<PAGE> 1
FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1996
COMMISSION FILE NUMBER 0-27664
UNIDIGITAL INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3856672
(State of Incorporation) (IRS Employer
Identification No.)
20 WEST 20TH STREET
9TH FLOOR
NEW YORK, NY 10011
(Address of principal executive offices)
(212) 337-0330
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No .
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Company's $.01 par value Common Stock
outstanding as of January 10, 1997 is 3,189,216 shares.
Transitional Small Business Disclosure Format. Yes No X .
--- ---
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UNIDIGITAL INC.
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
10-QSB PART AND ITEM NO. PAGE NO.
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<S> <C>
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Consolidated Balance Sheets as of November 30, 1996
(unaudited) and August 31, 1996 3
Consolidated Income Statements for the Three Months
Ended November 30, 1996 and 1995 (unaudited) 4
Consolidated Statements of Cash Flows for the Three
Months Ended November 30, 1996 and 1995 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION. 8
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 12
SIGNATURES 13
</TABLE>
2
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PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIDIGITAL INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 30, AUGUST 31,
1996 1996
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 2,953,914 $ 4,145,514
Accounts receivable, net of allowance of
$210,926 and $200,814, respectively 5,179,609 3,207,857
Prepaid expenses and other current assets 1,187,171 835,129
----------- ------------
Total current assets 9,320,694 8,188,500
Property, plant and equipment, net 9,272,252 8,594,985
Intangible assets, net 890,330 797,213
Other assets 47,457 42,628
----------- ------------
Total Assets $19,530,733 $ 17,623,326
=========== ============
LIABILITIES & STOCKHOLDERS' EQUITY
Due to banks $ 2,626,178 $ 1,741,973
Current portion of long term debt 79,072 77,800
Current portion of capital lease obligations 1,473,811 1,476,076
Accrued payments for acquisition of
business and cancellation of options 50,475 202,930
Accounts payable and accrued expenses 1,862,842 1,792,973
Income taxes payable 387,618 216,366
Loans and notes payable to stockholders 362,726 361,039
----------- ------------
Total current liabilities 6,842,722 5,869,157
Non-current portion of long term debt 1,868,009 1,898,865
Non-current portion of capital lease obligations 2,417,804 1,974,033
Deferred income taxes 480,524 516,596
----------- ------------
Total liabilities 11,609,059 10,258,651
Stockholders' equity:
Preferred stock, par value $.01; 5,000,000 shares
authorized; none issued & outstanding -- --
Common stock, par value $.01; 10,000,000 shares
authorized; 3,189,216 shares issued & outstanding 31,892 31,892
Additional-paid-in-capital 5,459,841 5,462,153
Retained earnings 2,359,072 1,897,252
Cumulative foreign translation adjustment 70,869 (26,622)
----------- ------------
Total stockholders' equity 7,921,674 7,364,675
----------- ------------
Total Liabilities and Stockholders' Equity $19,530,733 $ 17,623,326
=========== ============
</TABLE>
See notes to financial statements.
3
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UNIDIGITAL INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995*
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REVENUES
- --------
<S> <C> <C>
Net sales $ 5,227,719 $ 2,717,822
----------- -----------
EXPENSES
Cost of sales 2,650,103 1,188,485
Selling, general and administrative expenses 1,422,034 761,694
Corporate expenses 387,704 155,000
----------- -----------
Total operating expenses 4,459,841 2,105,179
----------- -----------
Income from operations 767,878 612,643
Interest expense (134,277) (60,884)
Interest and other income 40,694 --
----------- -----------
Income before income tax 674,295 551,759
Provision for income tax 212,475 116,000 (a)
----------- -----------
Net Income $ 461,820 $ 435,759
=========== ===========
Net income per share $ .14 $ .22
=========== ===========
Weighted average common shares outstanding 3,189,216 2,000,000
</TABLE>
See notes to financial statements.
*Combined Predecessors
(a) U.S. operations taxed as a Subchapter S Corporation, no provision for
federal income tax.
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UNIDIGITAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995*
---- -----
<S> <C> <C>
Operating Activities:
Net income $ 461,820 $ 435,759
----------- ---------
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 424,466 194,208
Provision for deferred income taxes (39,903) 12,000
Provision for bad debts 10,112 4,600
Changes in assets and liabilities:
Accounts receivable (1,819,354) (397,448)
Prepaid expenses and other current assets (321,343) (136,843)
Other assets (4,829) (19,730)
Accounts payable and accrued expenses 3,081 220,438
Income taxes payable 147,454 42,372
----------- ---------
Total adjustments (1,600,316) (80,403)
----------- ---------
Net cash (used in) provided by operating activities (1,138,496) 355,356
----------- ---------
Investing Activities:
Additions to property and equipment (116,532) (98,591)
----------- ---------
Net cash used in investing activities (116,532) (98,591)
----------- ---------
Financing Activities:
Proceeds from due to banks and long-term debt 783,047 174,681
Payments of due to banks and long-term debt (29,584) --
Payments of capital lease obligations (549,510) (173,442)
Payments of notes for cancellation of options
and acquisition of business (162,490) (163,968)
Shareholder loans/(repayments) (5,859) --
IPO issuance costs (2,312) --
----------- ---------
Net cash (provided by) used in financing activities 33,292 (162,729)
----------- ---------
Effect of Foreign Exchange Rates on Cash 30,136 (12,510)
----------- ---------
NET INCREASE/(DECREASE) IN CASH/CASH
EQUIVALENTS (1,191,600) 81,526
Cash and cash equivalents at beginning of period 4,145,514 186,802
----------- ---------
Cash and cash equivalents at end of period $ 2,953,914 $ 268,328
=========== =========
Supplemental disclosures:
Interest paid $ 122,494 $ 58,584
=========== =========
Income taxes paid -- $ 61,362
=========== =========
Non cash transactions:
Equipment acquired under
capital lease obligations $ 878,116 $ 31,661
=========== =========
</TABLE>
See notes to financial statements
* Combined Predecessors
5
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UNIDIGITAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996
1. ORGANIZATION AND BASIS OF PRESENTATION
Unidigital Inc. ("Unidigital"), a Delaware corporation, is the parent holding
company for Linographics Corporation ("Linographics") and Elements (UK) Limited
("Elements") (collectively the "Predecessor Companies"), Linographics (Delaware)
Corporation ("Linographics Delaware") and Unidigital/Cardinal Corporation
("Cardinal"). All references herein to the "Company" mean collectively
Unidigital, the Predecessor Companies, Linographics Delaware and Cardinal unless
the context requires otherwise.
Unidigital conducts operations through four wholly-owned subsidiaries.
Linographics engages in the digital prepress business in New York City. Elements
engages in the digital prepress business and through its wholly-owned
subsidiary, Regent, operates the document production and digital print business
in London. Linographics Delaware owns and operates the San Francisco prepress
business. Cardinal engages in the digital prepress and digital printing business
services to advertising agencies and corporations in the New York City area.
The accompanying unaudited financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted principles for complete financial statements. In the
opinion of management, the unaudited interim consolidated financial statements
contain all adjustments, consisting of normal recurring accruals, necessary to
present fairly the current financial position of the Company and its results of
operations and the cash flows for the periods presented. Results for the interim
period(s) are not necessarily indicative of results to be expected for the full
year. These financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended August 31, 1996.
2. RECENT DEVELOPMENTS
On November 27, 1996, the Company amended its Unidigital/Cardinal Corporation
$1.4 million long-term loan extending the maturity until January 31, 1998.
3. FOREIGN CURRENCY TRANSLATION
The portion of the Company's financial statements relating to the United Kingdom
operations are translated into U.S. Dollars using period end exchange rates (One
Pound = $1.68 at November 30, 1996 and $1.56 at August 31, 1996) and average
exchange rates (One Pound = $1.62 for the three months ended November 30, 1996
and $1.57 for the three months ended November 30, 1995). The translation
difference is reflected as a separate component of stockholders' equity.
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4. STOCKHOLDERS' EQUITY
Common Stock
The Company has authorized 10,000,000 shares of Common Stock, $.01 par value, of
which 3,189,216 shares were issued and outstanding at November 30, 1996. The
Company has reserved for issuance i) 300,000 shares of Common Stock upon
exercise of options granted or to be granted under its Stock Option Plans and
ii) 80,000 shares of Common Stock upon exercise of warrants issued to Burnham
Securities Inc., the managing underwriter of the Company's IPO. The
underwriter's warrants are exercisable at a price of $7.20 per share for a
period of four years commencing February 1, 1997.
In addition, the Company has granted options to purchase 209,667 shares of
common stock at exercise prices ranging from $5.50 to $6.75.
Preferred Stock
The Company has authorized 5,000,000 shares of Preferred Stock, $.01 par value,
which may be issued by the Board of Directors on such terms and with such
rights, preferences and designations as the Board of Directors may determine
without further action by the Company's stockholders. There were no shares of
Preferred Stock issued or approved for issuance as of November 30, 1996.
5. PER SHARE DATA
Income per common share is based on net income for the period(s) divided by the
weighted average number of common shares outstanding. Average common shares
outstanding includes 3,189,216 shares of Common Stock.
7
<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company provides a full range of digital prepress and digital printing
services to the corporate and professional graphic arts industry in the New York
City, San Francisco and London markets. Digital prepress services involve
preparing an image for reproduction by any of several printing processes. Using
advanced computer technology, the Company provides the imaging and reproduction
services required by graphic artists in connection with the creation of designs
for their clients, which includes end-users of printed media such as consumer
product packaging, marketing and advertising materials. The Company's services
afford graphic artists the ability to make numerous changes and enhancements in
their designs throughout the design and approval process with shorter turnaround
times and at reduced costs compared to traditional prepress methods. Once a
design is approved, the Company provides the vital technological and service
interface between graphic artists and traditional commercial volume printers
necessary to translate the approved design into the format required for volume
printing. The Company services also include scanning, document creation services
such as typesetting, and short-run digital printing.
<TABLE>
<CAPTION>
Financial condition at November 30, 1996:
- -----------------------------------------
<S> <C>
Working Capital $ 2,477,972
Total Assets $ 19,530,733
Stockholders' Equity $ 7,921,674
</TABLE>
Results of Operations
The following analysis of the results of operations includes the Company and its
wholly-owned subsidiaries for the three months ended November 30, 1996. The
Company's results include the first full quarter of the Cardinal operations,
which were acquired in an asset acquisition through a wholly-owned subsidiary on
August 9, 1996. The Cardinal acquisition expands the Company's digital prepress
and digital print operations in the New York City and surrounding area. For the
three months ended November 30, 1995, the combined results of operations include
Linographics Corporation, Elements and Regent. All intercompany transactions
have been eliminated.
Comparison of Three Months Ended November 30, 1996 and November 30, 1995
Net Sales. Net sales for the three months ended November 30, 1996 increased 92%
to $5,227,719 compared to $2,717,822 for the three months ended November 30,
1995. The United States sales increased 123% from $1,355,453 to $3,027,175 due
to the Cardinal and Linographics Delaware acquisitions, offset in part by
decreases in revenue at the Linographics operations due to personnel turnover.
The United Kingdom sales in increased 62% from $1,362,369 to $2,200,544
attributable to increases in the Company's short-run digital print and prepress
operations.
Cost of Sales. Cost of sales for the three months ended November 30, 1996
increased 123% to $2,650,103 compared to $1,188,485 for the three months ended
November 30, 1995. The United States cost of sales increased 191% from
$507,030 to $1,473,640 primarily attributable to the Cardinal acquisition and
depreciation expense relative to new capital leases at each of the Company's
United States operating subsidiaries. The United Kingdom cost of sales
increased 73% from $681,455 to $1,176,463 due to increased sales and higher
production costs associated with digital print and depreciation expenses
relative to the Company's investment in digital print equipment capital leases.
8
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Cost of sales as a percentage of net sales increased from 44% for the three
months ended November 30, 1995 to 51% for the three months ended November 30,
1996 due to the increase in the Company's short-run digital print operations in
the United States and United Kingdom and the associated higher production costs.
Digital print operating margins are generally lower than digital prepress
operating margins.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended November 30, 1996 increased
87% to $1,422,034 compared to $761,694 for the three months ended November 30,
1995. The United States selling, general and administrative expenses increased
147% primarily attributable to the Cardinal acquisition, offset in part by a
decrease in selling, general and administrative expenses at Linographics due to
a decline in sales. The United States selling, general and administrative
expenses as a percentage of sales increased from 28% to 31% due to an overall
increase in sales and higher commissions with digital print. The United Kingdom
selling, general and administrative expenses increased commensurate with
sales; however, as a percentage of net sales, selling, general and
administrative expenses decreased from 28% to 22%.
Selling, general and administrative expenses as a percentage of net sales
decreased from 28% for the three months ended November 30, 1995 to 27% for the
three months ended November 30, 1996 for the reasons discussed above.
Corporate Expenses. Corporate expenses for the three months ended November 30,
1996 increased 150% to $387,704 compared to $155,000 for the three months ended
November 30, 1995 due to additional management and administrative personnel and
costs associated with Unidigital which did not exist in 1995. Corporate expenses
of Unidigital include financial and administrative personnel, investor
relations, legal and other professional fees and facilities cost.
