October 1, 2009

Presstek, Inc.

10 Glenville Street

Greenwich, Connecticut 06831

 

Re:

Forbearance and Amendment Agreement

Ladies and Gentlemen:

Reference is hereby made to the Amended and Restated Credit Agreement, dated as
of November 5, 2004 (as amended and in effect from time to time, the "Credit
Agreement"), among Presstek, Inc. (the “Borrower”), Lasertel Inc., Precision
Lithograining Corp., Precision Acquisition Corp., SDK Realty Corp., ABD
International, Inc., Presstek Capital Corp., Presstek Overseas Corp., ABD Canada
Holdings, Inc., Presstek New York, Inc. (collectively, the “Guarantors” and,
together with the Borrower, the “Obligors”), the various lending institutions
party thereto (collectively, the "Lenders"), and RBS Citizens, National
Association (“Citizens”), as Administrative Agent for the Lenders (in such
capacity, the "Administrative Agent"). All capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.

Each Obligor acknowledges and agrees that certain Events of Default now exist
and are continuing under the Loan Documents. Each Obligor also acknowledges and
agrees that, as a result of the foregoing, the Administrative Agent or the
Requisite Lenders may, if the Administrative Agent or the Requisite Lenders
elect in their sole discretion to do so, proceed to enforce at any time on or
after the date hereof any of their rights and remedies under the Loan Documents
or at law or in equity, including, without limitation, the rights and remedies
set forth in Section 9.2 of the Credit Agreement. Notwithstanding the foregoing,
the Obligors have each now requested that the Lenders forbear from enforcing
their rights and remedies under the Loan Documents for the time period and on
the conditions set forth herein.

In response to such request, the Administrative Agent and the Lenders have
agreed to forbear from enforcing such rights and remedies until the Forbearance
Termination Date (as hereinafter defined) upon the following terms and
conditions:

 

Section 1.

Ratification of Existing Agreements.

All of the Obligors’ indebtedness, liabilities and obligations to the Lenders as
evidenced by or otherwise arising under the Loan Documents are, by the Obligors’
execution of this Agreement, ratified and confirmed in all respects. In
addition, by the execution of this Agreement, each Obligor represents, warrants
and agrees that (a) as of October 1, 2009, the aggregate outstanding principal
amount of the Term Loans is $834,000; (b) as of October 1, 2009, the aggregate
outstanding principal amount of the Revolving Loans is $26,362,428.93 (including
an outstanding Letter of Credit in the stated amount of $1,250,000); and (c) to
its knowledge, none of the Obligors has any defense, counterclaim, right of
set-off, or right of recoupment of any kind to or with respect to its obligation
to pay, as and when due and payable

 

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pursuant to the Loan Documents, the Term Loans and Revolving Loans, accrued and
unpaid interest thereon, and all of the other Obligations.

 

Section 2.

Representations and Warranties.

All the representations and warranties made by the Obligors in the Loan
Documents are true and correct on the date hereof as if made on and as of the
date hereof, except to the extent that any of such representations and
warranties relate by their terms to a prior date.

 

Section 3.

Forbearance Conditions.

