 80% of the
$76.4 million excess over $197.3 million, or
$61.1 million, for total estimated
distributable proceeds of $179.5 million.
-- In addition, if and when any payments are
received in connection with the retained
preferred units or the Kodak receivable (as
described below), such payments will be
treated as sale proceeds for purposes of
determining further distributions to the
banks.
Anticipated
Closing Date: June 18, 1999, but in no event later than July 1,
1999.
Assets and
Liabilities: The New Subsidiaries will be transferred all
assets used primarily in the DSI business, other
than certain enumerated excluded assets, and will
assume certain enumerated liabilities relating
primarily to the DSI business.
Adjustments: There will be a two-way post-closing adjustment to
the purchase price, based on the difference
between the net working capital at closing and
projected levels of working capital; provided that
no adjustment will be made if the difference is
less than $500,000. Danka management believes
that little or no adjustment will be made.
There will be a purchase price credit (estimated
to be $8 million) for the receivable due to the
Business from Kodak. Danka will retain this
receivable and, if and when payment is received
such payment will be treated as sale proceeds for
purposes of determining distributions to the
banks.
Pre-Closing
Covenants: Danka's covenants include:
-- delivery of audited financial statements for
the business for 1998 and 1999 (which is
anticipated to occur within one week);
-- obtaining of specified material consents (a
short list of customers, which DSI management
expects to receive shortly, and the bank
consent); and
-- operation of the business in the ordinary
course (with a number of specific
prohibitions).
Closing
Conditions: Conditions to the closing include:
-- Continued accuracy of representations and
warranties, subject to materiality; and
compliance with all material covenants.
-- Receipt of the Bank Consent, other material
consents and clearance from Irish and German
competition authorities.
-- No suit having been commenced to prevent the
transactions.
-- Minimum EBIT on the 1998 and 1999 audited
financial statements of $23.4 million and
$25.4 million, respectively (Danka's CFO
anticipates that these thresholds will be
met).
-- No material adverse change in the business.
-- Receipt of the debt financing in accordance
with the commitment letters.
-- Bank Agent shall have delivered (i) UCC
termination statements and any other
appropriate lien satisfaction instruments to
release any liens arising in connection with
the Credit Agreement on the Transferred
Assets and on the equity of the Company and
the New Subsidiaries; and (ii) an
acknowledgment that each security interest
and lien granted pursuant to the Credit
Agreement and related documentation on the
Transferred Assets and on the equity of the
Company and the New Subsidiaries has been
terminated and released.
Noncompete: -- For 18 months post-closing, Parent and its
affiliates will not enter into any contract
with a DSI customer to perform services of
the Business at a current DSI location
(including through sales of equipment
intended to substitute for the DSI services).
-- For 12 months post-closing, Parent and its
affiliates will not engage in the facilities
management business.
-- For 12 months post-closing, neither side will
solicit the employment of officers or
employees of the other.
Post-Closing
Relationship: Four agreements govern the post-closing
relationship:
-- Supply Agreement for sale of Danka equipment
to DSI -- three year term; Danka to be
preferred supplier, with right of first
refusal.
-- Transitional Support Services Agreement --
Danka will provide certain services and allow
use of shared facilities.
-- Preferred Outsourcing Agreement -- DSI will
continue to provide services at Danka's
headquarters, and DSI will be Danka's
preferred source of such services.
-- Services and Supplies Agreement -- Governs
the provision of services and supplies with
respect to new DSI contracts.
Indemnifi-
cation: Danka indemnifies DSI for (a) inaccuracies in
representations or warranties; (b) breaches of
covenants; (c) failure to discharge excluded
liabilities; (d) bulk sales issues; and (e)
consolidated group tax liability. The following
limitations apply:
-- $9,000,000 deductible basket;
-- expiration of September 30, 2000;
-- no consequential damages;
-- no recovery if Holdings had actual knowledge;
-- cap of 10% of the purchase price.
Danka will pledge to Holdings for 2 years its
retained interest in the Company to secure Danka's
indemnification obligations in the event of a
bankruptcy filing by Danka. Danka's banks will
have a second lien on this interest, which will
become a first lien on the second anniversary of
the closing date.
Holdings and DSI indemnify Danka for (a)
inaccuracies in representations or warranties; (b)
breaches of covenants; (c) failure to discharge
transferred liabilities; (d) WARN Act issues and
other post-closing actions; and (e) increased tax
liability based on the leveraged recapitalization
structure.
Termination: Drop dead date is July 1, 1999. If the
transaction is not closed due to failure to obtain
the banks' consent by July 1, 1999, Danka will
reimburse Holdings for its costs up to $2 million.
Other
Provisions: -- Each party pays half of all transfer taxes,
other than VAT.
-- Mutual nondisparagement covenant.
