CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 24, 1998
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Unidigital Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-27664 13-3856672
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
545 West 45th Street, New York, New York 10036
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(Address of Principal Executive Offices) (zip code)
(212) 337-0330
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(Registrant's telephone number, including
area code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OF ASSETS.
On March 25, 1998, Unidigital Inc. (the "Company"), through its
wholly-owned subsidiary, Unison (NY), Inc., consummated the acquisition of
substantially all of the assets of Kwik International Color, Ltd. (the "Seller")
located in New York City (the "Kwik Acquisition"). The Seller provided general
printing, color separation and large format printing services. The Company
intends to continue such line of business. The assets purchased included the
Seller's entire customer list, inventory, equipment, cash, accounts receivable
and trade name. The purchase price included cash payments of $20,590,349,
issuance of a 5.7% subordinated promissory note in the principal amount of
$750,000 (payable in 36 monthly installments commencing April 15, 1998),
issuance of 649,841 shares of restricted Common Stock of the Company and the
assumption of certain trade obligations of the Seller.
The purchase price is subject to adjustment in the event the Seller does
not achieve a certain net asset value as of the date of the acquisition. Such
determination shall be made within sixty (60) days of the date of closing. Of
the purchase price, $1,000,000 in cash and $1,000,000 of restricted Common Stock
of the Company (190,589 shares) is being held in escrow for a period of two
years to satisfy any purchase price adjustments or indemnification claims.
In determining the purchase price, the Company considered, among other
factors, (i) the composition of the Seller's assets, in particular, its cash
position and the strength of the Seller's balance sheet; (ii) the business,
operations and prospects of the Seller; (iii) the financial statements and other
relevant financial and operating data of the Seller; (iv) the historical and
projected financial information prepared by the management of the Seller; and
(v) the past and projected revenues generated from the customers of the Seller.
The Company funded the cash portion of the purchase price from proceeds of
a $25,000,000 term loan and a $10,000,000 revolving credit loan from Canadian
Imperial Bank of Commerce ("CIBC"). See "Item 5. Other Events." below.
Richard J. Sirota, the sole shareholder of the Seller ("Sirota"), and the
Company entered into a three-year Employment Agreement pursuant to which Sirota
shall serve as the Senior Vice President and Chief Operating Officer of the
Company at an initial annual salary of $250,000. Sirota also was appointed to
the Company's Board of Directors. Effective upon consummation of the Kwik
Acquisition, Peter Saad, formerly the Senior Vice President and Chief Operating
Officer of the Company, was named President of the Company.
In addition, on March 25, 1998, Sirota and William E. Dye, Chairman of the
Board and Chief Executive Officer of the Company ("Dye"), executed a
Stockholders' Agreement pursuant to which (i) Sirota and Dye granted the Company
and each other the right of first refusal with respect to their respective sales
of the Company's Common Stock, (ii) Sirota and Dye agreed to vote for each other
in the election of Directors of the Company and (iii) Sirota agreed not to
acquire more than 1,000,000 shares of the Company's Common Stock without the
prior written consent of Dye.
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ITEM 5. OTHER EVENTS.
On March 24, 1998, the Company terminated its financing facilities with The
Chase Manhattan Bank and entered into borrowing arrangements with CIBC in the
aggregate amount of $40,000,000, which consist of a: (i) $25,000,000 term loan;
(ii) $10,000,000 revolving line of credit facility which is available for
working capital purposes; and (iii) $5,000,000 credit facility which is
available for corporate acquisition purposes. Such credit facilities are
guaranteed by the Company's United States subsidiaries. In addition, the Company
pledged all of its equity interests in its United States subsidiaries and
two-thirds of its equity interests in its wholly-owned United Kingdom subsidiary
as collateral for such credit facilities. Interest under such credit facilities
is, at the Company's option, at the Base Rate or at the Eurodollar Rate, as
defined, plus an Applicable Margin, as defined, ranging from 0.75% to 3%
depending on the Company's consolidated debt to earnings ratio and the type of
loan. As of March 31, 1998, the Company had an outstanding balance of $8,350,000
under the revolving credit facility and $25,000,000 under the term loan. A
portion of the proceeds of such loans was used to repay in full promissory notes
previously issued by the Company in 1997 in the aggregate principal amount of
$4,000,000.
The credit facilities contain covenants which require the Company to
maintain certain earnings and debt to earnings ratio requirements based on the
combined operations of the Company and its subsidiaries. The credit facilities
are secured by a first priority lien on all of the assets of the Company and its
subsidiaries, a mortgage on the Company's facilities located at 545 West 45th
Street, New York, New York and a leasehold mortgage on the Company's facilities
acquired as part of the Kwik Acquisition located at 229 West 28th Street, New
York, New York. The Company, CIBC and Sirota entered into an intercreditor
subordination agreement with respect to CIBC's and Sirota's relative interests
in the Company.
The Company's agreement with CIBC restricts the Company's ability to pay
certain dividends without CIBC's prior written consent.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Information of Business Acquired.
To be filed by amendment. The Company believes that it is impracticable to
provide such financial information as of the date hereof. Such information shall
be filed with the Commission no later than June 7, 1998.
(b) Pro Forma Financial Information (unaudited).
To be filed by amendment. The Company believes that it is impracticable to
provide such financial information as of the date hereof. Such information shall
be filed with the Commission no later than June 7, 1998.
(c) Exhibits.
Exhibit No. Description of Exhibit
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4.1 Stockholders' Agreement dated as of March
25, 1998 by and among Unidigital Inc.,
William E. Dye and Richard J. Sirota.
10.1 Asset Purchase Agreement dated as of March
25, 1998 by and among Unidigital Inc.,
Unison (NY), Inc., Kwik International
Color, Ltd. and Richard J. Sirota.
10.2 Subordinated Promissory Note dated March
25, 1998 of Unidigital Inc. payable to Kwik
International Color, Ltd. in the principal
amount of $750,000.
10.3 Employment Agreement dated as of March
25, 1998 by and between Unidigital Inc.and
Richard J. Sirota.
10.4 Loft Lease dated March 1, 1997 between
S.N.Y., Inc. and Kwik International Color,
Ltd. for the property located at 229 W. 28th
Street, New York, New York, on the fourth
floor, known as Room 401-405.
10.5 Loft Lease dated March 1, 1997 between
S.N.Y., Inc. and Kwik International Color,
Ltd. for the property located at 229 W. 28th
Street, New York, New York, on the seventh
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floor, known as Room 706-714 and 707-
713.
10.6 Loft Lease dated March 1, 1997 between
S.N.Y., Inc. and Kwik International Color,
Ltd. for the property located at 229 W. 28th
Street, New York, New York, on the eighth
floor.
10.7 Loft Lease dated March 1, 1997 between
S.N.Y., Inc. and Kwik International Color,
Ltd. for the property located at 229 W. 28th
Street, New York, New York, on the ninth
floor.
10.8 Credit Agreement dated as of March 24,
1998 by and among Unidigital Inc., the
lenders from time to time parties thereto and
Canadian Imperial Bank of Commerce.
10.9 Term Note dated March 24, 1998 of
Unidigital Inc. payable to Canadian Imperial
Bank of Commerce in the principal amount
of $25,000,000.
10.10 Acquisition Note dated March 24, 1998 of
Unidigital Inc. payable to Canadian Imperial
Bank of Commerce in the principal amount
of $5,000,000.
10.11 Revolving Credit Note dated March 24,
1998 of Unidigital Inc. payable to Canadian
Imperial Bank of Commerce in the principal
amount of $10,000,000.
10.12 Stock Pledge Agreement (U.S.) dated as of
March 24, 1998 made by Unidigital Inc. in
favor of Canadian Imperial Bank of
Commerce.
10.13 Mortgage dated as of March 24, 1998 made
by Unidigital Inc. in favor of Canadian
Imperial Bank of Commerce.
10.14 Security Agreement dated as of March 24,
1998 made by Unidigital Inc. in favor of
Canadian Imperial Bank ofCommerce.
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10.15 Subsidiaries Guarantee dated as of March
24, 1998 made by each of Unidigital
Elements (NY), Inc., Unidigital Elements
(SF), Inc., Unison (NY), Inc. and Unison
(MA), Inc., in favor of Canadian Imperial
Bank of Commerce.
10.16 Intercreditor and Subordination Agreement
dated as of March 25, 1998 by and among
Kwik International Color, Ltd., Unidigital
Inc. and Canadian Imperial Bank of
Commerce.
10.17 Mortgage, Assignment of Leases and Rents
and Security Agreement dated as of March
24, 1998 between Unidigital Inc. and
Canadian Imperial Bank of Commerce.
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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, hereunto duly authorized.
Unidigital Inc.
By: /s/William E. Dye
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William E. Dye, Chairman of
the Board and Chief Executive
Officer (Principal Executive,
Financial and Accounting Officer)
Date: April 8, 1998
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated as of March 25, 1998 (this "Agreement"), by
and among Unidigital Inc., a Delaware corporation (the "Company"), William E.
Dye ("Dye"), and Richard J. Sirota ("Sirota" and, collectively with Dye, the
"Stockholders").
W I T N E S S E T H :
WHEREAS, the Company is authorized to issue 10,000,000 shares of common
stock, $0.01 par value (the "Common Stock"); and
WHEREAS, Dye, on the date hereof, has voting control over 1,051,421 shares
of the Common Stock; and
WHEREAS, the Company and Sirota are parties to that certain Asset Purchase
Agreement (the "Asset Purchase Agreement") dated March 25, 1998 by and among the
Company, Unison (NY), Inc., a Delaware corporation and wholly-owned subsidiary
of the Company ("Unison"), Kwik International Color, Ltd., a New York
corporation ("Kwik"), and Sirota, pursuant to which Sirota has been issued
649,841 shares of the Common Stock (the "Sirota Shares"); and
WHEREAS, the parties deem it in the best interests of each of the parties
to restrict the transfer of the Restricted Shares (as defined below) as herein
provided.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the Parties hereto hereby agree as follows:
SECTION 1. General Restrictions on Transfer of the Restricted Shares.
(a) During the term of this Agreement, none of the shares of Common
Stock owned on the date hereof or thereafter acquired by any Stockholder
(collectively, the "Restricted Shares") may be transferred, assigned, pledged,
encumbered or otherwise hypothecated except in accordance with the provisions of
this Agreement.
(b) Any attempted transfer of the Restricted Shares other than in
accordance with this Agreement (other than an involuntary transfer by operation
of law) shall be null and void and the Company shall refuse to recognize any
such transfer and shall not reflect on its records any change in record
ownership of the Restricted Shares pursuant to any such transfer.
(c) Notwithstanding anything contained herein to the contrary, but
subject to Section 5 hereof, it is understood and agreed that (i) each of the
Stockholders may transfer any or all of the Restricted Shares beneficially owned
by him to his immediate family (as defined below), or to trusts established for
the benefit of such immediate family, provided that in connection with such
transfer, the transferee grants to such transferor an irrevocable proxy coupled
with an interest to vote all of the Restricted Shares so transferred, and (ii)
in the case of Sirota, the Sirota Shares may be transferred to Sirota's former
business partner, Walter Berkower. Such transferees shall be
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referred to herein as "Permitted Transferees." For purposes of this Section
1(c), "immediate family" shall mean any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive
relationships.
SECTION 2. Right of First Refusal.
(a) Subject to Section 2(f) hereof, whenever and as often as any of
the Stockholders shall desire to sell any of the Restricted Shares pursuant to a
bona fide offer for the purchase thereof in a private transaction, such selling
Stockholder (the "Selling Stockholder") shall give notice (the "Notice") to the
Company in writing to such effect, enclosing a copy of such bona fide offer (it
being agreed that the Selling Stockholder shall cause any such offer to be
reduced to writing) and specifying the number of shares of the Selling
Stockholder's Restricted Shares which such Selling Stockholder desires to sell
(the "Shares"), the name of the person or persons to whom such Selling
Stockholder desires to make such sale and the dollar value of the consideration
which has been offered in connection therewith. Upon receipt of the Notice, the
Company shall have the first right and option to purchase all but not less than
all of the Shares, for cash at a purchase price equal to the dollar value of
such consideration (in the event such consideration includes noncash
consideration, subject to Section 2(g) hereof, the dollar value of such noncash
consideration shall be determined by the Company's Board of Directors, provided
that if such Selling Stockholder is a member of the Board of Directors, he shall
not participate in such determination), exercisable for a period of ten (10)
days from the date of receipt of the Notice. Failure of the Company to respond
to the Notice within the ten (10) day period shall be deemed to constitute a
notification to the Selling Stockholder of the Company's decision not to
exercise the first right and option to purchase the Shares under this Section
2(a).
(b) The Company may exercise the right and option provided in Section
2(a) above by giving written notice to the Selling Stockholder not later than
the close of business on the date of expiration of such right and option (or if
such date is not a business day, then on or before the close of business on the
next succeeding business day), advising of the election to exercise the same and
the date (not later than ten (10) days from the date of expiration of such first
right and option to purchase the Shares under Section 2(a)) upon which payment
of the purchase price for the Shares shall be made. The Selling Stockholder
shall cause to be delivered to the Company at the Company's principal office, on
the payment date specified in such written notice, the certificate or
certificates representing the Shares, properly endorsed for transfer, against
payment of the purchase price therefor by the Company in immediately available
funds.
(c) In the event that the Shares are not purchased by the Company
hereunder, the Selling Stockholder shall next give notice (the "Second Notice",
and together with the Notice, the "Notices") to the other Stockholder, by which
the Selling Stockholder shall then offer to the other Stockholder (the
"Offeree") the right and option to purchase all but not less than all of the
Shares for cash at the same purchase price and on the same terms as offered to
the Company as set forth in the Notice. Pursuant to such offer, the Offeree
shall have the right and option to purchase all but not less than all of the
Shares, for cash at a purchase price equal to the dollar value of such
consideration (in the event such consideration includes noncash consideration,
subject to Section 2(g) hereof, the dollar value of such noncash consideration
shall be determined
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by the Company's Board of Directors, provided that if the Selling Stockholder or
the Offeree is a member of the Board of Directors, he shall not participate in
such determination), exercisable for a period of ten (10) days from the date of
receipt of the Second Notice. Failure of the Offeree to respond to the Second
Notice within the ten (10) day period shall be deemed to constitute a
notification to the Selling Stockholder of the Offeree's decision not to
exercise the right and option to purchase the Shares under this Section 2(c).
(d) The Offeree may exercise the rights and options provided in
Section 2(c) by giving written notice to the Selling Stockholder not later than
the close of business on the date of expiration of such right and option (or if
such date is not a business day, then on or before the close of business on the
next succeeding business day), advising of the election to exercise the same and
the date (not later than ten (10) days from the date of expiration of the notice
upon which the Offeree is acting) upon which payment of the purchase price for
the Shares shall be made. The Selling Stockholder shall cause to be delivered to
the Offeree at the Company's principal office, on the payment date specified in
such written notice, the certificate or certificates representing the Shares
being purchased by the Offeree, properly endorsed for transfer, against payment
of the purchase price therefor.
(e) If the Shares are not purchased by the Company or the Offeree
in accordance with this Section 2, the Selling Stockholder may, during the
ninety (90) day period commencing on the expiration of the rights and options
provided for in Sections 2(a) and 2(c), sell all, but not less than all, of the
Shares to the transferee named in the Notices for consideration, the dollar
value of which is equal to or greater than the dollar value of the consideration
specified in the Notices, free of the restrictions contained in Section 2 of
this Agreement.
(f) Notwithstanding the foregoing, any of the Sirota Shares
distributed to the Company in satisfaction of an indemnification claim made by
the Company or Unison under the Asset Purchase Agreement shall be free of the
restrictions contained in Section 2 of this Agreement. In addition, in the event
a Selling Stockholder desires to sell any of the Restricted Shares pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, such sale
shall be free of the restrictions contained in Section 2 of this Agreement,
provided such sale does not result in such Selling Stockholder selling in excess
of 10,000 shares of Common Stock in the immediately preceding three-month
period.
(g) In the event the Selling Stockholder disputes the Board of
Directors' determination of the dollar value of noncash consideration to be paid
for the Shares, such Selling Stockholder shall notify the Company in writing
within three (3) calendar days after such determination setting forth the
amount, nature and basis of the dispute.
Within the following five (5) days, the parties shall use their
best efforts to resolve such dispute. Upon their failure to do so, the dispute
shall be submitted for arbitration as follows:
(i) The arbitrator shall be a public accounting firm located
in the City of New York, State of New York. In the event the selected arbitrator
declines or is unable to serve for any reason, the parties shall select another
arbitrator. Upon their failure to agree on
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another arbitrator, the jurisdiction of the Supreme Court of the State of New
York shall be invoked to make such selection.
(ii) The arbitrator shall follow the Commercial Arbitration
Rules of the American Arbitration Association, except as otherwise provided
herein. The arbitrator shall substantially comply with the rules of evidence;
shall grant essential but limited discovery; shall provide for the exchange of
witness lists and exhibit copies; shall conduct a pretrial and consider
dispositive motions. Each party shall have the right to request the arbitrator
to make findings of specific factual issues.
The arbitrator shall complete its proceedings and render its decision
within forty (40) days after submission of the dispute to it, unless both
parties agree to an extension. Each party shall cooperate with the arbitrator to
comply with the procedural time requirements and the failure of either to do so
shall entitle the arbitrator to extend the arbitration proceedings accordingly
and to impose sanctions on the party responsible for the delay, payable to the
other party.
In the event the arbitrator does not fulfill its responsibilities on a
timely basis, either party shall have the right to require a replacement and the
appointment of a new arbitrator.
(iii) The decision of the arbitrator shall be final and binding
upon the parties and accordingly a judgment by a court of competent jurisdiction
may be entered in accordance therewith.
SECTION 3. Election of Directors. At any time at which stockholders of
the Company will have the right to vote or will vote all shares of Common Stock
of the Company in matters relating to the election of directors, each
Stockholder shall vote all shares of Common Stock presently owned or hereafter
acquired by him to cause and maintain the election to the Board of Directors of
the Company of the other Stockholder; provided, however, that neither
Stockholder shall have any such obligation under this Section 3 in the event the
other Stockholder no longer owns at least ten percent (10%) of the Company's
then issued and outstanding shares of Common Stock.
SECTION 4. Standstill Agreement. Sirota hereby agrees that, without
the prior written consent of Dye, he shall not take any action to cause him to
be the beneficial owner of more than 1,000,000 shares of the Company's Common
Stock.
