PSC INC.
PSC SCANNING, INC.
675 Basket Road
Webster, New York 14580
As of March 31, 2000
JOHN HANCOCK LIFE INSURANCE COMPANY (formerly
John Hancock Mutual Life Insurance Company)
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
200 Clarendon Street
Boston, Massachusetts 02117
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
LINCOLN NATIONAL INCOME FUND, INC.
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Ft. Wayne, Indiana 46802
SECURITY-CONNECTICUT LIFE INSURANCE COMPANY
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South
Suite 800
Minneapolis, Minnesota 55401
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
c/o Alliance Capital Management L.P.
1345 Avenue of the Americas, 37th Floor
New York, New York 10105
Re: Amendment No. 6 and Consent and Waiver Under Securities Purchase
Agreements
Ladies and Gentlemen:
PSC INC., a New York corporation (the "Holding Company"), and PSC SCANNING,
INC., a Delaware corporation (formerly named SpectraScan, Inc.) and a
Wholly-Owned Subsidiary of the Holding Company (the "Operating Company") (the
Holding Company and the Operating Company are sometimes collectively referred to
herein as the "Companies" and each as a "Company"), jointly and severally agree
with you as follows:
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1. Definitions; Background.
(a) Reference is hereby made to those certain Securities Purchase
Agreements dated July 12, 1996, as amended, modified and supplemented by
(i) Amendment No. 1 to Securities Purchase Agreements dated October 10,
1996, (ii) Amendment No. 2 and Waivers Under Securities Purchase Agreements
dated as of July 4, 1997, (iii) Amendment No. 3 to Securities Purchase
Agreements and Warrants dated August 18, 1997, (iv) Consent and Waiver
Under Securities Purchase Agreements and Warrants dated December 29, 1997,
(v) Amendment No. 4, Consent and Waiver Under Securities Purchase
Agreements dated March 1, 1999, (vi) Amendment No. 5 and Consent Under
Securities Purchase Agreements dated December 20, 1999 and (vii) Consent
Under Securities Purchase Agreements dated January 19, 2000 (as the same
may be amended, modified or supplemented from time to time, the "Securities
Purchase Agreements"), among the Holding Company, the Operating Company and
each of you. Capitalized terms used herein without definition have the
meanings ascribed to them in the Securities Purchase Agreements.
(b) The Companies have requested that,among other things, the holders
of the Securities issued pursuant to the Securities Purchase Agreements (i)
amend the financial covenants contained in the Securities Purchase
Agreements and (ii) consent to the proposed sale leaseback transaction of
certain facilities of the Operating Company located in Webster, New York
and, upon and subject to the terms and conditions hereof, such holders by
their execution hereof agree to the same.
2. Amendments to the Securities Purchase Agreements.
(a) Section 10.1 of the Securities Purchase Agreements (Certain
Definitions) is hereby amended to revise the definition of "Superior
Indebtedness" appearing therein by (i) deleting the figure "$84,000,000"
appearing therein and inserting the figure "$78,750,000" in place thereof
and (ii) deleting the figure "$21,000,000" appearing therein and inserting
the figure "$52,500,000" in place thereof.
(b) Section 14.6(a) of the Securities Purchase Agreements (Limitation
on Restricted Payments; Payments on Seller Notes) is hereby amended to read
in its entirety as follows:
"(a) Neither Company will, and neither Company will permit any of
their respective Subsidiaries to, directly or indirectly, make or
commit to make any Restricted Payment; provided that the Holding
Company may acquire shares of Common Stock for an aggregate purchase
price not to exceed $12,000,000 if, both at the time of each such
purchase and immediately after giving effect
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thereto, (i) Consolidated Net Worth shall be not less than $44,000,000
and (ii) no Default or Event of Default shall have occurred and be
continuing."