<PAGE>
SCHEDULE I
LEVERAGE FEE
Period
(Dates Inclusive) LEVERAGE FEE (in bps)
Average Outstandings Average Outstandings
>=$650MM < $650MM
07/01/99 through 09/30/99 4 0
10/01/99 through 12/31/99 75 25
01/01/00 through 03/31/00 125 50
04/01/00 through July 15, 2000 150 75
SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this "Sixth
Amendment") is made and entered into as of July 9, 1999 among
DANKA BUSINESS SYSTEMS PLC, a limited liability company
incorporated in England and Wales (Registered Number 1101386)
("Danka PLC"), DANKALUX SARL & CO. SCA, a Luxembourg company
("Dankalux"), and DANKA HOLDING COMPANY, a Delaware corporation
("Danka Holding") (Danka PLC, Dankalux and Danka Holding are
herein each a "Company" and collectively the "Companies"),
AMERICAN BUSINESS CREDIT CORPORATION, AMERITREND CORPORATION,
CORPORATE CONSULTING GROUP, INC., D.I. INVESTMENT MANAGEMENT,
INC., DANKA IMAGING DISTRIBUTION, INC., DANKA MANAGEMENT COMPANY,
INC., DANKA OFFICE IMAGING COMPANY, DYNAMIC BUSINESS SYSTEMS,
INC., HERMAN ENTERPRISES, INC. OF SOUTH FLORIDA, QUALITY
BUSINESS, INC. (collectively with Danka Holding, the "Grantors"),
the entities listed on the signature pages hereof as
International Swing Line Borrowers (collectively the
"International Borrowers" and together with the Grantors and the
Companies, the "Danka Parties"), BANK OF AMERICA, NATIONAL
ASSOCIATION (formerly known as NationsBank, National Association,
a national banking association formerly known as NationsBank,
National Association (Carolinas)), each other Bank listed on the
signature pages hereof (each individually, a "Bank" and
collectively, the "Banks"), and BANK OF AMERICA, NATIONAL
ASSOCIATION (formerly known as NationsBank, National
Association), in its capacity as agent for the Banks (in such
capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Companies, the Banks and the Agent have
entered into a Credit Agreement as of December 5, 1996, as
amended and supplemented by a First Amendment dated December 5,
1997, a Second Amendment dated July 28, 1998, a Third Amendment
dated as of December 31, 1998, a Fourth Amendment dated March 29,
1999 (the "Fourth Amendment"), a Fifth Amendment dated as of June
15, 1999 (the "Fifth Amendment"), a Waiver Letter Agreement (the
"October Waiver Letter Agreement") dated as of October 20, 1998
and a Waiver Letter Agreement dated February 18, 1999 (the
"February Waiver Letter Agreement" and, together with the October
Waiver Letter Agreement, the "Waiver Letter Agreements") (as
further amended hereby and as from time to time further amended,
supplemented or modified, the "Credit Agreement"), pursuant to
which the Banks agreed to make certain revolving credit, term
loan and letter of credit facilities available to the Companies;
and
WHEREAS, pursuant to the October Waiver Letter
Agreement (i) the Agent and the Grantors entered into a Security
Agreement dated as of October 20, 1998 (the "Security
Agreement"), (ii) the Grantors executed and delivered a Guaranty
Agreement dated as of October 20, 1998 (the "Guaranty"), and
(iii) Danka Holding executed and delivered a Stock Pledge
Agreement Supplement dated as of October 20, 1998 (the "Stock
Pledge Agreement Supplement");
NOW, THEREFORE, in consideration of the mutual
covenants set forth herein and other good and sufficient
consideration, receipt of which is hereby acknowledged, the Danka
Parties and the Banks do hereby agree as follows:
1. Definitions. Any capitalized terms used herein
without definition shall have the meaning set forth in the Credit
Agreement. The term "Waiver Term" is defined in Section 10
hereof.
2. Effectiveness of Fifth Amendment. As of the date
hereof, the Danka Parties anticipate that the DSI Sale (as
defined in the Fifth Amendment) will not occur on or before July
15, 1999. As a result thereof, the Danka Parties and the Banks
desire to retain certain provisions of the Fifth Amendment and
eliminate or modify certain other provisions of the Fifth
Amendment. In order to provide a clear statement of the parties'
intention, as of the effectiveness of this Sixth Amendment, all
of the provisions of the Fifth Amendment shall be terminated and
of no further force and effect (except to the extent that an
identical provision is included in this Sixth Amendment, which
identical provision shall thereupon become the effective
provision); provided, however, that nothing contained herein
shall adversely affect any actions taken under the Fifth
Amendment prior to the effectiveness of this Sixth Amendment,
including, without limitation, the payment of any fees pursuant
to the first sentence of Section 5 of the Fifth Amendment.
3. Amendment of Credit Agreement. Subject to the
terms and conditions set forth herein, the Credit Agreement is
amended as follows:
(a) Section 1.1 is hereby amended by adding the
following clause before the period at the end of the
definition of "Applicable Margin":
"; provided, however, that (1)
notwithstanding the foregoing, during the Waiver
Term (as defined in the Sixth Amendment to Credit
Agreement dated as of July 9, 1999 (the "Sixth
Amendment")), the Applicable Margin for all Base
Rate Loans and Offshore Rate Loans shall be 2.00%,
and (2) the Companies shall pay to the Agent for
distribution to the Banks, promptly upon
calculation by the Agent of the actual Average
Outstandings for any period (or portion thereof in
existence prior to the repayment in full of all
Obligations) referred to on Schedule I attached to
the Sixth Amendment (an "Applicable Period")
(where the term "Average Outstandings" shall mean
the sum of the average daily outstanding principal
amounts of all Term Loan Outstandings, Revolving
Loan Outstandings and International Swing Line
Outstandings during the Applicable Period), a fee
(the "Leverage Fee") equal to (A) the actual
Average Outstandings for the Applicable Period,
times (B) a fraction, the numerator of which is
the number of days in the Applicable Period and
the denominator of which is 360, times (C) the
number of basis points constituting the Leverage
Fee as determined by reference to such Schedule I,
using the applicable column thereof based on the
level of Average Outstandings for the Applicable
Period.
(b) Section 2.9(f) is hereby amended as
follows:
(i) Clause (i) of Section 2.9(f) is
amended by deleting the "and" at the
end thereof;
(ii) Clause (ii) of Section 2.9 (f) is
amended by deleting the period at the
end thereof and replacing it with
";and"; and
(iii) A new clause (iii) is added after
clause (ii) of Section 2.9(f) as
follows:
"(iii) Notwithstanding the provisions of
clauses (i) and (ii) hereof, the Net Proceeds of
any sale, transfer or disposition of all or any
portion of Omnifax, DSI or International (as each
of such terms is defined in the February Waiver
Letter Agreement (as defined in the Sixth
Amendment)) shall be applied as provided in the
February Waiver Letter Agreement, except that any
such Net Proceeds shall be applied to reduce the
Term Loans Outstanding in inverse order of
maturity."
(c) Clause (ii) of Section 8.3 is hereby amended
to delete the phrase "At any time on or after the
Effective Date," at the beginning thereof and replace
it with the following:
"(1) At any time during the Waiver Term and
(a) on and after September 30, 1999 and on or
prior to December 30, 1999, the Adjusted
Consolidated Net Worth (which term, as used in
this Section 8.3(ii), shall exclude the impact of
the $10,000,000 waiver extension fee provided for
in the first sentence of Section 9 of the Sixth
Amendment) of Danka PLC and its Subsidiaries to be
less than $158,000,000, (b) on and after December
31, 1999 and on or prior to March 30, 2000, the
Adjusted Consolidated Net Worth of Danka PLC and
its Subsidiaries to be less than $166,000,000, (c)
on and after March 31, 2000 and on or prior to
June 29, 2000, the Adjusted Consolidated Net Worth
of Danka PLC and its Subsidiaries to be less than
$172,000,000 and (d) on and after June 30, 2000
and on or prior to July 31, 2000, the Adjusted
Consolidated Net Worth of Danka PLC and its
Subsidiaries to be less than $184,000,000, and (2)
thereafter at any time,".
