Hypo Vereinsbank agrees to sell to Newco, effective as of the Closing Date, DM 22,455,000 (U.S. $12,274,000) of the outstanding debt balance of DM 40,761,000 (U.S. $22,280,000) (as of August 13, 1999) under the Loan Agreement between Hypo Vereinsbank and Marker Germany dated October 13, 1998, as amended, for a consideration of DM 1, which effectively reduces the amount of debt that Marker Germany owes to Hypo Vereinsbank by DM 22,455,000 (U.S. $12,274,000) to an outstanding balance of DM 18,306,000 (U.S. $10,006,000) (as of August 13, 1999), which balance will be included in the New Financing Facility (defined below).
German Banks Settlement - On April 15, 1999, the Company did not make a required principal and interest payment of DM 900,000 (U.S. $492,000) on the Third Restated Promissory Note between the Company and Hypo Vereinsbank (acting through its New York branch) dated April 15, 1998 (the "Term Loan"). On April 16, 1999, Hypo Vereinsbank notified the Company that nonpayment of principal and interest constituted a default under the terms of the Term Loan and that the entire balance of DM 6.4 million (U.S. $3.5 million) was immediately due and payable. As a result, Hypo Vereinsbank applied the proceeds of a time deposit that was held as security by the bank in the amount of U.S. $2.0 million against the outstanding balance due on the Term Loan. In addition, on March 31, 1999, Marker Germany's DM 58.7 million (U.S. $32.1 million) line of credit with Hypo Vereinsbank, Deutsche Bank AG ("Deutsche Bank") and BFG Bank expired. Marker Germany's obligations to Hypo Vereinsbank and Deutsche Bank are guaranteed by the Company. In addition, the Company granted to the German Banks a second lien on its intangible assets. As a result, the Company and Marker Germany commenced negotiations with Hypo Vereinsbank to restructure the debt owed to Hypo Vereinsbank, culminating in a Settlement Agreement dated as of August 18, 1999, between Hypo Vereinsbank, the Company and CT (the "Hypo Vereinsbank Settlement Agreement"). Pursuant to the Plan and the Hypo Vereinsbank Settlement Agreement, Hypo Vereinsbank will forgive in full upon Closing, the outstanding indebtedness of the Company of DM 2,755,000 (U.S. $1,506,000) (plus interest accrued from April 19, 1999 to August 13, 1999) as of August 13, 1999, under the Term Loan, in full satisfaction of the Company's outstanding obligation to Hypo Vereinsbank (New York). Pursuant to the terms and conditions of the Hypo Vereinsbank Settlement Agreement, Hypo Vereinsbank agrees to sell to Newco, effective as of the Closing Date, DM 22,455,000 (U.S. $12,274,000) of the outstanding debt balance of DM 40,761,000 (U.S. $22,280,000) (as of August 13, 1999) under the Loan Agreement between Hypo Vereinsbank and Marker Germany dated October 13, 1998, as amended, for a consideration of DM 1, which effectively reduces the amount of debt that Marker Germany owes to Hypo Vereinsbank by DM 22,455,000 (U.S. $12,274,000) to an outstanding balance of DM 18,306,000 (U.S. $10,006,000) (as of August 13, 1999), which balance will be included in the New Financing Facility. |