Income From Operations. Income from operations for the three months ended
November 30, 1996 increased 25% to $767,878 compared to $612,643 for the three
months ended November 30, 1995 due to increased sales, offset in part by reduced
margins and increased selling, general and administrative expenses.
Interest Expense. Interest expense for the three months ended November 30, 1996
increased 121% to $134,277 compared to $60,884 for the three months ended
November 30, 1995. This increase is primarily attributable to the Company's
expanded United States credit facilities and capital leases assumed as part of
the Cardinal acquisition.
Interest and Other Income. Interest and other income, consisting primarily of
interest income associated with the Company's Initial Public Offering proceeds,
was $40,694 for the three months ended November 30, 1996.
Income Taxes. Income taxes for the three months ended November 30, 1996
increased 83% to $212,475 compared to $116,000 for the three months ended
November 30, 1995. The Company currently pays Federal, state and local income
tax for its U.S. operations where previously Linographics paid only local
corporate income tax as a result of its Subchapter S Corporation status.
Net Income. Net income for the three months ended November 30, 1996 increased 6%
to $461,820 compared to $435,759 for the three months ended November 30, 1995
due to the factors described above.
9
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Liquidity and Capital Resources
The Company's principal source of funds has been cash flow from operations and
working capital borrowings under its credit facilities. Cash (used in) /provided
by operations for the three months ended November 30, 1996 and 1995 was
($1,138,496) and $355,356, respectively. Cash used in operations for the three
months ended November 30, 1996 is primarily attributable to three months of
sales from the August 9, 1996 Cardinal acquisition. Cash used in investing
activities for the three months ended November 30, 1996 and 1995 was $116,532
and $98,591, respectively. Cash flows (provided by)/used in financing activities
for the three months ended November 30, 1996 and 1995 was $33,292 and
($162,729), respectively.
The Company maintains borrowing arrangements with banks in New York and London
which include term loans and lines of credits which are renewable annually. The
combined United States lines of credit aggregate $2,350,000 and the combined
United Kingdom lines of credit aggregate approximately $1,404,000. The Company's
term loans, exclusively in the United States, aggregate $1,700,000. At November
30, 1996, $1,550,000 in term loans are outstanding.
The United States lines of credit bear interest at prime plus 1/2% and the
United Kingdom lines of credit bear interest at 2.25% over the Bank's Base Rate,
as defined, for borrowings up to 600,000 Pound Sterling and bear interest at
2.75% over the Bank's Base Rate for borrowings in excess of such amount. The
term loans, excluding the Cardinal $1,400,000 term loan which is at prime, bear
interest at, the Company's discretion of, either the bank's prime rate plus
1/2% or at a fixed rate determined at the time of borrowing.
The United States credit facilities contain covenants limiting borrowings up to
specified amounts of accounts receivable aged 90 days or less. The credit
facilities are collateralized by the assets of Linographics, Linographics
(Delaware) and Cardinal. Unidigital is a guarantor on all bank debts of the
United States operating subsidiaries.
The United Kingdom credit facilities consist of a combined overdraft facility
relative to Elements and Regent and contain covenants limiting borrowings up to
specified amounts of accounts receivable aged 120 days or less and guaranteed by
Unidigital Inc. for the principal amount of 500,000 pounds.
At November 30, 1996, the Company was in compliance with all covenants under its
credit facilities.
The Company expects that cash flow from operations will be sufficient to fund
its capital lease obligations, debt service payments under its credit
facilities, capital expenditures and operations for the foreseeable future. The
Company may require additional financing to consummate future acquisitions.
There can be no assurance that the Company will be able to secure additional
financing.
10
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Inflation, Foreign Currency Fluctuations and Interest Rate Changes
Although the Company cannot accurately determine the precise effect thereof on
its operations, it does not believe inflation, currency fluctuations or interest
rate changes have historically had a material effect on revenues, sales or
results of operations. Inflation, currency fluctuations and changes in interest
rates have however, at various times, had significant effects on the economies
of the United States and United Kingdom and could adversely impact the Company's
revenues, sales and results of operations in the future. If there is a material
adverse change in the relationship between the United Kingdom Pound Sterling and
the United States Dollar, such change would adversely affect the results of the
Company's United Kingdom operations as reflected in the Company's financial
statements. The Company has not hedged its exposure with respect to this
currency risk, and does not expect to do so in the future, since it does not
believe that it is economically beneficial.
Forward Looking Information
Except for the historical information contained in this Form 10-QSB, certain
information herein may contain forward looking information. The matters referred
to in such statements could be affected by uncertainties involved in the
Company's business, including without limitation the effect of economic and
market conditions. Based upon the Company's current level of operations,
management expects that future cash flow from operations will be sufficient to
meet the anticipated requirements for working capital, capital expenditures and
scheduled payments of interest and principal under its credit facilities and
capital lease obligations.
11
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On or about November 21, 1996, Cardinal was named as a defendant in an
action (the "Action") brought by Phoenixcor, Inc. ("Phoenixcor"). In the Action,
Phoenixcor filed an order to show cause for replevin with temporary restraining
order in the Supreme Court of the State of New York, County of New York. On or
about December 24, 1996 an order of replevin and preliminary injunction was
entered against Cardinal in the Action. Insofar as it relates to Cardinal, the
Action relates to, among other matters, Cardinal's alleged failure to fully
assume the obligations of Cardinal Communications Group, Inc. under certain
equipment leases (the "Leases") acquired in connection with the Cardinal
acquisition, Cardinal's alleged default under the Leases and Phoenixcor's
alleged right to possession of the leased equipment.
The Company denies the allegations asserted by Phoenixcor in the Action,
but has elected to settle the matter in order to avoid protracted litigation
with the resultant costs and management distractions. On or about January 9,
1997, the parties reached an agreement in principle pursuant to which the
Company has agreed to assume the obligations under the Leases and to retain
possession of the leased equipment in exchange for reduced monthly payments
under such Leases. The Company believes that the terms of the foregoing
settlement will not have an adverse effect on the Company's business, financial
condition or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
10.1 Line of Credit between Linographics Corporation and Chase
Manhattan Bank.
10.2 Line of Credit between Linographics (Delaware) Corporation and
Chase Manhattan Bank.
10.3 Line of Credit and term loan between Unidigital/Cardinal
Corporation and Chase Manhattan Bank.
(b) FORM 8-K
On September 4, 1996, the Company filed a Form 8-K disclosing a
change in the certifying accountants.
On October 15, 1996, the Company filed a Form 8-K/A containing
required financial statements and pro forma information relating to
the acquisition disclosed in its Form 8-K filed on August 19, 1996.
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SIGNATURES
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 thereunto duly authorized.
UNIDIGITAL INC.
/s/ Kevin H. Rich
----------------------------------------
Kevin H. Rich
Vice President & Chief Financial Officer
January 14, 1997
13
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[THE CHASE MANHATTAN BANK LETTERHEAD]
November 11, 1996
Mr. William E. Dye, President
Linographics Corporation
Linographics (Delaware) Corporation
20 West 20th Street
New York, New York 10011
Dear Bill:
The Chase Manhattan Bank (the "Bank") is pleased to make available to
Linographics Corporation and Linographics (Delaware) Corporation, credit
facilities in the aggregate amount of $1,150,000. The Lines of Credit to be
extended at the Bank's sole discretion of up to $1,150,000 for working capital,
are subject but not limited to, the following terms and conditions:
LINOGRAPHICS CORPORATION:
LINE OF CREDIT
FACILITY:
Up to a maximum of $700,000 will be available for working capital purposes.
INTEREST RATE:
Borrowings will be priced at the Bank's Prime Rate, plus one-half (1/2%)
percent.
BORROWING BASE:
All drawdowns will be subject to a maximum borrowing base not to exceed 80% of
eligible accounts receivable aged ninety (90) days and less. Linographics will
provide a monthly borrowing base certificate to the Bank within fifteen (15)
days after the end of each month so long as there are loans outstanding under
the Line of Credit.
Any credit which the Bank may extend will be on terms and conditions as we may
require at the time Linographics requests an advance and must be evidenced by
documents in form and substance satisfactory to the Bank.
<PAGE> 2
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FACILITY FEE:
A facility fee of one half (1/2%) percent ($3,500) payable upon signing of this
Commitment Letter. Thereafter, one half (1/2%) percent of the entire Line of
Credit will be collected on an annual basis on the anniversary date of the Line
of Credit.
The Bank will continue to offer the Credit Facility as outlined herein in its
sole discretion subject to Linographics economic and financial condition
remaining acceptable to the Bank and Linographics maintenance of a satisfactory
relationship with the Bank. In any event, this Credit Facility is available
until January 31, 1998.
LINOGRAPHICS (DELAWARE) CORPORATION:
LINE OF CREDIT
FACILITY:
Up to a maximum of $450,000 will be available for working capital purposes.
INTEREST RATE:
Borrowings will be priced at the Bank's Prime Rate, plus one-half (1/2%)
percent.
BORROWING BASE:
All drawdowns will be subject to a maximum borrowing base not to exceed 80% of
eligible accounts receivable aged ninety (90) days and less. The borrowing base
will be the aggregate of the Accounts Receivable of Linographics Corporation
and Linographics (Delaware) Corporation. Linographics (Delaware) Corporation
will provide a monthly borrowing base certificate to the Bank within fifteen
(15) days after the end of each month so long as there are loans outstanding
under the Line of Credit.
Any credit which the Bank may extend will be on terms and conditions as we may
require at the time Linographics requests an advance and must be evidenced by
documents in form and substance satisfactory to the Bank.
FACILITY FEE:
A facility fee of one half (1/2%) percent ($2,250) payable upon signing of this
Commitment Letter. Thereafter, one half (1/2%) percent of the entire Line of
Credit will be collected on an annual basis on the anniversary date of the Line
of Credit.
<PAGE> 3
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The Bank will continue to offer the Credit Facility as outlined herein in its
sole discretion subject to Linographics (Delaware) Corporation's economic and
financial condition remaining acceptable to the Bank and the company's
maintenance of a satisfactory relationship with the Bank. In any event, this
Credit Facility is available until January 31, 1998.
GENERAL CONDITIONS OF THE CREDIT FACILITY:
All extensions of credit which the Bank may grant will be evidenced by
documents in form and substance satisfactory to the Bank. The Bank will
require the Companies to furnish the following support, which must remain in
place as long as the Credit Facilities as outlined herein are outstanding:
COLLATERAL/ CONDITIONS:
1. Priority UCC-1 Filing + GSA on all assets of Linographics Corp. and
Linographics (Delaware) Corporation.
2. Monthly borrowing base certificate(s) when line is outstanding for
Linographics Corporation or Linographics (Delaware) Corporation , with advances
up to 80% of eligible A/R's 90 days and less. The certificate will be provided
to the bank within 15 days of the end of the prior month.
3. Monthly account receivable agings for both entities provided within 15 days
of the end of the prior month.
4. The credit facility of Linographics (Delaware) Corporation will be supported
by the guaranty of Linographics Corporation.
5. Unidigital Inc.'s Corporate Guaranty remains in place for both facilities.
REPORTING:
1. Within 120 days after the close of each Fiscal Year, audited consolidated
statements for Unidigital Inc., prepared by an accounting firm acceptable to
the bank along with consolidating statements for each subsidiary.
2. Within 90 days after the date of the each semi-annual date, consolidated
statements for Unidigital Inc., prepared by an accounting firm acceptable to
the bank along with consolidating statements for each subsidiary.
3. Quarterly statements internally prepared by management for Unidigital Inc,
and its subsidiaries.
This letter is for your information only and is not to be shown to or relied
upon by third parties. This letter constitutes the entire understanding
between the Bank and the Company and supersedes all prior discussions.
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The Credit Facility described herein will not be made available to the
Companies until they acknowledge its understanding and agreement to the above
terms and conditions. If this letter correctly sets forth your understanding
of the terms and conditions regarding the Credit Facility, please indicate your
acceptance by signing in the space indicated and returning the original to the
Bank no later than November 30, 1996. If not accepted by you, the offer
contained herein shall at the Bank's option expire.
We appreciate this opportunity to work with you and look forward to the
continued development of our mutually beneficial relationship.
Very truly yours,
THE CHASE MANHATTAN BANK
BY: /s/ DONALD FURRER
-------------------------
Donald Furrer
Vice President
AGREED AND ACCEPTED
ON THIS DAY 21 DAY OF NOVEMBER 1996
-- --------
LINOGRAPHICS CORPORATION
BY: /s/ WILLIAM E. DYE
-------------------------
Title: President
----------------------
LINOGRAPHICS (DELAWARE) CORPORATION
BY: /s/ WILLIAM E. DYE
-------------------------
Title: President
----------------------
<PAGE> 5
CHASE LETTERHEAD
GRID TIME PROMISSORY NOTE
New York, New York
November 21, 1996
For value received, the undersigned unconditionally (and if more
than one, jointly and severally) promises to pay to the order of THE CHASE
MANHATTAN BANK ("Chase"), at its office located at 270 Park Avenue, New
York, New York, or to such other address as Chase may notify the
undersigned, the sum of Seven hundred thousand DOLLARS ($700,000.00) or
such unpaid principal amount of each loan made to the undersigned by Chase
and outstanding under this Note, on the maturity date(s) as shown on the
attached schedule or any continuation of the schedule.