(d) Section 8.3 is hereby amended to add new
clauses (iv) and (v) after clause (iii) thereof to read
as follows:
"(iv) (A) The cumulative Consolidated EBITDA of
Danka PLC and it Subsidiaries (a) for the two fiscal
quarter period ending September 30, 1999, to be less
than $95,624,000, (b) for the three fiscal quarter
period ending December 31, 1999, to be less than
$159,265,000, (c) for the four fiscal quarter period
ending March 31, 2000, to be less than $226,002,000 and
(d) for the four fiscal quarter period ending June 30,
2000 and each four fiscal quarter period ending on a
September 30, December 31, March 31 or June 30
thereafter, to be less than $253,517,000 and (B) the
portion of the cumulative Consolidated EBITDA that is
attributable to the division(s) or business unit(s) of
the Companies commonly referred to as of the date of
the Sixth Amendment as "International" (a) for the two
fiscal quarter period ending September 30, 1999, to be
less than $9,562,000, (b) for the three fiscal quarter
period ending December 31, 1999, to be less than
$15,926,000, (c) for the four fiscal quarter period
ending March 31, 2000, to be less than $22,600,000 and
(d) for the four fiscal quarter period ending June 30,
2000 and each four fiscal quarter period ending on a
September 30, December 31, March 31 or June 30
thereafter, to be less than $25,352,000; provided,
however, that in making the calculation of Consolidated
EBITDA for any periods ending on or prior to July 31,
1999, the Consolidated EBITDA attributable to the
Omnifax division of Danka Office Imaging Company shall
be included.
(v) The ratio for any period of (A) Consolidated
EBITDA for such period, to (b) gross interest expense
(excluding the impact of the $10,000,000 waiver
extension fee provided for in the first sentence of
Section 9 of the Sixth Amendment) for such period, in
each case of Danka PLC and its Subsidiaries (a) as at
September 30, 1999 for the two fiscal quarters then
ending to be less than 2.00 to 1.00, (b) as at December
31, 1999 for the three fiscal quarters then ending to
be less than 2.00 to 1.00, (c) as at March 31, 2000 for
the four fiscal quarters then ending to be less than
2.00 to 1.00, (d) as at June 30, 2000 for the four
fiscal quarters then ending to be less than 2.00 to
1.00 and (e) as at the end of any fiscal quarter ending
on or after September 30, 2000 for the four fiscal
quarters then ending to be less than 2.00 to 1.00;
provided, however, that in making the calculation of
Consolidated EBITDA for any periods ending on or prior
to July 31, 1999, the Consolidated EBITDA attributable
to the Omnifax division of Danka Office Imaging Company
shall be included."
(e) Section 8.8 is hereby amended as follows:
(i) Clause (b) of Section 8.8 is amended
by deleting the word "or" at the end
thereof;
(ii) Clause (c) of Section 8.8 is amended
by deleting the period at the end
thereof and replacing it with ";or";
and
(iii) A new clause (d) is added after clause
(c) of Section 8.8 as follows:
"(d) Such sale, transfer or disposition is
the sale, transfer or disposition of the assets or
equity of any or all of the Omnifax division of
Danka Office Imaging Company substantially in
accordance with the terms and conditions described
on Exhibit A attached to the Sixth Amendment."
4. Limitation on Aggregate Amount of Revolving Loan
Outstandings and International Swing Line Outstandings.
Notwithstanding any limitation on the amount of
Revolving Loan Outstandings or International Swing Line
Outstandings contained in the February Waiver Letter Agreement
(including, without limitation, Section 7 thereof), the Fourth
Amendment (including, without limitation, Section 4 thereof) or
the Fifth Amendment (including, without limitation, Section 3
thereof) (a) the Companies shall be permitted to request and
receive (subject to the satisfaction of any applicable condition
precedent therefor) Revolving Loans from the Banks in an
aggregate amount such that the aggregate Dollar Equivalent Amount
of the principal of all Revolving Loan Outstandings after giving
effect to such borrowing shall not exceed the combined Revolving
Commitments of the Banks (minus the Currency Hedge Utilization),
all on the terms and conditions provided in the Credit Agreement,
and (b) the International Swing Line Borrowers shall be permitted
to request and receive (subject to the satisfaction of any
applicable condition precedent therefor) International Swing Line
Loans from the International Swing Line Banks in an aggregate
amount such that the aggregate Dollar Equivalent Amount of the
principal of all International Swing Line Outstandings after
giving effect to such borrowing shall not exceed the combined
International Swing Line Commitments of the International Swing
Line Banks, all on the terms and conditions provided in the
International Swing Line Agreements.
5. Amendment of February Waiver Letter Agreement.
Subject to the terms and conditions set forth herein, Section 9
of the February Waiver Letter Agreement is hereby amended by
adding the phrase "with respect to any Net Proceeds received on
or before October 31, 1999," immediately before the phrase "60%
of the first $200,000,000 of Net Proceeds, 80% of the next
$200,000,000 of Net Proceeds and 90% of any additional Net
Proceeds", and adding the following phrase immediately
thereafter: ", and with respect to any Net Proceeds received
after October 31, 1999, 80% of the amount of Net Proceeds so
received after October 31, 1999 up to the excess of (a)
$400,000,000 over (b) the aggregate amount of Net Proceeds which
was received on or before October 31, 1999 and 90% of any
additional Net Proceeds so received after October 31, 1999".
6. DSI Sale. The Danka Parties hereby agree to use
their best efforts to close a sale (the "DSI Sale") of the assets
or equity of the division(s) or business unit(s) of the Companies
commonly referred to as of the date hereof as "DSI" at a price
not less than their fair market value and on commercially
reasonable sales terms (it being understood that, as provided in
the Credit Agreement, the DSI Sale will require the prior written
consent of the Majority Banks).