(c) Section 14.7 of the Securities Purchase Agreements (Certain
Financial Covenants) is hereby amended to read in its entirety as follows:
"14.7. Certain Financial Covenants. The Companies will, and will cause
their respective Subsidiaries to:
(a) Fixed Charge Coverage Ratio. Maintain at the end of each
fiscal quarter of the Holding Company specified below in this section
14.7(a) a Fixed Charge Coverage Ratio of not less than the ratio set
forth below for such period:
Four Fiscal Quarters Ending Ratio
--------------------------- -----
3/31/00 1.05 to 1.00
6/30/00 1.05 to 1.00
9/30/00 1.05 to 1.00
12/31/00 1.05 to 1.00
3/31/01 and the last day of
each fiscal quarter thereafter 1.15 to 1.00
(b) Adjusted Consolidated Indebtedness Ratio. Maintain at the end
of each fiscal quarter of the Holding Company specified below in this
section 14.7(b) an Adjusted Consolidated Indebtedness Ratio for such
date of not more than the ratio set forth below for such period:
Four Fiscal Quarters Ending Ratio
--------------------------- -----
3/31/00 4.25 to 1.00
6/30/00 4.75 to 1.00
9/30/00 4.50 to 1.00
12/31/00 4.25 to 1.00
3/31/01 and the last day of
each fiscal quarter thereafter 3.75 to 1.00
(c) Senior Debt to Adjusted EBITDA Ratio. Maintain at the end of
each fiscal quarter of the Holding Company specified below in this
section 14.7(c) a ratio of (i) Consolidated Senior Debt outstanding on
the last day of such fiscal quarter (provided that the portion of
Consolidated Senior Debt constituting Working Capital Advances
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(as defined in the Bank Credit Agreement) shall be deemed, for the
purpose of this calculation, to be an amount equal to the average
principal amount thereof outstanding on such day and on the last day
of the then most recently-completed fiscal quarter) to (ii)
Consolidated Adjusted EBITDA for the most recently completed four
fiscal quarters of the Holding Company, plus (x) the Quarterly
Provisional Charges for Disputed Royalty expensed during each fiscal
quarter in such four fiscal quarter period, less (y) the Normalized
Quarterly Provisional Charges for Disputed Royalty in respect of such
four fiscal quarter period, of not more than the ratio set forth below
for such period:
Four Fiscal Quarters Ending Ratio
--------------------------- -----
3/31/00 3.25 to 1.00
6/30/00 3.60 to 1.00
9/30/00 3.40 to 1.00
12/31/00 3.00 to 1.00
3/31/01 and the last day of
each fiscal quarter thereafter 2.50 to 1.00
(d) Net Worth. Maintain at all times an excess of Consolidated
Total Assets over Consolidated Total Liabilities of not less than the
sum of (i) $47,000,000, plus (ii) 50% of positive Consolidated Net
Income (without adjustment for any loss) for the period after December
31, 1999 to and including each date of determination computed on a
cumulative basis for said entire period."
(d) Section 14.8 of the Securities Purchase Agreements (Limitation on
Investments) is hereby amended (i) by deleting the word "and" appearing at
the end of clause (f) therein, (ii) by deleting the "." appearing at the
end of clause (g) therein and inserting "; and" in place thereof and (iii)
by inserting the following new clause (h) immediately after clause (g)
therein:
"(h) the Percon Acquisition."
(e) Section 14.9 of the Securities Purchase Agreements (Limitation on
Liens) is hereby amended (i) by deleting the word "and" appearing at the
end of clause (e) therein, (ii) by deleting the "." appearing at the end of
clause (f) therein and inserting ";" in place thereof and (iii) by
inserting the following new clauses (g) and (h) immediately after clause
(f) therein:
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"(g) Liens assumed in the Percon Acquisition, provided that the
aggregate outstanding amount secured by such Liens shall not exceed
$200,000 at any time; and
(h) Liens created pursuant to the 1999 Sale Leaseback Transaction
and the 2000 Sale Leaseback Transaction."
(f) Section 14.11(a) of the Securities Purchase Agreements
(Limitations on Rental Obligations) is hereby amended to read in its
entirety as follows:
"(a) create, incur, assume or suffer to exist any obligations as
lessee (i) for the rental or hire of real or personal property in
connection with any sale and leaseback transaction or (ii) for the
rental or hire of other real or personal property of any kind under
leases or agreements to lease including Capital Leases having an
original term of one year or more that would cause the Consolidated
Rental Obligations in respect of all such obligations to exceed
$5,000,000 payable in any period of 12 consecutive months; or"
(g) Section 15.1 of the Securities Purchase Agreements (Definitions of
Capitalized Terms) is hereby amended:
(i) to insert the following definitions in appropriate
alphabetical order:
""Amendment No. 6" shall mean that certain Amendment No. 6
and Consent and Waiver Under Securities Purchase Agreements dated
as of March 31, 2000."