SECTION 5. Purchasers or Transferees of Restricted Shares. Except as
otherwise specifically provided herein, any person who shall acquire (either
voluntarily or involuntarily, by operation of law or otherwise) any Restricted
Shares from a Stockholder or any Permitted Transferee, shall be bound by the
provisions of this Agreement relating to the voting, transfer and sale of such
Restricted Shares to the same extent as the parties hereto and, prior to the
registration of the transfer of any such Restricted Shares on the books of the
Company, any purchaser or other transferee shall execute a counterpart to this
Agreement agreeing to be bound by such provisions.
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SECTION 6. Legend on Stock Certificates. During the term of this
Agreement, each certificate issued after the date hereof representing Restricted
Shares held by a Stockholder shall conspicuously bear the following legend until
such time as the shares represented thereby are no longer subject to the
provisions hereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A STOCKHOLDERS' AGREEMENT, DATED AS OF
MARCH 25, 1998, AMONG UNIDIGITAL INC. (THE "COMPANY"), WILLIAM E.
DYE AND RICHARD J. SIROTA. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF THIS
CERTIFICATE TO THE COMPANY."
The Company covenants that it shall keep a copy of this Agreement on file at its
principal executive offices for the purpose of furnishing copies to the holders
of record of the Restricted Shares.
SECTION 7. Duration of Agreement. This Agreement shall terminate on
the tenth anniversary of the date of this Agreement, unless earlier terminated
by the parties hereto. Additionally, this Agreement shall terminate as to a
Stockholder upon the transfer of all the Restricted Shares owned by such
Stockholder.
SECTION 8. Representations and Warranties.
(a) Each of the Company and the Stockholders (in the case of clause
(ii) below) represents and warrants, severally and not jointly, to the Company
and each of the other parties hereto as follows:
(i) The execution, delivery and performance of this Agreement by the
Company will not violate any provision of law, any order of any court or
other agency of government, or any provision of any material indenture,
agreement or other instrument to which the Company or any of its properties
or assets is bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Company (other than those arising
hereunder).
(ii) This Agreement has been duly executed and delivered by the
Company or such Stockholder, as the case may be, and constitutes the legal,
valid and binding obligation of the Company or such Stockholder,
enforceable against the Company or such Stockholder in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors' rights, and except that the
availability of the equitable remedies of specific performance and
injunctive relief may be subject to the discretion of the court before
which any proceeding may be brought.
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(b) Sirota represents and warrants to the Company and Dye that the
Sirota Shares constitute the entire ownership interest of Sirota in the Common
Stock of the Company as of the date hereof.
SECTION 9. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 10. Benefits of Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, legal representatives and heirs.
SECTION 11. Notices. Any notice, demand or request required or
permitted to be given under the provisions of this Agreement (a) shall be in
writing; (b) shall be delivered personally, including by means of telecopy or
courier, or mailed by registered or certified mail, postage prepaid and return
receipt requested; (c) shall be deemed given on the date of personal delivery or
on the date set forth on the return receipt; and (d) shall be delivered or
mailed as follows or to such other address as any party may from time to time
direct:
(i) if to the Company or Dye, c/o Unidigital Inc., 545 West 45th
Street, New York, New York, 10036, Attention: President, with a copy to Buchanan
Ingersoll, 500 College Road East, Princeton, New Jersey, 08540, Attention: David
J. Sorin, Esq.; or
(ii) if to Sirota, c/o Kwik International Color, Ltd., 229 West 28th
Street, New York, New York, 10001-5996, Attention: Mr. Richard J. Sirota, with a
copy to Kantor Davidoff Wolfe Mandelker & Kass, 51 East 42nd Street, New York,
New York, 10017, Attention: Herbert C. Kantor, Esq.
SECTION 12. Modification. Except as otherwise provided herein, neither
this Agreement nor any provision hereof may be modified, changed, discharged or
terminated except by an instrument in writing signed by the party against whom
the enforcement of any modification, change, discharge or termination is sought.
SECTION 13. Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable,
such illegality, invalidity or unenforceability shall not affect any other
provisions of this Agreement.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 15. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, and
supersedes all previous agreements. In the event of any conflict between this
Agreement and any other agreement or instrument with respect to the subject
matter hereof, the provisions of this Agreement shall control.
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SECTION 16. Reorganization, Etc. The provisions of this Agreement
shall apply mutatis mutandis to any shares or other securities resulting from
any stock split or reverse split, stock dividend, reclassification, subdivision,
consolidation or reorganization of any shares or other securities of the Company
and to any shares or other securities of the Company or of any successor company
which may be received by each Stockholder by virtue of his ownership of the
Restricted Shares.
SECTION 17. Survival of Representations. Each representation,
warranty, covenant and agreement of the parties hereto herein contained shall
survive the date hereof, notwithstanding any investigation at any time made by
or on behalf of any of the parties.
SECTION 18. Headings. The headings of this Agreement are for
convenience of reference only and are not part of the substance of this
Agreement.
* * * * * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders' Agreement as of the day and year first above written.
UNIDIGITAL INC.
By:/s/ William E. Dye
--------------------------------
Name: William E. Dye
Title: President and Chief Executive
Officer
STOCKHOLDERS
/s/ William E. Dye
-----------------------------------
William E. Dye
/s/ Richard J. Sirota
-----------------------------------
Richard J. Sirota
ASSET PURCHASE AGREEMENT
Agreement made as of the 25th day of March, 1998 by and among
Unidigital Inc., a Delaware corporation with its principal office at 545 West
45th Street, New York, New York 10036 ("Unidigital"), its wholly-owned
subsidiary, Unison (NY), Inc., a Delaware corporation with its principal office
at c/o Unidigital Inc., 545 West 45th Street, New York, New York 10036 (the
"Buyer"), Kwik International Color, Ltd., a New York corporation with its
principal office at 229 West 28th Street, New York, New York 10001-5996 (the
"Seller") and Richard J. Sirota, the sole shareholder of the Seller (the
"Shareholder"). The Seller and the Shareholder are sometimes collectively
referred to herein as the "Selling Parties."
Preliminary Statement
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The Seller is engaged principally in the business of general printing,
color separation services and large format printing services (the "Business").
The Buyer desires to purchase, and the Seller desires to sell, all of the assets
and the Business of the Seller (except for the Excluded Assets (as defined
below)), for the consideration set forth below and the assumption of certain of
the Seller's liabilities set forth below, subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Sale and Delivery of the Assets
-------------------------------
1.1 Delivery of the Assets.
----------------------
(a) Subject to and upon the terms and conditions of this
Agreement, except as specifically provided in Section 1.1(b) hereof, at the
closing of the transactions contemplated by this Agreement (the "Closing"), the
Seller shall sell, transfer, convey, assign and deliver to the Buyer, and the
Buyer shall purchase from the Seller, free and clear of all liens, liabilities,
security interests, leasehold interests and encumbrances of any nature
whatsoever (except as otherwise expressly provided herein), all of the
properties, assets and other claims, rights and interests of the Seller or which
are used in the Business of whatever kind, character or description, whether
real, personal or mixed, tangible or intangible, wherever situated, including
without limitation:
(i) all inventories of raw materials, work in process, goods
in transit (i.e., inventories purchased by, but not delivered to, the Seller),
finished goods, office supplies, maintenance supplies, packaging materials,
spare parts and similar items (collectively, the "Inventory");
(ii) all accounts receivable and notes receivable (including
any security held by the Seller for the payment thereof) (collectively, the
"Accounts Receivable");
(iii)those prepaid expenses set forth in Schedule
1.1(a)(iii);
<PAGE>
(iv) all rights under the contracts, agreements, leases,
licenses, purchase orders, customer sales agreements and other instruments set
forth on Schedule 2.9(b) and Schedule 2.13(b) attached hereto (collectively, the
"Contract Rights");
(v) except as set forth in Section 1.1(b)(iv), all books;
payment records; accounts; customer lists; environmental reports or studies;
correspondence; production records; technical, accounting, manufacturing and
procedural manuals; engineering data; development and design data; plans,
blueprints, specifications and drawings; employment and personnel records; and
other useful business records, including electronic media, and any confidential
or other information which has been reduced to writing, utilized in the conduct
of or relating to the Business or the Assets (as hereinafter defined), subject
to the Seller's right to retain copies thereof which the Seller reasonably
requires for its ongoing operation, winding-up or dissolution;
(vi) all rights of the Seller under express or implied
warranties from the suppliers of the Assets to the extent transferable (but
excluding such rights insofar as the same pertain to liabilities retained by the
Seller hereunder);
(vii)the motor vehicles and other rolling stock listed on
Schedule 1.1(a)(vii);
(viii)all of the machinery, equipment, tools, dies, tooling,
production fixtures, maintenance machinery and equipment, computers,
telecommunication systems, fittings and other office equipment, furniture,
leasehold improvements and construction in progress on the date hereof whether
or not reflected as capital assets in the accounting records of the Seller which
are owned by the Seller and used or useful in the Business including but not
limited to all of the foregoing located at the locations set forth on Schedule
1.1(a)(viii) (collectively, the "Fixed Assets");
(ix) all right, title and interest of the Seller in and to
all intangible property rights relating to the Business, including but not
limited to inventions, discoveries, trade secrets, processes, formulas,
know-how, United States and foreign patents, patent applications, trade names,
including but not limited to the name "Kwik International Color, Ltd.", or any
derivation thereof and those names listed on Schedule 2.20 attached hereto,
trademarks, trademark registrations, applications for trademark registrations,
copyrights, copyright registrations, certification marks, industrial designs,
technical expertise, research data and other similar property and the
registrations and applications for registration thereof owned by the Seller or,
where not owned, used by the Seller in the Business and all goodwill associated
thereto and all licenses and other agreements to which the Seller is a party (as
licensor or licensee) or by which the Seller is bound relating to any of the
foregoing kinds of property or rights to any "know-how" or disclosure or use of
ideas (collectively, the "Intangible Property");
(x) all transferable approvals, authorizations,
certifications, consents, variances, permissions, licenses and permits to or
from, or filings, notices or recordings to or
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with, federal, state, foreign, and local governmental authorities as held or
effected by the Seller in connection with the Assets;
(xi) all of the Seller's goodwill and the exclusive right to
use the names of the Seller as all or part of a corporate name;
(xii)except as specifically provided in Section 1.1(b)
hereof, all other assets, properties, claims, rights and interests of the Seller
which relate to the Business and exist on the date hereof, of every kind and
nature and description, whether tangible or intangible, real, personal or mixed;
and
(xiii)cash or cash equivalents ("Cash").
(b) Notwithstanding the provisions of Section 1.1(a) above, the
assets to be transferred to the Buyer under this Agreement shall not include (i)
any of Seller's rights or consideration under this Agreement, or (ii) any
refunds of federal, state, foreign or local income or other tax paid by the
Seller, or (iii) any insurance policies currently held by the Seller and related
premium agreements for general liability, product liability and workers
compensation insurance for periods prior to the date hereof, or (iv) the
financial books and records of the Seller (it being understood that the Seller
shall make such financial books and records available at the reasonable request
of the Buyer), or (v) those assets listed on Schedule 1.1(b) attached hereto
(collectively, the "Excluded Assets").
(c) The Inventory, Accounts Receivable, Contract Rights, Fixed
Assets, Intangible Property, Cash and other properties, assets and business of
the Seller described in Section 1.1(a) above, other than the Excluded Assets,
shall be referred to collectively as the "Assets."
1.2 Further Assurances.
------------------
(a) At the Closing, the Seller shall execute and deliver a Bill
of Sale (the "Bill of Sale") substantially in the form attached hereto as
Exhibit A, and the assignments described in Sections 7.14(b) and (c) hereof. At
any time and from time to time after the Closing, at the Buyer's request and
without further consideration, the Selling Parties (or their successors)
promptly shall execute and deliver such assignments of leases and other
instruments of sale, transfer, conveyance, assignment and confirmation, and take
such other action, as the Buyer may reasonably request to more effectively
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all of the Assets and the Business, to put the Buyer in actual possession and
operating control thereof, to assist Buyer in exercising all rights with respect
thereto and to carry out the purpose and intent of this Agreement.
(b) The Selling Parties and the Buyer each will use its best
efforts to obtain as promptly as possible written consents to the transfer,
assignment or sublicense to the Buyer of all
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agreements, commitments, purchase orders, contracts, licenses, leases, rights
and other contract documents being transferred pursuant to Section 1.1(a) hereof
where the approval or other consent of any other person is required. If any such
approval or consent cannot be obtained, or if the parties hereafter agree in
writing that it is not in their respective best interests to obtain any such
approval or other consent, the Selling Parties will cooperate with the Buyer in
any reasonable arrangement designed to provide the Buyer with substantially the
same economic benefits as if such approval or other consent had been obtained
and the transfer effected on or before the date hereof.
1.3 Assumption of Liabilities.
-------------------------
(a) At the Closing, the Buyer shall execute and deliver an
Instrument of Assumption of Liabilities (the "Assumption Agreement")
substantially in the form attached hereto as Exhibit B, pursuant to which it
shall assume and agree to (i) perform, pay and discharge, in accordance with
their respective terms, all those liabilities and obligations set forth on
Schedule 1.3(a) attached hereto which were incurred in the ordinary course of
business of the Business and are outstanding on the date hereof (the obligations
set forth in (i) are collectively, the "Assumed Current Liabilities"); (ii)
perform in accordance with their terms those obligations outstanding on the date
hereof under the Contract Rights; and (iii) perform in accordance with their
terms those liabilities arising after the date hereof from any agreement,
contract, commitment or other contract documents which the Buyer has requested
be transferred to it pursuant to Section 1.1(a) but which has not been so
transferred due to the failure of the Seller to obtain the consent or approval
required for such transfer, provided that the Buyer has received substantially
the same economic benefit of such contract as if such consent or approval had
been obtained (the obligations set forth in (i), (ii) and (iii) are,
collectively, the "Assumed Liabilities").
(b) Except as otherwise provided herein, the Buyer shall not
assume any of the liabilities of the Selling Parties and shall purchase the
Assets free and clear of all liens, mortgages, security interests, encumbrances
and claims and the Selling Parties each represent, warrant and agree that the
Buyer shall not be or become liable for any claims, demands, liabilities or
obligations not expressly assumed in this Agreement of any kind whatsoever
arising out of or relating to the conduct of the Business by Seller or the
Assets or Assumed Liabilities prior to the date hereof. Without limiting the
foregoing, the Buyer shall not at the Closing assume or agree to perform, pay or
discharge, and the Selling Parties shall remain unconditionally liable for, all
obligations, liabilities and commitments, fixed or contingent, of the Selling
Parties other than the Assumed Liabilities, including but not limited to:
(i) severance, termination or other payments or benefits
(including but not limited to post-retirement benefits) including but not
limited to those owing under the Seller's severance policy or any employment
agreement to any employees (union or non-union), sales agents or independent
contractors employed by the Seller prior to the Closing (collectively, "Seller's
Employees"), liabilities arising under any federal, state, local or foreign
"plant closing law", liabilities accruing under the Seller's employee benefit
plans, vacation pay plans or
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programs, retirement plans, and liabilities for any Employee Plan (as defined in
Section 2.21 except those liabilities to Seller's Employees who become employees
of the Buyer after the Closing relating solely to and arising solely out of
their term of employment with the Buyer);
(ii) worker's compensation claims arising from events prior
to the Closing;
(iii)stock option or other stock-based awards made to
Seller's Employees;
(iv) liabilities for any federal, state, local or foreign
income taxes (including interest, penalties and additions to such taxes) or any
deferred income taxes of the Selling Parties;
(v) liabilities for any payroll taxes (including interest,
penalties and additions to such taxes), except those liabilities to Seller's
Employees who become employees of the Buyer after the Closing relating solely to
and arising solely out of their term of employment with the Buyer;
(vi) liabilities incurred for violations of occupational
safety, wage, health, welfare, employee benefit or environmental laws or
regulations prior to the date hereof;
(vii)liabilities to the extent related solely to the
Excluded Assets;
(viii)except as provided in Section 11 hereof, any tax
(including but not limited to any federal, state, local or foreign income,
franchise, single business, value added, excise, customs, intangible, sales,
transfer, recording, documentary or other tax) imposed upon, or incurred by, the
Selling Parties, if any, in connection with or related to this Agreement or the
transactions contemplated hereby (including interest, penalties and additions to
such taxes);
(ix) liabilities for any commercial rent taxes to the extent
accrued but not paid prior to the date hereof;
(x) other than the Assumed Liabilities, any liabilities of
the Seller to third parties arising out of the failure of the Seller to obtain
any necessary consents to the assignment to the Buyer of contracts or leases to
which the Seller is a party (including damages asserted by third parties for
breach of such contracts or leases due to the failure to obtain such consents);
(xi) liabilities, contingent or otherwise, which are not
disclosed on Schedule 1.3(a);
(xii)liabilities for borrowed money or liabilities, other
than the Assumed Liabilities, to creditors of the Selling Parties;
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(xiii)liabilities of the Seller for any state franchise taxes
or annual license or other fees relating to qualification as a foreign
corporation or authorization to do business in such states (including interest,
penalties and additions to such taxes and fees); and
(xiv)any other liabilities of any kind or nature whether now
in existence or arising hereafter not expressly assumed by the Buyer under
Section 1.3(a) hereof.
1.4 Purchase Price.
--------------
(a) In consideration of the transfer of the Business and Assets
of the Seller to the Buyer hereunder, the Buyer will assume the Assumed
Liabilities and will pay an aggregate purchase price (the "Purchase Price"),
subject to the provisions of Sections 1.4(b) and (c), Section 1.5 and Section
1.7, equal to (i) $18,000,000 in cash payable to the Seller (such aggregate
amount of consideration to be paid in cash in accordance with the provisions of
this Section 1.4(a)(i) hereof being referred to herein as the "Cash
Consideration"), (ii) $750,000 payable to the Seller, such amount to be paid by
the issuance of a 5.7% subordinated promissory note (the "Note") in the form
attached hereto as Exhibit C, and (iii) $6,000,000 payable to the Shareholder,
such amount to be paid by the issuance of such number of shares of restricted
Unidigital common stock (the "Unidigital Stock"), which when multiplied by the
average closing prices of Unidigital's common stock for the twenty (20) trading
days immediately prior to the ten (10) trading days immediately prior to the
Closing (the "Stock Price"), shall have a market value of $6,000,000; provided,
however, that in no event shall the Stock Price be (A) less than $4.00 per
share, or (B) greater than $10.00 per share and provided, further, however, that
Unidigital, in its sole discretion, shall have the right to limit the number of
shares of Unidigital Stock delivered pursuant to this Section 1.4 to such number
of shares of Unidigital Stock equal to twenty percent (20%) of the then
outstanding number of shares of common stock of Unidigital minus one share (such
aggregate amount of consideration paid in stock in accordance with the
provisions of this Section 1.4(a)(iii) hereof being referred to herein as the
"Stock Consideration").