7. DigiSource Financing.
(a) Notwithstanding any provision to the contrary
in the Loan Documents, including, without limitation, Section
8.2, Section 8.10 and Section 8.13 of the Credit Agreement and
Section 14 of the February Waiver Letter Agreement, the Companies
may (i) incur additional Indebtedness in an aggregate principal
amount not in excess of $40,000,000 at any one time outstanding
to finance on commercially reasonable terms the purchase,
marketing, sale and holding in inventory (but not the
development) of that product commonly referred to as the "Kodak
DigiSource 9110" or any substantially similar digital high volume
product (whether manufactured by the same or a different
company), and all related components, parts, accessories,
consumables and supplies (the "DigiSource Products"), (ii) grant
or create, or provide for the granting, imposition or retention
of, a Lien on any DigiSource Products and any proceeds of the
sale or other disposition thereof in favor of the seller,
distributor or any third party financing entity, in each case
providing the financing referred to in clause (i) above, or any
successor or assign thereof (collectively, the "DigiSource
Secured Party"), (iii) enter into an agreement not to permit any
Lien on the DigiSource Products in favor of any other Person,
including any of the Banks, and (iv) execute, deliver or file
financing statements with respect to the DigiSource Products to
perfect, or otherwise perfect, any Lien in favor of any
DigiSource Secured Party.
(b) The Companies hereby agree that they will deliver
to the Agent by facsimile transmission no less frequently than
once a week, a certificate with respect to any Indebtedness or
Lien incurred or created as permitted by clause (a) above, which
certificate shall:
(i) specify the dollar amount of such
Indebtedness outstanding as of the date of such certificate;
(ii) provide each serial number (in the case of
DigiSource Products having serial numbers) and such other
information requested by the Agent sufficient to identify (in the
case of all other DigiSource Products) each applicable DigiSource
Product;
(iii) indicate the location of each
applicable DigiSource Product as of the date of the certificate;
and
(iv) have attached thereto a copy of any
uniform commercial code financing statement which has been filed
with respect to such Indebtedness or Lien.
(c) The Banks agree that no Lien in favor of the
Secured Parties under (and as defined in) the Security Agreement
or other Loan Documents shall attach to or otherwise encumber the
DigiSource Products financed as described in clause (a) above or
the proceeds thereof and the Agent, on behalf of the Secured
Parties, shall execute and deliver any document, agreement or
other instrument and provide any acknowledgment reasonably
requested by the Companies or the DigiSource Secured Party to
provide assurances that the Secured Parties have or assert no
such Lien.
(d) The Companies agree that any Lien granted to
the DigiSource Secured Party shall extend only to the DigiSource
Products being financed by such DigiSource Secured Party and any
proceeds thereof and not to any other assets of the Companies.
8. Acknowledgment; Release.
(a) The Companies and the Grantors acknowledge
that they have no existing defense, counterclaim, offset,
cross-complaint, claim or demand of any kind or nature whatsoever
that can be asserted to reduce or eliminate all or any part of
any of their respective liability to pay the full indebtedness
outstanding under the terms of the Credit Agreement and any other
documents which evidence, guaranty or secure the Obligations.
The Companies and the Grantors hereby release and forever
discharge the Agent, the International Swing Line Banks, the
Banks and all of their officers, directors, employees, attorneys,
consultants and agents from any and all actions, causes of
action, debts, dues, claims, demands, liabilities and obligations
of every kind and nature, both in law and in equity, known or
unknown, whether matured or unmatured, absolute or contingent.
(b) The International Swing Line Borrowers
acknowledge that they have no existing defense, counterclaim,
offset, cross-complaint, claim or demand or any kind or nature
whatsoever that can be asserted to reduce or eliminate all or any
part of their respective liability to pay the full indebtedness
owed by any of them under the terms of the International Swing
Line Agreement or any separate facility which has been made
available to any of them by any International Swing Line Bank or
a Designated Local Lender (as defined in the International Swing
Line Agreement) and any agreements related thereto. The
International Swing Line Borrowers hereby release and forever
discharge the Agent, the International Swing Line Banks and the
Designated Local Lenders (as defined in the International Swing
Line Agreement) and all of their officers, directors, employees,
attorneys, consultants and agents from any and all actions,
causes of action, debts, dues, claims, demands, liabilities and
obligations of every kind and nature, both in law and in equity,
known or unknown, whether matured or unmatured, absolute or
contingent.
9. Waiver Extension Fees; Expenses. Upon the
effectiveness of this Sixth Amendment, the Banks shall have fully
earned and become entitled to receive a waiver extension fee in
an aggregate amount equal to $10,000,000, such fee to be paid by
the Danka Parties to the Agent for distribution to the Banks on
the earliest of (a) July 31, 2000, (b) the date on which the
Companies shall have paid all Obligations in full and shall have
terminated all Revolving Loan Commitments and Term Loan
Commitments of the Banks and all International Swing Line
Commitments of the International Swing Line Banks, and (c) the
date of the closing of the DSI Sale. In addition, in the event
that at any of the following dates the Companies shall not have
paid all Obligations in full and terminated all Revolving Loan
Commitments and Term Loan Commitments of the Banks and all
International Swing Line Commitments of the International Swing
Line Banks, the Danka Parties shall pay to the Agent for
distribution to the Banks a waiver extension fee calculated as
follows: (i) on October 31, 1999, equal to 1/4% of the Banks'
aggregate Commitments and International Swing Line Commitments
then in effect, (ii) on December 31, 1999, equal to 1/2% of the
Banks' aggregate Commitments and International Swing Line
Commitments then in effect and (iii) on March 31, 2000, equal to
1% of the Banks' aggregate Commitments and International Swing
Line Commitments then in effect. The Danka Parties shall pay to
ABN AMRO Bank N.V., on the effectiveness of this Sixth Amendment,
a facility fee in the amount of $50,000 for the period August 1,
1999 through July 31, 2000 in lieu of the fee provided in Section
2.9 of the International Swing Line Agreement. The Danka Parties
agree promptly to pay or reimburse the members of the Steering
Committee of Banks for such members' reasonable expenses
(including the reasonable fees and expenses of outside counsel
for each member of the Steering Committee) incurred in connection
with the Credit Agreement and the other Loan Documents.