""Disputed Royalty Case" shall mean the civil action in the
United States District Court, Western District of New York,
numbered 96-CV-6152T, entitled "PSC Inc. v. Symbol Technologies,
Inc.""
""Disputed Royalty Decision" shall mean the Decision and
Order dated February 8, 2000 issued by Hon. Michael A. Telesca in
the Disputed Royalty Case and any related order or judgment."
""Excluded Leaseback Gain" shall mean all gain (gross --
before tax) resulting from the 1999 Sale Leaseback Transaction or
a termination of the lease thereunder if (and only if) such gain
is more than $50,000 during any period comprised of four full
consecutive fiscal quarters taken together as one accounting
period."
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""Final Decision" shall mean a final judgment or order
entered into with respect to the Disputed Royalty Decision for
which (a) the Companies shall agree to be bound or (b) no stay of
enforcement shall be in effect for a period of 10 consecutive
days by reason of a pending appeal or otherwise."
""Fixed Charge Coverage Ratio" shall mean, at any date, the
ratio of (a) (i) Consolidated Adjusted EBITDA for the most
recently completed four fiscal quarters of the Holding Company
less (ii) the sum of (A) Consolidated Capital Expenditures made
during such period plus (B) the aggregate amount of federal,
state, local and foreign income taxes paid by the Holding Company
and its Subsidiaries during such period plus (C) for any
calculation as of any date before the Final Decision, the
Quarterly Provisional Charges for Disputed Royalty expensed
during such period to (b) the sum of (i) cash interest payable by
the Holding Company and its Subsidiaries on Consolidated
Indebtedness during such period, plus (ii) cash rentals payable
under Capital Leases during such period, plus (iii) the aggregate
amount of scheduled principal payments made or required to be
made in respect of Funded Debt and Current Debt by the Holding
Company and its Subsidiaries during such period excluding (A) the
1999 Sale Leaseback Prepayment, (B) the 2000 Sale Leaseback
Prepayment, (C) mandatory "excess cash flow" prepayments under
Section 2.06(b)(i) of the Bank Credit Agreement and (D) payments
or prepayments of Funded Debt and/or Current Debt under the Bank
Credit Agreement with the Stock Sale Proceeds other than (and not
excluding) payments scheduled to be due and payable during such
period, if any (without the application of Section 2.06(b)(ii) of
the Bank Credit Agreement), plus (iv) after the Proven
Performance Date, the aggregate purchase price paid by the
Holding Company and its Subsidiaries during such period to
purchase Common Stock of the Holding Company."
""1999 Sale Leaseback Prepayment" shall mean the prepayment
of Funded Debt and/or Current Debt under the Bank Credit
Agreement pursuant to Section 2.06(b)(ii) thereof by reason of
the 1999 Sale Leaseback Transaction."
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""1999 Sale Leaseback Transaction" shall mean the sale and
leaseback transaction of certain facilities of the Operating
Company located in Eugene, Oregon pursuant to the Carey Letter
Agreement (as defined (and consented to) in that certain
Amendment No. 4, Consent and Waiver Under Securities Purchase
Agreements dated March 1, 1999)."
""Normalized Quarterly Provisional Charges for Disputed
Royalty" shall mean, for each fiscal quarter, severally, (a)
through December 31, 1999, the amount listed on Schedule A to
Amendment No. 6 to reflect the accounting normalization
attributable to each fiscal quarter of the Quarterly Provisional
Charges for Disputed Royalty and (b) after December 31, 1999, an
amount equal to the Quarterly Provisional Charges for Disputed
Royalty."
""Percon Acquisition" shall have the meaning specified in
that certain Consent Under Securities Purchase Agreements dated
January 19, 2000."