(b) In the event that the value of the Stock Consideration paid
to the Shareholder is less than $6,000,000 (determined by multiplying the Stock
Price by the number of shares of Unidigital Stock actually delivered by
Unidigital pursuant to Section 1.4(a)(iii) hereof), the Buyer shall pay
additional cash consideration (the "Additional Cash Consideration") to the
Shareholder, such that the sum of the value of the Stock Consideration and the
Additional Cash Consideration is equal to $6,000,000.
(c) As promptly as possible following the Closing, but in no
event later than sixty (60) days following the Closing, the Buyer and the Seller
shall cooperate in the preparation of Schedule 1.4(c) setting forth Minimum Net
Asset Value (as defined below) as of the date hereof. In the event that such
Minimum Net Asset Value is less than $3,500,000, the Purchase Price payable to
the Selling Parties shall be reduced by the amount of such deficiency. Such
deficiency shall be paid to the Buyer pursuant to the terms of the Escrow
Agreement (as defined below) to the extent available.
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<PAGE>
(d) In the event the Seller disputes Schedule 1.4(c), the Seller
shall notify the Buyer in writing within twenty (20) calendar days after
delivery of Schedule 1.4(c) setting forth the amount, nature and basis of the
dispute.
Within the following thirty (30) days, the parties shall use
their best efforts to resolve such dispute. Upon their failure to do so, the
dispute shall be submitted for arbitration as follows:
(i) The arbitrator shall be a public accounting firm located
in the City of New York, State of New York. In the event the selected arbitrator
declines or is unable to serve for any reason, the parties shall select another
arbitrator. Upon their failure to agree on another arbitrator, the Commercial
Arbitration Rules of the American Arbitration Association shall be invoked to
make such selection.
(ii) The arbitrator shall follow the Commercial Arbitration
Rules of the American Arbitration Association, except as otherwise provided
herein. The arbitrator shall substantially comply with the rules of evidence;
shall grant essential but limited discovery; shall provide for the exchange of
witness lists and exhibit copies; shall conduct a pretrial and consider
dispositive motions. Each party shall have the right to request the arbitrator
to make findings of specific factual issues.
The arbitrator shall complete its proceedings and render its
decision within forty (40) days after submission of the dispute to it, unless
both parties agree to an extension. Each party shall cooperate with the
arbitrator to comply with procedural time requirements and the failure of either
to do so shall entitle the arbitrator to extend the arbitration proceedings
accordingly and to impose sanctions on the party responsible for the delay,
payable to the other party.
In the event the arbitrator does not fulfill its responsibilities
on a timely basis, either party shall have the right to require a replacement
and the appointment of a new arbitrator.
(iii)The decision of the arbitrator shall be final and
binding upon the parties and accordingly a judgment by a court of competent
jurisdiction may be entered in accordance therewith.
(e) For purposes of this Agreement, "Minimum Net Asset Value"
shall mean the aggregate value of the Assets acquired hereunder less (i) the
Assumed Current Liabilities and (ii) the capital lease obligations (net of
current portion included in Assumed Current Liabilities) assumed hereunder.
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1.5 The Closing.
-----------
(a) The Closing shall take place at the offices of Kantor
Davidoff Wolfe Mandelker & Kass, counsel to the Seller, on the date hereof. The
transfer of the Assets by the Seller to the Buyer shall be deemed to occur on
the date hereof.
(b) Subject to Section 1.5(c) and Section 1.7, at the Closing,
the Buyer shall pay the Purchase Price in the following manner:
(i) by the assumption of the Assumed Liabilities;
(ii) payment of the Cash Consideration;
(iii) delivery of the Note;
(iv) payment of the Additional Cash Consideration, if any;
and
(v) delivery of the Stock Consideration.
(c) At the Closing, the Buyer shall deliver a portion of the Cash
Consideration equal to $1,000,000 and such number of shares of Unidigital Stock
which have a market value of $1,000,000 (determined in accordance with the
provisions set forth in Section 1.4(a)) (collectively, the "Escrow Amount") to a
third-party escrow agent, reasonably acceptable to the Seller and the Buyer (the
"Escrow Agent"), pursuant to an Escrow Agreement (the "Escrow Agreement")
substantially in the form attached hereto as Exhibit D. The disbursement of the
Escrow Amount held by the Escrow Agent shall be done in accordance with the
terms of the Escrow Agreement.
(d) Subject to Section 1.7, the Cash Consideration shall be paid
to the Seller by wire transfer to an account to be specified by the Seller.
1.6 Allocation of Purchase Price. The aggregate amount of the Purchase
Price shall, for tax purposes only, be allocated among the Assets and Assumed
Liabilities substantially in accordance with the amounts set forth on Schedule
1.6. The Seller and the Buyer agree that they will not take any position which
is materially inconsistent with the allocations provided for in this Agreement
in preparing income, capital or franchise tax returns.
1.7 Use of Proceeds. At the Closing, the Buyer shall direct that a
portion of the Cash Consideration be paid as set forth on Schedule 1.7 attached
hereto.
2. Representations of the Selling Parties
--------------------------------------
The representations and warranties made by the Selling Parties
herein or in any instrument or document furnished in connection herewith shall
survive the Closing until (and including) the second anniversary of the date
hereof, except for any representations or warranties
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<PAGE>
relating to any tax matters which shall survive through the appropriate statute
of limitations. The representations and warranties in this Section 2 or in any
document delivered to the Buyer pursuant to this Agreement are deemed to be
material and the Buyer is entering into this Agreement relying on such
representations and warranties. The Selling Parties, jointly and severally,
represent and warrant to the Buyer as follows (it being understood that all
references in this Section 2 to the Seller shall be deemed to include any of
Seller's subsidiaries, unless the context otherwise requires):
2.1 Organization. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has all requisite power and authority (corporate and other) to own its
properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby. Schedule 2.1 sets forth the authorized and
outstanding capital stock of the Seller as well as the record and beneficial
owners thereof. Except as set forth on Schedule 2.1, the Seller does not own or
control, directly or indirectly, any corporation, partnership, association or
business entity. The Seller is duly qualified to do business and in good
standing in all jurisdictions in which its ownership of property or the
character of its business requires such qualification. Schedule 2.1 contains a
true, correct and complete list of all of the jurisdictions in which the
ownership of the property used in the Business or the nature of the Business
requires qualification.
2.2 Authorization. The execution and delivery of this Agreement (and
all other agreements provided for herein) by the Seller, and the consummation by
the Seller of all transactions contemplated hereby, has been duly authorized by
all requisite corporate and shareholder action. This Agreement and all such
other agreements and obligations entered into and undertaken in connection with
the transactions contemplated hereby to which the Seller is a party constitutes
the valid and legally binding obligations of the Seller, enforceable against it,
in accordance with their respective terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally. The execution, delivery and performance by the
Seller of this Agreement and the agreements provided for herein, and the
consummation by the Buyer of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
(a) violate the provisions of any law, rule or regulation applicable to the
Seller; (b) violate the provisions of the Certificate of Incorporation or Bylaws
of the Seller; (c) violate any judgment, decree, order or award of any court,
governmental body or arbitrator; or (d) conflict with or result in the breach or
termination of any term or provision of, or constitute a default under, or cause
any acceleration under, or cause the creation of any lien, charge or encumbrance
upon the properties or assets of the Seller pursuant to, any indenture,
mortgage, deed of trust or other instrument or agreement to which any of them is
a party or by which any of them or any of their properties is or may be bound,
other than with respect to obligations of Seller which will be discharged at or
prior to Closing. Schedule 2.2 attached hereto sets forth a true, correct and
complete list of all consents, approvals, permissions, licenses, authorizations
and other requirements prescribed by law, rule, regulation or by contract in
connection with the
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consummation by the Seller of the transactions contemplated by this Agreement.
Except as indicated on Schedule 2.2, all such items have been obtained and
satisfied.
2.3 Ownership of the Assets. Schedule 2.3 attached hereto sets forth a
true, correct and complete list of all claims, liabilities, liens, pledges,
charges, encumbrances and equities of any kind affecting their respective Assets
(collectively, the "Encumbrances"). The Seller is the true and lawful owner of
the Assets, and has the right to sell and transfer to the Buyer good and
marketable title to all Assets, which are free and clear of all Encumbrances.
The delivery to the Buyer of the instruments of transfer of ownership
contemplated by this Agreement will vest good and marketable title to all Assets
in the Buyer, free and clear of all liens, mortgages, pledges, security
interests, restrictions, prior assignments, encumbrances and claims of any kind
or nature whatsoever. The Assets to be conveyed to the Buyer hereunder
constitute all properties, assets, rights and claims which are necessary to the
conduct of the Business as currently conducted by the Seller.
2.4 Financial Statements.
--------------------
(a) The Seller has previously delivered to the Buyer its audited
balance sheets as of December 31, 1996 and 1997, and the related statements of
operations, shareholders' equity and changes in financial position of the Seller
for the fiscal years then ended (collectively, the "Audited Financial
Statements"). As promptly as possible following the Closing, but in no event
later than sixty (60) days following the Closing, the Seller shall deliver to
the Buyer an unaudited balance sheet as of February 28, 1998, and the related
statements of operations, shareholders' equity and changes in financial position
of the Seller for each of the months ended January 31, 1998 and February 28,
1998, respectively (collectively, the "Unaudited Financial Statements" and,
together with the Audited Financial Statements, the "Financial Statements"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied consistently with past practice.
(b) The Financial Statements are accurate and complete, and
fairly present, as of their respective dates, the financial condition, retained
earnings (deficit), assets and liabilities of the Seller and the results of
operations of the Seller's business for the periods indicated. Nothing has come
to the attention of the Seller since the date of the Financial Statements which
would lead it to believe that the reserves and accruals shown thereon are
inadequate for all reasonably anticipated losses, costs and expenses and the
Seller reasonably believes that such reserves and accruals are adequate for all
of such losses, costs and expenses.
(c) Schedule 2.4(c) attached hereto sets forth Adjusted EBITDA
(as defined below) for the twelve-month period ended December 31, 1997.
(d) For purposes of this Agreement, "Adjusted EBITDA" shall mean
the Seller's audited earnings before interest, taxes, depreciation and
amortization, plus annual remuneration in excess of $500,000 paid by the Seller
to the Shareholder (provided such remuneration is paid to the Shareholder as
compensation in the normal course of performance of
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his duties as an employee, officer and director of the Seller), plus certain
non-recurring, non-operating expenses as shall have been approved by the Buyer.
2.5 Litigation. Except as set forth on Schedule 2.5, the Seller is not
a party to, or to the Selling Parties' best knowledge threatened with, and none
of the Assets are subject to, any litigation, suit, action, investigation (to
the best of the Selling Parties' knowledge), grievance, arbitration, proceeding,
or controversy or claim before any court, administrative agency or other
governmental authority relating to or affecting the Assets or the business,
properties, condition (financial or otherwise) or prospects of the Business. The
Seller is not in violation of or in default with respect to any judgment, order,
award, writ, injunction, decree or rule of any court, governmental department,
commission, agency, instrumentality, arbitrator, administrative agency or
governmental authority or any regulation of any administrative agency or
governmental authority, where such violation or default would have a material
adverse effect upon the Assets, the business, properties, condition (financial
or otherwise) or prospects of the Business or the consummation of the
transactions contemplated hereby. The Seller has not received notice of any
product liability claim, warranty claim or other claim whatsoever which, if
decided adversely, would have a material adverse effect on the Assets or the
business, condition (financial or otherwise), properties or prospects of the
Business.
2.6 Insurance. Schedule 2.6 sets forth a true, correct and complete
list of all fire, theft, casualty, general liability, workers compensation,
business interruption, environmental impairment, product liability, automobile
and other insurance policies insuring the Assets or business of the Business and
of all life insurance policies maintained for any employees of the Business,
specifying the type of coverage, the amount of coverage, the premium, the
insurer and the expiration date of each such policy (collectively, the
"Insurance Policies") and all claims made under such Insurance Policies since
January 1, 1993. True, correct and complete copies of all of the Insurance
Policies have been previously delivered by the Seller to the Buyer. The
Insurance Policies are in full force and effect and are in amounts and of a
nature which are adequate and customary for the business of the Business. All
premiums due on the Insurance Policies or renewals thereof have been paid and
there is no default under any of the Insurance Policies. Except as set forth on
Schedule 2.6, the Seller has not received any notice or other communication from
any issuer of the Insurance Policies canceling or materially amending any of the
Insurance Policies, materially increasing any deductibles or retained amounts
thereunder, or materially increasing the annual or other premiums payable
thereunder, and, to the best knowledge of the Selling Parties, no such
cancellation, amendment or increase of deductibles, retainers or premiums is
threatened.
2.7 Inventory. Schedule 2.7 sets forth a true, correct and complete
list of the Inventory as of the date hereof, including a description and
valuation thereof. At the Closing, the Inventory will consist of items of a
quality and quantity which are usable or saleable, without discount and at
values at least equal to the values indicated on the latest balance sheet
included in the Financial Statements, in the ordinary course of business, except
as otherwise reserved or provided for in accordance with the procedures set
forth on Schedule 2.7, conducted by and
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within the normal operating cycle of the Business. At the Closing, the value of
all items of obsolete materials, excess quantities of materials and of materials
of below standard quantity will be reserved for in accordance with the
procedures set forth in Schedule 2.7, and to the extent not inconsistent, with
generally accepted accounting principles.
2.8 Fixed Assets. Schedule 2.8 sets forth a true, correct and complete
list of all Fixed Assets as of the date hereof, including a description and the
cost and accumulated depreciation on an aggregate basis with respect to all
Fixed Assets. Except as set forth in Schedule 2.8, as of the date hereof, the
Fixed Assets are in good condition and repair and are sufficiently operational
(apart from ordinary wear and tear) to enable the Buyer to conduct the business
in essentially the same manner in which it has heretofore been conducted by the
Seller.
2.9 Leases. Schedule 2.9(a) attached hereto sets forth a true, correct
and complete list as of the date hereof of all leases of real estate,
identifying separately each ground lease, to which the Seller is a party as
lessee or tenant or which the Seller uses in the operations of the Business.
Schedule 2.9(b) attached hereto sets forth a list of all leases of real estate
which the Buyer will assume pursuant to this Agreement (the "Leases"). True,
correct and complete copies of the Leases, and all amendments, modifications and
supplemental agreements thereto, have previously been delivered by the Seller to
the Buyer. The Leases are in full force and effect, are binding and enforceable
against each of the parties thereto in accordance with their respective terms
and, except as set forth on Schedule 2.9(b) attached hereto, have not been
modified or amended since the date of delivery to the Buyer. No party to any
Lease has sent written notice to the other claiming that such party is in
default thereunder, which default remains uncured. Except as set forth on
Schedule 2.9(b) attached hereto, there has not occurred any event which would
constitute a breach of or default in the performance of any material covenant,
agreement or condition contained in any Lease by either party thereto, nor has
there occurred any event which with the passage of time or the giving of notice
or both would constitute such a breach or material default. The Seller is not
obligated to pay any leasing or brokerage commission relating to any Lease and
will not have any enforceable obligation to pay any leasing or brokerage
commission upon the renewal or extension of any Lease. No material construction,
alteration or other leasehold improvement work with respect to any of the Leases
remains to be paid for or to be performed by any party under any Lease. Seller
has fulfilled all material obligations required pursuant to the Leases to have
been performed by Seller. None of the Leases imposes any restrictions that would
materially interfere with the continued operation of the business as currently
conducted on any of the properties that are the subject of the Leases. There is
no pending or, to the best of the Selling Parties' knowledge, threatened eminent
domain taking or condemnation that will or may affect any of the properties that
are the subject of the Leases.
2.10 Change in Financial Condition and Assets. Since December 31,
1996, there has been no change which materially and adversely affects the Assets
or the business, properties, condition (financial or otherwise) or prospects of
the Business. The Selling Parties have no knowledge of any existing or
threatened occurrence, event or development related to the Assets or the
business, properties, condition (financial or otherwise) or prospects of the
Business which
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could have a material adverse effect on the Assets or the business, properties,
condition (financial or otherwise) or prospects of the Business.
2.11 Accounts Receivable. Schedule 2.11 sets forth a true, correct and
complete list of all Accounts Receivable, including an aging thereof as of the
date hereof. All Accounts Receivable arose out of the sales of inventory or
services in the ordinary course of business and are collectible in the values
set forth on Schedule 2.11 net of the respective reserves shown on the latest
balance sheet included in the Audited Financial Statements (which reserves are
adequate and calculated consistent with past practice). Except as set forth on
Schedule 2.11, there is no contest, claim, or right of set-off, other than
returns in the ordinary course of business, under any contract or agreement with
any account debtor of an Account Receivable relating to the amount or validity
of such Account Receivable.
2.12 Books and Records. The general ledgers, minute books and books of
account of the Seller with respect to the Business, all federal, state, local
and foreign income, franchise, property and other tax returns filed by the
Seller, with respect to the Assets, and all other books and records of the
Seller with respect to the Business, all of which have been made available to
the Buyer, are in all material respects complete and correct and have been
maintained in accordance with good business practice and in accordance with all
applicable procedures required by laws and regulations other than any digression
from such practice and procedures which has no material and adverse effect on
the Assets or the Business, or the valuations thereof for the purposes of this
Agreement, as conducted as of and prior to the date hereof.
2.13 Contracts and Commitments.
-------------------------
(a) Schedule 2.13(a) attached hereto contains a true, complete
and correct list and description of the following contracts and agreements,
whether written or oral, which relate to the Business:
(i) all loan agreements, indentures, mortgages and
guaranties to which the Seller is a party or by which the Seller or its property
is bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements relating to any of the Assets to which the Seller
is a party or by which the Seller or any of its property is bound;
(iii)all contracts, agreements, commitments, purchase orders
(other than merchandise deliveries to customers in the normal course of business
upon standard terms) or other understandings or arrangements to which the Seller
is a party or by which any of their respective property is bound which (A)
involve payments or receipts by any of them of more than $10,000 in the case of
any single contract, agreement, commitment, understanding or arrangement under
which full performance (including payment) has not been rendered by all
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parties thereto or (B) may materially adversely affect the condition (financial
or otherwise) or the properties, Assets, business or prospects of the Business;
(iv) all collective bargaining agreements, employment and
consulting agreements, non-competition agreements, trust agreements, executive
compensation plans, bonus, 401(k), or profit-sharing plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, memoranda of understanding, arrangements or
commitments to which the Seller is a party or by which the Seller or any of its
property is bound;
(v) all agency, distributor, sales representative and
similar agreements to which the Seller is a party;
(vi) all contracts, agreements or other understandings or
arrangements, whether written or oral, between the Seller and any shareholder,
employee, officer or director of the Seller which may affect the Business as
conducted as of and prior to the date hereof or the Assets;
(vii)all leases, whether operating, capital or otherwise,
under which the Seller is lessor or lessee, including, without limitation, all
equipment leases;
(viii)all contracts, agreements and other documents or
information relating to past disposal of waste (whether or not hazardous) which
are available;
(ix) all return policies and product warranties relating to
products or goods manufactured or distributed by the Business as the same are
currently in effect or may have been in effect from time to time since December
31, 1996, as well as any exception to such policies, all cooperative advertising
arrangements and all rebate, discount or allowance arrangements;
(x) all contracts related to operation, maintenance or
management of the leased facilities under any Leases (the "Leased Premises")
other than immaterial contracts which do not constitute a part of Assumed
Liabilities; and
(xi) any licensing agreements, franchise agreements and
other material agreement or contract entered into by the Seller.