10. Effectiveness; Extension of Waiver. This Sixth
Amendment shall become effective as of July 9, 1999 upon (a)
receipt by the Agent of an executed copy of this Sixth Amendment
(which may be signed in counterparts and may be received by
facsimile transmission) signed by the Danka Parties and the
Majority Banks and (b) receipt by the Danka Parties (with a copy
to the Agent) of a duly executed waiver effective for the entire
Waiver Term, (i) of all violations of the financial covenants
incorporated into the tax retention operating lease documents to
which certain of the Danka Parties are party, (ii) granting all
consents to the sale of the Omnifax division of Danka Office
Imaging Company referred to in Section 8.8(d) of the Credit
Agreement required to be obtained from the parties to such lease
documents, and (iii) waiving any required principal payments
under such lease documents during the Waiver Term (other than
certain cash collateralization payments required by such lease
documents upon the aforesaid sale of the Omnifax division or the
DSI Sale or upon any other sale of assets by the Danka Parties
(including, without limitation, any sale of collateral securing
obligations under such lease documents), and other than any
payments required by such lease documents on or after the date on
which the Companies shall have paid all Obligations in full and
shall have terminated all Revolving Loan Commitments and Term
Loan Commitments of the Banks and all International Swing Line
Commitments of the International Swing Line Banks). The waiver
of the enforcement of the financial covenants contained in
Section 8.3 of the Credit Agreement, as provided in the Waiver
Letter Agreements, shall continue in effect throughout the Waiver
Term; provided, however, that, notwithstanding the foregoing such
waiver shall not impair the effectiveness of the provisions of
this Sixth Amendment, including, without limitation, Section 3(c)
and (d) hereof, and the provisions of Section 8.3 of the Credit
Agreement modified or added hereby shall, as so modified or
added, be in full force and effect during the Waiver Term (and
the provisions of Section 7.1(c) of the Credit Agreement shall be
applicable thereto). The "Waiver Term" shall be the period
commencing upon the effectiveness of this Sixth Amendment and
ending on July 31, 2000. The provisions of Sections 8 and 12 of
the February Waiver Letter Agreement shall continue in effect
during the Waiver Term as if the phrase "Waiver Period" used
therein was replaced with the phrase "Waiver Term" as defined
herein.
11. Entire Agreement. This Sixth Amendment sets forth
the entire understanding and agreement of the parties hereto in
relation to the subject matter hereof and supersedes any prior
negotiations and agreements among the parties relative to such
subject matter.
12. Deemed Amendment of Other Loan Documents; Full
Force and Effect. To the extent necessary to give effect to the
provisions hereof, the International Swing Line Agreement and
Security Agreement shall be deemed amended and supplemented by
the terms hereof. Except as hereby specifically amended,
modified or supplemented, the Credit Agreement and all other Loan
Documents are hereby confirmed and ratified in all respects and
shall remain in full force and effect according to their
respective terms.
13. Counterparts. This Sixth Amendment may be
executed in any number of counterparts (including, without
limitation, counterparts sent by facsimile transmission), each of
which shall be deemed an original as against any party whose
signature appears thereon, and all of which shall together
constitute one and the same instrument.
14. Governing Law. This Sixth Amendment shall in all
respects be governed by the laws and judicial decisions of the
State of Florida.
15. Enforceability. Should any one or more of the
provisions of this Sixth Amendment be determined to be illegal or
unenforceable as to one or more of the parties hereto, all other
provisions nevertheless shall remain effective and binding on the
parties hereto.
16. Authorization. This Sixth Amendment (including
the provisions of Exhibit A and Schedule I hereto) has been duly
authorized, executed and delivered by the parties hereto and
constitutes a legal, valid and binding obligation of the parties
hereto, except as may be limited by general principles of equity
or by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors'
rights generally.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
WITNESS: DANKA BUSINESS SYSTEMS PLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
DANKA HOLDING COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
DANKALUX SARL & CO. SCA
BY: DANKALUX SARL, COMMANDITE
By:_____________________________________
Name:___________________________________
Title:__________________________________
AMERICAN BUSINESS CREDIT CORPORATION
AMERITREND CORPORATION
CORPORATE CONSULTING GROUP, INC.
D.I. INVESTMENT MANAGEMENT, INC.
DANKA IMAGING DISTRIBUTION, INC.
DANKA MANAGEMENT COMPANY, INC.
DANKA OFFICE IMAGING COMPANY
DYNAMIC BUSINESS SYSTEMS, INC.
HERMAN ENTERPRISES, INC. OF SOUTH FLORIDA
By:_____________________________________
Name:___________________________________
Title:__________________________________
QUALITY BUSINESS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
INTERNATIONAL SWINGLINE BORROWERS
DANKA CHILE COMERCIAL LTDA
DANKA DO BRASIL LIMITADA
DANKA MEXICANA S DE RL DE CV
DANKA DE PANAMA S.A.
DANKA DE COLOMBIA
PUERTO RICO DANKA INC.
DANKA DE VENEZUELA S.A.
DANKA AUSTRALIA PTY LIMITED &
DANKA NEW ZEALAND LIMITED
DANKA OFFICE IMAGING (JAPAN)
DANKA PHILIPPINES INC.
DANKA FRANCE S.A.R.L.
DANKA FRANCE SA
DANKA OFFICE PRODUCTS B.V.
DANKA OFFICE IMAGING GMBH,
DANKA DEUTSCHLAND GMBH,
DANKA DISTRIBUTION GMBH,
DANKA DEUTSCHLAND HOLDING GMBH
DANKA OFFICE PRODUCTS B.V.
DANKA ITALIA S.P.A., BASSILLICHI INFOTEC
S.P.A., DANKA S.P.A. & DANKA OFFICE
IMAGING S.P.A.
DANKA HOLDINGS BV, DANKA EUROPE BV,
DANKA DISTRIBUTION BV (FKA INFOTEC
EUROPE BV), INFOTEC NEDERLAND BV,
DANKA GROUP BV, DANKA SERVICES
INTERNATIONAL BV, DANKA OFFICE
PRODUCTS BV, INFOTEC PARTICIPATIE BV,
AND DANKA NEDERLAND BV
DANKA OFFICE PRODUCTS BV
DANKA BUSINESS SYSTEMS PLC,
DANKALUX SARL & CO. SCA &
DANKA HOLDING COMPANY
By:_____________________________
Name: F. Mark Wolfinger
Title: Director
BANK OF AMERICA, NATIONAL ASSOCIATION.
(formerly known as NationsBank, N.A.), as
Agent and Issuing Bank
By:____________________________________
Name:__________________________________
Title:_________________________________
BANK OF AMERICA, NATIONAL ASSOCIATION
(formerly known as NationsBank, N.A.), as
a Bank (Trade)
By:__________________________________
Name:________________________________
Title:_______________________________
BANK OF AMERICA, NATIONAL ASSOCIATION
(formerly known as NationsBank, N.A.), as
a Bank
By:__________________________________
Name:________________________________
Title:_______________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as International
Swing Line Bank
By:__________________________________
Name:________________________________
Title:_______________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:__________________________________
Name:________________________________
Title:_______________________________
THE BANK OF NOVA SCOTIA
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
THE BANK OF NEW YORK
By:__________________________________
Name:________________________________
Title:_______________________________
CREDIT LYONNAIS NEW YORK BRANCH
By:__________________________________
Name:________________________________
Title:_______________________________
CIBC, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
PNC BANK, KENTUCKY, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
FIRST UNION NATIONAL BANK
By:__________________________________
Name:________________________________
Title:_______________________________
SUN TRUST BANK, TAMPA BAY
By:__________________________________
Name:________________________________
Title:_______________________________
THE FUJI BANK AND TRUST COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
ABN AMRO BANK N.V.