This Note includes any Schedule or Rider attached hereto.
MATURITY DATE(S). Each loan shall mature on the last day of the
Interest Period therefor, as noted on the Interest Period column on the
attached schedule. As to a Variable Rate loan, if no Interest Period is
noted, then such loan is payable ON DEMAND.
INTEREST. The undersigned promise(s) to pay interest on the unpaid
balance of the principal amount of each such loan from and including the
date of each such loan to but excluding the date such loan shall be paid in
full at the following applicable rates (check Other Rate box if
applicable):
Variable Rate: A rate of interest per year which shall
automatically increase or decrease from time to
time so that at all times such rate shall remain
equal to that rate of interest from time to time
announced by Chase at its head office as its
prime commercial lending rate (the "Prime Rate")
PLUS 1/2%. Changes in the rate of interest
hereunder shall be effective as of and for the
entire day on which such change in the Prime Rate
becomes effective.
and
Other Rate: see Rider(s) attached hereto.
Interest shall be payable, as to a Variable Rate loan, on THE
FIRST DAY of each month and as to an Other Rate loan, on the last day of
each Interest Period, or if such Interest Period is more than 90 days, then
on the 90th day after the date of such loan and on the last day of such
Interest Period, unless otherwise specified on a Rider attached hereto, in
respect of the corresponding principal. Interest shall be calculated on the
basis of a year of 360 days and payable for the actual number of days
elapsed.
After the occurrence of an Event of Default set forth below,
Chase, at its option, by written notice to the undersigned may increase the
interest rate on this Note by an additional four percent (4%) per year
effective on the date of such notice.
PAYMENTS. All payments under this Note shall be made in lawful
money of the United States of America and in immediately available funds at
Chase's office specified above. Chase may (but shall not be obligated to)
debit the amount of any payment (principal or interest) under this Note
when due to any deposit account of (any of) the undersigned with Chase. If
the undersigned are more than one, all obligations of each of the
undersigned under this Note shall be joint and several. This Note may be
prepaid without premium unless otherwise specified on a Rider attached
hereto. Chase may apply any money received or collected for payment of this
Note to the principal of, interest on or any other amount payable under,
this Note in any order that Chase may elect.
<PAGE> 6
Whenever any payment to be made hereunder (including principal and
interest) shall be stated to be due on a day on which Chase's head office
is not open for business, that payment will be due on the next following
banking day, and any extension of time shall in each case be included in
the computation of interest payable on this Note.
If any payment (principal or interest) shall not be paid when due
other than a payment of the entire principal balance of the Note due upon
acceleration after default, the undersigned shall pay a late payment charge
equal to five percent (5%) of the amount of such delinquent payment,
provided that the amount of such late payment charge shall be not less than
$25 nor more than $500.
AUTHORIZATIONS. The undersigned hereby authorizes Chase to make
loans and disburse the proceeds thereof to the account listed below and to
make repayments of such loans by debiting such account upon oral,
telephonic or telecopied instructions made by any person purporting to be
an officer or agent of the undersigned who is empowered to make such
requests and give such instructions. The undersigned may amend these
instructions, from time to time, effective upon actual receipt of the
amendment by Chase. Chase shall not be responsible for the authority, or
lack of authority, of any person giving such telephonic instructions to
Chase pursuant to these provisions. By executing this Note, the undersigned
agrees to be bound to repay any loan obtained hereunder as reflected on
Chase's books and records and made in accordance with these authorizations,
regardless of the actual receipt of the proceeds thereof.
RECORDS. The date, amount and maturity date of each loan under
this Note and each payment of principal, loan(s) to which such principal is
applied (which shall be at the discretion of Chase) and the outstanding
principal balance of loans, shall be recorded by Chase on its books and
prior to any transfer of this Note (or, at the discretion of Chase at any
other time) endorsed by Chase on the schedule attached or any continuation
of the schedule. Any such endorsement shall be conclusive absent manifest
error.
REPRESENTATIONS AND WARRANTIES. If the undersigned is other than
an individual, the undersigned represents and warrants upon the execution
and delivery of this Note and upon each loan request hereunder, that: (a)
it is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and, if relevant under
such laws, in good standing; (b) it has the power to execute and deliver
this Note and to perform its obligations hereunder and has taken all
necessary action to authorize such execution, delivery and performance; (c)
such execution, delivery and performance do not violate or conflict with
any law applicable to it, any provision of its organizational documents,
any order or judgment of any court or other agency of government applicable
to it or any of its assets or any material contractual restriction binding
on or materially affecting it or any of its assets; (d) to the best of
undersigned's knowledge, all governmental and other consents that are
required to have been obtained by it with respect to this Note have been
obtained and are in full force and effect and all conditions of any such
consents have been complied with; (e) its obligations under this Note
constitute its legal, valid and binding obligations, enforceable in
accordance with its terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency or other similar laws
affecting creditors' rights generally; (f) all financial statements and
related information furnished and to be furnished to Chase from time to
time by the undersigned are true and complete and fairly present the
financial or other information stated therein as at such dates or for the
periods covered thereby; (g) there are no actions, suits, proceedings or
investigations pending or, to the knowledge of the undersigned, threatened
against or affecting the undersigned before any court, governmental agency
or arbitrator, which involve forfeiture of any assets of the undersigned or
which may materially adversely affect the financial condition, operations,
properties or business of the undersigned or the ability of the undersigned
to perform its obligation under this Note; and (h) there has been no
material adverse change in the financial condition of the undersigned since
the last such financial statements or information. If the undersigned is an
individual, the undersigned represents and warrants at the times set forth
at the beginning of this section, the correctness of clauses (c), (d), (e),
(f), (g) and (h) above to the extent applicable to an individual.
NO COMMITMENT. This Note does not create and shall not be deemed
or construed to create any contractual commitment to lend by Chase. Any
such commitment in respect of this Note can only be made by and shall only
be effective to the extent set forth in a separate writing expressly
designated for that purpose and subscribed by a duly authorized officer of
Chase.
<PAGE> 7
SECURITY. As collateral security for the payment of this Note and of any
and all other obligations and liabilities of the undersigned to Chase, now
existing or hereafter arising, the undersigned grants to Chase a security
interest in and a lien upon and right of offset against all moneys, deposit
balances, securities or other property or interest therein of the
undersigned now or at any time hereafter held or received by or for or left
in the possession or control of Chase or any of its affiliates, including
subsidiaries, whether for safekeeping, custody, transmission, collection,
pledge or for any other or different purpose.
DEFAULT. IF ANY OF THE FOLLOWING EVENTS OF DEFAULT SHALL OCCUR
with respect to any of the undersigned (each an "Event of Default"):
(a) the undersigned shall fail to pay the principal of, or
interest on, this Note, or any other amount payable under this
Note, as and when due and payable;
(b) any representation or warranty made or deemed made by the
undersigned in this Note or in any document granting security or
support for (or otherwise executed in connection with) this Note
or by any third party supporting or liable with respect to this
Note (whether by guaranty, subordination, grant of security or any
other credit support, a "Third Party") in any document evidencing
the obligations of a Third Party (this Note and all of the
foregoing documents and all agreements, instruments or other
documents executed by the undersigned or a Third Party being the
"Facility Documents") or which is contained in any certificate,
document, opinion, financial or other statement furnished at any
time under or in connection with any Facility Document, shall
prove to have been incorrect in any material respect on or as of
the date made or deemed made;
(c) the undersigned or any Third Party shall fail to perform
or observe any term, covenant or agreement contained in any
Facility Document on its part to be performed or observed, and
such failure shall continue for 30 consecutive days;
(d) the undersigned or any Third Party shall fail to pay when
due any indebtedness (including but not limited to indebtedness
for borrowed money) or if any such indebtedness shall become due
and payable, or shall be capable of becoming due and payable at
the option of any holder thereof, by acceleration of its maturity,
or if there shall be any default by the undersigned or any Third
Party under any agreement relating to such indebtedness;
(e) the undersigned or any Third Party: (i) shall generally
not, or be unable to, or shall admit in writing its inability to,
pay its debts as such debts become due; (ii) shall make an
assignment for the benefit of creditors; (iii) shall file a
petition in bankruptcy or for any relief under any law of any
jurisdiction relating to reorganization, arrangement, readjustment
of debt, dissolution or liquidation; (iv) shall have any such
petition filed against it and the same shall remain undismissed
for a period of 30 days or shall consent or acquiesce thereto; or
(v) shall have had a receiver, custodian or trustee appointed for
all or a substantial part of its property;
(f) if the undersigned or any Third Party is an individual,
such individual shall die or be declared incompetent;
(g) any Third Party Facility Document shall at any time and
for any reason cease to be in full force and effect or shall be
declared null and void, or its validity or enforceability shall be
contested by the relevant Third Party or such Third Party shall
deny it has any further liability or obligation under any Facility
Document or shall fail to perform its obligations under any
Facility Document;
(h) any security agreement or other agreement (whether by the
undersigned or any Third Party) granting a security interest,
lien, mortgage or other encumbrance securing obligations under any
Facility Document shall at any time and for any reason cease to
create a valid and perfected first priority security interest,
lien, mortgage or other encumbrance in or on the property
purported to be subject to such agreement or shall cease to be in
full force and effect or shall be declared null and void, or the
validity or enforceability of any such agreement shall be
contested by any party to such agreement, or such party shall deny
it has any further liability or obligation under such agreement or
any such party shall fail to perform any of its obligations under
such agreement;
(i) the undersigned shall make or permit to be made any
material change in the character, management or direction of the
undersigned's business or operations (including, but not limited
to, a change in its executive management or in the ownership of
its capital stock which effects a change in the control of any
such business or operations), which is not satisfactory to Chase;
(j) the undersigned or any Third Party shall suffer a material
adverse change in its business, financial condition, properties or
prospects;
(k) any action, suit, proceeding or investigation against or
affecting the undersigned or a Third Party before any court or
governmental agency which involves forfeiture of any assets of the
undersigned or a Third Party shall have been commenced; or
<PAGE> 8
(l) one or more judgments, decrees or orders for the payment
of money in excess of $50,000 in the aggregate shall be rendered
against the undersigned and shall continue unsatisfied and in
effect for a period of 30 consecutive days without being vacated,
discharged, satisfied or stayed or bonded pending appeal.
THEN, IN ANY SUCH CASE, if Chase shall elect by notice to the undersigned,
the unpaid principal amount of this Note, together with accrued interest,
shall become forthwith due and payable; provided that in the case of an
event of default under (e) above, the unpaid principal amount of this Note,
together with accrued interest, shall immediately become due and payable
without any notice or other action by Chase.
THE EVENTS OF DEFAULT AND REMEDIES SET FORTH ABOVE ARE IN ADDITION
TO AND WITHOUT IN ANY WAY DIMINISHING ANY RIGHT BY CHASE TO MAKE DEMAND FOR
PAYMENT AT ANY TIME.
CERTAIN WAIVERS. The undersigned waive(s) presentment, notice of
dishonor, protest and any other notice or formality with respect to this
Note.
COSTS. The undersigned agree(s) to reimburse Chase on demand for
all costs, expenses and charges (including, without limitation, fees and
charges of external legal counsel for Chase and costs allocated by its
internal legal department) in connection with the preparation,
interpretation, performance or enforcement of this Note and the Facility
Documents.
NOTICES. All notices, requests, demands or other communications to
or upon the undersigned or Chase shall be in writing and shall be deemed to
be delivered upon receipt if delivered by hand or overnight courier or five
days after mailing to the address (a) of the undersigned as set forth next
to the undersigned's execution of this Note, (b) of Chase as first set
forth above, or (c) of the undersigned or Chase at such other address as
the undersigned or Chase shall specify to the other in writing.
ASSIGNMENT. This Note shall be binding upon the undersigned and
its or their successors and shall inure to the benefit of Chase and its
successors and assigns.
AMENDMENT AND WAIVER. This Note may be amended only by a writing
signed on behalf of each party and shall be effective only to the extent
set forth in that writing. No delay by Chase in exercising any power or
right hereunder shall operate as a waiver thereof or of any other power or
right; nor shall any single or partial exercise of any power or right
preclude other or future exercise thereof, or the exercise of any other
power or right hereunder.
GOVERNING LAW; JURISDICTION. This Note shall be governed by and
construed in accordance with the laws of the State of New York, Connecticut
or New Jersey, depending on the location of the Chase office set forth in
this Note. The undersigned consent(s) to the nonexclusive jurisdiction and
venue of the state or federal courts located in such state. In the event of
a dispute hereunder, suit may be brought against the undersigned is such
courts or in any jurisdiction where the undersigned or any of its assets
may be located. Service of process by Chase in connection with any dispute
shall be binding on the undersigned if sent to the undersigned by
registered mail at the address(es) specified below or to such further
address(es) as the undersigned may specify to Chase in writing.
MAXIMUM INTEREST. Notwithstanding any other provision of this
Note, the undersigned shall not be required to pay any amount pursuant to
this Note which is in excess of the maximum amount permitted to be charged
by national banks under applicable law and any such excess interest paid
shall be refunded to the undersigned or applied to principal owing
hereunder.