(b) Schedule 2.13(b) attached hereto sets forth a true, correct
and complete list of the contracts and agreements, whether written or oral,
which are to be assigned from the Seller to the Buyer at the Closing
(collectively, the "Contracts").
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(c) Except as set forth on Schedule 2.13(c), the continuation,
validity and effectiveness of each Contract would not be affected by the
transfer thereof to the Buyer under this Agreement and all such Contracts are
assignable to the Buyer without a consent and:
(i) each Contract is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms, and the
Selling Parties have no knowledge that any Contract is not a valid and binding
agreement of the other parties thereto:
(ii) the Seller has fulfilled all material obligations
required pursuant to the Contracts to have been performed by it prior to the
date hereof;
(iii)the Seller is not in breach of or default under any
Contract, and no event has occurred which with the passage of time or giving of
notice or both would constitute such a default, result in a loss of rights or
result in the creation of any lien, charge or encumbrance, thereunder or
pursuant thereto (an "Inchoate Default"); and
(iv) to the best knowledge of the Selling Parties, there is
no existing breach or default by any other party to any Contract, and no
Inchoate Default.
(d) True, correct and complete copies of all of the foregoing
contracts and agreements (other than all unfilled purchase orders and all
unfilled customer orders), including but not limited to the Contracts, and a
list of all unfilled purchase orders and all unfilled customer orders, have been
delivered by the Seller to the Buyer prior to the date hereof.
2.14 Compliance with Laws. The Seller has all requisite licenses,
permits and certificates, including health and safety permits, from federal,
state, local and foreign authorities necessary to conduct the Business and own
and operate the Assets (collectively, the "Permits"). Schedule 2.14 sets forth a
true, correct and complete list of all such Permits, copies of which previously
have been delivered by the Seller to the Buyer. The Seller has not engaged in
any activity which would cause or, to the knowledge of the Selling Parties,
permit revocation or suspension of any such Permit and no action or proceeding
looking to or contemplating the revocation or suspension of any such Permit is
pending or threatened. There are no existing defaults or Inchoate Defaults by
the Seller under any Permit. The Selling Parties have no knowledge of any
default or claimed or purported or alleged default or Inchoate Defaults on the
part of any party in the performance of any obligation to be performed or paid
by any party under any Permit. Except as set forth in Schedule 2.14, the
consummation of the transactions contemplated by this Agreement will in no way
affect the continuation, validity or effectiveness of the Permits or require the
consent of any third party under any such Permit. The Seller is not in violation
of any law, regulation or ordinance (including but not limited to laws,
regulations or ordinances relating to building, zoning, land use or similar
matters) relating to its properties, the violation of which could have a
material adverse effect on the Assets or the business, properties, condition
(financial or otherwise) or prospects of the Seller. The business of the Seller
does not violate, in any material respect, and the Seller is not in violation
of, any federal, state, local or foreign laws, regulations or orders, the
violation or enforcement of which would have a material
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and adverse effect on the Assets, business, properties, condition (financial or
otherwise) or prospects of the Seller. Except as set forth on Schedule 2.14, the
Seller has not received any notice or communication from any federal, state,
foreign, or local governmental or regulatory authority or otherwise of any such
violation or noncompliance and has not received any notice prior to such time of
any violation that has not been cured.
2.15 Employee Relations.
------------------
(a) The Seller is in compliance with all material federal, state,
local and foreign laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours, and is not engaged in any unfair
labor practice, and there are no arrears in the payment of wages or taxes or
workers compensation assessments or penalties.
(b) Except as set forth on Schedule 2.15:
(i) none of Seller's Employees are represented by any labor
union;
(ii) there is no unfair labor practice complaint against the
Seller pending before the National Labor Relations Board or any state, foreign,
or local agency affecting the Seller;
(iii)there is no pending labor strike or other material
labor trouble affecting the Seller (including but not limited to any
organizational campaign);
(iv) there is no material labor grievance pending against or
affecting the Seller;
(v) there is no pending organizing activities respecting the
Seller's Employees;
(vi) there are no pending arbitration proceedings arising
out of or under any collective bargaining agreement to which the Seller is a
party, or to the best knowledge of the Selling Parties, any basis for which a
claim may be made under any collective bargaining agreement to which the Seller
is a party affecting the Seller's Employees; and
(vii)there is no pending litigation, or other proceeding or
basis for an unasserted claim against the Seller by any employee or group of
employees or independent contractor or group of independent contractors which is
based on claims arising out of any employee's or group of employees' employment
relationship with the Seller or any independent contractor's or group of
independent contractors' independent consulting relationship with the Seller
(insofar as such relationship pertains to the Business of the Seller), including
but not limited to claims for contract, tort, discrimination, employee benefits,
commissions, wrongful termination, age discrimination, sexual harassment, sexual
discrimination and any and all common law or statutory claims.
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(c) The Seller has not violated the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Sections 2101-09 (the "WARN Act") or any
similar state or local law. Except as set forth on Schedule 2.15, since July 1,
1997, the Seller has not terminated any employees.
2.16 Absence of Certain Changes or Events. Except as set forth on
Schedule 2.16, since December 31, 1996, the Seller has not entered into any
transaction which is not in the usual and ordinary course of business, and,
without limiting the generality of the foregoing, the Seller has not:
(a) Mortgaged, pledged or subjected to lien, charge or other
encumbrance any of the Assets;
(b) Sold or purchased, assigned or transferred any of its Assets
(except for Inventory sold in the ordinary course of business);
(c) Made any material amendment to or termination of any Contract
or done any act or omitted to do any act which would cause the breach of any
Contract;
(d) Suffered any casualty losses, whether insured or uninsured,
and whether or not in the control of the Seller, in excess of $25,000 in the
aggregate, or waived any rights of any value unless such loss or waiver is
reflected in the Financial Statements;
(e) Authorized or issued recall notices for any of its products
relating to the Business or initiated any safety investigations relating to the
Business; or
(f) Received notice of any litigation, warranty claim or products
liability claims relating to the Business.
2.17 Customers. The Seller has heretofore provided to the Buyer a
true, correct and complete list of the names and addresses of all customers of
the Seller. None of the 30 customers which accounted for the largest dollar
volume of purchases from the Seller for the twelve month periods ended December
31, 1996 and December 31, 1997, respectively, has notified the Seller that it
intends to discontinue its relationship with the Seller nor, to the best of the
Selling Parties' knowledge, does there exist any actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship of the Seller with any such customer nor does there
exist a present condition or state of facts or circumstances known to the Seller
involving such customers which would materially adversely affect the Business or
prevent the Buyer from conducting the Business after the consummation of the
transactions contemplated by this Agreement in essentially the same manner in
which it has heretofore been conducted by the Seller. The Seller has no
consignment sales in effect as of the date hereof and no customer has any return
rights except as set forth on Schedule 2.13(a).
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2.18 Suppliers. Schedule 2.18 sets forth a true, correct and complete
list of the names and addresses of the ten suppliers of the Seller which
accounted for the largest dollar volume of purchases by the Seller for the
twelve month periods ended December 31, 1996 and December 31, 1997,
respectively. The Seller is not a party to any requirements contract relating to
the purchase of inventory, finished goods or other property used in the conduct
of the Business. None of the Seller's suppliers has notified the Seller that it
intends to discontinue its relationship with the Seller, nor raise its prices so
as to materially adversely affect the Business nor, to the best of the Selling
Parties' knowledge, does there exist any actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship of the Seller with any such supplier, nor does there exist a
present condition or state of facts or circumstances known to the Selling
Parties involving such suppliers which would materially adversely affect the
Business or prevent the Buyer from conducting the Business after the
consummation of the transactions contemplated by this Agreement in essentially
the same manner in which it has heretofore been conducted by the Seller.
2.19 Prepayments and Deposits. Except as set forth on Schedule 2.19,
the Seller has no prepayments or deposits from customers for products to be
shipped, or services to be performed, by the Seller after the date hereof.
2.20 Trade Names and Other Intangible Property.
-----------------------------------------
(a) Schedule 2.20 attached hereto sets forth a true, correct and
complete list and a description of all Intangible Property. True, correct and
complete copies of all licenses and other agreements relating to the Intangible
Property have been previously delivered by the Seller to the Buyer. The Selling
Parties have no knowledge of any default or claimed or purported or alleged
default or state of facts which with notice or lapse of time or both would
constitute a default on the part of any party in the performance of any
obligation to be performed or paid by any party under any such license or
agreement. During the past five years the only name by which the Seller has been
known or which the Seller has used is its corporate name set forth in the
preamble of this Agreement.
(b) Except as otherwise disclosed in Schedule 2.20 attached
hereto, the Seller is the sole and exclusive owner, free and clear of all liens,
claims and restrictions, of all Intangible Property and all designs, permits,
labels and packages used on or in connection therewith. The Intangible Property
owned by the Seller is sufficient to conduct the Business, as presently
conducted. The Seller has received no notice of, and has no knowledge of any
basis for, a claim against it that any of its operations, activities, products
or publications infringes on any patent, trademark, trade name, copyright or
other property right of a third party, or that it is illegally or otherwise
using the trade secrets, formulae or any property rights of others. Except as
otherwise disclosed in Schedule 2.20, the Seller (i) has no disputes with or
claims against any third party for infringement by such third party of any trade
name or other Intangible Property of the Seller, and (ii) is not obligated or
under any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
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trademark, trade name, copyright or other property right, with respect to the
use thereof or in connection with the conduct of the Business or otherwise. The
Seller has taken all steps reasonably necessary to protect its right, title and
interest in and to the Intangible Property. Except as set forth in Schedule
2.20, the consummation of the transactions contemplated by this Agreement
(including any required financing) will in no way affect the continuation,
validity or effectiveness of the Intangible Property or require the consent of
any third party in respect of the Intangible Property.
2.21 Employee Benefit Plans.
----------------------
(a) ERISA. Except as set forth on Schedule 2.21(a), neither the
Seller nor any person, firm, corporation or entity which is (or within the past
five years has been) a member with the Seller of a "controlled or affiliated
group", within the meaning of Section 414(b), (c), (m), (n) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code"), has maintained,
sponsored or contributed to any "pension plan" within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), any "welfare plan" within the meaning of Section 3(1) of ERISA, or
any other employee benefit plan, program, practice or arrangement, whether or
not subject to ERISA (a "non-ERISA plan") (such pension plans, welfare plans and
non-ERISA plans of the Seller being herein referred to as the "Employee Plans").
Except as set forth on Schedule 2.21(a), the Seller has provided the Buyer with
a true, correct and complete copy of each pension plan, each welfare plan and
each non-ERISA plan listed on such Schedule, together with a copy of the most
recent summary plan description and annual report (if applicable) with respect
to each such plan. Except as set forth on Schedule 2.21(a), each pension plan
listed on such Schedule is a "qualified plan" within the meaning of Section 401
of the Code. Except as set forth on Schedule 2.21(a), each pension plan, each
welfare plan and each non-ERISA plan listed on such Schedule has been
administered in accordance with its terms, and each pension plan and welfare
plan has been operated and administered in accordance with all applicable
requirements of ERISA and the Code. Without limiting the generality of the
foregoing, no trustee, administrator, sponsor, or other party-in-interest or
disqualified person, has engaged or participated in any "prohibited
transaction", as that term is defined in Section 4975(c)(1) of the Code, with
respect to any pension plan or welfare plan listed on Schedule 2.21(a). Without
limiting the generality of the foregoing, in connection with all welfare or
non-ERISA plans which are subject to continuation coverage under Section 4980B
of the Code, all notices and elections with respect to such coverage have been
made in compliance with the requirements of Section 4980B. With respect to each
"defined benefit pension plan", as defined in Section 3(35) of ERISA, identified
on Schedule 2.21(a): (i) the fair market value of the assets thereof as of the
date hereof is as set forth on such Schedule; (ii) the present value of all
accrued benefits thereunder, determined as if such pension plan terminated on
the date hereof, is as set forth on Schedule 2.21(a); (iii) if any such plan is
a "multiemployer plan", as defined in Section 3(37) of ERISA, the present value
of the contingent liability of the Seller both in the event of the termination
of such plan and in the event that the Seller withdraws therefrom is as set
forth on Schedule 2.21(a); (iv) no such plan has incurred an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA, and (v) no
such pension
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plan has terminated, nor has any "reportable event", within the meaning of
Section 4043 of ERISA, occurred with respect to such plan. All contributions for
all periods ending prior to the date hereof (including periods from the first
day of the current plan year to the date hereof) will be made prior to the date
hereof by the Seller in accordance with past practice with respect to pension
plans, welfare plans and non-ERISA plans. All insurance premiums (including
premiums to the Pension Benefit Guaranty Corporation) have been paid in full,
subject only to normal retrospective adjustments in the ordinary course of
business, with regard to applicable plans for policy years or other applicable
policy periods ending on or before the date hereof. Except as set forth on
Schedule 2.21(a), the Seller has no obligations or liabilities with respect to
any unfunded post-retirement medical benefits as of the date hereof.
(b) Claims and Litigation. Except as set forth on Schedule
2.21(b), to the best of the Selling Parties' knowledge, there are no threatened
or pending claims, suits or other proceedings by present or former employees of
Seller, plan participants, beneficiaries or spouses of any of the above, the
Internal Revenue Service, the Pension Benefit Guaranty Corporation, or any other
pension or entity involving any Employee Plan, including claims against the
assets of any trust, involving any Employee Plan, or any rights or benefits
thereunder, other than ordinary and usual claims for benefits to participants or
beneficiaries, including claims pursuant to domestic relations orders and there
is no basis for any legal action, proceeding or investigation with respect to
such plans.
2.22 Leased Premises.
---------------
(a) Schedule 2.22 contains a true, correct and complete list of
address and legal description of all Leased Premises.
(b) Except as set forth on Schedule 2.22, no work has been
performed on or materials supplied to the Leased Premises within any applicable
statutory period which could give rise to mechanics or materialmen's liens; all
bills and claims for labor performed and materials furnished to or for the
benefit of the Leased Premises for all periods prior to the Closing shall be
paid in full, and the Selling Parties have no knowledge of any mechanic's or
materialmen's liens, whether or not perfected, on or affecting any portion of
the Leased Premises.
(c) There is no pending or threatened condemnation or eminent
domain proceeding with respect to the Leased Premises.
(d) Except as set forth on Schedule 2.22, there are no taxes or
betterment or special assessments other than ordinary real estate taxes pending
or payable against the Leased Premises and there are no contingencies existing
under which any assessment for real estate taxes may be retroactively filed
against the Leased Premises; the Selling Parties have no knowledge of any
proposed special assessment that may affect the Leased Premises or any part
thereof; there are no penalties due with respect to real estate taxes and/or
impositions, and all real estate taxes and/or impositions (excepting those for
the current year that are not yet due and payable) with
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respect to the Leased Premises have been paid in full; there are no taxes or
levies, permit fees or connection fees which must be paid respecting existing
curb cuts, sewer hookups, water-main hookups or services of a like nature.
(e) The Leased Premises comply with the requirements of all
building, zoning, subdivision, health, safety, environmental, pollution control,
waste products, sewage control and all other applicable statutes, laws, codes,
ordinances, rules, orders, regulations and decrees (collectively, the
"Government Regulations") of any and all government agencies. To the extent set
forth in Schedule 2.14, the Seller has obtained and provided to the Buyer all
consents, permits, licenses and approvals required by such Government
Regulations, such consents, permits, licenses and approvals are in full force
and effect, have been properly and validly issued, and on or prior to the date
hereof will be assigned to the Buyer by the Seller to the extent the same are
assignable. Except as set forth in Schedule 2.14, there is no uncured breach of
any condition or requirement imposed by, or pursuant to, any permit or license
issued with respect to the Leased Premises. There is no action pending or, to
the best of the Selling Parties' knowledge, threatened by any government
agencies claiming that the Leased Premises violates such Government Regulations
or threatening to shut down the Business or the use of the Assets or to prevent
the Assets from being used as presently used.
(f) Except as set forth on Schedule 2.22, there are no actions,
suits, petitions, notices or proceedings pending, given or, to the best of the
Seller's knowledge, threatened by any persons or government agencies before any
court, government agencies or instrumentalities, administrative or otherwise,
which if given, commenced or concluded would have a material adverse effect on
the value, occupancy, use or operation of the Leased Premises.
(g) The structural components of all of the buildings located on
the Leased Premises are in good condition and repair, normal wear and tear
excepted.
(h) The Selling Parties (i) have not received notice and (ii)
have no knowledge of the existence of any outstanding notice:
(A) from any federal, state, county, municipal or
foreign authority alleging any health, safety, pollution, environmental, zoning
or other violation of law with respect to the Leased Premises or any part
thereof that has not been entirely corrected; or
(B) from any insurance company or bonding company
with respect to any defects or inadequacies in the Leased Premises or any part
thereof that would adversely affect the insurability of same or cause the
imposition of extraordinary premiums or charges therefor or any termination or
threatened termination of any policy of insurance or bond relating thereto.
2.23 Bank Accounts; Securities. Set forth in Schedule 2.23 is a list
of all bank accounts, safe deposit boxes, money market funds, certificates of
deposit, stocks, bonds, notes
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and other securities in the names of or owned or controlled by the Seller, all
of which are included in the Assets.
2.24 Disclosure. No representation or warranty by the Selling Parties
in this Agreement or in any Exhibit hereto, or in any list, statement, document
or information set forth in or attached to any Schedule delivered or to be
delivered pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements contained therein not misleading. The Selling
Parties have disclosed to the Buyer all material facts pertaining to the
transactions contemplated by this Agreement.
2.25 Brokers. Except for the fees owed by the Seller to Swarthmore
Associates, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by the Seller without the intervention
of any other person in such manner as to give rise to any valid claim for a
finder's fee, brokerage commission or other like payment.
2.26 Preservation of Assets. Except as set forth on Schedule 2.26, the
Seller has not sold, assigned or transferred any of the Assets, other than in
the ordinary course of business, or declared or paid any dividend or other
distribution in respect of shares of capital stock or made any purchase,
redemption or other acquisition, directly or indirectly, of any outstanding
shares of its capital stock, since January 1, 1996.