By:__________________________________
Name:________________________________
Title:_______________________________
PARIBAS
By:__________________________________
Name:________________________________
Title:_______________________________
DEUTSCHE BANK AG
New York Branch and/or Cayman Island
Branch
By:__________________________________
Name:________________________________
Title:_______________________________
HIBERNIA NATIONAL BANK
By:__________________________________
Name:________________________________
Title:_______________________________
SAN PAOLO IMI SPA
By:__________________________________
Name:________________________________
Title:_______________________________
LLOYDS BANK PLC
By:__________________________________
Name:________________________________
Title:_______________________________
THE SUMITOMO BANK, LIMITED
By:__________________________________
Name:________________________________
Title:_______________________________
BANCA COMMERCIALE ITALIANA
New York Branch
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
AMSOUTH BANK OF FLORIDA
By:__________________________________
Name:________________________________
Title:_______________________________
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
BANKERS TRUST COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
THE DAI-ICHI KANGYO BANK, LIMITED
By:__________________________________
Name:________________________________
Title:_______________________________
NATIONAL AUSTRALIA BANK LIMITED
ACN 004044937
By:__________________________________
Name:________________________________
Title:_______________________________
SANWA BANK LIMITED
By:__________________________________
Name:________________________________
Title:_______________________________
THE TOKAI BANK LIMITED, NEW YORK BRANCH
By:__________________________________
Name:________________________________
Title:_______________________________
WACHOVIA BANK OF GEORGIA, N.A.
By:__________________________________
Name:________________________________
Title:_______________________________
NATIONAL WESTMINSTER BANK PLC
By:__________________________________
Name:________________________________
Title:_______________________________
BANCA NAZIONALE DEL LAVORO S.p.A. -
LONDON BRANCH
By:__________________________________
Name:________________________________
Title:_______________________________
CREDIT AGRICOLE INDOSUEZ
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
STATE STREET BANK AND TRUST COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
THE CHASE MANHATTAN BANK
By:__________________________________
Name:________________________________
Title:_______________________________
LAZARD BROTHERS & CO., LIMITED
By:_____________________________________
Name:___________________________________
Title:__________________________________
SOUTHTRUST BANK, N.A.
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
SCHEDULE I
LEVERAGE FEE
Period
(Dates Inclusive) LEVERAGE FEE (in bps)
Average Outstandings Average Outstandings
>= $650MM < $650MM
07/01/99 through 09/30/99 25 0
10/01/99 through 12/31/99 75 25
01/01/00 through 03/31/00 125 50
04/01/00 through 07/31/00 150 75
[NATIONSBANK LETTERHEAD]
July 9, 1999
Danka Holding Company
11201 Danka Circle North
St. Petersburg, Florida
Re: Participation Agreement dated as of November 15, 1995,
as amended (the Participation Agreement") among Danka
Holding Company, as Construction Agent ("Holding"),
Holding, as Lessee, First Security Bank N.A, as owner
trustee (the "Owner Trustee"), NationsBank, N.A, as a
Holder (the "Holder"), Bank of America, N.A. f/k/a
NationsBank N.A., as Administrative Agent and SunTrust
Bank, Tampa Bay, as Co-Agent. Capitalized terms
contained herein and not otherwise defined shall have
the meaning set forth in the Participation Agreement.
Ladies and Gentlemen:
Bank of America, N.A. f/k/a NationsBank, N.A., as Administrative
Agent under the Participation Agreement and Credit Agreement has
received the waiver for the period from the date hereof through
July 31, 2000 by the Majority Lenders of certain amendments to
Article VIII of that certain Credit Agreement dated as of
December 5, 1996, as amended, among Danka Business Systems PLC,
Dankalux Sarl & Co. SCA, Danka Holding Company, Bank of America,
N.A. f/k/a NationsBank, N.A as Agent and the Lenders party
thereto and the waiver of any adverse effect resulting therefrom,
subject to the terms and conditions set forth in the letter dated
July 9, 1999, from you, a copy of which is attached hereto.
BANK OF AMERICA, N.A. f/k/a
NATIONSBANK, N.A., as Administrative Agent
By:_________________________________
DeWitt W. King, III
Senior Vice President
July 9, 1999
Bank of America, N.A. f/k/a NationsBank,
National Association, as Agent
101 North Tryon Street, NC1-001-15-04
Charlotte, North Carolina 28255
Re: Participation Agreement dated as of November 15, 1995,
as amended (the "Participation Agreement") among Danka
Holding Company, as Construction Agent ("Holding"),
Holding, as Lessee, First Security Bank, N.A., as owner
trustee (the "Owner Trustee"), Bank of America, N.A.
f/k/a NationsBank, N.A., as a Holder (the "Holder"),
Bank of America, N.A. f/k/a NationsBank, N.A., as
Administrative Agent and SunTrust Bank, Tampa Bay, as
Co-Agent.
Ladies and Gentlemen:
Pursuant to the Participation Agreement and a Credit
Agreement dated as of November 15, 1995, as amended (the "Credit
Agreement") among the Owner Trustee, the several lenders party
thereto (the "Lenders"), the Administrative Agent and the
Co-Agent, the Lenders and the Holder agreed to make loans and
Holder Advances to the Owner Trustee which would be used to
acquire land and make improvements thereon, which land and
improvements are leased to Holding pursuant to a Lease Agreement,
dated as of November 15, 1995, as amended (the "Lease Agreement")
between the Owner Trustee and Holding. Capitalized terms used
herein without definition shall have the meaning set forth in the
Participation Agreement and the Credit Agreement.
Section 28.1(a) of the Lease Agreement incorporates by
reference various covenants contained in Article VII and Article
VIII of that certain Credit Agreement dated as of December 5,
1996, as amended or otherwise modified by waiver agreement (the
"Existing Danka Credit Agreement") among Danka Business Systems
PLC ("Danka PLC"), Dankalux Sarl & Co. SCA, Holding, the
financial institutions party thereto and Bank of America, N.A.
f/k/a NationsBank, N.A., as agent and prohibits the waiver of
compliance with, or any amendments to, such incorporated
covenants without the written consent of the Majority Lenders.