Subject to the terms and conditions set forth herein, the Administrative Agent
and Lenders agree to forbear from exercising their rights and remedies under the
Loan Documents, including without limitation, commencing legal action to enforce
the agreements and obligations of the Obligors under the Loan Documents, until
the date (the “Forbearance Termination Date”) which is the earliest to occur of
(a) the occurrence or continuance after the date hereof of any Event of Default
other than the Events of Default listed on Schedule 1 attached hereto (the
Events of Default listed on Schedule 1 being referred to herein as “Specified
Defaults”); (b) the failure of any Obligor to comply with any term or condition
set forth in this Agreement; (c) the occurrence after the date hereof of any
event or circumstance that has, or could be reasonably expected to have, a
Material Adverse Effect; (d) any Obligor or any Affiliate of any Obligor shall
commence any litigation or other proceeding against the Administrative Agent or
any Lender or any Affiliate of the Administrative Agent or any Lender in
connection with any of the transactions contemplated by any of the Loan
Documents (which term shall include without limitation this Agreement); (e) the
failure of actual cash flow, as projected in the projections to be delivered by
the Borrower pursuant to Section 5.3 (as added to the Credit Agreement hereby),
for any month, commencing with the month ended September 30, 2009, to be at
least eighty percent (80%) of the amount of cash flow projected for such month
by such projections; and (f)  November 30, 2009, provided that the date set
forth in this clause (f) shall be automatically extended to December 15, 2009
without any further action of the parties hereto upon the Borrower’s payment to
the Administrative Agent, in immediately available funds, for the pro rata
accounts of each of the Lenders in accordance with the aggregate amount of
Obligations owed to each of them, of $20,000. On and after the Forbearance
Termination Date, the Administrative Agent in its sole and absolute discretion
(or as directed by the Requisite Lenders in their sole and absolute discretion)
may proceed to enforce any or all of its and the Lenders’ rights under or in
respect of the Loan Documents and applicable law.

 

Section 4.

Conditions Precedent.

The forbearance obligations of the Lenders hereunder shall be subject to the
satisfaction on or before the date hereof of the following conditions precedent
(the date that such conditions are satisfied being referred to herein as the
“Forbearance Effective Date”):

(a)       This Agreement shall be executed by each of the Obligors, each of the
Lenders and the Administrative Agent.

(b)       No Event of Default (other than the Specified Defaults) shall have
occurred and be continuing as of the date hereof.

 

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(c)       The Borrower shall have paid to the Administrative Agent, in
immediately available funds, for the pro rata accounts of the Lenders in
accordance with the aggregate amount of Obligations owed to each of them,
$125,000 of the Forbearance Fee due in accordance with Section 2.6(f) of the
Credit Agreement (which such Section 2.6(f) is being added to the Credit
Agreement as set forth in Section 5(e) below).

(d)       The Borrower shall have paid to the Administrative Agent’s counsel,
Bingham McCutchen LLP (“Bingham”), in immediately available funds, all
reasonable legal fees and disbursements owed to Bingham for the services billed
by it on or before the date hereof.

 

Section 5.

Amendments to Credit Agreement.

The Credit Agreement is amended as of the Forbearance Effective Date as follows
(and, except to the extent expressly provided otherwise in this Section 5, each
such amendment shall continue in effect after the Forbearance Termination Date):

(a)       The following definitions are hereby added to Section 1 of the Credit
Agreement in their appropriate alphabetical order:

“Forbearance Agreement” shall mean the Forbearance and Amendment Agreement dated
as of October 1, 2009 by and among the Borrower, the Guarantors, the
Administrative Agent and the Lenders, as amended from time to time.

“Forbearance Effective Date” shall mean the Forbearance Effective Date as
defined in the Forbearance Agreement.

“Forbearance Fee” shall have the meaning assigned to it in Section 2.6.

 

“Forbearance Termination Date” shall mean the Forbearance Termination Date as
defined in the Forbearance Agreement.

 

“Projected Cash Flow Report” shall have the meaning assigned to it in Section
5.3.

 

“Refinancing” shall have the meaning assigned to it in Section 6.13.

 

“Rolling Cash Flow Report” shall have the meaning assigned to it in Section 5.3.

(b)       The definition of “Commitment Termination Date” in Section 1 of the
Credit Agreement is hereby amended by deleting “November 4, 2009” therefrom and
by substituting therefor “the Forbearance Termination Date”.

(c)       The definition of “Prime Rate” in Section 1 of the Credit Agreement is
hereby amended by deleting “Citizens Bank New Hampshire” therefrom and by
substituting therefor “RBS Citizens, National Association”.