2.27 Environmental Compliance.
------------------------
(a) The Seller has obtained all permits, licenses and other
authorizations required under Federal, state and local laws, relating to
protection of the Environment (as defined below), including laws relating to any
Release (as defined below) of or presence of pollutants, contaminants, or
hazardous or toxic materials or wastes into or in soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air,
and/or any environmental medium (the "Environment") or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or waste. Schedule 2.27 hereto sets forth a complete and accurate list
of all such permits, licenses and other authorizations obtained by the Seller,
copies of which have been delivered to the Buyer. The Seller is in full
compliance with all terms and conditions of such permits, licenses and other
authorizations. To the best of the Selling Parties' knowledge, except as set
forth on Schedule 2.27, there are no proposed or pending changes in the federal,
state, county or local laws, regulations, standards, or in the Seller's permits,
licenses or authorizations relating to pollution or protection of the
Environment that would increase the present costs of compliance with such laws
or change any methods of operation.
(b) Except as indicated on Schedule 2.27 neither the Seller has,
and, to the best of the Selling Parties' knowledge, after due inquiry, none of
the Seller's employees, agents, contractors or subcontractors have, used,
generated, processed, stored, transported, recycled, Released or otherwise
handled any Hazardous Materials (as defined below) except as permitted
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by law on or about any real property related to the Seller's business or the
Seller's contractual relations with any such agents, contractors or
subcontractors, including, but not limited to, real property formerly owned by
the Seller (collectively, the "Seller Real Property") and the facilities now or
formerly leased or operated by the Seller (collectively, the "Seller
Facilities"). Additionally, except as indicated on Schedule 2.27, neither the
Seller Facilities nor the Seller Real Property is being used or has ever
previously been used for the generation, use, processing, storage,
transportation, recycling, Release or handling of any Hazardous Materials,
except as such use may have been permitted by law. In addition, except as
indicated on Schedule 2.27, neither the Seller Facilities nor the Seller Real
Property has ever been affected by any Hazardous Materials Contamination or
Environmental Condition. The Seller, in the conduct of its business, is and has
been in compliance with all Environmental Laws. Notwithstanding any statement or
representation to the contrary in any affidavit or other document, the Seller
affirmatively represents that as of the date hereof, the Seller has made all
filings required by RCRA and that there have been no failures by the Seller to
timely report under CERCLA ss. 103 or RCRA ss. 304. The Seller has not received
any written notice from any governmental authority or any other person
respecting or related to any actual, threatened or potential Release or presence
of any Hazardous Materials or any non-compliance with any Environmental Laws as
to which any such claimed noncompliance presently exists. Notwithstanding the
preceding sentence, the Seller has not received any notice from any governmental
authority respecting noncompliance with RCRA. No investigation, administrative
proceeding, consent order or agreement, limitation or settlement with respect to
Hazardous Materials, Hazardous Materials Contamination or Environmental
Condition is, to the best of the Selling Parties' knowledge, proposed,
threatened, anticipated or in force with respect to its business, nor has such
property ever been on any Federal or state "Superfund" or "Super Lien" list.
As used in this Section 2.27, "due inquiry" shall mean that Selling
Parties have made inquiry of all of Seller's executives, corporate officers and
directors and any employee or agent of Seller with responsibility for
environmental matters.
As used herein "Hazardous Materials" include any (i) "Hazardous Waste"
as defined by The Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.), as amended from time to time ("RCRA"), and regulations
promulgated thereunder; and "Hazardous Substance" as defined by The
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Section 9601 et seq.), as amended from time to time ("CERCLA"), and
regulations promulgated thereunder; (ii) asbestos; (iii) polychlorinated
biphenyls; (iv) any substance, the presence of which on the premises of the
Seller's business, is prohibited by applicable law; (v) oil, petroleum or any
petroleum products or by-products; (vi) any other substance which, according to
applicable law, requires special handling or notification of any Federal, state
or local governmental entity in its collection, processing, handling, storage,
transport, treatment or disposal or exposure thereto; (vii) any substance, which
if not properly disposed of, may pollute, contaminate, harm or have any
detrimental effect on the Environment; (viii) underground storage tanks, whether
empty, filled or partially filled with any substance; and (ix) any other
pollutant, toxic substance, hazardous substance, hazardous waste, hazardous
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material or hazardous substance as regulated by or defined in or pursuant to any
Environmental law or any other Federal, state, or local environmental law,
regulation, ordinance, rule, or by-law, whether existing on or prior to the date
hereof.
As used herein, "Hazardous Materials Contamination" shall mean, with
respect to any premises, building or facilities or, the Environment,
contamination by a Release or the presence of Hazardous Materials.
As used herein, "Environmental Condition" shall mean any condition with
respect to the Environment on or off the Seller Real Property and Seller
Facilities, whether or not yet discovered, which could or does result in any
damage, loss, cost, expense, claim, demand, order, or liability to or against
the parties hereto by any third party (including, without limitation, any
government entity), including, without limitation, any condition resulting from
the operation of Seller's business and/or the operation of the business of any
other property owner or operator in the vicinity of the Seller Real Property and
Seller Facilities and/or any activity or operation formerly conducted by any
person or entity on or off the Seller Real Property and Seller Facilities.
As used herein, "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing.
As used herein, "Environmental Laws" shall mean any environmental or
health and/or safety-related law, regulation, rule, ordinance, or by-law at the
Federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted, including but not limited to: (i)
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USCA
601 et seq.; (ii) Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid
Waste Amendments of 1984, 42 USCA 6901 et seq.; (iii) Federal Water Pollution
Control Act of 1972 as amended by the Clean Water Act of 1977, as amended, 33
USCA 1251 et seq.; (iv) Toxic Substances Control Act of 1976, as amended, 15
USCA 2601 et seq.; (v) Emergency Planning and Community Right-to-Know Act of
1986, 42 USCA 11001 et seq.; (vi) Clean Air Act of 1966, as amended by the Clean
Air Act of 1986, as amended by the Clean Air Act Amendments of l990, 42 USCA
7401 et seq.; (vii) National Environmental Policy Act of 1970, as amended, 42
USCA 4321 et seq.; (viii) Rivers and Harbors Act of 1970, as amended, 33 USCA
401 et seq.; (ix) Endangered Species Act of 1973, as amended, 16 USCA 1531, et
seq; (x) Occupational Safety and Health Act of 1970, as amended, 29 USCA 651 et
seq.; (xi) Safe Drinking Water Act of 1974, as amended, 42 USCA 300 et seq., and
any other federal, state, or local law, regulation, rule, ordinance or order
currently in existence which governs:
(i) the existence, cleanup and/or remediation of toxic or
Hazardous Materials;
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(ii) the Release, emission, discharge or presence of
Hazardous Materials into or in the Environment;
(iii)the control of Hazardous Materials; or
(iv) the use, generation, transport, treatment, storage,
disposal, removal or recovery of Hazardous Materials.
2.28 Purchase for Investment. The Shareholder represents that he is an
"accredited investor", within the meaning of Regulation D under the Securities
Act of 1933, as amended (the "1933 Act"), and is acquiring the Unidigital Stock
and the Note (collectively, the "Securities") for his own account, for
investment purposes only, and not with a view to the resale or distribution of
all or any part thereof. The Shareholder has not offered or sold any portion of
the Securities and has no present plan or intention of dividing such Securities
with others or reselling or otherwise disposing of any portion of the
Securities, either currently or after the passage of a fixed or determinable
period of time, or upon the occurrence or nonoccurrence of any predetermined
event or circumstance. The Shareholder agrees not to distribute or to transfer
any of the Securities in the United States except in compliance with all
applicable United States federal and state securities laws. The Shareholder
further recognizes that the Securities will not be registered under the 1933 Act
or the securities laws of any state, and the transfer of the same will be
restricted under such laws, and the Securities cannot be sold except pursuant to
an effective registration statement under such laws or an available exemption
from such registration, and the certificates or instruments representing the
Securities will bear a legend to such effect. The Shareholder acknowledges and
understands that Unidigital is under no obligation to register the Securities;
provided, however, that, subject to the approval of the lead managing
underwriter, the Company agrees to use its reasonable and commercial efforts to
register a portion of the Shareholder's Unidigital Stock on a pro-rata basis
(based on the total number of shares of Common Stock to be sold by the
Shareholder and any other selling shareholders compared to the total number of
shares of Common Stock owned by such selling shareholders) in any underwritten
public offering which includes other selling shareholders of the Company. Except
as otherwise provided herein, the Shareholder agrees not to distribute or to
transfer any of the Unidigital Stock within two years after the date hereof. The
Shareholder is aware of Unidigital's business affairs and financial condition,
has had the opportunity to ask questions of Unidigital's management with respect
to its business affairs and financial condition and has acquired sufficient
information (including, but not limited to, Unidigital's Form 10-KSB for the
fiscal year ended August 31, 1997, Unidigital's 1997 annual report, Unidigital's
1997 proxy statement and Unidigital's Form 10-QSB for the quarter ended November
30, 1997) about Unidigital to reach an informed and knowledgeable decision to
acquire the Securities. The Shareholder acknowledges that, upon consummation of
the transactions contemplated hereby, he will be deemed an "affiliate" of
Unidigital as such term is defined under the 1933 Act and, as an affiliate of
Unidigital, he will be subject to the reporting and legal requirements under
Sections 13 and 16 of the Securities Exchange Agreement of 1934, as amended (the
"1934 Act").
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2.29 Solvency. The Seller is not now insolvent, and will not be
rendered insolvent by any of the transactions contemplated by this Agreement. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, (i) the Seller will be able to pay
its debts as they become due, (ii) the property of the Seller does not and will
not constitute unreasonably small assets, and the Seller will not have
unreasonably small assets and will not have insufficient assets with which to
conduct its present or proposed business, and (iii) taking into account all
pending and threatened litigation, final judgments against the Seller in actions
for money damages are not reasonably anticipated to be rendered at a time when,
or in amounts such that, the Seller will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered) as well as all other
obligations of the Seller. The cash available to the Seller, after taking into
account all other anticipated uses of the cash of the Seller, will be sufficient
to pay all such judgments promptly in accordance with their terms. As used in
this Section 2.29, (x) "insolvent" means that the sum of the present fair
saleable value of the Seller's assets does not and will not exceed the Seller's
debts and other probable liabilities, and (ii) the term "debts" includes any
legal liability, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent, disputed or undisputed or secured or unsecured.
3. Representations of the Buyer and Unidigital
Representations and warranties made by the Buyer and Unidigital
herein or in any instrument or document furnished in connection herewith shall
survive the Closing until (and including) the second anniversary of the date
hereof. The Buyer and Unidigital represent and warrant to the Seller as follows:
3.1 Organization and Authority. Each of the Buyer and Unidigital is
duly organized and validly existing and in good standing under the laws of the
state of Delaware, and has requisite power and authority to own its properties
and to carry on its business as now being conducted. Each of the Buyer and
Unidigital has full power to execute and deliver this Agreement, and the
Assumption Agreement and to consummate the transactions contemplated hereby and
thereby.
3.2 Authorization. The execution and delivery of this Agreement by the
Buyer and Unidigital and the agreements provided for herein to which each is a
party, and the consummation by the Buyer and Unidigital of all transactions
contemplated hereby, have been duly authorized by all requisite corporate
action. This Agreement and all such other agreements and written obligations
entered into and undertaken in connection with the transactions contemplated
hereby constitute the respective valid and legally binding obligations of the
Buyer and Unidigital, enforceable against them in accordance with their
respective terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors rights generally.
The execution, delivery and performance of this Agreement and the agreements
provided for herein, and the consummation by the Buyer and Unidigital of the
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transactions contemplated hereby and thereby, will not, with or without the
giving of notice or the passage of time or both, (a) violate the provisions of
any law, rule or regulation applicable to the Buyer or Unidigital; (b) violate
the provisions of the organizational documents of the Buyer or Unidigital; (c)
violate any judgment, decree, order or award of any court, governmental body or
arbitrator applicable to the Buyer or Unidigital; or (d) conflict with or result
in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under, or cause the creation of any
lien, charge or encumbrance upon the properties or assets of the Buyer or
Unidigital pursuant to, any indenture, mortgage, deed of trust or other
agreement or instrument to which it or its properties is a party or by which the
Buyer or Unidigital is or may be bound. Schedule 3.2 attached hereto sets forth
a true, correct and complete list of all consents and approvals of third parties
that are required of the Buyer and Unidigital in connection with the
consummation by the Buyer and Unidigital of the transactions contemplated by
this Agreement.
3.3 Regulatory Approvals. All consents, approvals, authorizations and
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Buyer and Unidigital and which are necessary for
its consummation by the Buyer and Unidigital of the transactions contemplated by
this Agreement have been obtained and satisfied.
3.4 Brokers. Except for the fees owed by Unidigital to CIBC
Oppenheimer Corp., all negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Buyer and
Unidigital without the intervention of any other person in such manner as to
give rise to any valid claim for a finder's fee, brokerage commission or other
like payment.
4. Access to Information; Public Announcements
-------------------------------------------
4.1 Confidentiality. All information not previously disclosed to the
public or not generally known to persons engaged in the business of the Seller
or the Buyer which shall have been furnished by the Buyer or the Seller to the
other party in connection with the transactions contemplated hereby shall not be
disclosed by such receiving party to any person other than their respective
employees, directors, attorneys, accountants or financial advisors or other than
as contemplated herein. In the event that the transactions contemplated by this
Agreement shall not be consummated, all such information which shall be in
writing shall be returned to the party furnishing the same, including, to the
extent reasonably practicable, all copies or reproductions thereof which may
have been prepared, and neither party shall at any time thereafter disclose to
third parties, or use, directly or indirectly, for its own benefit, any such
information, written or oral, about the business of the other party hereto.
4.2 Public Announcements. Except as otherwise required by law or
government regulation, any public announcement, press release or similar
publicity with respect to this Agreement or the transactions contemplated hereby
shall be issued, if at all, at such time and in such manner as the Buyer and the
Seller mutually determine. Unless consented to by the Buyer in advance or
required by applicable law, the Selling Parties shall keep this Agreement
strictly
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confidential and may not make any disclosure related to this Agreement to any
person. The Selling Parties and the Buyer shall consult with each other
concerning the means by which the Seller's Employees, customers, suppliers and
others having a business relationship with the Selling Parties will be informed
of the transactions contemplated hereby, and the Buyer shall have the right to
be present for any such communication. The Seller hereby acknowledges that this
Agreement may be filed by Unidigital as an exhibit to certain registration
statements and/or reports filed by it pursuant to the 1933 Act or the 1934 Act.
5. Employee Matters
5.1 Seller's Employees. The Seller has furnished to the Buyer a list
containing the names of Seller's Employees, including each such employee's
status, social security number and current compensation.
5.2 Future Changes. Nothing in this Section 5 shall require the Buyer
to retain any of Seller's Employees for any period of time after the date
hereof. Subject to requirements of applicable law, the Buyer reserves the right
at any time after the date hereof to terminate such employment and amend, modify
or terminate any term or condition of employment, including without limitation,
any employee benefit plan, program, policy, practice or arrangement.
5.3 Plant Closing. None of the Selling Parties has, directly or
indirectly, taken or omitted to take any action which may result in the Seller's
or the Buyer's liability to any person or entity under the WARN Act. The term
"any action" does not include the sale and acquisition contemplated by this
Agreement. The liability under the WARN Act, if any, which results from the
Seller's termination of employees in connection with such sale and acquisition
is the sole responsibility of the Seller.
5.4 Reporting of Data. The Buyer and the Seller shall compile and
furnish to each other such actuarial and employee data as shall be required from
time to time for each party to perform and fulfill its obligations under this
Section 5.
5.5 Pending Litigation. With respect to any litigation pending, or to
the knowledge of the Selling Parties threatened, as set forth in Schedule 2.15
hereto, which claim alleges violation of any nondiscrimination laws, collective
bargaining agreements, employment contract and termination thereof or wage and
hour laws, the Seller shall fully defend such claim. The Seller shall be
responsible for any monetary damages awarded in connection therewith. It is
understood by the parties that if the Seller chooses to settle any matter
relating to any of the foregoing, including the terms and conditions thereof of
any back pay claims, such settlement shall be at the sole discretion of the
Seller and the Seller shall be solely responsible for the payment or performance
of any such settlement terms.
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6. Best Efforts to Obtain Satisfaction of Conditions
-------------------------------------------------
The Selling Parties and the Buyer covenant and agree to use their
best efforts to obtain the satisfaction of the conditions specified in this
Agreement.
7. Conditions to Obligations of the Buyer
--------------------------------------
The obligations of the Buyer under this Agreement are subject to
the fulfillment, at the Closing, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
7.1 Continued Truth of Representations and Warranties of the Selling
Parties: Compliance with Covenants and Obligations. The representations and
warranties of the Selling Parties shall be true in all material respects on and
as of the date hereof. The Seller shall have performed and complied in all
material respects with all covenants required by this Agreement to be performed
or complied with by it prior to or at the date hereof.
7.2 Corporate and Shareholder Proceedings. All corporate and other
proceedings required to be taken on the part of the Seller to authorize or carry
out this Agreement and to convey, assign, transfer and deliver the Assets shall
have been taken.
7.3 Other Governmental Approvals. All courts of law, governmental
agencies, departments, bureaus, commissions and similar bodies, the consent,
authorization or approval of which is necessary under any applicable law, rule,
order or regulation for the consummation by the Seller of the transactions
contemplated by this Agreement and the operation of the Seller's business by the
Buyer, shall have consented to, authorized, permitted or approved such
transactions including but not limited to, all clearance certificates required
pursuant to any applicable retail sales tax legislation required in connection
with the completion of the transactions contemplated herein.
7.4 Consents of Lenders, Lessors and Other Third Parties. The Seller
shall have received the consents and approvals of all lenders, lessors and other
third parties whose consent or approval is required in order for the Seller to
consummate the transactions contemplated by this Agreement.
7.5 Adverse Proceedings. No action or proceeding by or before any
court or other governmental body shall have been instituted by any governmental
body or person whatsoever which shall seek to restrain, prohibit or invalidate
the transactions contemplated by this Agreement or which might affect the right
of the Buyer to own or use the Assets after the Closing.
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7.6 Opinion of Counsel. The Buyer shall have received an opinion of
Kantor Davidoff Wolfe Mandelker & Kass, counsel to the Seller, dated as of the
date hereof, substantially in the form attached hereto as Exhibit E (the
"Opinion of Seller's Counsel").
7.7 Board of Directors and Shareholder Approval. The directors and
shareholders of the Seller shall have duly authorized the transactions
contemplated by this Agreement.