Holding hereby requests that the Agent seek the written consent
of the Majority Lenders to certain amendments to Article VIII of
the Existing Danka Credit Agreement and a waiver of any adverse
effect resulting thereby, such waiver to be effective as of July
9, 1999, and for a period from July 9, 1999, through July 31,
2000 (the "Waiver Period").
Holding acknowledges and agrees that the consent of the
Lenders, Owner Trustee, Holder, Administrative Agent and Co-Agent
to such waiver shall be subject to the following terms and
conditions.
1. During the Waiver Period, the "Applicable Margin" shall be
as follows: 2.35% from the date hereof through September 30,
1999; 2.85% from October 1, 1999, through December 31, 1999;
3.35% from January 1, 2000, through March 31, 2000; and 3.60%
from April 1, 2000, through July 31, 2000. However, if during
the Waiver Period, Holding sells the Roosevelt Corporate Center
III located in St. Petersburg, Florida, and pays the Termination
Value associated with the Project (the "Project"), the Applicable
Margin will be fixed for the remainder of the Waiver Period at
the rate applicable when the Termination Value is paid after a
sale of the Project. The Applicable Margin shall be applicable
to all Eurodollar Loans and shall also be added to the Base Rate
for all Base Rate Loans during the Waiver Period.
2. Holding shall furnish to the Administrative Agent, the
Lenders and the Holder as soon as practicable but in any event
within thirty (30) days of the end of each calendar month,
commencing with the calendar month ending June 30, 1999, the
monthly consolidated balance sheet and consolidated statements of
earnings and cash flow of Danka PLC and its Subsidiaries,
certified in writing by any representative authorized to provide
the certification required by Section 7.1(c) of the Credit
Agreement to have been prepared in accordance with GAAP in a
manner consistent with past practices of Danka PLC, and to the
best knowledge of such signatory to be true, correct, and
complete in all material respects, subject to routine audit
adjustments.
3. During the Waiver Period (i) Danka PLC shall not pay any
dividends or make any distributions, (ii) neither Danka PLC nor
any of its Subsidiaries shall make any Acquisitions, and (iii)
neither Danka PLC nor any of its Subsidiaries will make any
Investments except as otherwise agreed to by the Banks under the
Existing Danka Credit Agreement.
4. Holding shall deposit with the Administrative Agent 5% of
the first $200,000,000.00 in "Net Proceeds" that are payable to
Holding or any subsidiary or affiliate of Holding (collectively,
a "Danka Party") from the sale of any Danka Party (including, but
not limited to those divisions or subsidiaries commonly known as
"Omnifax," "DSI," and "International") or any of their capital
assets as collateral for the Loan and up to 2% of any "Net
Proceeds" that are payable to any Danka Party of subsequent sales
of any Danka Party (including, but not limited to those divisions
or subsidiaries commonly known as "Omnifax," "DSI," and
"International") or any of their capital assets (collectively the
"Sale Proceeds") up to a maximum pledge amount of $15,000,000.00.
The term "Net Proceeds" shall have the meaning as defined in the
Existing Danka Credit Agreement prior to (and Net Proceeds shall
include) any payments contemplated or required by any previous or
subsequent amendment to the Existing Danka Credit Agreement or
any amendment to any security (or similar) agreement related to
the Existing Danka Credit Agreement. Such Net Proceeds shall be
held in a cash collateral account bearing interest at a market
rate at the Administrative Agent and shall be pledged as
additional collateral for the Loan. To the extent that any
assets of a Danka Party are sold and Sale Proceeds are used to
reduce the principal balance of the Loan in accordance with the
Lease Agreement, the maximum pledge amount described by this
paragraph shall be reduced by an amount that is equal to the
percentage of principal reduction on the Loan. For example, if
the principal amount of the Loan is reduced from $50,000,000.00
to $45,000,000.00, the amount of the maximum pledge amount
pursuant to this paragraph shall be reduced from $15,000,000.00
to $13,500,000.00.
5. The amount of funds that can be advanced under the Credit
Agreement with respect to the Project shall be limited to
$200,000.00. Any advances over the $200,000 previously mentioned
with respect to the Project shall be at the sole discretion of
the Lenders.
6. The Commitments of Lenders have been reduced from
$58,200,000.00 to $51,000,000.00 pursuant to a waiver letter
agreement dated February 25, 1999, which letter was accepted by
Administrative Agent on February 26, 1999 (the "February 1999
Waiver Letter").
7. Holding agrees that all amounts outstanding under the Loan
shall be due and payable on the Original Maturity Date or the
date on which all amounts outstanding under the Existing Danka
Credit Agreement are paid in full, whichever occurs first and the
Lenders hereby consent to such prepayment of such amounts.
8. In addition to the provisions of Section 4 hereof, Holding
shall pay to Holder an amount equal to the Termination Value with
respect to such property for any property to be released from the
Operative Documents and Holder, Lenders and Administrative Agent
consent to the release of such property and payment of the
Termination Value upon such release notwithstanding any other
requirements of the Operative Documents. For purposes of this
waiver letter, "Termination Value" shall mean the amount funded
by Lenders against such property or properties being released
plus a pro rata share of all other costs advanced by Lenders for
such property or properties being released.
9. Holding will pay all reasonable legal, inspector and
appraisal costs of each Lender and all travel costs and expenses
of each Lender in connection herewith.
10. Upon the execution of this letter, Holding shall pay to the
Administrative Agent for the benefit of the Lenders and Holder a
waiver fee of $127,500.00. In addition, Holding shall pay to the
Administrative Agent for the benefit of the Lenders and Holding
additional waiver fees calculated as follows: (a) on October 31,
1999, a waiver fee equal to one-quarter percent (0.25%) of the
Commitments on such date; (b) on December 31, 1999, a waiver fee
equal to one-half percent (0.50%) of the Commitments on such
date, and (c) on March 31, 2000, a waiver fee equal to one
percent (1.0%) of the Commitments on such date.
11. Holding shall at its expense, permit and fully cooperate
with the Administrative Agent and its representatives in a review
and evaluation of all assets of Holding and its Subsidiaries
located in the United States.