COMMERCIAL TRANSACTION. IF THE UNDERSIGNED IS A CONNECTICUT
DOMICILED ENTITY OR RESIDENT, EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGES
THAT THIS NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY CONSTITUTE
COMMERCIAL TRANSACTIONS WITHIN THE MEANING OF SECTION 52L-278a OF THE
CONNECTICUT GENERAL STATUTES. EACH OF THE UNDERSIGNED EXPRESSLY WAIVES ANY
AND ALL RIGHTS, CONSTITUTIONAL OR OTHERWISE, WITH RESPECT TO NOTICE AND
HEARING AND ANY RIGHTS UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES IN CONNECTION WITH ANY PREJUDGMENT REMEDY AVAILABLE TO CHASE.
<PAGE> 9
BORROWER WAIVERS. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE(S) (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY
RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS NOTE
OR ANY FACILITY DOCUMENT, AND AGREES THAT ANY SUCH DISPUTE SHALL, AT CHASE'S
OPTION, BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
IN ADDITION, THE UNDERSIGNED WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE
BASED UPON ANY STATUTE OF LIMITATIONS OR ANY CLAIM OF DELAY BY CHASE AND ANY
SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION.
Chase Account No. to be charged for
Disbursements and Payments:
--------------------------------------------
Address for notices: Linographics Corporation
--------------------------------------------
20 West 20th Street By: /s/ William Dye
- ------------------------ ----------------------------------------
New York, New York 10011 Print Name: William Dye
- ------------------------ --------------------------------
Title: President
- ------------------------ -------------------------------------
By:
- ------------------------ ----------------------------------------
Telecopier No. ( ) - Print Name:
--- ---- ---- --------------------------------
Title:
-------------------------------------
<PAGE> 10
SCHEDULE TO GRID
PROMISSORY NOTE OF
_______________________ DATED _______________, 199_.
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL
DATE BALANCE NOTATION
OF INTEREST AMOUNT OF INTEREST AMOUNT OF REMAINING MADE
LOAN PERIOD LOAN RATE PAYMENT UNPAID BY
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
[THE CHASE MANHATTAN BANK LETTERHEAD]
November 11, 1996
Mr. William E. Dye, President
Linographics Corporation
Linographics (Delaware) Corporation
20 West 20th Street
New York, New York 10011
Dear Bill:
The Chase Manhattan Bank (the "Bank") is pleased to make available to
Linographics Corporation and Linographics (Delaware) Corporation, credit
facilities in the aggregate amount of $1,150,000. The Lines of Credit to be
extended at the Bank's sole discretion of up to $1,150,000 for working capital,
are subject but not limited to, the following terms and conditions:
LINOGRAPHICS CORPORATION:
LINE OF CREDIT
FACILITY:
Up to a maximum of $700,000 will be available for working capital purposes.
INTEREST RATE:
Borrowings will be priced at the Bank's Prime Rate, plus one-half (1/2%)
percent.
BORROWING BASE:
All drawdowns will be subject to a maximum borrowing base not to exceed 80% of
eligible accounts receivable aged ninety (90) days and less. Linographics will
provide a monthly borrowing base certificate to the Bank within fifteen (15)
days after the end of each month so long as there are loans outstanding under
the Line of Credit.
Any credit which the Bank may extend will be on terms and conditions as we may
require at the time Linographics requests an advance and must be evidenced by
documents in form and substance satisfactory to the Bank.
<PAGE> 2
- 2 -
FACILITY FEE:
A facility fee of one half (1/2%) percent ($3,500) payable upon signing of this
Commitment Letter. Thereafter, one half (1/2%) percent of the entire Line of
Credit will be collected on an annual basis on the anniversary date of the Line
of Credit.
The Bank will continue to offer the Credit Facility as outlined herein in its
sole discretion subject to Linographics economic and financial condition
remaining acceptable to the Bank and Linographics maintenance of a satisfactory
relationship with the Bank. In any event, this Credit Facility is available
until January 31, 1998.
LINOGRAPHICS (DELAWARE) CORPORATION:
LINE OF CREDIT
FACILITY:
Up to a maximum of $450,000 will be available for working capital purposes.
INTEREST RATE:
Borrowings will be priced at the Bank's Prime Rate, plus one-half (1/2%)
percent.
BORROWING BASE:
All drawdowns will be subject to a maximum borrowing base not to exceed 80% of
eligible accounts receivable aged ninety (90) days and less. The borrowing base
will be the aggregate of the Accounts Receivable of Linographics Corporation
and Linographics (Delaware) Corporation. Linographics (Delaware) Corporation
will provide a monthly borrowing base certificate to the Bank within fifteen
(15) days after the end of each month so long as there are loans outstanding
under the Line of Credit.
Any credit which the Bank may extend will be on terms and conditions as we may
require at the time Linographics requests an advance and must be evidenced by
documents in form and substance satisfactory to the Bank.
FACILITY FEE:
A facility fee of one half (1/2%) percent ($2,250) payable upon signing of this
Commitment Letter. Thereafter, one half (1/2%) percent of the entire Line of
Credit will be collected on an annual basis on the anniversary date of the Line
of Credit.
<PAGE> 3
- 3 -
The Bank will continue to offer the Credit Facility as outlined herein in its
sole discretion subject to Linographics (Delaware) Corporation's economic and
financial condition remaining acceptable to the Bank and the company's
maintenance of a satisfactory relationship with the Bank. In any event, this
Credit Facility is available until January 31, 1998.
GENERAL CONDITIONS OF THE CREDIT FACILITY:
All extensions of credit which the Bank may grant will be evidenced by
documents in form and substance satisfactory to the Bank. The Bank will
require the Companies to furnish the following support, which must remain in
place as long as the Credit Facilities as outlined herein are outstanding:
COLLATERAL/ CONDITIONS:
1. Priority UCC-1 Filing + GSA on all assets of Linographics Corp. and
Linographics (Delaware) Corporation.
2. Monthly borrowing base certificate(s) when line is outstanding for
Linographics Corporation or Linographics (Delaware) Corporation , with advances
up to 80% of eligible A/R's 90 days and less. The certificate will be provided
to the bank within 15 days of the end of the prior month.
3. Monthly account receivable agings for both entities provided within 15 days
of the end of the prior month.
4. The credit facility of Linographics (Delaware) Corporation will be supported
by the guaranty of Linographics Corporation.
5. Unidigital Inc.'s Corporate Guaranty remains in place for both facilities.
REPORTING:
1. Within 120 days after the close of each Fiscal Year, audited consolidated
statements for Unidigital Inc., prepared by an accounting firm acceptable to
the bank along with consolidating statements for each subsidiary.
2. Within 90 days after the date of the each semi-annual date, consolidated
statements for Unidigital Inc., prepared by an accounting firm acceptable to
the bank along with consolidating statements for each subsidiary.
3. Quarterly statements internally prepared by management for Unidigital Inc,
and its subsidiaries.
This letter is for your information only and is not to be shown to or relied
upon by third parties. This letter constitutes the entire understanding
between the Bank and the Company and supersedes all prior discussions.
<PAGE> 4
- 4 -
The Credit Facility described herein will not be made available to the
Companies until they acknowledge its understanding and agreement to the above
terms and conditions. If this letter correctly sets forth your understanding
of the terms and conditions regarding the Credit Facility, please indicate your
acceptance by signing in the space indicated and returning the original to the
Bank no later than November 30, 1996. If not accepted by you, the offer
contained herein shall at the Bank's option expire.
We appreciate this opportunity to work with you and look forward to the
continued development of our mutually beneficial relationship.
Very truly yours,
THE CHASE MANHATTAN BANK
BY: /s/ DONALD FURRER
-------------------------
Donald Furrer
Vice President
AGREED AND ACCEPTED
ON THIS DAY 21 DAY OF NOVEMBER 1996
-- --------
LINOGRAPHICS CORPORATION
BY: /s/ WILLIAM E. DYE
-------------------------
Title: President
----------------------
LINOGRAPHICS (DELAWARE) CORPORATION
BY: /s/ WILLIAM E. DYE
-------------------------
Title: President
----------------------
<PAGE> 5
CHASE LETTERHEAD
GRID TIME PROMISSORY NOTE
New York, New York
November 21, 1996
For value received, the undersigned unconditionally (and if more
than one, jointly and severally) promises to pay to the order of THE CHASE
MANHATTAN BANK ("Chase"), at its office located at 270 Park Avenue, New
York, New York, or to such other address as Chase may notify the
undersigned, the sum of Four hundred and fifty thousand DOLLARS
($450,000.00) or such unpaid principal amount of each loan made to
the undersigned by Chase and outstanding under this Note, on the maturity
date(s) as shown on the attached schedule or any continuation of the
schedule.
This Note includes any Schedule or Rider attached hereto.
MATURITY DATE(S). Each loan shall mature on the last day of the
Interest Period therefor, as noted on the Interest Period column on the
attached schedule. As to a Variable Rate loan, if no Interest Period is
noted, then such loan is payable ON DEMAND.
INTEREST. The undersigned promise(s) to pay interest on the unpaid
balance of the principal amount of each such loan from and including the
date of each such loan to but excluding the date such loan shall be paid in
full at the following applicable rates (check Other Rate box if
applicable):
Variable Rate: A rate of interest per year which shall
automatically increase or decrease from time to
time so that at all times such rate shall remain
equal to that rate of interest from time to time
announced by Chase at its head office as its
prime commercial lending rate (the "Prime Rate")
PLUS 1/2%. Changes in the rate of interest
hereunder shall be effective as of and for the
entire day on which such change in the Prime
Rate becomes effective.
and
Other Rate: see Rider(s) attached hereto.
Interest shall be payable, as to a Variable Rate loan, on THE
FIRST DAY of each month and as to an Other Rate loan, on the last day of
each Interest Period, or if such Interest Period is more than 90 days, then
on the 90th day after the date of such loan and on the last day of such
Interest Period, unless otherwise specified on a Rider attached hereto, in
respect of the corresponding principal. Interest shall be calculated on the
basis of a year of 360 days and payable for the actual number of days
elapsed.
After the occurrence of an Event of Default set forth below,
Chase, at its option, by written notice to the undersigned may increase the
interest rate on this Note by an additional four percent (4%) per year
effective on the date of such notice.
PAYMENTS. All payments under this Note shall be made in lawful
money of the United States of America and in immediately available funds at
Chase's office specified above. Chase may (but shall not be obligated to)
debit the amount of any payment (principal or interest) under this Note
when due to any deposit account of (any of) the undersigned with Chase. If
the undersigned are more than one, all obligations of each of the
undersigned under this Note shall be joint and several. This Note may be
prepaid without premium unless otherwise specified on a Rider attached
hereto. Chase may apply any money received or collected for payment of this
Note to the principal of, interest on or any other amount payable under,
this Note in any order that Chase may elect.
<PAGE> 6
Whenever any payment to be made hereunder (including principal and
interest) shall be stated to be due on a day on which Chase's head office
is not open for business, that payment will be due on the next following
banking day, and any extension of time shall in each case be included in
the computation of interest payable on this Note.
If any payment (principal or interest) shall not be paid when due
other than a payment of the entire principal balance of the Note due upon
acceleration after default, the undersigned shall pay a late payment charge
equal to five percent (5%) of the amount of such delinquent payment,
provided that the amount of such late payment charge shall be not less than
$25 nor more than $500.
AUTHORIZATIONS. The undersigned hereby authorizes Chase to make
loans and disburse the proceeds thereof to the account listed below and to
make repayments of such loans by debiting such account upon oral,
telephonic or telecopied instructions made by any person purporting to be
an officer or agent of the undersigned who is empowered to make such
requests and give such instructions. The undersigned may amend these
instructions, from time to time, effective upon actual receipt of the
amendment by Chase. Chase shall not be responsible for the authority, or
lack of authority, of any person giving such telephonic instructions to
Chase pursuant to these provisions. By executing this Note, the undersigned
agrees to be bound to repay any loan obtained hereunder as reflected on
Chase's books and records and made in accordance with these authorizations,
regardless of the actual receipt of the proceeds thereof.
RECORDS. The date, amount and maturity date of each loan under
this Note and each payment of principal, loan(s) to which such principal is
applied (which shall be at the discretion of Chase) and the outstanding
principal balance of loans, shall be recorded by Chase on its books and
prior to any transfer of this Note (or, at the discretion of Chase at any
other time) endorsed by Chase on the schedule attached or any continuation
of the schedule. Any such endorsement shall be conclusive absent manifest
error.
REPRESENTATIONS AND WARRANTIES. If the undersigned is other than
an individual, the undersigned represents and warrants upon the execution
and delivery of this Note and upon each loan request hereunder, that: (a)
it is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and, if relevant under
such laws, in good standing; (b) it has the power to execute and deliver
this Note and to perform its obligations hereunder and has taken all
necessary action to authorize such execution, delivery and performance; (c)
such execution, delivery and performance do not violate or conflict with
any law applicable to it, any provision of its organizational documents,
any order or judgment of any court or other agency of government applicable
to it or any of its assets or any material contractual restriction binding
on or materially affecting it or any of its assets; (d) to the best of
undersigned's knowledge, all governmental and other consents that are
required to have been obtained by it with respect to this Note have been
obtained and are in full force and effect and all conditions of any such
consents have been complied with; (e) its obligations under this Note
constitute its legal, valid and binding obligations, enforceable in
accordance with its terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency or other similar laws
affecting creditors' rights generally; (f) all financial statements and
related information furnished and to be furnished to Chase from time to
time by the undersigned are true and complete and fairly present the
financial or other information stated therein as at such dates or for the
periods covered thereby; (g) there are no actions, suits, proceedings or
investigations pending or, to the knowledge of the undersigned, threatened
against or affecting the undersigned before any court, governmental agency
or arbitrator, which involve forfeiture of any assets of the undersigned or
which may materially adversely affect the financial condition, operations,
properties or business of the undersigned or the ability of the undersigned
to perform its obligation under this Note; and (h) there has been no
material adverse change in the financial condition of the undersigned since
the last such financial statements or information. If the undersigned is an
individual, the undersigned represents and warrants at the times set forth
at the beginning of this section, the correctness of clauses (c), (d), (e),
(f), (g) and (h) above to the extent applicable to an individual.