7.8 Title to Assets. At the Closing, the Buyer shall receive good and
marketable title to all Assets, free and clear of all liens, mortgages, pledges,
security interests, restrictions, prior assignments, encumbrances and claims of
any kind or nature whatsoever.
7.9 Environmental Reports; Compliance with Laws. The Buyer shall not
have received unsatisfactory environmental reports from its environmental
consultants and at any time prior to the Closing shall not have discovered that
any Leased Premises fails to comply in any material respect with all applicable
federal, foreign, state or local environmental, zoning, land use, and wetlands
laws, rules and regulations.
7.10 Fire, Casualty or Eminent Domain. If any of the Assets are, prior
to the Closing, either damaged by fire or other casualty insured against or
taken, in whole or in part, by eminent domain proceedings, then the Buyer shall
have the right to accept said Assets in their damaged or diminished condition
together with an assignment to Buyer of all insurance and/or condemnation
proceeds payable with respect to such fire, casualty or loss or terminate this
Agreement.
7.11 Due Diligence Review. The Buyer shall have completed a due
diligence review of the Business, the results of which review are satisfactory
to the Buyer.
7.12 Employment Agreement. The Shareholder shall have entered into the
Employment Agreement with Unidigital substantially in the form attached hereto
as Exhibit F (the "Employment Agreement"), which shall include, without
limitation, confidentiality, invention assignment, non-solicitation and
non-competition provisions.
7.13 Stockholders Agreement. The Shareholder and Unidigital shall have
entered into the Stockholders Agreement substantially in the form attached
hereto as Exhibit G (the "Stockholders Agreement").
7.14 Closing Deliveries. The Buyer shall have received at or prior to
the Closing each of the following documents:
(a) the Bill of Sale, executed by the Seller;
(b) such instruments of conveyance, assignment and transfer, and
motor vehicle transfers and safety inspection certificates, if any, in form and
substance satisfactory to the Buyer, as shall be appropriate to convey, transfer
and assign to, and to vest in, the Buyer, good and marketable title to the
Assets other than the Intangible Property;
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(c) such instruments of conveyance, assignment and transfer in
form and substance satisfactory to the Buyer and in a form appropriate to file,
if required, with the United States Office of Patents and Trademarks, sufficient
to convey, transfer and assign to, and to vest in, the Buyer, good and
marketable title to the Intangible Property;
(d) all technical data, formulations, product literature and
other documentation relating to the Seller's business, all in form and substance
satisfactory to the Buyer;
(e) such contracts, files and other data and documents pertaining
to the Assets or the Business as the Buyer may reasonably request;
(f) copies of the general ledgers and books of account of the
Seller related to the Business, and all federal, state, local and foreign
income, franchise, capital, property and other tax returns filed by the Seller
with respect to the Assets since January 1, 1996.
(g) such certificates of the Seller's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 7
as the Buyer shall reasonably request; certificate of the Secretary or Assistant
Secretary of the Seller attesting to the incumbency of the Seller's officers,
and the authenticity of the resolutions authorizing the transactions
contemplated by the Agreement and the organizational documents of the Seller;
(h) estoppel certificates from each lessor under the Leases set
forth in Schedule 2.9(b) attached hereto (i) consenting to the assignment of
such Lease to the Buyer; (ii) representing that there are no outstanding claims
against the Seller under any such Lease, and no outstanding defaults or events
which, with the passage of time, may become defaults; (iii) specifying the
commencement and termination dates under the Lease; and (iv) providing that any
purchase right, purchase option, right of first refusal, renewal right or other
similar provision is enforceable by the Buyer and specifying the rental rates
under the Lease and any other matters that Buyer may reasonably require;
(i) the originals, if in the Seller's possession, of all building
permits, certificates of occupancy, and other governmental licenses, permits and
approvals, and all plans and specifications relating to the Leased Premises not
previously delivered to the Buyer;
(j) the Employment Agreement, executed by the Shareholder;
(k) the Stockholders Agreement, executed by the Shareholder;
(l) the Opinion of Seller's Counsel;
(m) the Amendment of the Certificate of Incorporation of the
Seller to discontinue the use of the name "Kwik International Color, Ltd." and
to file any instruments as
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may be necessary with any governmental authority to change their corporate names
and foreign qualifications; and
(o) such other documents, instruments or certificates as the
Buyer may reasonably request in order to evidence the accuracy of the Selling
Parties' representations or compliance by Seller with its covenants hereunder.
8. Conditions to Obligations of the Seller
---------------------------------------
The obligations of the Seller under this Agreement are subject to
the fulfillment, at the Closing, of the following conditions precedent, each of
which may be waived in writing at the sole discretion of the Seller:
8.1 Continued Truth of Representations and Warranties of the Buyer and
Unidigital; Compliance with Covenants and Obligations. The representations and
warranties of the Buyer and Unidigital in this Agreement shall be true on and as
of the date hereof. The Buyer and Unidigital shall have performed and complied
in all material respects with all covenants required by this Agreement to be
performed or complied with by each of them prior to or at the date hereof.
8.2 Corporate Proceedings. All corporate, legal and other proceedings
required to be taken on the part of the Buyer and Unidigital to authorize or
carry out this Agreement shall have been taken.
8.3 Approvals. All other governmental agencies, departments, bureaus,
commissions and similar bodies, the consent, authorization or approval of which
is necessary under any applicable law, rule, order or regulation for the
consummation by the Buyer and Unidigital of the transactions contemplated by
this Agreement shall have consented to, authorized, permitted or approved such
transactions.
8.4 Consents of Lenders, Lessors and Other Third Parties. The Buyer
and Unidigital shall have received all requisite and material consents and
approvals of all lenders, lessors and other third parties whose consent or
approval is required in order for the Buyer and Unidigital to consummate the
transactions contemplated by this Agreement, including but not limited to those
set forth on Schedule 3.2 attached hereto.
8.5 Adverse Proceedings. No action or proceeding by or before any
court or other governmental body shall have been instituted by any governmental
body or person whatsoever which shall seek to restrain, prohibit or invalidate
the transactions contemplated by this Agreement or which might affect the right
of the Seller to transfer the Assets or would affect the right of the Buyer to
acquire the Assets.
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8.6 Opinion of Counsel. The Seller shall have received an opinion of
Buchanan Ingersoll, counsel to the Buyer and Unidigital, dated as of the date
hereof, substantially in the form attached hereto as Exhibit H (the "Opinion of
Buyer's Counsel").
8.7 Material Adverse Change. Neither the Buyer nor Unidigital have
suffered a material adverse change (financial or otherwise) since the date of
Unidigital's last quarterly report filed with the Securities and Exchange
Commission pursuant to the 1934 Act.
8.8 Closing Deliveries. The Seller shall have received at or prior to
the Closing each of the following documents:
(a) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 8
as the Seller shall reasonably request;
(b) a certificate of the Secretary or Assistant Secretary of the
Buyer attesting to the incumbency of the Buyer's officers, and the authenticity
of the resolutions authorizing the transactions contemplated by this Agreement
and the organizational documents of the Buyer;
(c) such certificates of Unidigital's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 8
as the Seller may reasonably request;
(d) a certificate of the Secretary of Unidigital attesting to the
incumbency of Unidigital's officers, and the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement and the
organizational documents of Unidigital;
(e) the Assumption Agreement, executed by the Buyer and accepted
by the Seller;
(f) payment of the portion of Purchase Price due at the Closing,
including the Cash Consideration, the Note, the Stock Consideration and the
Additional Cash Consideration, if any;
(g) the Employment Agreement, executed by Unidigital;
(h) the Stockholders Agreement, executed by Unidigital and
William E. Dye;
(i) the Opinion of Buyer's Counsel; and
(j) such other documents, instruments or certificates as the
Seller may reasonably request.
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9. Post-Closing Agreements
-----------------------
9.1 Proprietary Information.
-----------------------
(a) The Seller shall hold in confidence, and use its best efforts
to have all officers, shareholders, directors and personnel hold in confidence,
all knowledge and information of a secret or confidential nature with respect to
the Business, and shall not disclose, publish or make use of the same without
the consent of the Buyer, except to the extent that such information shall have
become public knowledge other than by breach of this Agreement by the Seller or
by any other persons who have agreed not to disclose, publish or make use of
such information.
(b) The Seller agrees that the remedy at law for any breach of
this Section 9.1 would be inadequate and that the Buyer and/or Unidigital shall
be entitled to injunctive relief in addition to any other remedy it may have
upon breach of any provision of this Section 9.1.
(c) The foregoing to the contrary notwithstanding, no
information, written or oral, shall be construed or considered confidential
information and thereby subject to the restrictions of this Section 9.1 if such
information was (i) generally available to the public other than as a result of
a disclosure by the Seller or anyone to whom the Seller transmits the
information in violation hereof, (ii) in the possession of the Seller or known
to the Seller on a non-confidential basis prior to its disclosure to the Seller,
(iii) available to the Seller on a non-confidential basis from a source other
than the Buyer or Unidigital who is not bound by a confidentiality agreement
with the Buyer or Unidigital, as the case may be, or (iv) available in trade
publications, reference books or other resources and which may be compiled by
any person's decisions of preparing a report or memorandum containing such
information.
9.2 Solicitation or Hiring of Former Employees. Except as provided by
law or with the written consent of the Buyer, for a period of three years after
the date hereof, the Seller and any persons or entities that are not natural
persons, that directly or indirectly, through one or more intermediaries,
control, are controlled by, or are under common control with, the Seller (the
"Corporate Affiliates"), shall not solicit any person who was a Seller's
Employee on the date hereof, and has been employed, and not terminated without
cause, by the Buyer, to terminate his employment with the Buyer or to become an
employee of the Seller or its Corporate Affiliates or hire any person who was
such an employee on the date hereof.
9.3 Non-Competition Agreement.
-------------------------
(a) For a period of five (5) years after the date hereof, neither
the Seller nor any Corporate Affiliate (except for the Shareholder) thereof
shall directly or indirectly (i) manufacture, market or sell any product or
service which has the same or substantially the same function and primary
application as any existing or proposed product or service manufactured,
marketed or sold by the Seller on or prior to the date hereof or (ii) engage in,
manage, operate, be connected with or acquire any interest in, as an employee,
consultant, advisor, agent, owner, partner, co-venturer, principal, director,
shareholder, lender or otherwise, any business
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<PAGE>
competitive with the business of the Seller, Unidigital or the Buyer as
conducted on the date hereof (a "Competitive Business"), in any country in the
world, except that the Seller and its Corporate Affiliates may own, in the
aggregate, not more than 1% of the outstanding shares of any publicly held
corporation which is a Competitive Business which has shares listed for trading
on a securities exchange registered with the Securities and Exchange Commission
or through the automatic quotation system of a registered securities
association.
(b) The parties hereto agree that the duration and geographic
scope of the non-competition provision set forth in this Section 9.3 are
reasonable. In the event that any court determines that the duration or the
geographic scope, or both, are unreasonable and that such provision is to that
extent unenforceable, the parties hereto agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable. The parties intend that this
non-competition provision shall be deemed to be a series of separate covenants,
one for each and every county of each and every state of the United States of
America and each and every political subdivision of each and every country
outside the United States of America where this provision is intended to be
effective. The Seller agrees that damages are an inadequate remedy for any
breach of this provision and that the Buyer shall, whether or not it is pursuing
any potential remedies at law, be entitled to equitable relief in the form of
preliminary and permanent injunctions without bond or other security upon any
actual or threatened breach of this non-competition provision. If the Seller or
any Corporate Affiliate shall violate this Section 9.3, the duration of this
Section 9.3 automatically shall be extended as against such violating party for
a period equal to the period during which such party shall have been in
violation of this Section 9.3. The covenants contained in this Section 9.3 are
deemed to be material and the Buyer is entering into this Agreement relying on
such covenants.
9.4 Sharing of Data. The Seller shall have the right for a period of
seven years following the date hereof to have reasonable access to such books,
records and accounts, including financial and tax information, correspondence,
production records, employment records and other similar information as are
transferred to the Buyer pursuant to the terms of this Agreement for the limited
purposes of concluding its involvement in the business of the Seller prior to
the date hereof and for complying with its obligations under applicable
securities, tax, environmental, employment or other laws and regulations. The
Buyer and/or Unidigital shall have the right for a period of seven years
following the date hereof to have reasonable access to those books, records and
accounts, including financial and tax information, correspondence, production
records, employment records and other records which are retained by the Seller
pursuant to the terms of this Agreement to the extent that any of the foregoing
relates to the Business transferred to the Buyer hereunder or is otherwise
needed by the Buyer and/or Unidigital in order to comply with its obligations
under applicable securities, tax, environmental, employment or other laws and
regulations.
9.5 Cooperation in Litigation. Each party hereto will fully cooperate
with the other in the defense or prosecution of any litigation or proceeding
already instituted or which may be instituted hereafter against or by such party
relating to or arising out of the conduct of the
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<PAGE>
Business prior to or after the date hereof (other than litigation arising out of
the transactions contemplated by this Agreement and except as otherwise
expressly provided herein). The party requesting such cooperation shall pay the
out-of-pocket expenses (including legal fees and disbursements) of the party
providing such cooperation and of its officers, directors, employees and agents
reasonably incurred in connection with providing such cooperation, but shall not
be responsible to reimburse the party providing such cooperation for such
party's time spent in such cooperation or the salaries or costs of fringe
benefits or similar expenses paid by the party providing such cooperation to its
officers, directors, employees and agents while assisting in the defense or
prosecution of any such litigation or proceeding.
9.6 Guaranty. In the event that the Buyer fails to duly and properly
perform and satisfy its obligations under this Agreement in accordance with the
terms and conditions hereof, Unidigital will, upon written demand of the Selling
Parties setting forth the specific failure of the Buyer, perform and satisfy
those obligations of the Buyer set forth in such written demand in accordance
with the terms and conditions of this Agreement.
9.7 Customer and Other Business Relationships. The Selling Parties
will cooperate with the Buyer in its efforts to continue and maintain, with
lessors, licensors, customers, suppliers and other business associates of any of
the Selling Parties, the same business relationships with the Buyer after the
Closing as maintained with such Selling Party before the Closing, with respect
to the business to be carried on by the Buyer utilizing the Assets. The Selling
Parties will refer to the Buyer all inquiries relating to the Business from
customers and all such other persons. The Selling Parties will not take any
action designed or intended to have the effect of discouraging any customer or
such other person from continuing or maintaining the same such business with the
Buyer after the Closing. The Selling Parties shall use their best efforts to
satisfy any liability or obligation not assumed by the Buyer hereunder in a
manner which is not detrimental to the Buyer's relationships with suppliers and
vendors.
9.8 Subrogation. If the Buyer or Unidigital becomes liable for or
suffers any damage with respect to any matter that was covered by insurance
maintained by the Selling Parties at or before the Closing, the Buyer and
Unidigital, as the case may be, shall be and hereby are subrogated to any rights
of the Selling Parties under such insurance coverage. The Selling Parties shall
promptly remit to the Buyer or Unidigital, as the case may be, any insurance
proceeds any of them may receive on account of any such liability or damage.
10. Indemnification and Reimbursement
---------------------------------
10.1 Indemnification.
---------------
(a) The Selling Parties shall indemnify, defend and hold harmless
the Buyer and any parent, subsidiary or affiliate thereof and all directors,
officers, employees, agents and consultants of each of the foregoing
(collectively, the "Buyer Group") from and against all demands, claims, actions
or causes of action, assessments, losses, damages, liabilities (whether
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<PAGE>
absolute, accrued, contingent or otherwise), costs and expenses, including but
not limited to, interest, penalties and attorneys' fees and expenses
(collectively, "Damages"), asserted against, imposed upon or incurred by the
Buyer Group or any member thereof, directly or indirectly, by reason of or
resulting from or relating to any of the following (but in any event excluding
the Assumed Liabilities) at such time as the Damages (except for Damages
incurred pursuant to clause (vi) of this Section 10.1(a)), whether actual or
alleged, exceed $100,000, and only to the excess thereof:
(i) liability and obligation of the Selling Parties;
(ii) misrepresentation or breach of warranty or covenant or
agreement by the Selling Parties made or contained in this Agreement or in any
certificate, document, writing or instrument furnished or to be furnished to the
Buyer under this Agreement;
(iii)failure to comply with any bulk sales or similar laws
applicable to the transactions contemplated hereby;
(iv) litigation or other claim arising from acts, failures
to act or events which occurred prior to the date hereof including, without
limitation, the remediation of environmental conditions attributable to the
conduct of the Business at the manufacturing facility in New York, New York
prior to the date hereof and claims for product failure or defect (including but
not limited to claims for personal injury, property damages and breach of
warranty) which relate to any product manufactured or sold prior to the date
hereof;
(v) litigation or other claim arising out of the transfer of
shares of the Seller's common stock pursuant to that certain Redemption
Agreement dated as of January 15, 1998 between the Seller and Walter Berkower;
(vi) failure to comply with any provisions set forth in any
collective bargaining agreement between the Seller and any of the Seller's
Employees (it being understood that the Selling Parties' indemnification
obligation under this clause (vi) shall be limited to one-half of any Damages in
excess of $500,000 arising hereunder); and
(vii)in addition to the foregoing, the Seller shall also
indemnify the Buyer for the face value of all Accounts Receivable which existed
as of the Closing, but are not collected within one hundred twenty (120) days
after Closing, upon the Buyer's request therefor, provided that the Buyer has
used commercially reasonable efforts to collect such receivables. If the Buyer
shall thereafter collect any Account Receivable for which it has received an
indemnification payment from the Seller pursuant to the immediately preceding
sentence, the Buyer shall promptly remit the amount so collected to the Seller.
(b) The Buyer and Unidigital shall indemnify, defend and hold
harmless the Seller and any parent, subsidiary or affiliate thereof and all
directors, officers, employees, agents and consultants of the foregoing
(collectively, the "Seller Group") from and against all Damages
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<PAGE>
asserted against, imposed upon or incurred by the Seller Group or any member
thereof, directly or indirectly, by reason of or resulting from or relating to
the Assumed Liabilities.
10.2 CERCLA. Nothing contained in this Agreement shall be deemed a
waiver of the right of the Buyer to maintain a private party cost recovery
action under the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq.
10.3 Notice and Defense of Claims. The parties' obligations and
liabilities hereunder with respect to claims resulting from the assertion of
liability by the Buyer Group, the Seller Group or third parties shall be subject
to the following terms and conditions:
(a) Notice. The party seeking indemnification hereunder (each, an
"Indemnified Party") shall give prompt written notice to the party from whom
indemnification is being sought (each, an "Indemnifying Party") of any claim or
event known to it which does or may give rise to a claim by the Indemnified
Party against the Indemnifying Party for which the Indemnified Party believes it
is entitled to indemnification pursuant to this Section 10 of this Agreement,
stating the nature and basis of said claims or events and the amounts thereof,
to the extent known, and in the case of any claim, action, suit or proceeding
brought by any third party, a copy of any claim, process or legal pleadings with
respect thereto promptly after any such documents are received by the
Indemnified Party. Such notice shall be given in accordance with Section 12
hereof.