12. Holding acknowledges and agrees that it has no existing
defense, counterclaim, offset, claim or demand in respect of the
transaction described herein and hereby releases the Lenders,
Owner Trustee, Holder, Administrative Agent and Co-Agent from any
claims, causes of action or other liabilities arising in
connection with this transaction. Holding further acknowledges
and agrees that the total amount of principal indebtedness
(including Loans and Holder Advances), outstanding in connection
with the tax retention operating lease financing is
$51,300,106.32.
13. Holding shall cooperate fully with Lender and the
Administrative Agent in their efforts to examine, evaluate, or
appraise the Properties, including providing reasonable access to
the Properties, plans, specifications, construction papers,
contractors, subcontractors, books and records relating to the
Properties.
14. Holding shall deliver to the Administrative Agent a
marketing plan within 30 days of the date hereof which delineates
any proposed marketing of and each listing agreement related to
the Project by Holding. Holding shall then use its best efforts
to implement such marketing plan and to sell the Project in
accordance with such marketing plan to reduce the principal
balance of the Loan. Holding shall deliver to Administrative
Agent on a monthly basis, a report in a form acceptable to
Administrative Agent, which report details the status of the
marketing efforts concerning the Project.
15. Holding shall deliver to the Administrative Agent prior to
any request for advance, a schedule of proposed additional draws
during the Waiver Period which schedule shall be acceptable to
the Administrative Agent and Majority Lenders, in their sole
discretion, and at the time of any such subsequent advance the
Administrative Agent shall have received all documents required
by Credit Agreement and Operative Agreements, including a draw
request and a progress report for all Properties then under
construction, which draw request and progress payments shall be
acceptable to the Administrative Agent and Majority Lenders.
16. Within five Business Days of the date hereof, all domestic
subsidiaries of Holding which have guaranteed payment of
indebtedness under the Existing Danka Credit Agreement and have
not delivered a guaranty of payment of obligations of Holding
under the Lease Agreement, shall deliver a guaranty.
17. Holding has not entered and shall not enter into any further
sublease of any of the Properties to any Person other than a
Danka Party, except that Holding may sublease to Xerox
Corporation the property located at 9715 Burnet Road, Austin,
Texas (the "Austin Property") for a term not to extend beyond
July 31, 2001. If Holder subleases the Austin Property to Xerox
Corporation, Holder shall promptly assign its rights under the
sublease as additional collateral for the Loan under terms
acceptable to Lenders. Holding shall not be entitled to
substitute any new Properties for any existing Properties
18. Holding agrees to use its best efforts to close a sale (the
"DSI Sale") of the assets or equity of the division(s) or
business unit(s) of the companies affiliated with Holding and
commonly referred to as of the date hereof as "DSI" at a price
not less than their fair market value and on commercially
reasonable sale terms.
19. Upon the effectiveness of this document, the Lenders shall
have fully earned and become entitled to receive a waiver fee in
the amount of $510,000.00, such fee to be paid by Holding to the
Administrative Agent for distribution to the Lenders on the
earliest of (a) July 31, 2000, (b) the date on which all amounts
outstanding under the Loan shall be paid in full and the
Commitments of Lenders have terminated, or (c) the date of the
closing of the DSI Sale. The waiver fee required by this
paragraph is in addition to the waiver fees required by paragraph
10 above.
20. The provisions of this document supersede any provisions of
the Credit Agreement, the Participation Agreement or any Other
Operative Agreement to the extent they are inconsistent. The
terms of this document supersede and replace any prior waiver
letters from Holding to the Lenders, including, but not limited
to, the waiver letter dated February 25, 1999, that was accepted
by Administrative Agent on February 26, 1999, and all such prior
wavier letters shall no longer be in force or effect.
21. This document extends to the amendments to Article VIII of
the Existing Danka Credit Agreement that are evidenced by the
Sixth Amendment to Credit Agreement dated as of July 9, 1999 (the
"Sixth Amendment"), and does not extend to any other future
amendments, modifications or waivers of any of the provisions of
Article VIII of the Existing Danka Credit Agreement, the Credit
Agreement or the Lease Agreement.
22. This document shall become effective as of the date hereof
upon (a) receipt by the Administrative Agent of an executed copy
of this document (which may be signed in counterparts and may be
received by facsimile transmission) signed by Holding and the
undersigned Guarantors, (b) receipt by Administrative Agent of a
copy of the fully executed Sixth Amendment, (c) the payment by
Holding to Administrative Agent of the waiver fee of $127,500.00
required by paragraph 10 hereof, and (d) Holding shall have
executed the Assignment of Deposit Account concerning the cash
collateral that is required by paragraph 4 hereof, Holding shall
have executed a UCC-1 Financing Statement concerning such
account, and Holding shall deposit $135,000.00 in such account
arising from the sale of Ulysses _________.
Holding further acknowledges and agrees that any breach
during the Waiver Period in the timely performance, observance,
or fulfillment of any of the terms or conditions stated above
shall constitute an Event of Default under the Lease Agreement
and unless the Majority Lenders shall otherwise agree in writing,
shall terminate the effectiveness of any waiver obtained by the
Administrative Agent from the Lenders pursuant to this request.
Holding further acknowledges and agrees that nothing contained
herein is intended to or shall limit any of the provisions of the
Participation Agreement, Lease Agreement or any Operative
Agreement as currently in effect, except as expressly stated
herein and except that, should the Administrative Agent obtain
the consent of the Majority Lenders to the amendments to Article
VIII of the Existing Danka Credit Agreement requested hereby, the
enforcement of such provisions shall be waived during the Waiver
Period as well as any adverse effect resulting therefrom subject
to full and timely compliance with the terms and conditions of
such waiver stated above.
Very truly yours,
DANKA HOLDING COMPANY
By:_____________________________
Name:___________________________
Title:__________________________
The undersigned Guarantors hereby consent to the foregoing and
hereby confirm their guaranty of payment of obligations arising
under the tax retention operating lease transaction.
AMERICAN BUSINESS CREDIT
CORPORATION
AMERITREND CORPORATION
CORPORATE CONSULTING GROUP, INC.
D.I. INVESTMENT MANAGEMENT, INC.
DANKA IMAGING DISTRIBUTION, INC.
DANKA MANAGEMENT COMPANY, INC.
DANKA OFFICE IMAGING COMPANY
(successor by merger to Danka
Corporation)
DANKA PLC
KIS IMAGING SERVICES, INC.
By:_____________________________
Name:___________________________
Title:__________________________
DANKA BUSINESS SYSTEMS PLC
By:_____________________________
Name:___________________________
Title:__________________________