 

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(d)       The aggregate Revolving Loan Commitment of the Lenders is hereby
reduced to $27,000,000 on and as of the Forbearance Effective Date. The
Revolving Loan Commitment of each Lender is hereby reduced as of such date to
the amounts set forth on Schedule 2 hereto.

(e)       The following subsection (g) is hereby added to the end of Section 2.4
of the Credit Agreement:

(g) Notwithstanding anything to the contrary set forth in this Section 2.4, from
and at all times after the Forbearance Effective Date, Borrower shall pay
interest to Administrative Agent on all Loans, for the ratable benefit of
Lenders in accordance with the various Loans being made by each Lender, in
arrears on the first Business Day of each month to occur while such Loan is
outstanding and on the date that each such Loan is paid in full, at a rate equal
to the Prime Rate plus four percent (4.00%) per annum; provided, however, that
on and at all times after the Forbearance Termination Date, at the election of
Administrative Agent (or upon the written request of Requisite Lenders), the
interest rate applicable to the Loans shall be the Prime Rate plus six percent
(6.00%) per annum, and on and after the Forbearance Termination Date all
references in this Agreement and the other Loan Documents to the “Default Rate”
shall mean and refer to the Prime Rate plus six percent (6.00%) per annum.
Without limitation of the generality of the foregoing, from and after the
Forbearance Effective Date, Borrower shall not have the right to elect to pay
interest on any Loan based on the LIBOR Rate.

(f)        The following subsection (f) is hereby added to the end of Section
2.6 of the Credit Agreement:

(f) Borrower shall pay to Administrative Agent, in immediately available funds,
for the pro rata accounts of the Lenders in accordance with the aggregate amount
of Obligations owed to each of them, a forbearance fee in the amount of $250,000
(the “Forbearance Fee”). Although the entire $250,000 Forbearance Fee is deemed
to have been earned and irrevocably due as of the Forbearance Effective Date,
$125,000 of the Forbearance Fee shall be due and payable on the Forbearance
Effective Date and $125,000 of the Forbearance Fee shall be due and payable on
the earlier of the consummation of the Refinancing and the Forbearance
Termination Date.

(g)       The following is hereby added to the end of Section 2.16 of the Credit
Agreement:

Notwithstanding anything to the contrary contained in the foregoing, (a)
Presstek Overseas Corp. and ABD Canada Holdings, Inc. shall each have a thirty
(30) day period after the Forbearance Effective Date to execute and deliver all
documents and instruments to Administrative Agent as Administrative Agent may
reasonably

 

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request in order for such parties to secure their guaranties of the Guaranteed
Obligations with all of their real and personal property, (b) Delta-V
Technologies, Inc., HIC, Inc., R/H Acquisition Corp. and Presstek Charitable
Fund shall each have a thirty (30) day period after the Forbearance Effective
Date to become a party to this Agreement as a Guarantor and to execute and
deliver all documents and instruments to Administrative Agent as Administrative
Agent may reasonably request in order for such parties to become a Guarantor, to
guaranty the Guaranteed Obligations under this Agreement, and to secure such
guaranty with all of their real and personal property and for Borrower and (any
domestic Subsidiary of Borrower) to assign to Administrative Agent as collateral
security for the Obligations the promissory note(s) of any of such parties that
is a Foreign Subsidiary which evidence indebtedness of such Foreign Subsidiary
to the Borrower (or any domestic Subsidiary of the Borrower), and (c) Presstek
Europe Ltd. and Presstek Canada shall not be required to comply with the
requirements of this Section 2.16.

(h)       Section 5 of the Credit Agreement is hereby amended by adding the
following Sections 5.3 and 5.4 after Section 5.2 thereof:

 

5.3

Additional Documents and Information.