""Proven Performance Date" shall mean the last day of the
first fiscal quarter (a) which is after the Final Decision and
(b) as of which the Companies shall have been in full compliance
with all terms of the Operative Documents for not less than four
consecutive fiscal quarters, which compliance shall be supported
by financial statements delivered pursuant to and in compliance
with section 7."
""Quarterly Provisional Charges for Disputed Royalty" shall
mean for each fiscal quarter, severally, the amount determined in
accordance with GAAP of the non-cash expense appearing on the
Holding Company's consolidated statement of income for such
quarter as a charge to earnings reflecting the amount which may
be payable in respect of such quarter's earnings pursuant to the
Disputed Royalty Decision (exclusive of any Undisputed
Royalties)."
""Total Reserves for Disputed Royalty" shall mean, at any
date, the amount determined in accordance with GAAP appearing on
the Holding Company's consolidated balance sheet as of such date
reflecting the amount which may be payable pursuant to the
Disputed Royalty Decision."
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""2000 Acquisition and Restructuring Charge" shall mean the
one-time expense determined in accordance with GAAP charged to
the Holding Company's consolidated income statement in the first
fiscal quarter of 2000 relating to the Percon Acquisition and
restructuring incurred by the Holding Company and its
Subsidiaries in an amount not exceeding $2,300,000."
""2000 Sale Leaseback Prepayment" shall mean any prepayment
of Funded Debt and/or Current Debt under the Bank Credit
Agreement pursuant to Section 2.06(b)(ii) thereof by reason of
the 2000 Sale Leaseback Transaction."
""2000 Sale Leaseback Transaction" shall mean the proposed
sale and leaseback transaction of certain facilities of the
Operating Company located in Webster, New York; provided that the
Required Holders of the Notes shall have consented (in writing)
to the same."
""Undisputed Royalties" shall mean all liabilities
determined in accordance with GAAP of the Holding Company and its
Subsidiaries to Symbol Technologies, Inc. or its affiliates
pursuant to and under the contracts which are the subject of the
Disputed Royalty Case and which were not in dispute in the
Disputed Royalty Case (i.e., the flat rate or 3% of the Net Sales
Price of all Bar Code Readers sold under the "Spectra-Physics
license" as such term is used in the Disputed Royalty
Decision)."; and
(ii) to amend the definitions of "Adjusted Consolidated
Indebtedness Ratio"; "Adjusted EBITDA", "Current Debt" and "Funded
Debt" to read in their entireties as follows:
""Adjusted Consolidated Indebtedness Ratio" shall mean, at
any date, the ratio of (a) the sum of (i) the aggregate amount of
Total Reserves for Disputed Royalty and (ii) Consolidated
Indebtedness on the last day of the most recently completed
fiscal quarter of the Holding Company (without double counting in
the event that Consolidated Indebtedness shall include the amount
payable in respect of the Final Royalty Decision) to (b) (i)
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Consolidated Adjusted EBITDA for the most recently completed four
fiscal quarters of the Holding Company, plus (ii) the Quarterly
Provisional Charges for Disputed Royalty expensed during each
fiscal quarter in such four fiscal quarter period, less (iii) the
Normalized Quarterly Provisional Charges for Disputed Royalty in
respect of such four fiscal quarter period, provided that, for
purposes solely of calculating Consolidated Indebtedness on any
day, the Working Capital Advances (as defined in the Bank Credit
Agreement) shall be deemed to be outstanding in an aggregate
principal amount equal to the average principal amount thereof
outstanding on the then two most recent fiscal quarter end
dates."
""Adjusted EBITDA" of any Person shall mean, for any period,
(a) the Net Income of such Person for such period, plus (i) the
2000 Acquisition and Restructuring Charge (which is taken only in
the first fiscal quarter in 2000), less (ii) that portion of the
2000 Acquisition and Restructuring Charge actually paid within
such period, less (iii) any gain arising from a reversal of the
2000 Acquisition and Restructuring Charge and less (iv) on the
fiscal quarter end date of December 31, 2000, the balance of the
2000 Acquisition and Restructuring Charge which the Holding
Company and/or any of its Subsidiaries has not paid in cash,
after restoring thereto amounts deducted for (b) Interest
Charges, (c) taxes in respect of income and profits, and (d)
amortization and depreciation, in each case determined in
accordance with GAAP, less, however, the Excluded Leaseback Gain,
if any, accruing during such period, and plus the loss on sale of
assets, if any, incurred as a result of the 2000 Sale Leaseback
Transaction; provided that if the period for which Adjusted
EBITDA is being computed includes any or all of the fiscal
quarters ending on or about March 31, 1999, June 30, 1999,
September 30, 1999 and December 31, 1999, Adjusted EBITDA shall
be calculated by using the Pro Forma Adjusted EBITDA as set forth
on Schedule B to Amendment No. 6 for each such fiscal quarter in
such period."