NO COMMITMENT. This Note does not create and shall not be deemed
or construed to create any contractual commitment to lend by Chase. Any
such commitment in respect of this Note can only be made by and shall only
be effective to the extent set forth in a separate writing expressly
designated for that purpose and subscribed by a duly authorized officer of
Chase.
<PAGE> 7
SECURITY. As collateral security for the payment of this Note and of any
and all other obligations and liabilities of the undersigned to Chase, now
existing or hereafter arising, the undersigned grants to Chase a security
interest in and a lien upon and right of offset against all moneys, deposit
balances, securities or other property or interest therein of the
undersigned now or at any time hereafter held or received by or for or left
in the possession or control of Chase or any of its affiliates, including
subsidiaries, whether for safekeeping, custody, transmission, collection,
pledge or for any other or different purpose.
DEFAULT. IF ANY OF THE FOLLOWING EVENTS OF DEFAULT SHALL OCCUR
with respect to any of the undersigned (each an "Event of Default"):
(a) the undersigned shall fail to pay the principal of, or
interest on, this Note, or any other amount payable under this
Note, as and when due and payable;
(b) any representation or warranty made or deemed made by the
undersigned in this Note or in any document granting security or
support for (or otherwise executed in connection with) this Note
or by any third party supporting or liable with respect to this
Note (whether by guaranty, subordination, grant of security or any
other credit support, a "Third Party") in any document evidencing
the obligations of a Third Party (this Note and all of the
foregoing documents and all agreements, instruments or other
documents executed by the undersigned or a Third Party being the
"Facility Documents") or which is contained in any certificate,
document, opinion, financial or other statement furnished at any
time under or in connection with any Facility Document, shall
prove to have been incorrect in any material respect on or as of
the date made or deemed made;
(c) the undersigned or any Third Party shall fail to perform
or observe any term, covenant or agreement contained in any
Facility Document on its part to be performed or observed, and
such failure shall continue for 30 consecutive days;
(d) the undersigned or any Third Party shall fail to pay when
due any indebtedness (including but not limited to indebtedness
for borrowed money) or if any such indebtedness shall become due
and payable, or shall be capable of becoming due and payable at
the option of any holder thereof, by acceleration of its maturity,
or if there shall be any default by the undersigned or any Third
Party under any agreement relating to such indebtedness;
(e) the undersigned or any Third Party: (i) shall generally
not, or be unable to, or shall admit in writing its inability to,
pay its debts as such debts become due; (ii) shall make an
assignment for the benefit of creditors; (iii) shall file a
petition in bankruptcy or for any relief under any law of any
jurisdiction relating to reorganization, arrangement, readjustment
of debt, dissolution or liquidation; (iv) shall have any such
petition filed against it and the same shall remain undismissed
for a period of 30 days or shall consent or acquiesce thereto; or
(v) shall have had a receiver, custodian or trustee appointed for
all or a substantial part of its property;
(f) if the undersigned or any Third Party is an individual,
such individual shall die or be declared incompetent;
(g) any Third Party Facility Document shall at any time and
for any reason cease to be in full force and effect or shall be
declared null and void, or its validity or enforceability shall be
contested by the relevant Third Party or such Third Party shall
deny it has any further liability or obligation under any Facility
Document or shall fail to perform its obligations under any
Facility Document;
(h) any security agreement or other agreement (whether by the
undersigned or any Third Party) granting a security interest,
lien, mortgage or other encumbrance securing obligations under any
Facility Document shall at any time and for any reason cease to
create a valid and perfected first priority security interest,
lien, mortgage or other encumbrance in or on the property
purported to be subject to such agreement or shall cease to be in
full force and effect or shall be declared null and void, or the
validity or enforceability of any such agreement shall be
contested by any party to such agreement, or such party shall deny
it has any further liability or obligation under such agreement or
any such party shall fail to perform any of its obligations under
such agreement;
(i) the undersigned shall make or permit to be made any
material change in the character, management or direction of the
undersigned's business or operations (including, but not limited
to, a change in its executive management or in the ownership of
its capital stock which effects a change in the control of any
such business or operations), which is not satisfactory to Chase;
(j) the undersigned or any Third Party shall suffer a material
adverse change in its business, financial condition, properties or
prospects;
(k) any action, suit, proceeding or investigation against or
affecting the undersigned or a Third Party before any court or
governmental agency which involves forfeiture of any assets of the
undersigned or a Third Party shall have been commenced; or
<PAGE> 8
(l) one or more judgments, decrees or orders for the payment
of money in excess of $50,000 in the aggregate shall be rendered
against the undersigned and shall continue unsatisfied and in
effect for a period of 30 consecutive days without being vacated,
discharged, satisfied or stayed or bonded pending appeal.
THEN, IN ANY SUCH CASE, if Chase shall elect by notice to the undersigned,
the unpaid principal amount of this Note, together with accrued interest,
shall become forthwith due and payable; provided that in the case of an
event of default under (e) above, the unpaid principal amount of this Note,
together with accrued interest, shall immediately become due and payable
without any notice or other action by Chase.
THE EVENTS OF DEFAULT AND REMEDIES SET FORTH ABOVE ARE IN ADDITION
TO AND WITHOUT IN ANY WAY DIMINISHING ANY RIGHT BY CHASE TO MAKE DEMAND FOR
PAYMENT AT ANY TIME.
CERTAIN WAIVERS. The undersigned waive(s) presentment, notice of
dishonor, protest and any other notice or formality with respect to this
Note.
COSTS. The undersigned agree(s) to reimburse Chase on demand for
all costs, expenses and charges (including, without limitation, fees and
charges of external legal counsel for Chase and costs allocated by its
internal legal department) in connection with the preparation,
interpretation, performance or enforcement of this Note and the Facility
Documents.
NOTICES. All notices, requests, demands or other communications to
or upon the undersigned or Chase shall be in writing and shall be deemed to
be delivered upon receipt if delivered by hand or overnight courier or five
days after mailing to the address (a) of the undersigned as set forth next
to the undersigned's execution of this Note, (b) of Chase as first set
forth above, or (c) of the undersigned or Chase at such other address as
the undersigned or Chase shall specify to the other in writing.
ASSIGNMENT. This Note shall be binding upon the undersigned and
its or their successors and shall inure to the benefit of Chase and its
successors and assigns.
AMENDMENT AND WAIVER. This Note may be amended only by a writing
signed on behalf of each party and shall be effective only to the extent
set forth in that writing. No delay by Chase in exercising any power or
right hereunder shall operate as a waiver thereof or of any other power or
right; nor shall any single or partial exercise of any power or right
preclude other or future exercise thereof, or the exercise of any other
power or right hereunder.
GOVERNING LAW; JURISDICTION. This Note shall be governed by and
construed in accordance with the laws of the State of New York, Connecticut
or New Jersey, depending on the location of the Chase office set forth in
this Note. The undersigned consent(s) to the nonexclusive jurisdiction and
venue of the state or federal courts located in such state. In the event of
a dispute hereunder, suit may be brought against the undersigned is such
courts or in any jurisdiction where the undersigned or any of its assets
may be located. Service of process by Chase in connection with any dispute
shall be binding on the undersigned if sent to the undersigned by
registered mail at the address(es) specified below or to such further
address(es) as the undersigned may specify to Chase in writing.
MAXIMUM INTEREST. Notwithstanding any other provision of this
Note, the undersigned shall not be required to pay any amount pursuant to
this Note which is in excess of the maximum amount permitted to be charged
by national banks under applicable law and any such excess interest paid
shall be refunded to the undersigned or applied to principal owing
hereunder.
COMMERCIAL TRANSACTION. IF THE UNDERSIGNED IS A CONNECTICUT
DOMICILED ENTITY OR RESIDENT, EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGES
THAT THIS NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY CONSTITUTE
COMMERCIAL TRANSACTIONS WITHIN THE MEANING OF SECTION 52L-278a OF THE
CONNECTICUT GENERAL STATUTES. EACH OF THE UNDERSIGNED EXPRESSLY WAIVES ANY
AND ALL RIGHTS, CONSTITUTIONAL OR OTHERWISE, WITH RESPECT TO NOTICE AND
HEARING AND ANY RIGHTS UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES IN CONNECTION WITH ANY PREJUDGMENT REMEDY AVAILABLE TO CHASE.
<PAGE> 9
BORROWER WAIVERS. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE(S) (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY
RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS NOTE
OR ANY FACILITY DOCUMENT, AND AGREES THAT ANY SUCH DISPUTE SHALL, AT CHASE'S
OPTION, BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
IN ADDITION, THE UNDERSIGNED WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE
BASED UPON ANY STATUTE OF LIMITATIONS OR ANY CLAIM OF DELAY BY CHASE AND ANY
SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION.
Chase Account No. to be charged for
Disbursements and Payments:
-----------------------------
Address for notices: Linographics (Delaware) Corporation
-------------------------------------------
20 West 20th Street By: /s/ William Dye
- ------------------------ ---------------------------------------
New York, New York 10011 Print Name: William Dye
- ------------------------ -------------------------------
Title: CEO
- ------------------------ ------------------------------------
By:
- ------------------------ ---------------------------------------
Telecopier No. ( ) - Print Name:
--- ---- ---- ------------------------------
Title:
-----------------------------------
<PAGE> 10
SCHEDULE TO GRID
PROMISSORY NOTE OF
_______________________ DATED _______________, 199_.
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL
DATE BALANCE NOTATION
OF INTEREST AMOUNT OF INTEREST AMOUNT OF REMAINING MADE
LOAN PERIOD LOAN RATE PAYMENT UNPAID BY
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 11
GUARANTY
(UNLIMITED AMOUNT)
This Guaranty is granted by the Guarantor to THE CHASE MANHATTAN BANK
(Chase), having an office located at 270 Park Avenue, New York, New York
-----------------------------------------
- ------------------------------------------------------------------------------
("Business Office"), and/or any of its subsidiaries and/or affiliates and
wherever located (hereinafter with their respective successors and assigns,
collectively or individually, as the context may require, referred to as
"Chase").
RECITALS. Linographics (Delaware) Corporation (the
-----------------------------------------------------
"Borrower") has obtained or desires or may desire at some time and/or from time
to time to obtain financial accommodation from Chase; and each of the
undersigned (hereinafter collectively and individually referred to as the
"Guarantor") represents that it owns directly or indirectly a substantial amount
of the stock of or other ownership interest in the Borrower and/or is
financially interested in its affairs and expects to derive advantage from each
and every such accommodation;
CONSIDERATION. To induce Chase, at its option, at any time or from time
to time, to extend financial accommodation, with or without security, to or for
the account of the Borrower, or in respect of which the Borrower may be liable
in any capacity (the term "financial accommodation" including, without
limitation, extension of loans, credit or accommodation, issuance or
confirmation of letters of credit or creation of acceptances, or discount or
purchase of, or loans on, accounts, leases, instruments, securities, documents,
chattel paper and other security arrangements or other property, or entering
into any foreign exchange, precious metals or other contract or agreement
between Borrower and Chase), the Guarantor hereby agrees as follows:
GUARANTY. The Guarantor (and if there is more than one Guarantor,
jointly and severally) absolutely and unconditionally guarantees to Chase that
the Borrower will promptly perform and observe every agreement and condition
contained in any instrument, writing or arrangement relating to or the subject
of any such financial accommodation (a "Credit Arrangement") to be performed or
observed by the Borrower, that all sums stated to be payable in, or which become
payable under, any Credit Arrangement, and all other sums which may be owing by
the Borrower to Chase now or hereafter, will be promptly paid in full when due,
whether at maturity or earlier by reason of acceleration or otherwise, or, if
now due, when payment thereof shall be demanded by Chase, together with interest
and any and all legal and other costs and expenses paid or incurred in
connection therewith by Chase (collectively, the "Guaranteed Obligations"), and,
in case of one or more extensions of time of payment or renewals, in whole or in
part, of any Credit Arrangement or obligation, that the same will be promptly
paid or performed when due, according to each such extension or renewal, whether
at maturity or earlier by reason of acceleration or otherwise. The Guarantor
agrees that, as between the Guarantor and Chase, the Guaranteed Obligations may
be declared to be due and payable for purposes of this Guaranty notwithstanding
1
<PAGE> 12
any stay, injunction or other prohibition which may prevent, delay or vitiate
any such declaration as against the Borrower and that, in the event of any such
declaration (or attempted declaration), the Guaranteed Obligations (whether or
not due and payable by the Borrower) shall forthwith become due and payable by
the Guarantor for purposes of this Guaranty. The Guarantor further guarantees
that all payments made by the Borrower to Chase of any Guaranteed Obligation
will, when made, be final and agrees that if any such payment is recovered from,
or repaid by, Chase in whole or in part by reason of any bankruptcy, insolvency
or similar proceeding instituted by or against the Borrower, this Guaranty shall
continue to be fully applicable to such obligation to the same extent as though
the payment so recovered or repaid had never been originally made on such
obligation.