In addition to the other documents and information required to be delivered by
Borrower to Administrative Agent pursuant to Annex B and this Section 5,
Borrower hereby agrees that from and after the Forbearance Effective Date and at
all times thereafter, Borrower will deliver to Administrative Agent and each
Lender the following, at the following times:

(a)       Within twenty (20) days after the financial close date for September
2009 (i.e., October 3, 2009 for the month of September) and within twenty (20)
days after the financial close date of each month thereafter (e.g., October 31,
2009 for the month of October and November 28, 2009 for the month of November),
consolidated and consolidating financial information for Borrower and its
Subsidiaries, certified by the Chief Financial Officer of Borrower, consisting
of unaudited and preliminary (draft) balance sheets and statements of income as
of the close of such month, all prepared in accordance with GAAP but without
full footnotes (subject to normal year-end adjustments);

(b)       within thirty (30) days after the financial close date for September
2009 and within thirty (30) days after the financial close date of each month
thereafter, consolidated and consolidating financial information for Borrower
and its Subsidiaries, certified by the Chief Financial Officer of Borrower,
consisting of unaudited and preliminary (draft) statements of cash flows as of
the close of such month, all prepared in accordance with GAAP but without full
footnotes (subject to normal year-end adjustments);

(c)       on Friday of each week commencing on the first Friday following the
Forbearance Effective Date, a rolling thirteen (13) week cash flow statement

 

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for the thirteen (13) weeks ended on Friday of the week before the delivery of
such cash flow statement (the “Rolling Cash Flow Report”), which Rolling Cash
Flow Report shall be accompanied by a comparison of actual cash flow, as stated
on the Rolling Cash Flow Report, to projected cash flow as set forth in the
Projected Cash Flow Report;

(d)       on Tuesday of each week commencing on the first Tuesday following the
Forbearance Effective Date, a detailed cash balance report as of close of
business on Friday of the previous week;

(e)       on or before September 30, 2009, projections on a monthly basis, in
reasonable detail, of Borrower’s financial results through the remainder of the
Fiscal Year ended January 2, 2010, which projections shall include for each
month projections of Borrower’s balance sheet and income statement and cash flow
(the projection therein of cash flow for each such month being the “Projected
Cash Flow Report”); and

(f)        within five (5) days of receipt thereof, copies of any appraisals of
its assets that Borrower may conduct or cause to be conducted.

 

5.4

Access to Books and Records; Field Examinations.

Borrower shall permit Administrative Agent from time to time, as and when
requested by Administrative Agent, to visit and inspect the assets of Borrower
or any Guarantor, inspect, audit and make extracts from Borrower's or any
Guarantor’s books and records, and discuss with its officers, employees, agents,
advisors and independent accountants Borrower's or any Guarantor’s business,
financial condition, assets, prospects and results of operations. Any Lender may
participate in any such visit or inspection. Neither Administrative Agent nor
any Lender shall have any duty to Borrower to make any inspection, nor to share
any results of any inspection, appraisal or report with Borrower. Borrower
acknowledges that any such inspection, appraisal or report will be prepared by
Administrative Agent and Lenders for their own purposes, and that Borrower shall
not be entitled to rely upon them. Borrower shall reimburse Administrative Agent
on demand for all reasonable out-of-pocket costs and expenses of Administrative
Agent in connection with (i) examinations of Borrower’s or any Guarantor’s books
and records or any other financial or Collateral matters as Administrative Agent
deems appropriate, and (ii) any appraisals that Administrative Agent may conduct
or cause to be conducted; provided, however, that prior to the Forbearance
Termination Date, Borrower will not be required to reimburse Administrative
Agent more than $20,000 for such expenses. Without limiting the foregoing,
Borrower specifically agrees to pay Administrative Agent's then standard charges
for each day that an employee of Administrative Agent or its Affiliates is
engaged in any examination activities, and shall pay the standard charges of
Administrative Agent's internal appraisal group. The preceding sentence shall
not be construed to limit Administrative

 

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Agent's right to conduct examinations or to obtain appraisals at any time using
third parties or employees for such purposes.