(b) Third Party Claims or Actions.
-----------------------------
(i) In the event any claim, action, suit or proceeding is
made or brought by any third party against the Indemnified Party, with respect
to which the Indemnifying Party may have liability for Damages under this
Section 10 of this Agreement, the Indemnifying Party shall, at its own expense,
be entitled to participate in and, to the extent that it shall wish, jointly and
with any other Indemnifying Party, to assume the defense, with independent
counsel reasonably satisfactory to the Indemnified Party, provided that in
assuming the defense of any such third party claim, action, suit or proceeding,
the Indemnifying Party acknowledges in writing to the Indemnified Party that the
Indemnifying Party shall thereafter be liable for any Damage with respect to
such claim, action, suit or proceeding.
(ii) If the Indemnifying Party elects to assume control of
such defense or settlement, it shall conduct such defense or settlement in a
manner reasonably satisfactory and effective to protect the Indemnified Party
fully; such company and its counsel will keep the Indemnified Party fully
advised as to its conduct of such defense or settlement, and no compromise or
settlement shall be agreed or made without the written consent of the
Indemnified Party. In any case, the Indemnified Party shall have the right to
employ its own counsel and such counsel may participate in such action, but the
reasonable fees and expenses of such counsel shall be at the expense of the
Indemnified Party, when and as incurred, unless (A) the employment of counsel by
the Indemnified Party has been authorized in writing by the Indemnifying Party,
(B) the Indemnified Party shall have reasonably concluded that there may be
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<PAGE>
a conflict of interest between the Indemnifying Party and the Indemnified Party
in the conduct of the defense of such action, (C) the Indemnifying Party shall
not in fact have employed independent counsel reasonably satisfactory to the
Indemnified Party to assume the defense of such action and shall have been so
notified by the Indemnified Party, (D) the Indemnified Party shall have
reasonably concluded and specifically notified the Indemnifying Party either
that there may be specific defenses available to it which are different from or
additional to those available to it or that such claim, action, suit or
proceeding involves or could have a material adverse effect upon it beyond the
financial resources of the Indemnifying Party or the scope of this Agreement, or
(E) the Indemnifying Party fails to conduct such defense or settlement in a
manner reasonably satisfactory to protect the Indemnified Party fully. If clause
(B), (C), (D) or (E) of the preceding sentence shall be applicable, then counsel
for the Indemnified Party shall have the right to direct the defense of such
claim, action, suit or proceeding on behalf of the Indemnified Party and the
reasonable fees and disbursements of such counsel shall constitute Damages
hereunder.
(iii)If the Indemnifying Party does not elect to assume the
defense of any such claim, or if they fail to conduct said defense or settlement
in a manner reasonably satisfactory to protect the Indemnified Party fully, the
Indemnified Party may engage independent counsel selected by the Indemnified
Party to assume the defense and may contest, pay, settle or compromise any such
claim on such terms and conditions as the indemnified party may determine. The
reasonable fees and disbursements of such counsel shall constitute Damages
hereunder.
(iv) The Buyer and the Selling Parties, as the case may be,
shall be kept fully informed of such claim, action, suit or proceeding at all
stages thereof whether or not such party is represented by its own counsel.
10.4 Cooperation. The parties hereto agree to render to each other
such assistance as they may reasonably require of each other and to cooperate in
good faith with each other in order to ensure the proper and adequate defense of
any claim, action, suit or proceeding brought by any third party. Where counsel
has been selected by the Selling Parties or by the Buyer pursuant to Section
10.4, the Selling Parties or the Buyer, as the case may be, shall be entitled to
rely upon the advice of such counsel in the conduct of the defense.
10.5 Confidentiality. The parties agree to cooperate in such a manner
as to preserve in full the confidentiality of all confidential business records
and the attorney-client and work-product privileges. In connection therewith,
each party agrees that (a) it will use its best efforts, in any action, suit or
proceeding in which it has assumed or participated in the defense, to avoid
production of confidential business records and (b) all communications between
any party hereto and counsel responsible for or participating in the defense of
any action, suit or proceeding shall, to the extent possible, be made so as to
preserve any applicable attorney-client or work-product privilege.
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<PAGE>
10.6 Escrow; Right of Offset. The Buyer may offset any and all Damages
owed by the Selling Parties to the Buyer Group pursuant to this Section 10
against any funds held in escrow pursuant to the Escrow Agreement. Neither the
exercise of nor the failure to exercise such right or to give notice of a claim
under the Escrow Agreement shall constitute an election of remedies or limit the
Buyer in any manner in the enforcement of any other legal or equitable remedies
that may be available to the Buyer.
11. Transfer and Sales Tax
----------------------
The Buyer shall be responsible for and pay all filing and
recording taxes and fees, and all sales, use and transfer taxes and fees, if
any, upon the sale and transfer of the Assets hereunder.
12. Notices
-------
Any notices or other communications required or permitted
hereunder shall be sufficiently given if in writing (including
telecommunications) and delivered personally or sent by telex, telecopy or other
wire transmission (with request for assurance in a manner typical with respect
to communications of that type), federal express or other overnight air courier
(postage prepaid), registered or certified mail (postage prepaid with return
receipt requested), addressed as follows or to such other address of which the
parties may have given notice:
To the Seller: Kwik International Color, Ltd.
229 West 28th Street
New York, New York 10001-5996
Attn: Richard J. Sirota, President
Tel. No.: (212) 643-0200
Fax No.: (212) 643-0201
With a copy to: Kantor Davidoff Wolfe Mandelker & Kass
51 East 42nd Street
New York, New York 10017
Attn: Herbert C. Kantor, Esq.
Tel. No.: (212) 682-8383
Fax No.: (212) 949-5206
To the Buyer: Unidigital Inc.
545 West 45th Street
New York, New York 10036
Attn: Mr. William Dye, President
Tel. No.: (212) 397-0800
Fax No.: (212) 262-1568
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<PAGE>
With a copy to: Buchanan Ingersoll
500 College Road East
Princeton, New Jersey 08540
Attn: David J. Sorin, Esq.
Tel. No.: (609) 987-6800
Fax No.: (609) 520-0360
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally or by wire
transmission; (b) on the next business day after mailing or deposit with an
overnight air courier; or (c) five business days after being sent, if sent by
registered or certified mail.
13. Successors and Assigns
----------------------
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Neither the
Seller nor the Buyer may assign all or a portion of its rights and obligations
hereunder without the prior written consent of the other party, except that the
Buyer may assign all or a portion of its rights and obligations hereunder to an
Affiliate of the Buyer, provided that the Buyer shall remain liable for the
performance of the Buyer's obligations under this Agreement. Any assignment in
contravention of this provision shall be void.
14. Entire Agreement; Amendments; Attachments
-----------------------------------------
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties except as expressly provided herein. The Buyer and the
Seller, by the consent of their respective Boards of Directors, or officers
authorized by such Boards, may amend or modify this Agreement, in such manner as
may be agreed upon, by a written instrument executed by the Buyer and the
Seller.
(b) If the provisions of any Schedule or Exhibit to this
Agreement are inconsistent with the provisions of this Agreement, the provisions
of the Agreement shall prevail. The Exhibits and Schedules attached hereto or to
be attached hereafter are hereby incorporated as integral parts of this
Agreement.
15. Expenses
--------
Except as otherwise expressly provided herein, the Buyer and the
Seller shall each pay their own expenses in connection with this Agreement and
the transactions contemplated hereby.
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<PAGE>
16. Governing Law
-------------
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without reference to conflicts of laws
rules or principles.
17. Section Headings
----------------
The section headings are for the convenience of the parties and
in no way alter, modify, amend, limit, or restrict the contractual obligations
of the parties.
18. Severability
------------
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
19. Counterparts
------------
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which shall be one and
the same document.
20. Currency
--------
Unless otherwise indicated, all dollar amounts referred to in
this Agreement are in United States funds.
21. Waiver
------
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party, (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given, and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
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<PAGE>
22. Ambiguity in Drafting
---------------------
Each party shall have been deemed to have participated equally in
the drafting of this Agreement and the agreements contemplated hereby and any
ambiguity in any such contracts shall not be construed against any purported
author thereof.
[Signature page follows]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of and on the date first above written.
(Corporate Seal) SELLER:
ATTEST: KWIK INTERNATIONAL COLOR, LTD.
/s/ Herbert C. Kantor By:/s/ Richard J. Sirota
- ----------------------------- -----------------------------
Assistant Secretary Name: Richard J. Sirota
Title: President
SHAREHOLDER:
/s/ Richard J. Sirota
--------------------------------
Richard J. Sirota
(Corporate Seal) BUYER:
ATTEST: UNISON (NY), INC.
/s/ Peter Saad By:/s/ William E. Dye
- ----------------------------- -----------------------------
Secretary Name: William E. Dye
Title: Chairman of the Board
(Corporate Seal)
ATTEST: UNIDIGITAL INC.
/s/ Peter Saad By:/s/ William E. Dye
- ----------------------------- -----------------------------
Assistant Secretary Name: William E. Dye
Title: President
THIS NOTE HAS BEEN ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH SUCH REQUIREMENTS OR A WRITTEN OPINION OF
COUNSEL ACCEPTABLE TO THE OBLIGOR THAT SUCH TRANSFER WILL NOT RESULT IN ANY
VIOLATION OF SUCH LAWS OR AFFECT THE LEGALITY OF ITS ISSUANCE.
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO OTHER INDEBTEDNESS
PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE SUBJECT TO THE
TERMS OF, THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED MARCH 25, 1998
(THE "SUBORDINATION AGREEMENT"), AS THE SAME MAY BE AMENDED, MODIFIED OR
OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG UNIDIGITAL INC., AS
BORROWER, CANADIAN IMPERIAL BANK OF COMMERCE, AS ADMINISTRATIVE AGENT FOR THE
LENDERS PARTIES TO THE SENIOR CREDIT AGREEMENT REFERRED TO IN THE SUBORDINATION
AGREEMENT, AND THE HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER
THE SUBORDINATED NOTE REFERRED TO IN THE SUBORDINATION AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THIS NOTE.
SUBORDINATED PROMISSORY NOTE
$750,000 March 25, 1998
FOR VALUE RECEIVED, the undersigned, Unidigital Inc., a Delaware
corporation (the "Obligor"), hereby promises to pay to the order of Kwik
International Color, Ltd., a New York corporation (the "Holder"), the principal
sum of Seven Hundred Fifty Thousand Dollars ($750,000) payable as set forth
below. The Obligor also promises to pay to the order of the Holder interest on
the principal amount hereof at a rate per annum equal to five and seven-tenths
percent (5.7%) compounded annually, which interest shall be payable at such time
as the principal is due hereunder. Interest shall be calculated on the basis of
a year of 365 days and for the number of days actually elapsed. Any amounts of
interest and principal not paid when due shall bear interest at the maximum rate
of interest allowed by applicable law. The payments of principal and interest
hereunder shall be made in coin or currency of the United States of America
which at the time of payment shall be legal tender therein for the payment of
public and private debts.
This Note shall be subject to the following additional terms and
conditions:
1. Payments. Principal shall be payable in thirty-five (35) equal
installments of $20,833.33 and one (1) installment of $20,833.45.
Each such payment shall be made by the Obligor to the Holder on
the fifteenth (15th) day of each month, commencing on April 15,
1998. In the event that any payment to be made hereunder shall be
or become due on a Saturday, Sunday or any other day which
<PAGE>
is a legal bank holiday under the laws of the State of New York,
such payment shall be or become due on the immediately preceding
business day.
2. Restrictions on Transferability. This Note may not be transferred
in any manner other than by will or by the laws of descent or
distribution; provided, however, that the Holder shall be
permitted to transfer this Note, in whole or in part, to Richard
J. Sirota, the sole shareholder of the Holder, Mr. Sirota's wife,
Mr. Sirota's daughter or Walter Berkower (each, a "Permitted
Transferee"). Prior to transferring this Note pursuant to this
Section 2, the Holder shall cause the Permitted Transferee to
agree to be bound by the terms and provisions of this Note.
3. No Waiver. No failure or delay by the Holder in exercising any
right, power or privilege under this Note shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law. No course of dealing between
the Obligor and the Holder shall operate as a waiver of any
rights by the Holder.
4. Waiver of Presentment and Notice of Dishonor. The Obligor and all
endorsers, guarantors and other parties that may be liable under
this Note hereby waive presentment, notice of dishonor, protest
and all other demands and notices in connection with the
delivery, acceptance, performance or enforcement of this Note.
5. Place of Payment. All payments of principal of this Note and the
interest due thereon shall be made at the office of the Holder,
229 West 28th Street, New York, New York 10001-5996 or at such
other place as the Holder may from time to time designate in
writing.
6. Events of Default. The entire unpaid principal amount of this
Note and the interest due thereon shall, at the option of the
Holder exercised by written notice to the Obligor, forthwith
become and be due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived, if any one or more of the following events
(herein called "Events of Default") shall have occurred (for any
reason whatsoever and whether such happening shall be voluntary
or involuntary or come about or be effected by operation of law
or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any
administrative or governmental body) and be continuing at the
time of such notice, that is to say:
a) if default shall be made in the due and punctual payment of
the principal of this Note and the interest due thereon when
and as the same shall become due and payable, whether at
maturity, or by acceleration or otherwise, and such default
shall have continued for a period of five days;
- 2 -
<PAGE>
b) if the Obligor shall:
(i) admit in writing its inability to pay its debts
generally as they become due;
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act;
(iii)make an assignment for the benefit of creditors;
(iv) consent to the appointment of a receiver of the whole
or any substantial part of his property;
(v) on a petition in bankruptcy filed against him, be
adjudicated a bankrupt; or
(vi) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any
other applicable law or statute of the United States of
America or any State, district or territory thereof;
c) if a court of competent jurisdiction shall enter an order,
judgment, or decree appointing, without the consent of the
Obligor, a receiver of the whole or any substantial part of
Obligor's property, and such order, judgment or decree shall
not be vacated or set aside or stayed within 90 days from
the date of entry thereof; and
d) if, under the provisions of any other law for the relief or
aid of debtors, any court of competent jurisdiction shall
assume custody or control of the whole or any substantial
part of Obligor's property and such custody or control shall
not be terminated or stayed within 90 days from the date of
assumption of such custody or control.
7. Remedies. In case any one or more of the Events of Default
specified in Section 6 hereof shall have occurred and be
continuing, the Holder may proceed to protect and enforce his
rights either by suit in equity and/or by action at law, whether
for the specific performance of any covenant or agreement
contained in this Note or in aid of the exercise of any power
granted in this Note, or the Holder may proceed to enforce the
payment of all sums due upon this Note or to enforce any other
legal or equitable right of the Holder.
8. Severability. In the event that one or more of the provisions of
this Note shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Note, but this Note shall be construed as if such invalid,
illegal or unenforceable provision had never been contained
herein.
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<PAGE>
9. Governing Law. This Note and the rights and obligations of the
Obligor and the Holder shall be governed by and construed in
accordance with the laws of the State of New York.
10. Unsecured Obligations. The Holder hereby acknowledges that the
obligations of the Obligor hereunder are unsecured.
* * * * * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
and delivered on the date first written above.
UNIDIGITAL INC.
By:/s/ William E. Dye
---------------------------
William E. Dye, President
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of this 25th day of March,
1998, by and between Unidigital Inc., a Delaware corporation, with an office for
purposes of this Agreement at 545 West 45th Street, New York, NY 10036
(hereinafter the "Company" or "Employer"), and Richard Sirota with an address at
1 Pallisar Road, Irvington, New York 10533 (hereinafter the "Employee").
WITNESSETH:
WHEREAS:
(a) Company wishes to engage the services of Employee to render
services for and on its behalf in accordance with the following terms,
conditions and provisions; and
(b) Employee wishes to perform such services for and on behalf of
the Company, in accordance with the following terms, conditions and provisions.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained the parties hereto intending to be legally bound
hereby agree as follows:
1. EMPLOYMENT. Company hereby employs Employee and Employee accepts
such employment and shall perform his duties and the responsibilities provided
for herein in accordance with the terms and conditions of this Agreement
principally in New York City, New York.
<PAGE>
2. EMPLOYMENT STATUS. Employee shall at all times be Company's
employee subject to the terms and conditions of this Agreement.
3. TERM. The term of this Agreement (the "Term") shall commence on
March 25, 1998, and shall terminate on March 25, 2001 (the "Termination Date"),
for a total term of three (3) years, unless earlier terminated pursuant to the
terms and provisions of this Agreement.
4. During Employee's employment hereunder, Employee shall serve as
Senior Vice President and Chief Operating Officer of the Company. In such
positions, Employee shall have the customary powers, responsibilities and
authorities of officers in such position of corporations of the size, type and
nature of the Company. Employee shall perform such duties and exercise such
powers commensurate with his positions and responsibilities as shall be
determined from time to time by the Company's Board of Directors (the "Board"),
William E. Dye or such other executive officer designated by the Board or Mr.
Dye and shall report directly to William E. Dye and to no other person, entity
or committee other than the Board or a duly appointed designee of the Board or
Mr. Dye. Employee shall be provided with an office, staff and other working
facilities consistent with his positions and as required for the performance of
his duties. In addition, Company agrees to cause Employee to be nominated to
serve as a director of the Company and to use its best efforts to cause Employee
to be elected to the Board and be retained as a director of the Company during
Employee's employment during the Term, as it may be extended.
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<PAGE>
5. COMPENSATION.
(a) For the performance of all Employee's services to be rendered
pursuant to the terms of this Agreement, Company will pay and Employee will
accept the following compensation:
Base Salary. During the Term, Company shall pay the Employee
an initial base annual salary of $250,000 (the "Base Salary") payable in regular
installments in accordance with the Company's usual payment practices (which
currently is in equal bi-monthly installments). Employee shall be entitled to
such further increases, if any, in his Base Salary as may be determined from
time to time in the sole discretion of the Board; but, in any event, Employee
shall be entitled to receive an annual increase equal to the increase in the CPI
for the New York Metropolitan Area on annual basis. Employee's Base Salary, as
in effect from time to time, is hereinafter referred to as the "Employee's Base
Salary".
Bonus. During the Term, Employee shall be eligible for and
may receive bonuses. The amount of such bonuses, if any, shall be solely within
the discretion of the Board or the Compensation Committee thereof.
(b) Company shall deduct and withhold from Employee's
compensation all necessary or required taxes, including but not limited to
Social Security, withholding and otherwise, and any other applicable amounts
required by law or any taxing authority.