""Current Debt" of any Person shall mean, at any date,
without duplication, (a) all Indebtedness for borrowed money or
in respect of Capital Leases or the deferred purchase price of
property (including, without limitation, Indebtedness of the kind
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referred to in clauses (b), (c), (d) and (e) of the definition of
Indebtedness, but excluding operating leases), whether or not
interest bearing, of such Person at such date which would, in
accordance with GAAP, be classified as short-term Indebtedness at
such date, but specifically excluding the current maturities of
such Person's Funded Debt, (b) all Guarantees by such Person at
such date of Current Debt of others and (c) the aggregate amount
which is due on or before the expiration of one year from such
date in respect of any Redeemable Shares of such Person; provided
that for purposes of section 14.5 of this Agreement, Current Debt
shall not include amounts payable to George A. Plesko pursuant to
and in accordance with the GEO/GAP Term Sheet; provided, further,
that for all purposes Current Debt shall not include amounts
which may be payable pursuant to the Disputed Royalty Decision
until it becomes a Final Decision (and then such amount shall not
be double counted as Current Debt)."
""Funded Debt" of any Person shall mean, at any date,
without duplication, (a) all Indebtedness for borrowed money or
in respect of Capital Leases or the deferred purchase price of
property (including, without limitation, Indebtedness of the kind
referred to in clauses (b), (c), (d) and (e) of the definition of
Indebtedness, but excluding operating leases), whether or not
interest-bearing, of such Person which would, in accordance with
GAAP, be classified as long-term Indebtedness at such date, but
in any event including all such Indebtedness, whether secured or
unsecured, of such Person which matures (or which, pursuant to
the terms of a revolving credit agreement or otherwise, is
directly or indirectly renewable or extendible at the option of
such Person for a period ending) more than one year after the
date of the creation thereof, notwithstanding the fact that
payments in respect thereof (whether installment, serial maturity
or sinking fund payments or otherwise) are required to be made by
such Person not more than one year after the date as of which the
amount of Funded Debt is being determined, other than any amount
thereof which is at the time included in Current Debt of such
Person, (b) all Guarantees by such Person at such date of Funded
Debt of others and (c) the aggregate amount which is due more
than one year from such date in respect of any Redeemable Shares
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of such Person; provided that for purposes of section 14.5 of
this Agreement, Funded Debt shall not include amounts payable to
George A. Plesko pursuant to and in accordance with the GEO/GAP
Term Sheet; provided, further, that for all purposes Funded Debt
shall not include amounts which may be payable pursuant to the
Disputed Royalty Decision until it becomes a Final Decision (and
then such amount shall not be double counted as Funded Debt)."
3. Amendment to the Notes to Increase Interest Rate. Each of the Notes is
hereby amended to provide that the rate of interest applicable thereto is
increased from 11.25% per annum to 12% per annum (and the default rate of
interest is increased from 13.25% per annum to 14% per annum). Upon the request
of any holder of Notes, the Operating Company shall deliver to such holder new
Notes in exchange for those held by such holder to reflect the foregoing.
Exhibit 1(a)(i) to the Securities Purchase Agreements is hereby amended to be in
the form of Exhibit 3 attached hereto.
4. Amendment to the Warrants to Reduce Exercise Price. Each of the Warrants
is hereby amended to provide that the Exercise Price thereof is reduced from
$8.00 (the amount to which it was previously reduced (pursuant to Amendment No.
3 to Securities Purchase Agreements and Warrants)) to $5.25 per share (such
Exercise Price being subject to further adjustment as provided in the Warrants).