(i)        The following Sections 6.12 and 6.13 are hereby added to the Credit
Agreement after Section 6.11 thereof:

 

6.12

Hiring of Turnaround Management Consultant.

On or before September 30, 2009, Borrower shall hire a turnaround management
consultant (or an employee with responsibilities equivalent to those of
turnaround management consultant) who is reasonably acceptable to Administrative
Agent and who reports directly to the chief executive officer of Borrower. Such
turnaround management consultant shall be responsible for analyzing and advising
Borrower as to how to appropriately and successfully restructure the business
and for reviewing all documents and information delivered to Administrative
Agent, including without limitation the documents and information set forth in
Annex B and Section 5. Until the Forbearance Termination Date, Borrower shall at
all times thereafter retain in such capacity such an employee or management
consultant reasonably acceptable to Administrative Agent.

 

6.13

Refinancing.

Borrower agrees to use its best efforts to seek equity and/or debt to repay all
amounts owing to the Lenders (the “Refinancing”), in immediately available
funds, prior to the Forbearance Termination Date, and shall provide the
Administrative Agent and each Lender, every week (and more often as and when
there is a material development or change in such efforts), with a written
update (which can be via e-mail) as to the status of such efforts, and, promptly
upon receipt thereof, with copies of any and all term sheets and correspondence
supplied and received with respect thereto. On or before October 15, 2009,
Borrower shall deliver or cause to be delivered to the Administrative Agent, in
form and content satisfactory to the Administrative Agent, a fully executed term
sheet from a bona fide third party setting forth such party’s commitment to the
terms of a transaction providing for a repayment in full of all of the
Obligations on or before the Forbearance Termination Date.

(j)        Section 7.2 of the Credit Agreement is hereby amended by deleting
“$1,000,000” in each place that such amount appears therein and by substituting
therefor in each such place “$100,000.”

(k)       Section 7.3(b) of the Credit Agreement is hereby amended by deleting
“$1,000,000” from clause (iii) thereof and by substituting therefor “$100,000.”

(l)        Section 7.4(b) of the Credit Agreement is hereby amended by deleting
“$100,000” and “$500,000” therefrom and by substituting therefor “$50,000” and
“$100,000”, respectively.

 

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(m)      Section 7.7 of the Credit Agreement is hereby amended by deleting
“$1,000,000” from clause (c) thereof and by substituting therefor “$100,000.”

(n)       Section 7.8 of the Credit Agreement is hereby amended by deleting
“$1,000,000” and “$3,000,000” therefrom and by substituting therefor “$50,000”
and “$100,000”, respectively.

 

Section 6.

Release.

Borrower and each Guarantor, on behalf of itself and its shareholders,
directors, officers, employees, successors and assigns, as the case may be,
hereby waives, releases and discharges the Administrative Agent and each Lender
and all of the shareholders, affiliates, predecessors, successors and assigns of
each of them, and all directors, officers, employees, attorneys and agents of
each of them, from any and all claims, demands, actions or causes of action
(collectively, “Claims”) arising out of or in any way relating to the Loan
Documents and/or any documents, agreements, dealings or other matters connected
with the Loan Documents and the administration thereof, whether any such Claim
is known or unknown, based on contract, tort, or otherwise, to the extent that
any such Claim is based in whole or in part on any event or circumstance that
occurred on or before the date of this Agreement. This Release shall remain in
effect regardless of when the Forbearance Termination Date occurs.

 

Section 7.

No Waiver; Inconsistencies.

Except as otherwise expressly provided for in this Agreement, nothing in this
Agreement shall extend to or affect in any way any of the rights or obligations
of Borrower or any Guarantor or any of the rights and remedies of Administrative
Agent and Lenders arising under the Loan Documents, and neither Administrative
Agent nor any Lender shall be deemed to have waived any of its rights or
remedies with respect to any Default or Event of Default. In the event of any
conflict or inconsistency between the provisions of this Agreement and any other
document or understanding of the parties, the provisions of this Agreement shall
prevail and shall constitute the agreement of the parties with respect to such
provisions. This Agreement sets forth the entire understanding and agreement of
the parties with respect to the forbearance by Lenders and Administrative Agent
and the amendments provided for herein, and this agreement shall supersede any
prior understandings or agreements of the parties with respect to such
forbearance and the amendments set forth herein.