This is a guaranty of payment and performance and not a guaranty of
collection only.
This Guaranty is enforceable irrespective of the validity, regularity
or enforceability of any instrument, writing or arrangement relating to or the
subject of a Credit Arrangement or the obligations thereunder and irrespective
of any present or future law or order of any government (whether of right or in
fact and whether Chase shall have consented thereto) or of any agency thereof
purporting to reduce, amend, restructure or otherwise affect any obligation of
the Borrower or other obligor or to vary the terms of payment.
CONSENTS AND WAIVERS. The Guarantor hereby consents that from time to
time, without notice to or further consent of the Guarantor, the performance or
observance by the Borrower of any Credit Arrangement or Guaranteed Obligation
may be waived or the time of performance thereof extended by Chase, and payment
of any Guaranteed Obligation may be accelerated in accordance with any agreement
governing the same, or may be extended, or any Credit Arrangement may be renewed
in whole or in part, or the terms of any Credit Arrangement or any part thereof
may be changed, including increase or decrease in the rate of interest thereon,
or any collateral therefor may be exchanged, surrendered or otherwise dealt with
as Chase may determine, or any co-guarantor or any other party liable upon or in
respect of any obligation may be released, and any of the acts mentioned in any
Credit Arrangement may be done, all without notice to or affecting the liability
of the Guarantor hereunder. The Guarantor waives notice of acceptance of this
Guaranty and of the creation of any Guaranteed Obligations. The Guarantor hereby
waives presentment of any instrument, demand for payment, protest and notice of
non-payment or protest thereof or of any exchange, sale, surrender or other
handling or disposition of any such collateral, and any requirement that Chase
exhaust any right, power or remedy or proceed against the Borrower under any
Credit Arrangement or against any other person under any other guaranty of, or
security for, any of the Guaranteed Obligations. The Guarantor hereby further
waives any defense whatsoever which might constitute a defense available to, or
discharge of, the Borrower or a guarantor. No payment by the Guarantor pursuant
to any provision hereunder shall entitle the Guarantor, by subrogation to the
rights of Chase or otherwise, to any payment by the Borrower (or out of the
property of the Borrower) except after payment in full of all sums (including
interest, costs and expenses) which may be or become payable by the Borrower to
Chase at any time or from time to time, unless the Guaranteed Obligations shall
be paid in full.
2
<PAGE> 13
CONTINUING GUARANTY; TERMINATION. This Guaranty shall be a continuing
guaranty, and Chase may continue to act in reliance hereon until the receipt by
Chase of written notice from the Guarantor not to give further financial
accommodation in reliance hereon, provided that such notice shall not affect the
obligations, absolute or contingent, of the Guarantor hereunder with respect to
any such accommodation given prior to such notice. Such notice shall be
effective only after receipt by Chase at its Business Office, and Chase shall
have had a reasonable time to act upon such notice at each of its offices
extending financial accommodation to Borrower.
FINANCIAL STATEMENTS. The Guarantor shall furnish to Chase, after the
end of the Guarantor's fiscal year or at such other times or intervals as Chase
may request, financial statements certified by the Guarantor showing the
Guarantor's financial condition at the end of and for the entire fiscal year.
Such statements shall fairly present the financial condition of the Guarantor as
at the end of such fiscal year or periods in accordance with generally accepted
accounting principles consistently applied. Upon demand by Chase, the Guarantor
shall retain an independent certified public accountant acceptable to Chase to
prepare such financial statements, on an audited, review or compilation basis,
as selected by Chase, and as to audited statements, accompanied by a
satisfactory report of such accountants which shall not contain any
qualification of opinion or disclaimer by reason of audit limitations imposed by
the Guarantor. Further, Guarantor agrees to furnish to Chase copies of its tax
returns, as soon as available and in any event not later than 15 days after such
tax returns are required to be filed.
FOREIGN CURRENCIES. With respect to each obligation (or portion
thereof) hereby guaranteed that is payable in a foreign currency, the following
provisions shall apply: the Guarantor shall be obligated to pay to Chase the
unpaid amount of such Guaranteed Obligation in the same foreign currency and
place in which such Guaranteed Obligation is payable by its terms; provided,
however, that the Guarantor may, at its option (or, if for any reason whatsoever
the Guarantor is unable to effect payment of such unpaid amount as aforesaid,
the Guarantor shall be obligated to) pay to Chase at its principal office in New
York City the equivalent of such unpaid amount in United States currency
computed at Chase's selling rate, most recently in effect on or prior to the
date such Guaranteed Obligation becomes due, for cable transfers of such foreign
currency to the place where such Guaranteed Obligation is payable. In any case
in which the Guarantor shall make or shall be obligated to make such payment in
United States currency, the Guarantor shall hold Chase harmless from any loss
incurred by Chase arising from any change in the value of United States currency
in relation to such foreign currency between the date such Guaranteed Obligation
becomes due and the date Chase is actually able, following the conversion of the
United States currency paid by the Guarantor into such foreign currency and
remittance of such foreign currency to the place where such Guaranteed
Obligation is payable, to apply such foreign currency to such obligation. The
term foreign currency" as used herein shall be deemed to refer to that type of
such currency which under applicable laws and regulations may be used to pay and
discharge such Guaranteed Obligation.
RIGHTS CUMULATIVE. The rights, powers and remedies granted to Chase
herein shall be cumulative and in addition to any rights, powers and remedies to
which Chase may be entitled
3
<PAGE> 14
either by operation of law or pursuant to any other document or instrument
delivered or from time to time to be delivered to Chase in connection with any
Credit Arrangement.
SECURITY. As collateral security for the payment of any and all
obligations and liabilities of the Guarantor to Chase, now existing or hereafter
arising, the Guarantor grants to Chase a security interest in and a lien upon
and right of offset against all moneys, deposit balances, securities or other
property or interest therein of the Guarantor now or at any time hereafter held
or received by or for or left in the possession or control of Chase or any of
its affiliates, whether for safekeeping, custody, transmission, collection,
pledge or for any other or different purpose.
REPRESENTATIONS AND WARRANTIES. Each Guarantor which is other than an
individual represents and warrants that: (a) it is duly organized and validly
existing under the laws of the jurisdiction of its organization or incorporation
and, if relevant under such laws, in good standing; (b) it has the power to
execute and deliver this Guaranty and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance; (c) such execution, delivery and performance do not violate or
conflict with any law applicable to it, any provision of its organizational
documents, any order or judgment of any court or other agency of government
applicable to it or any of its assets or any material contractual restriction
binding on or materially affecting it or any of its assets; (d) to the best of
Guarantor's knowledge, all governmental and other consents that are required to
have been obtained by it with respect to this Guaranty have been obtained and
are in full force and effect and all conditions of any such consents have been
complied with; (e) its obligations under this Guaranty constitute its legal,
valid and binding obligations, enforceable in accordance with its terms except
to the extent that such enforcement may be limited by applicable bankruptcy,
insolvency or other similar laws affecting creditors' rights generally; (f) all
financial statements and related information furnished and to be furnished to
Chase from time to time by the Guarantor are true and complete and fairly
present the financial or other information stated therein as at such dates or
for the periods covered thereby; (g) there are no actions, suits, proceedings or
investigations pending or, to the knowledge of the Guarantor, threatened against
or affecting the Guarantor before any court, governmental agency or arbitrator,
which involve forfeiture of any assets of the Guarantor or which may materially
adversely affect the financial condition, operations, properties or business of
the Guarantor or the ability of the Guarantor to perform its obligation under
this Guaranty; and (h) there has been no material adverse change in the
financial condition of the Guarantor since the last such financial statements or
information. If the Guarantor is an individual, the Guarantor represents and
warrants the correctness of clauses (c), (d), (e), (f), (g) and (h) above to the
extent applicable to an individual.
COSTS. The Guarantor agrees to reimburse Chase on demand for all costs,
expenses and charges (including, without limitation, fees and charges of
external legal counsel for Chase and costs allocated by its internal legal
department) in connection with the enforcement of this Guaranty.
ENTIRE AGREEMENT, AMENDMENT AND WAIVERS. This Guaranty constitutes the
entire agreement between the Guarantor and Chase in respect of the subject
matter hereof and may be amended only by a writing signed on behalf of each
party and shall be effective only to the extent
4
<PAGE> 15
set forth in that writing. No delay by Chase in exercising any power or right
hereunder shall operate as a waiver thereof or of any other power or right; nor
shall any single or partial exercise of any power or right preclude other or
future exercise thereof, or the exercise of any other power or right hereunder.
No waiver shall be deemed to be made by Chase of any of its rights hereunder
unless the same shall be in writing signed on behalf of Chase, and each waiver,
if any, shall be a waiver only with respect to the specific instance involved
and shall in no way impair the rights of Chase or the obligations of the
Guarantor to Chase in any other respect at any other time.
As to each Guarantor who is an individual, this Guaranty is being
signed by such Guarantor in an individual capacity and any descriptive terms
placed after the Guarantor's name shall not affect the Guarantor's personal
liability under this Guaranty.
SUCCESSORS. This agreement shall be immediately binding upon the
Guarantor, and the successors of the Guarantor. Chase may assign this Guaranty
or any of its rights and powers hereunder, with all or any of the obligations
hereby guaranteed, and may assign and/or deliver to any such assignee any of the
security herefor and, in the event of such assignment, the assignee hereof or of
such rights and powers and of such security, if any such security be so assigned
and/or delivered, shall have the same rights and remedies as if originally named
herein in place of Chase, and Chase shall be thereafter fully discharged from
all responsibility with respect to any such Security so assigned and/or
delivered.
GOVERNING LAW; JURISDICTION. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York, Connecticut or
New Jersey, depending on the location of the Chase office set forth in this
Guaranty. The undersigned consent(s) to the nonexclusive jurisdiction and venue
of the state or federal courts located in such state. In the event of a dispute
hereunder, suit may be brought against the undersigned in such courts or in any
jurisdiction where the undersigned or any of its assets may be located. Service
of process by Chase in connection with any dispute shall be binding on the
undersigned if sent to the undersigned by registered mail at the address(es)
specified below or to such further address(es) as the undersigned may specify to
Chase in writing.
COMMERCIAL TRANSACTION. IF THE UNDERSIGNED IS A CONNECTICUT DOMICILED
ENTITY OR RESIDENT, EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGES THAT THIS
GUARANTY AND THE TRANSACTIONS CONTEMPLATED HEREBY CONSTITUTE COMMERCIAL
TRANSACTIONS WITHIN THE MEANING OF SECTION 52-278a OF THE CONNECTICUT GENERAL
STATUTES. EACH OF THE UNDERSIGNED EXPRESSLY WAIVES ANDY AND ALL RIGHTS,
CONSTITUTIONAL OR OTHERWISE, WITH RESPECT TO NOTICE AND HEARING AND ANY RIGHTS
UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES IN CONNECTION WITH ANY
PREJUDGMENT REMEDY AVAILABLE TO CHASE.
GUARANTOR WAIVERS. EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY
RIGHT TO A TRIAL BY JURY OF ANY
5
<PAGE> 16
DISPUTE ARISING UNDER OR RELATING TO THIS GUARANTY, AND AGREES THAT ANY SUCH
DISPUTE SHALL, AT CHASE'S OPTION, BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.
IN ADDITION, EACH GUARANTOR WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE
BASED UPON ANY STATUTE OF LIMITATIONS OR ANY CLAIM OF DELAY BY CHASE AND ANY
SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION.
IN WITNESS WHEREOF, the Guarantor has executed this instrument or has
caused this instrument to be duly executed by its proper officer(s) or
partner(s) this 30th day of November, 1996.
---- -------- -
Address for notices:
Linographics Corporation
-----------------------------------
Linographics Corporation By: /s/ William Dye
- -------------------------------- -------------------------------
20 West 20th Street Print Name William Dye
- -------------------------------- ------------------------
New York, New York 10011 Title: President
- -------------------------------- ----------------------------
Telecopier No. ( ) -
--- ------------ -----------------------------------
By: /s/ [illegible]
-------------------------------
Print Name [illegible]
------------------------
Title: Secretary
----------------------------
<PAGE> 17
STATE OF )
) SS.:
COUNTY OF )
On this _____ day of ________________, 199___, before me personally
came ___________________________________, to me known, who, being by me duly
sworn, did depose and say that he/she resides in
____________________________________________; that he/she is
__________________________________ of
______________________________________________________, the corporation
described in and which executed the above instrument; and that he/she signed
his/her name thereto by order of the board of directors of said corporation.