The Holding Company hereby certifies that since July 12, 1996 no event has
occurred which, under the terms of the Warrants, requires an adjustment to the
Exercise Price or to the number or kind of securities issuable upon exercise
thereof. Upon the request of any holder of Warrants, the Holding Company shall
deliver to such holder new Warrants in exchange for those held by such holder to
reflect the foregoing. Exhibit 1(b) to the Securities Purchase Agreements is
hereby amended to be in the form of Exhibit 4 attached hereto.
5. Consents and Waivers.
(a) Each of you hereby acknowledges that section 14.16(c) of the
Securities Purchase Agreements permits the amendment of the Bank Credit
Agreement as provided for in that certain Amendment Nine and Consent and
Waiver to Credit Agreement dated as of March 31, 2000, among the Holding
Company, the Operating Company, the financial institutions party thereto,
Fleet National Bank (formerly known as Fleet Bank), as Initial Issuing
Bank, and Fleet National Bank, as administrative agent, substantially in
the form attached hereto as Exhibit 5(a).
(b) Nothing herein shall constitute a consent of any holder of any of
the Notes to the consummation of the "2000 Sale Leaseback Transaction".
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6. Conditions Precedent to Effectiveness. The provisions of this Letter
Agreement shall be effective as of the date first specified above at such time
as each of the following conditions shall have been fulfilled:
(a) the Companies shall have paid in immediately available funds:
(i) an amendment fee to the holders of the Notes in an aggregate
amount equal to $150,000, which amount shall be allocated and paid to
each such holder in proportion to the aggregate principal amount of
Notes held by such holder; and
(ii) without limiting the generality of section 8 hereof, the
fees and expenses of special counsel to the holders of the Notes
incurred in connection herewith; and
(b) the Companies shall have delivered an executed copy of Amendment
Nine and Consent and Waiver to Credit Agreement.
7. No Default, Representations and Warranties, etc.
(a) The Companies represent and warrant that, except as otherwise
modified by:
(i) the documents referred to in section 5(a)(i) of Amendment No.
3 to Securities Purchase Agreements and Warrants dated August 18,
1997;
(ii) the projections referred to on Exhibit B attached to
Amendment No. 2 and Waivers under Securities Purchase Agreements dated
as of July 4, 1997;
(iii) the information delivered to the Purchasers on June 11,
1997, which is attached to Amendment No. 2 and Waivers Under
Securities Purchase Agreements dated as of July 4, 1997 as Exhibit C;
(iv) the documents referred to in Section 3(a)(iv) of Consent and
Waiver Under Securities Purchase Agreements and Warrants dated
December 29, 1997;
(v) the documents referred to in section 4(a)(v) of Amendment No.
4, Consent and Waiver under Securities Purchase Agreements;
(vi) the documents referred to in section 3(a)(vi) of Consent
Under Securities Purchase Agreements dated January 19, 2000; and
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(vii) the following documents filed by the Holding Company with
the Commission under the Exchange Act: (A) Form 8-K filed on December
22, 1999, (B) Form 8-K filed on February 2, 2000 and (C) Form 8-K/A
filed on April 3, 2000
(true, correct and complete copies of all of which items have been
furnished to you), the representations and warranties contained in the
Securities Purchase Agreements and the other Operative Documents are in all
material respects correct on and as of the date hereof as if made on such
date (except to the extent affected by the consummation of transactions
permitted by the Securities Purchase Agreements). The Companies further
represent and warrant that, after giving effect to the provisions of this
Letter Agreement, no Default or Event of Default exists.
(b) The Companies each ratify and confirm the Securities Purchase
Agreements and each of the other Operative Documents to which each is a
party and agree that each such agreement, document and instrument is in
full force and effect, that its obligations thereunder and under this
Letter Agreement are its legal, valid and binding obligations enforceable
against it in accordance with the terms thereof and hereof and that it has
no defense, whether legal or equitable, setoff or counterclaim to the
payment and performance of such obligations.