 

Section 8.

Governing Law; Amendments; Time of the Essence.

This Agreement shall be governed by and construed in accordance with the laws of
the State of New Hampshire applicable to contracts made and performed in that
state and any applicable laws of the United States of America, and this
Agreement may not be amended, and none of the provisions herein may be waived,
except by a written instrument executed by the parties hereto (or, in the case
of a waiver, executed by the party giving such waiver). TIME IS OF THE ESSENCE
AS TO ALL OF THE PROVISIONS HEREIN.

 

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Section 9.

WAIVER OF JURY TRIAL.

EACH OF THE PARTIES HERETO HEREBY WAIVES THE RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT OR ANY MATTER RELATING HERETO.

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

 

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If the foregoing terms and conditions are acceptable to you, please indicate
your agreement to those provisions by signing the counterpart of this letter
enclosed herewith and returning such counterpart to us.

 

RBS CITIZENS, NATIONAL ASSOCIATION,

as Administrative Agent and Lender

By: /s/ Paul M. Mongeau

 

Name:

Paul M. Mongeau

 

Title:

Senior Vice President

 

 

KEYBANK NATIONAL ASSOCIATION

By: /s/ Leslie A. Jones

 

Name:

Leslie A. Jones

 

Title:

Vice President

 

 

TD BANK, N.A.

By: /s/ Robyn Zeller

 

Name:

Robyn Zeller

 

Title:

Senior Vice President

 

 

AGREED TO AND ACCEPTED as of the date of the above letter:

 

PRESSTEK, INC.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

EVP and Chief Financial officer

 

 

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ACKNOWLEDGED AND AGREED TO

BY THE UNDERSIGNED GUARANTORS:

 

LASERTEL INC.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

PRECISION LITHOGRAINING CORP.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

PRECISION ACQUISITION CORP.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

SDK REALTY CORP.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

ABD INTERNATIONAL, INC.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

PRESSTEK CAPITAL CORP.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

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PRESSTEK OVERSEAS CORP.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

ABD CANADA HOLDINGS, INC.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

PRESSTEK NEW YORK, INC.

By: /s/ Jeffrey A. Cook

Name:

Jeffrey A. Cook

Title:

Treasurer

 

 

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Schedule 1

 

1.

Borrower’s failure to comply with its covenant under subparagraph (a) of Annex C
(Section 7.10) to the Credit Agreement (Minimum Fixed Charge Coverage Ratio) for
the Fiscal Quarter ended July 4, 2009 and the Fiscal Quarter ending October 3,
2009.

 

2.

Borrower’s failure to comply with its covenant under subparagraph (b) of Annex C
(Section 7.10) to the Credit Agreement (Maximum Funded Debt to EBITDA Ratio) for
the Fiscal Quarter ended July 4, 2009 and the Fiscal Quarter ending October 3,
2009.

 

3.

Borrower’s failure to comply with its covenant under subparagraph (c) of Annex C
(Section 7.10) to the Credit Agreement (Minimum Tangible Capital Base) for the
Fiscal Quarter ending October 3, 2009.

 

4.

Borrower’s failure to comply with its covenant under subparagraph (d) of Annex C
(Section 7.10) to the Credit Agreement (Current Ratio) for the Fiscal Quarter
ending October 3, 2009.

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Schedule 2

 

Revolving Loan Commitments of Lenders

 

 

Lender

Commitment as of
Forbearance Effective Date

 

 

RBS Citizens, National Association

$10,125,000

 

 

Keybank National Association

$10,125,000

 

 

TD Bank, N.A.

$6,750,000