___________________________________
Notary Public
<PAGE> 1
[THE CHASE MANHATTAN BANK LETTERHEAD]
November 27, 1996
Mr. William Dye, President
Unidigital/ Cardinal Corporation
20 West 20th Street
New York, New York 10011
Dear Bill:
Reference is made to the Credit Agreement dated November 11, 1996, as amended,
between Unidigital/ Cardinal Corporation (the "Borrower") and The Chase
Manhattan Bank (the "Bank") (as amended or otherwise modified from time to
time). Terms used herein which are defined in the Credit Agreement are used
herein as therein.
It is hereby agreed by the Borrower and the Bank as follows:
The credit agreement for the $1,400,000 Line of Credit is, effective November
27, 1996, hereby amended as follows:
1. The maturity date is extended until 1/31/98.
If you agree to the terms and provisions hereof, please evidence your agreement
by executing and returning this letter to:
The Chase Manhattan Bank
600 Fifth Avenue - Fifth Floor
New York NY 10020
Attention: Donald Furrer, Vice President
<PAGE> 2
[THE CHASE MANHATTAN BANK LETTERHEAD]
November 11, 1996
Mr. William Dye, President
Unidigital/ Cardinal Corporation
20 West 20th Street
New York, NY 10011
Dear Bill:
The Chase Manhattan Bank ("Chase") is pleased to advise that it is prepared, in
its sole discretion, to offer a line of credit to Unidigital/ Cardinal
Corporation (the "Borrower") subject to the terms and conditions described
below.
$1,400,000 Line of Credit to Unidigital/Cardinal Corporation
Amount: $1,400,000.
Sublimits: N/A
Borrower: Unidigital/Cardinal Corporation
Type of Credit: A line of credit repayable on a demand basis.
Maturity: September 1, 1997
At maturity, the borrower will have the option of
repaying the then unpaid principal balance in a term
loan of 60 equal monthly principal payments, to
include if requested a balloon payment not to exceed
$200,000.
Use of Proceeds: Acquisition Financing
Interest Rate: All outstanding borrowings under this arrangement
will bear interest equal at all times to Chase's
Prime Rate (Prime) in effect from time to time.
Interest is to be computed on an actual /360-day
basis and is payable monthly.
Fees: N/A
Requests for Advances: Any advances made under this line of credit will be
on the terms and conditions as Chase may require at
the time the Borrower requests an advance and must be
evidenced by documents in form and substance
satisfactory to Chase.
Security: Unidigital Inc. will pledge, transfer and assigns to
the Bank and grant to the Bank a security interest
in, and a general lien upon and/ or right of offset
against $1,750,000 in collateral as per the
Collateral Agreement [Third Party} document executed
at closing.
<PAGE> 3
Additional Conditions: In addition to the above mentioned terms and
conditions, and in order to enable Chase to perform
its ongoing financial review, the Borrower will be
required to comply with the following conditions:
a. The Borrower will furnish to Chase:
1. Within 120 days after the close of each Fiscal
Year, audited consolidated statements for Unidigital
Inc., prepared by an accounting firm acceptable to
the bank along with consolidating statements for each
subsidiary.
2. Within 90 days after the date of the each
semi-annual date, consolidated statements for
Unidigital Inc., prepared by an accounting firm
acceptable to the bank along with consolidating
statements for each subsidiary.
3. Quarterly statements internally prepared by
management for Unidigital Inc, and its subsidiaries.
Chase reserves the right to request, and the Borrower agrees to provide, such
other information as Chase may determine necessary in order to exercise its
discretion in honoring requests for advances under this line of credit.
This line of credit does not constitute a commitment or in any way obligate
Chase to lend whether or not the Borrower satisfies the conditions stated in
this letter, and is issued subject to Chase, in its sole discretion, continuing
to be satisfied with the Borrower's financial condition and economic prospects,
prompt advice to Chase of any circumstances which might materially or adversely
affect the Borrower, and the Borrower's maintenance of a satisfactory
relationship with Chase.
This letter is for the Borrower's information only and is not to be shown or
relied upon by third parties. This letter constitutes the entire understanding
between Chase and the Borrower and supersedes all prior discussions. The terms
and conditions set forth in this letter shall survive the execution of the note
evidencing the indebtedness and shall remain in effect so long as this facility
remains in place or any amounts remain outstanding under this line of credit.
Chase will consider requests for advances hereunder until January 31, 1998
unless this discretionary line of credit is earlier terminated by Chase in its
sole discretion.
Please acknowledge your understanding of and agreement to the foregoing by
signing and returning the enclosed copy of this letter to the undersigned no
later than November 30, 1996.
Very truly yours,
THE CHASE MANHATTAN BANK
/s/ DONALD FURRER
- -------------------------------
Donald Furrer, Vice President
(212) 332-4329
RECEIPT OF THE FOREGOING LETTER
IS HEREBY ACKNOWLEDGED, TOGETHER WITH
ASSENT TO THE TERMS THEREOF:
Unidigital /Cardinal Corporation
By: /s/ WILLIAM E. DYE Date: 11/21/96
----------------------------------- ---------------
Its: CEO
----------------------------------
<PAGE> 4
[THE CHASE MANHATTAN BANK LETTERHEAD]
November 11, 1996
Mr. William Dye, President
Unidigital /Cardinal Corporation
20 West 20th Street
New York, NY 10011
Dear Bill:
The Chase Manhattan Bank ("Chase") is pleased to advise that it is prepared, in
its sole discretion, to offer a line of credit to Unidigital /Cardinal
Corporation (the "Borrower") subject to the terms and conditions described
below.
$1,200,000 Line of Credit to Unidigital /Cardinal Corporation
Amount: $1,200,000.
Sublimits: N/A
Borrower: Unidigital/Cardinal Corporation
Guarantors: Unlimited Guaranty of Payment of Unidigital Inc.
Type of Credit: A line of credit repayable on a demand basis.
Use of Proceeds: Working Capital
Interest Rate: All outstanding borrowings under this arrangement
will bear interest equal at all times to Chase's
Prime Rate plus one-half percent (Prime + 1/2%) in
effect time to time. Interest is to be computed on an
actual /360-day basis and is payable monthly.
Fees: The Borrower agrees to pay a line origination fee of
$2,250 to cover Chase's costs associated with the
preparation of this line of credit.
Clean Up Requirement: This line of credit is subject to the requirement
that for 30 consecutive days during a twelve month
period, there shall be no loans outstanding.
Requests for Advances: Any advances made under this line of credit will be
on the terms and conditions as Chase may require at
the time the Borrower requests an advance and must be
evidenced by documents in form and substance
satisfactory to Chase.
<PAGE> 5
Borrowing Base: All drawdowns will be subject to a maximum borrowing
base not to exceed 80 % of eligible accounts
receivable aged 90 days and less. Unidigital/
Cardinal Corporation will provide a monthly borrowing
base certificate to the Bank within 15 days after the
end of each month so long as there are loans
outstanding under this Line of Credit.
The first borrowing base will be tested at 91 days
after the acquisition date of Cardinal Communications
Inc. by Unidigital Inc.
Security: A first priority security interest in all of the
Borrower's accounts receivable, inventory, machinery,
equipment, fixtures, chattel paper and general
intangibles, including but not limited to, corporate
name, trademarks, trade names, goodwill, patents,
copyrights and know how.
Additional Conditions: In addition to the above mentioned terms and
conditions, and in order to enable Chase to perform
its ongoing financial review, the Borrower will be
required to comply with the following conditions:
a. The Borrower will furnish to Chase:
1. Within 120 days after the close of each Fiscal
Year, audited consolidated statements for Unidigital
Inc., prepared by an accounting firm acceptable to
the bank along with consolidating statements for each
subsidiary.
2. Within 90 days after the date of the each
semi-annual date, consolidated statements for
Unidigital Inc., prepared by an accounting firm
acceptable to the bank along with consolidating
statements for each subsidiary.
3. Quarterly statements internally prepared by
management for Unidigital Inc, and its subsidiaries.
4. A monthly accounts receivable aging report due
within 15 days of the end of each month so long as
there are loans outstanding under this line of
credit.
5.Quarterly 10-K and 10-Q reports.
Chase reserves the right to request, and the Borrower agrees to provide, such
other information as Chase may determine necessary in order to exercise its
discretion in honoring requests for advances under this line of credit.
This line of credit does not constitute a commitment or in any way obligate
Chase to lend whether or not the Borrower satisfies the conditions stated in
this letter, and is issued subject to Chase, in its sole discretion, continuing
to be satisfied with the Borrower's financial condition and economic prospects,
prompt advice to Chase of any circumstances which might materially or adversely
affect the Borrower, and the Borrower's maintenance of a satisfactory
relationship with Chase.
<PAGE> 6
This letter is for the Borrower's information only and is not to be shown or
relied upon by third parties. This letter constitutes the entire understanding
between Chase and the Borrower and supersedes all prior discussions. The terms
and conditions set forth in this letter shall survive the execution of the note
evidencing the indebtedness and shall remain in effect so long as this facility
remains in place or any amounts remain outstanding under this line of credit.
Chase will consider requests for advances hereunder until January 31, 1998
unless this discretionary line of credit is earlier terminated by Chase in its
sole discretion.
Please acknowledge your understanding of and agreement to the foregoing by
signing and returning the enclosed copy of this letter to the undersigned no
later than November 30, 1996.
Very truly yours,
THE CHASE MANHATTAN BANK
/s/ DONALD FURRER
- -----------------------------
Donald Furrer, Vice President
(212) 332-4329
RECEIPT OF THE FOREGOING LETTER
IS HEREBY ACKNOWLEDGED, TOGETHER WITH
ASSENT TO THE TERMS THEREOF:
Unidigital/Cardinal Corporation
By: /s/ WILLIAM E. DYE Date: 11/20/96
------------------------------------- ---------------------
Its: CEO
------------------------------------
<PAGE> 7
CHASE LETTERHEAD
GRID TIME PROMISSORY NOTE
New York, New York
November 21, 1996
For value received, the undersigned unconditionally (and if more
than one, jointly and severally) promises to pay to the order of THE CHASE
MANHATTAN BANK ("Chase"), at its office located at 270 Park Avenue, New
York, New York, or to such other address as Chase may notify the
undersigned, the sum of One million two hundred thousand DOLLARS
($1,200,000.00) or such unpaid principal amount of each loan made to
the undersigned by Chase and outstanding under this Note, on the maturity
date(s) as shown on the attached schedule or any continuation of the
schedule.
This Note includes any Schedule or Rider attached hereto.
MATURITY DATE(S). Each loan shall mature on the last day of the
Interest Period therefor, as noted on the Interest Period column on the
attached schedule. As to a Variable Rate loan, if no Interest Period is
noted, then such loan is payable ON DEMAND.
INTEREST. The undersigned promise(s) to pay interest on the unpaid
balance of the principal amount of each such loan from and including the
date of each such loan to but excluding the date such loan shall be paid in
full at the following applicable rates (check Other Rate box if
applicable):
Variable Rate: A rate of interest per year which shall
automatically increase or decrease from time to
time so that at all times such rate shall remain
equal to that rate of interest from time to time
announced by Chase at its head office as its
prime commercial lending rate (the "Prime Rate")
PLUS 1/2%. Changes in the rate of interest
hereunder shall be effective as of and for the
entire day on which such change in the Prime
Rate becomes effective.
and
Other Rate: see Rider(s) attached hereto.
Interest shall be payable, as to a Variable Rate loan, on THE
FIRST DAY of each month and as to an Other Rate loan, on the last day of
each Interest Period, or if such Interest Period is more than 90 days, then
on the 90th day after the date of such loan and on the last day of such
Interest Period, unless otherwise specified on a Rider attached hereto, in
respect of the corresponding principal. Interest shall be calculated on the
basis of a year of 360 days and payable for the actual number of days
elapsed.
After the occurrence of an Event of Default set forth below,
Chase, at its option, by written notice to the undersigned may increase the
interest rate on this Note by an additional four percent (4%) per year
effective on the date of such notice.
PAYMENTS. All payments under this Note shall be made in lawful
money of the United States of America and in immediately available funds at
Chase's office specified above. Chase may (but shall not be obligated to)
debit the amount of any payment (principal or interest) under this Note
when due to any deposit account of (any of) the undersigned with Chase. If
the undersigned are more than one, all obligations of each of the
undersigned under this Note shall be joint and several. This Note may be
prepaid without premium unless otherwise specified on a Rider attached
hereto. Chase may apply any money received or collected for payment of this
Note to the principal of, interest on or any other amount payable under,
this Note in any order that Chase may elect.
<PAGE> 8
Whenever any payment to be made hereunder (including principal and
interest) shall be stated to be due on a day on which Chase's head office
is not open for business, that payment will be due on the next following
banking day, and any extension of time shall in each case be included in
the computation of interest payable on this Note.
If any payment (principal or interest) shall not be paid when due
other than a payment of the entire principal balance of the Note due upon
acceleration after default, the undersigned shall pay a late payment charge
equal to five percent (5%) of the amount of such delinquent payment,
provided that the amount of such late payment charge shall be not less than
$25 nor more than $500.