(c) The Companies agree that (i) if any default shall be made in the
performance or observance of any covenant, agreement or condition contained
in this Letter Agreement or in any agreement, document or instrument
executed in connection herewith or pursuant hereto or (ii) if any
representation or warranty made by the Companies herein or therein shall
prove to have been false or incorrect on the date as of which made, the
same shall constitute an Event of Default under the Securities Purchase
Agreements and the other Operative Documents and, in such event, you and
each other holder of any of the Notes shall have all rights and remedies
provided by law and/or provided or referred to in the Securities Purchase
Agreements and the other Operative Documents. The Companies further agree
that this Letter Agreement is an Operative Document and all references
thereto in the Securities Purchase Agreements and in any other of the other
Operative Documents shall include this Letter Agreement.
(d) On December 31, 1997, each of Lazerdata Holdings, Inc., PSC S.A.,
Inc. and PSC Scanning Systems, Inc. was merged into the Holding Company.
8. Payment of Transaction Costs. The Companies shall pay all reasonable
fees and disbursements incurred by you in connection herewith, including,
without limitation, the reasonable fees, expenses and disbursements of your
special counsel.
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9. Governing Law. This Letter Agreement, including the validity hereof and
the rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
New York without giving effect to any choice of law or conflicts of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.
10. Miscellaneous. The headings in this Letter Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
This Letter Agreement embodies the entire agreement and understanding among the
parties hereto and supersedes all prior agreements and understandings relating
to the subject matter hereof. In case any provision in this Letter Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. This Letter Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts but all such
counterparts shall together constitute but one and the same instrument.
[The remainder of this page is intentionally left blank.]
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart hereof, whereupon this Letter
Agreement shall become a binding agreement under seal among the parties hereto.
Please then return one of such counterparts to the Companies.
Very truly yours,
PSC INC.
By:
---------------------------------
(Title)
PSC SCANNING, INC.
By:
---------------------------------
(Title)
Each of the undersigned (a) acknowledges and assents to the terms and
provisions of the foregoing Letter Agreement and (b) ratifies and confirms each
of the Operative Documents to which it is a party and agrees that each such
Operative Document is in full force and effect, that its obligations thereunder
are its legal, valid and binding obligations enforceable against it in
accordance with the terms thereof and that it has no defense, whether legal or
equitable, setoff or counterclaim, to the payment and performance of such
obligations.
INSTAREAD CORPORATION
By:
---------------------------------
(Title)
PSC AUTOMATION, INC. (formerly
named Lazerdata Corporation)
By:
---------------------------------
(Title)
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GEO LABS, INC.
By:
---------------------------------
(Title)
GAP TECHNOLOGIES, INC.
By:
---------------------------------
(Title)
PERCON INCORPORATED
By:
---------------------------------
(Title)
[The remainder of this page is intentionally left blank.]
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The foregoing is hereby accepted and agreed to:
JOHN HANCOCK LIFE INSURANCE COMPANY
(formerly John Hancock Mutual
Life Insurance Company)
By:
-----------------------------
(Title)
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By:
-----------------------------
(Title)
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.
Its Attorney-in-Fact
By:
------------------------
(Title)
LINCOLN NATIONAL INCOME FUND, INC.
By:
-----------------------------
(Title)
SECURITY-CONNECTICUT LIFE
INSURANCE COMPANY
By:
-----------------------------
(Title)
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THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By:
-----------------------------
(Title)
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Schedule A
Normalized Quarterly Provisional Charges for Disputed Royalty
-------------------------------------------------------------
(000's)
Q1 1999 Q2 1999 Q3 1999 Q4 1999
-------------------------------------------------------------
$1,378 $1,121 $1,514 $1,753
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Schedule B
Pro Forma EBITDA
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PSC Inc./Percon, Inc. Consolidated
(000's)
Q1 1999 Q2 1999 Q3 1999 Q4 1999
------- ------- ------- -------
Net Income/(Loss) $2,704 $ 4,245 $ 4,754 $ (546)
Interest Expense 2,101 1,878 1,770 1,709
Income Tax Expense 1,499 2,742 2,554 (160)
Depreciation Expense 1,719 1,731 1,877 1,881
Amortization Expense 1,887 1,858 1,868 1,682
------- ------- ------- -------
EBITDA $9,910 $12,454 $12,823 $4,566
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Exhibit 5(a)
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Amendment Nine and Consent and Waiver to Credit Agreement
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