AUTHORIZATIONS. The undersigned hereby authorizes Chase to make
loans and disburse the proceeds thereof to the account listed below and to
make repayments of such loans by debiting such account upon oral,
telephonic or telecopied instructions made by any person purporting to be
an officer or agent of the undersigned who is empowered to make such
requests and give such instructions. The undersigned may amend these
instructions, from time to time, effective upon actual receipt of the
amendment by Chase. Chase shall not be responsible for the authority, or
lack of authority, of any person giving such telephonic instructions to
Chase pursuant to these provisions. By executing this Note, the undersigned
agrees to be bound to repay any loan obtained hereunder as reflected on
Chase's books and records and made in accordance with these authorizations,
regardless of the actual receipt of the proceeds thereof.
RECORDS. The date, amount and maturity date of each loan under
this Note and each payment of principal, loan(s) to which such principal is
applied (which shall be at the discretion of Chase) and the outstanding
principal balance of loans, shall be recorded by Chase on its books and
prior to any transfer of this Note (or, at the discretion of Chase at any
other time) endorsed by Chase on the schedule attached or any continuation
of the schedule. Any such endorsement shall be conclusive absent manifest
error.
REPRESENTATIONS AND WARRANTIES. If the undersigned is other than
an individual, the undersigned represents and warrants upon the execution
and delivery of this Note and upon each loan request hereunder, that: (a)
it is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and, if relevant under
such laws, in good standing; (b) it has the power to execute and deliver
this Note and to perform its obligations hereunder and has taken all
necessary action to authorize such execution, delivery and performance; (c)
such execution, delivery and performance do not violate or conflict with
any law applicable to it, any provision of its organizational documents,
any order or judgment of any court or other agency of government applicable
to it or any of its assets or any material contractual restriction binding
on or materially affecting it or any of its assets; (d) to the best of
undersigned's knowledge, all governmental and other consents that are
required to have been obtained by it with respect to this Note have been
obtained and are in full force and effect and all conditions of any such
consents have been complied with; (e) its obligations under this Note
constitute its legal, valid and binding obligations, enforceable in
accordance with its terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency or other similar laws
affecting creditors' rights generally; (f) all financial statements and
related information furnished and to be furnished to Chase from time to
time by the undersigned are true and complete and fairly present the
financial or other information stated therein as at such dates or for the
periods covered thereby; (g) there are no actions, suits, proceedings or
investigations pending or, to the knowledge of the undersigned, threatened
against or affecting the undersigned before any court, governmental agency
or arbitrator, which involve forfeiture of any assets of the undersigned or
which may materially adversely affect the financial condition, operations,
properties or business of the undersigned or the ability of the undersigned
to perform its obligation under this Note; and (h) there has been no
material adverse change in the financial condition of the undersigned since
the last such financial statements or information. If the undersigned is an
individual, the undersigned represents and warrants at the times set forth
at the beginning of this section, the correctness of clauses (c), (d), (e),
(f), (g) and (h) above to the extent applicable to an individual.
NO COMMITMENT. This Note does not create and shall not be deemed
or construed to create any contractual commitment to lend by Chase. Any
such commitment in respect of this Note can only be made by and shall only
be effective to the extent set forth in a separate writing expressly
designated for that purpose and subscribed by a duly authorized officer of
Chase.
<PAGE> 9
SECURITY. As collateral security for the payment of this Note and of any
and all other obligations and liabilities of the undersigned to Chase, now
existing or hereafter arising, the undersigned grants to Chase a security
interest in and a lien upon and right of offset against all moneys, deposit
balances, securities or other property or interest therein of the
undersigned now or at any time hereafter held or received by or for or left
in the possession or control of Chase or any of its affiliates, including
subsidiaries, whether for safekeeping, custody, transmission, collection,
pledge or for any other or different purpose.
DEFAULT. IF ANY OF THE FOLLOWING EVENTS OF DEFAULT SHALL OCCUR
with respect to any of the undersigned (each an "Event of Default"):
(a) the undersigned shall fail to pay the principal of, or
interest on, this Note, or any other amount payable under this
Note, as and when due and payable;
(b) any representation or warranty made or deemed made by the
undersigned in this Note or in any document granting security or
support for (or otherwise executed in connection with) this Note
or by any third party supporting or liable with respect to this
Note (whether by guaranty, subordination, grant of security or any
other credit support, a "Third Party") in any document evidencing
the obligations of a Third Party (this Note and all of the
foregoing documents and all agreements, instruments or other
documents executed by the undersigned or a Third Party being the
"Facility Documents") or which is contained in any certificate,
document, opinion, financial or other statement furnished at any
time under or in connection with any Facility Document, shall
prove to have been incorrect in any material respect on or as of
the date made or deemed made;
(c) the undersigned or any Third Party shall fail to perform
or observe any term, covenant or agreement contained in any
Facility Document on its part to be performed or observed, and
such failure shall continue for 30 consecutive days;
(d) the undersigned or any Third Party shall fail to pay when
due any indebtedness (including but not limited to indebtedness
for borrowed money) or if any such indebtedness shall become due
and payable, or shall be capable of becoming due and payable at
the option of any holder thereof, by acceleration of its maturity,
or if there shall be any default by the undersigned or any Third
Party under any agreement relating to such indebtedness;
(e) the undersigned or any Third Party: (i) shall generally
not, or be unable to, or shall admit in writing its inability to,
pay its debts as such debts become due; (ii) shall make an
assignment for the benefit of creditors; (iii) shall file a
petition in bankruptcy or for any relief under any law of any
jurisdiction relating to reorganization, arrangement, readjustment
of debt, dissolution or liquidation; (iv) shall have any such
petition filed against it and the same shall remain undismissed
for a period of 30 days or shall consent or acquiesce thereto; or
(v) shall have had a receiver, custodian or trustee appointed for
all or a substantial part of its property;
(f) if the undersigned or any Third Party is an individual,
such individual shall die or be declared incompetent;
(g) any Third Party Facility Document shall at any time and
for any reason cease to be in full force and effect or shall be
declared null and void, or its validity or enforceability shall be
contested by the relevant Third Party or such Third Party shall
deny it has any further liability or obligation under any Facility
Document or shall fail to perform its obligations under any
Facility Document;
(h) any security agreement or other agreement (whether by the
undersigned or any Third Party) granting a security interest,
lien, mortgage or other encumbrance securing obligations under any
Facility Document shall at any time and for any reason cease to
create a valid and perfected first priority security interest,
lien, mortgage or other encumbrance in or on the property
purported to be subject to such agreement or shall cease to be in
full force and effect or shall be declared null and void, or the
validity or enforceability of any such agreement shall be
contested by any party to such agreement, or such party shall deny
it has any further liability or obligation under such agreement or
any such party shall fail to perform any of its obligations under
such agreement;
(i) the undersigned shall make or permit to be made any
material change in the character, management or direction of the
undersigned's business or operations (including, but not limited
to, a change in its executive management or in the ownership of
its capital stock which effects a change in the control of any
such business or operations), which is not satisfactory to Chase;
(j) the undersigned or any Third Party shall suffer a material
adverse change in its business, financial condition, properties or
prospects;
(k) any action, suit, proceeding or investigation against or
affecting the undersigned or a Third Party before any court or
governmental agency which involves forfeiture of any assets of the
undersigned or a Third Party shall have been commenced; or
<PAGE> 10
(l) one or more judgments, decrees or orders for the payment
of money in excess of $50,000 in the aggregate shall be rendered
against the undersigned and shall continue unsatisfied and in
effect for a period of 30 consecutive days without being vacated,
discharged, satisfied or stayed or bonded pending appeal.
THEN, IN ANY SUCH CASE, if Chase shall elect by notice to the undersigned,
the unpaid principal amount of this Note, together with accrued interest,
shall become forthwith due and payable; provided that in the case of an
event of default under (e) above, the unpaid principal amount of this Note,
together with accrued interest, shall immediately become due and payable
without any notice or other action by Chase.
THE EVENTS OF DEFAULT AND REMEDIES SET FORTH ABOVE ARE IN ADDITION
TO AND WITHOUT IN ANY WAY DIMINISHING ANY RIGHT BY CHASE TO MAKE DEMAND FOR
PAYMENT AT ANY TIME.
CERTAIN WAIVERS. The undersigned waive(s) presentment, notice of
dishonor, protest and any other notice or formality with respect to this
Note.
COSTS. The undersigned agree(s) to reimburse Chase on demand for
all costs, expenses and charges (including, without limitation, fees and
charges of external legal counsel for Chase and costs allocated by its
internal legal department) in connection with the preparation,
interpretation, performance or enforcement of this Note and the Facility
Documents.
NOTICES. All notices, requests, demands or other communications to
or upon the undersigned or Chase shall be in writing and shall be deemed to
be delivered upon receipt if delivered by hand or overnight courier or five
days after mailing to the address (a) of the undersigned as set forth next
to the undersigned's execution of this Note, (b) of Chase as first set
forth above, or (c) of the undersigned or Chase at such other address as
the undersigned or Chase shall specify to the other in writing.
ASSIGNMENT. This Note shall be binding upon the undersigned and
its or their successors and shall inure to the benefit of Chase and its
successors and assigns.
AMENDMENT AND WAIVER. This Note may be amended only by a writing
signed on behalf of each party and shall be effective only to the extent
set forth in that writing. No delay by Chase in exercising any power or
right hereunder shall operate as a waiver thereof or of any other power or
right; nor shall any single or partial exercise of any power or right
preclude other or future exercise thereof, or the exercise of any other
power or right hereunder.
GOVERNING LAW; JURISDICTION. This Note shall be governed by and
construed in accordance with the laws of the State of New York, Connecticut
or New Jersey, depending on the location of the Chase office set forth in
this Note. The undersigned consent(s) to the nonexclusive jurisdiction and
venue of the state or federal courts located in such state. In the event of
a dispute hereunder, suit may be brought against the undersigned is such
courts or in any jurisdiction where the undersigned or any of its assets
may be located. Service of process by Chase in connection with any dispute
shall be binding on the undersigned if sent to the undersigned by
registered mail at the address(es) specified below or to such further
address(es) as the undersigned may specify to Chase in writing.
MAXIMUM INTEREST. Notwithstanding any other provision of this
Note, the undersigned shall not be required to pay any amount pursuant to
this Note which is in excess of the maximum amount permitted to be charged
by national banks under applicable law and any such excess interest paid
shall be refunded to the undersigned or applied to principal owing
hereunder.
COMMERCIAL TRANSACTION. IF THE UNDERSIGNED IS A CONNECTICUT
DOMICILED ENTITY OR RESIDENT, EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGES
THAT THIS NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY CONSTITUTE
COMMERCIAL TRANSACTIONS WITHIN THE MEANING OF SECTION 52L-278a OF THE
CONNECTICUT GENERAL STATUTES. EACH OF THE UNDERSIGNED EXPRESSLY WAIVES ANY
AND ALL RIGHTS, CONSTITUTIONAL OR OTHERWISE, WITH RESPECT TO NOTICE AND
HEARING AND ANY RIGHTS UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES IN CONNECTION WITH ANY PREJUDGMENT REMEDY AVAILABLE TO CHASE.
<PAGE> 11
BORROWER WAIVERS. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE(S) (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY
RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS NOTE
OR ANY FACILITY DOCUMENT, AND AGREES THAT ANY SUCH DISPUTE SHALL, AT CHASE'S
OPTION, BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
IN ADDITION, THE UNDERSIGNED WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE
BASED UPON ANY STATUTE OF LIMITATIONS OR ANY CLAIM OF DELAY BY CHASE AND ANY
SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION.
Chase Account No. to be charged for
Disbursements and Payments:
002-1-543954
-----------------------------
Address for notices: Unidigital/Cardinal Corporation
-------------------------------------------
20 West 20th Street By: /s/ William Dye
- ------------------------ ----------------------------------------
New York, New York 10011 Print Name: William Dye
- ------------------------ --------------------------------
Title: CEO
- ------------------------ -------------------------------------
By:
- ------------------------ ----------------------------------------
Telecopier No. ( ) - Print Name:
--- ---- ----- --------------------------------
Title:
-------------------------------------
<PAGE> 12
SCHEDULE TO GRID
PROMISSORY NOTE OF
_______________________ DATED NOV. 21, 1996.
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL
DATE BALANCE NOTATION
OF INTEREST AMOUNT OF INTEREST AMOUNT OF REMAINING MADE
LOAN PERIOD LOAN RATE PAYMENT UNPAID BY
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AT NOVEMBER 30, 1996 AND FOR THE
THREE MONTH PERIOD ENDED NOVEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 2,953,914
<SECURITIES> 0
<RECEIVABLES> 5,390,535
<ALLOWANCES> (210,926)
<INVENTORY> 0
<CURRENT-ASSETS> 9,320,694
<PP&E> 11,775,109
<DEPRECIATION> (2,502,857)
<TOTAL-ASSETS> 19,530,733
<CURRENT-LIABILITIES> 6,842,722
<BONDS> 0
0
0
<COMMON> 31,892
<OTHER-SE> 7,889,782
<TOTAL-LIABILITY-AND-EQUITY> 19,530,733
<SALES> 5,227,719
<TOTAL-REVENUES> 5,268,413
<CGS> 2,650,103
<TOTAL-COSTS> 2,650,103
<OTHER-EXPENSES> 1,799,626
<LOSS-PROVISION> 10,112
<INTEREST-EXPENSE> 134,277
<INCOME-PRETAX> 674,295
<INCOME-TAX> 212,475
<INCOME-CONTINUING> 461,820
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 461,820
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