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<PAGE>
6. EMPLOYEE BENEFITS.
(a) During the Term hereof and so long as Employee is not
terminated, Employee shall receive and be provided health and insurance
benefits, and during Employee's employment hereunder, Employee shall receive and
be provided employee benefits (including without limitation, fringe benefits,
vacation, automobile, retirement plan participation and life, health, accident
and disability insurance etc., (collectively, "Employee Benefits") on the same
basis as those benefits are generally made available to the most senior
executives of the Company. Employee shall be entitled to receive not less than
four weeks vacation per year and if such vacation time is not taken by Employee,
in the then current year, Employee at his option may accrue vacation or receive
compensation at the then current level.
(b) At his discretion and at the Company's sole expense, Employee
may travel business class, portal to portal, when traveling on business for the
Company.
7. BUSINESS EXPENSES AND PERQUISITES.
(a) Reasonable travel, entertainment and other business expenses
incurred by Employee in the performance of his duties hereunder shall be
reimbursed by the Company in accordance with Company policies then in effect.
(b) Company shall provide Employee a new automobile, every three
years, including all related maintenance, repairs, insurance parking and other
costs. The base annual automobile rental expense shall not exceed $18,000 per
annum.
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<PAGE>
8. TERMINATION.
(a) For Cause by the Company. (i) Employee's employment hereunder
may be terminated by the Company for cause. For purposes of this Agreement,
"cause" shall mean (A) Employee's unjustified failure to perform his duties
hereunder or to follow reasonable directions of the Board, William E. Dye or a
duly appointed designee of the Board or Mr. Dye, (B) willful misconduct by
Employee in connection with his employment, (C) Employee's conviction of, or
plea of nolo contendere to, any crime constituting a felony under the laws of
the United States or any State thereof, or any crime constituting a misdemeanor
under any such law involving moral turpitude, or (D) Employee's material breach
of any of the provisions of this Agreement.
(ii) If Employee is terminated for cause, he shall entitled
to receive
Employee's Base Salary from Company through the date of termination and
Employee shall be entitled to no other payments of Employee's Base Salary under
this Agreement. All other benefits, if any, due Employee following Employee's
termination of employment pursuant to this Section 8(a) shall be determined in
accordance with the plans, policies and practices of the Company for most senior
executives.
(b) Disability or Death. (i) Employee's employment hereunder
shall terminate upon his death or if Employee becomes physically or mentally
incapacitated and is therefore unable (or will as a result thereof, be unable)
for a period of six (6) consecutive months or for an aggregate of twelve (12)
months in any twenty-four (24) consecutive month
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<PAGE>
period to perform his duties (such incapacity is hereinafter referred to as
"Disability"). Any question as to the existence of the Disability of Employee as
to which Employee and the Company cannot agree shall be determined in writing by
a qualified independent physician mutually acceptable to Employee and the
Company. If Employee and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination
of Disability made in writing to the Company and Employee shall be final and
conclusive for all purposes of the Agreement.
(ii) Upon termination of Employee's employment hereunder
during the Term for Disability, Employee shall receive from the Company 50% of
Employee's Base Salary through the end of the Term and the amount equivalent to
50% of the last bonus, if any, received by the Employee under the terms of this
Agreement times the number of years remaining in the Term. Employee shall be
entitled to no further payments of Employee's Base Salary under this Agreement,
provided that any payment under this Section 8(b)(ii) shall be reduced by the
amount of any disability benefits paid to Employee under any other disability
plan, program or arrangement maintained and paid for by the Company or its
affiliates.
(iii)Upon termination of Employee's employment hereunder
during the Term as a result of death, the Employee's estate or named
beneficiary(ies) shall receive from the Company (A) Employee's Base Salary at
the rate in effect at the time of Employee's death through the end of the month
in which his death occurs and pro rata bonus paid to Employee during then
immediately preceding year of the Term, and (B) the proceeds of any
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<PAGE>
life insurance policy maintained for his benefit by the Company pursuant to
Section 6(a) under this Agreement.
(iv) All other benefits, if any, due Employee following
Employee's termination of employment pursuant to this Section 8(b) shall be
determined in accordance with the plans, policies and practices of the Company
and shall be at least equal to those received by most senior executives of the
Company.
(c) Without Cause by the Company. If Employee's employment is
terminated by the Company without cause (other than by reason of Disability or
death), then Employee shall be entitled to receive the Employee's Base Salary
from the Company for the balance of the Term, to be paid to Employee during
immediately succeeding next bi-weekly intervals. All other benefits, if any, due
Employee following Employee's termination of employment pursuant to this Section
8(c) shall be determined in accordance with the plans, policies and practices of
the Company then in effect.
(d) Termination by Employee. If Employee wishes to terminate his
employment with the Company for any reason, Employee must afford the Company
with at least six full month's written notice of termination. Such termination
shall not be deemed a breach of this Agreement.
(e) Change of Control. For purposes of this Agreement, "Change of
Control" shall mean (i) any transaction or series of transactions (including,
without limitation, a tender offer, merger or consolidation) the result of which
is that any "person" or "group"
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<PAGE>
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), becomes the "beneficial" owner (as
defined in Rule 13(d)(3) under the Exchange Act) of more than 50 percent (50%)
of the total aggregate voting power of all classes of the voting stock of the
Company and/or warrants or options to acquire such voting stock, calculated on a
fully diluted basis, or (ii) a sale of assets constituting all or substantially
all of the assets of the Company (determined on a consolidated basis). In the
event of such a Change of Control, the new entity shall be obligated to perform
the Company's obligations under the terms of this Agreement. Notwithstanding the
foregoing, such Change in Control shall not release the Company from its
liability for the full and faithful performance of all the terms and conditions
of this Agreement.
9. NON-DISCLOSURE OF INFORMATION. Employee acknowledges that by virtue
of his position he will be privy to the Company's trade secrets including, but
not limited to, Company's customers list and private processes, as they may
exist or as Company may determine from time to time, and that such secrets are
valuable, special, and unique assets of Company's business and constitute
confidential information and trade secrets of Company (hereafter collectively
"Confidential Information"). Employee shall not, during the Term and for a
period of two (2) years thereafter, intentionally disclose all or any part of
the Confidential Information to any person, firm, corporation, association or
any other entity for any reason or purpose whatsoever, nor shall Employee and
any other person by, through or with Employee, during the Term and for a period
of two (2) years thereafter, intentionally make use of any of the Confidential
Information for any purpose or for the benefit of any
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<PAGE>
other person or entity, other than Company, under any circumstances. Company and
Employee agree that a violation of the foregoing covenants will cause
irreparable injury to the Company, and that in the event of a breach or
threatened breach by the Employee of the provisions of this Section 9, Company
shall be entitled to an injunction.
The foregoing to the contrary notwithstanding, no information, written
or oral, shall be construed or considered "Confidential Information" and thereby
subject to the restrictions of this Section 9 if such information was (i)
generally available to the public other than as a result of a disclosure by the
Employee or anyone to whom the Employee transmits the information in violation
hereof, (ii) in the possession of the Employee or known to him on a
non-confidential basis prior to its disclosure to him, (iii) available to the
Employee on a non-confidential basis from a source other than Unidigital who is
not bound by a confidentiality agreement with Unidigital, or (iv) available in
trade publications, reference books or other resources and which may be compiled
by any person desirous of preparing a report or memorandum containing such
information.
10. RESTRICTIVE COVENANT.
Without the prior written approval of the Board first obtained:
(a) For a period of two (2) years after the termination of this
Agreement, Employee covenants and agrees that, within a radius of twenty-five
(25) miles from each of the then present place(s) of Company's business or any
other area in which Company is engaged in business, he shall not own, manage,
operate, control, be employed by, participate
- 9 -
<PAGE>
in, or be connected in any manner with the ownership, management, operation, or
control, whether directly or indirectly, as an individual on his own account, or
as a partner, member, joint venture, officer, director or shareholder of a
corporation or other entity (this excludes ownership of less than five (5%)
percent of any public company), of any business similar to or competitive with
the type of business conducted by Company at the time of the termination or
expiration of this Agreement. Employee further covenants and agrees he shall
not, directly or indirectly, in any manner whatsoever interfere with, solicit or
disrupt or attempt to interfere with, solicit or disrupt the relationship,
contractual or otherwise, between Company and any customer, supplier, lessee or
employee of Company, its parent or subsidiaries during such period.
(b) For the period set forth in the immediately preceding
subsection (a) Employee covenants and agrees that within a radius of twenty-five
(25) miles from each of the then present place(s) of Company's business or any
other area in which Company is engaged in business, he shall not render any
services to any person, firm, corporation, association or other entity to whom
any Confidential Information in whole or in part, has been disclosed or is
threatened to be disclosed in violation of this Agreement.
(c) Company and Employee agree that a violation of either of the
foregoing covenants will cause irreparable injury to the Company, and that in
the event of a breach or threatened breach by Employee of the provisions of this
Section 10, Company shall be entitled to an injunction.
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<PAGE>
(d) Employee acknowledges that the restrictions contained in this
Section 10 are reasonable. In that regard, it is the intention of the parties to
this Agreement that the provisions of this Section 10 shall be enforced to the
fullest extent permissible under the law and public policy applied in each
jurisdiction in which enforcement is sought. Accordingly, if any portion of this
Section 10 shall be adjudicated or deemed to be invalid or unenforceable, the
remaining portions shall remain in full force and effect, and such invalid or
unenforceable portion shall be limited to the particular jurisdiction in which
such adjudication is made.
11. BREACH OR THREATENED BREACH OF COVENANTS. In the event of
Employee's actual or threatened breach of his obligations under either Section 9
or 10, or both, of this Agreement, in addition to any other remedies Company may
have, Company shall be entitled to obtain a temporary restraining order and a
preliminary and/or permanent injunction restraining the other from violating
these provisions. Nothing in this Agreement shall be construed to prohibit
Company from pursuing and obtaining any other available remedies which Company
may have for such breach or threatened breach, whether at law or in equity,
including the recovery of damages from the other.
12. REPRESENTATIONS AND WARRANTIES BY EMPLOYEE. Employee hereby
warrants and represents that he is not subject to or a party to any restrictive
covenants or other agreements that in any way preclude, restrict, restrain or
limit him (a) from being an Employee of Company, (b) from engaging in the
business of Company in any capacity, directly or indirectly, and (c) from
competing with any other persons, companies, businesses or entities engaged in
the business of Company.
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<PAGE>
13. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, the performance thereof of its breach or threatened breach
shall be settled by arbitration in the State of New York, County of New York in
accordance with the then governing rules of the American Arbitration
Association. The findings of the arbitration panel or arbitrator shall be final
and binding upon the parties. Judgment upon any arbitration award rendered may
be entered and enforced in any court of competent jurisdiction. In no event may
the arbitration determination change Employee's compensation, title, duties or
responsibilities, the entity to whom Employee reports or the principal place
where Employee is to render his services.
14. NOTICES. Any notice required, permitted or desired to be given
under this Agreement shall be sufficient if it is in writing and (a) personally
delivered to Employee or an authorized member of Company, (b) sent by overnight
delivery, or (c) sent by registered or certified mail, return receipt requested,
to Employer's or Employee's address as provided in this Agreement or to a
different address designated in writing by either party. In all instances of
notices to be given to Company, a copy by like means shall be delivered to
Company's counsel care of Buchanan Ingersoll, 500 College Road East, Princeton,
NJ 08540, Attn: David Sorin, Esq. In all instances of notices to be given to
Employee, a copy by like means shall be delivered to Employee's counsel care of
Kantor Davidoff Wolfe Mandelbaum & Kass, 51 East 42nd Street, New York, NY
10017, Attn: Herbert C. Kantor, Esq. Notice is deemed given on the day it is
delivered personally or by overnight delivery, or five (5) business days after
it is mailed, if transmitted by the United States Post Office.
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<PAGE>
15. ASSIGNMENT. Employee acknowledges that his services are unique and
personal. Accordingly, Employee may not assign his rights or delegate his duties
or obligations under this Agreement. Company's rights and obligations under this
Agreement shall inure to the benefit of and shall be binding upon the Company's
successors and assigns. Company has the absolute right to assign its rights and
benefits under the terms of this Agreement.
16. WAIVER OF BREACH. Any waiver of a breach of provision of this
Agreement, or any delay of failure to exercise a right under a provision of this
Agreement, by either party, shall not operate or be construed as a waiver of
that or any other subsequent breach or right.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties. It may not be changed orally but only by an agreement in writing
which is signed by the parties. The parties hereto agree that any existing
employment agreement between them shall be terminated as of the date of this
Agreement.
18. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of New York.
19. SEVERABILITY. The invalidity or non-enforceability of any
provision of this Agreement or application thereof shall not affect the
remaining valid and enforceable provisions of this Agreement or application
thereof.
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<PAGE>
20. CAPTIONS. Captions in this Agreement are inserted only as a matter
of convenience and reference and shall not be used to interpret or construe any
provisions of this Agreement.
21. GRAMMATICAL USAGE. In construing or interpreting this Agreement,
masculine usage shall be substituted for those feminine in form and vice versa,
and plural usage shall be substituted or singular and vice versa, in any place
in which the context so requires.
22. CAPACITY. Employee has read and is familiar with all the terms and
conditions of this Agreement and has the capacity to understand such terms and
conditions hereof. By executing this Agreement, Employee agrees to be bound by
this Agreement and the terms and conditions hereof.
23. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first hereinabove written.
UNIDIGITAL INC.
/s/ William E. Dye
--------------------------
William E. Dye
Chief Executive Officer
/s/ Richard J. Sirota
--------------------------
Richard J. Sirota
2/94
STANDARD FORM OF LOFT LEASE The Real Estate Board of
New York, Inc.
AGREEMENT OF LEASE, made as of this 1ST day of MARCH 1997, between S.N.Y.,
INC., a New York corporation having an office at 229 W. 28th St, NY, party of
the first part, hereinafter referred to as OWNER, and KWIK INTERNATIONAL COLOR,
LTD., a New York corporation, having an office at 229 W. 28th St., NY, NY 10001
party of the second part, hereinafter referred to as TENANT,
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from
Owner a portion of the Fourth Floor, known as Room 401-405), with square footage
of approximately 2,875 square feet in the building known as 229 West 28th Street
in the Borough of Manhattan, City of New York, for the term of Twelve (12) years
(or until such term shall sooner cease and expire as hereinafter provided) to
commence on the 1st day of March nineteen hundred and ninety-seven, and to end
on the 28th day of February, Two Thousand Nine both dates inclusive, at an
annual rental rate of Forty Six Thousand ($46,000) Dollars from March 1, 1997 to
February 28, 2003; Forty Eight Thousand Eight Hundred Seventy Five ($48,875)
Dollars from March 1, 2003 to February 28, 2009.
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first monthly installment(s) on the execution hereof (unless this lease
be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
RENT: 1. Tenant shall pay the rent as above and as hereinafter provided.
OCCUPANCY: 2. Tenant shall use and occupy demised premises for printing and
graphic services provided such use is in accordance with the certificate of
occupancy for the building, if any, and for no other purpose.
ALTERATIONS: 3. Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, tenant, at Tenant's
expense, may make alterations, installations, additions or improvements which
are nonstructural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
at its expense, before making any alterations, additions, installations or
improvements obtain all permits, approval and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner. Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have been done
for, or materials furnished to, Tenant, whether or not done pursuant to this
article, the same shall be discharged by Tenant within thirty days thereafter,
at Tenant's expense, by payment or filing the bond required by law or otherwise.
All fixtures and all paneling, partitions, railings and like installations,
installed in the premises at any time, either by Tenant or by Owner on Tenant's
behalf, shall, upon installation, become the property of Owner and shall remain
upon and be surrendered with the demised premises unless Owner, by notice to
Tenant no later than twenty days prior to the date fixed as the termination of
this lease, elects to relinquish Owner's right thereto and to have them removed
by Tenant, in which event the same shall be removed from the demised premises by
Tenant prior to the expiration of the lease, at Tenant's expense. Nothing in
this Article shall be construed to give Owner title to or to prevent Tenant's
removal of trade fixtures, moveable office furniture and equipment, but upon
removal of any such from the premises or upon removal of other installations as
may be required by Owner, Tenant shall immediately and at its expense, repair
and restore the premises to the condition existing prior to installation and
repair any damage to the demised premises or the building due to such removal.
All property permitted or required to be removed by Tenant at the end of the
term remaining in the premises after Tenant's removal shall be deemed abandoned
and may, at the election of Owner, either be retained as Owner's property or
removed from the premises by Owner, at Tenant's expense.
REPAIRS: 4. Owner shall maintain and repair the exterior of and the public
portions of the building. Tenant shall, throughout the term of this lease, take
good care of the demised premises including the bathrooms and lavatory
facilities (if the demised premises encompass the entire floor of the building)
and the windows and window frames and, the fixtures and appurtenances therein
and at Tenant's sole cost and expense promptly make all repairs thereto and to
the building, whether structural or non-structural in nature, caused by or
resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the original work or construction. If Tenant fails, after ten days
notice, to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Owner at the expense of Tenant, and the
expenses thereof incurred by Owner shall be collectible, as additional rent,
after rendition of a bill or statement therefor. If the demised premises be or
become infested with vermin, Tenant shall, at its expense, cause the same to be
exterminated. Tenant shall give Owner prompt notice of any defective condition
in any plumbing, heating system or electrical lines located in the demised
premises and following such notice, Owner shall remedy the condition with due
diligence, but at the expense of Tenant, if repairs are necessitated by damage
or injury attributable to Tenant, Tenant's servants, agents, employees, invitees
or licensees as aforesaid. Except as specifically provided in Article 9 or
elsewhere in this lease, there shall be no allowance to the Tenant for a
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. It is specifically
agreed that Tenant shall not be entitled to any set off or reduction of rent by
reason of any failure of Owner to comply with the covenants of this or any other
article of this lease. Tenant agrees that Tenant's sole remedy at law in such
instance will be by way of any action for damages for breach of contract. The
provisions of this Article 4 with respect to the making of repairs shall not
apply in the case of fire or other casualty with regard to which Article 9
hereof shall apply.
WINDOW: 5. Tenant will not clean nor require, permit, suffer or allow any window
in the demised premises to be cleaned from the outside in violation of Section
202 of the New York State Labor Law or any other applicable law or of the Rules
of the Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
REQUIREMENTS OF LAW, FIRE INSURANCE: 6. Prior to the commencement of the lease
term, if Tenant is then in possession, and at all times thereafter Tenant shall,
at Tenant's sole cost and expense, promptly comply with all present and future
laws, orders and regulations of all state, federal, municipal and local
governments, departments, commissions and boards and any direction of any public
officer pursuant to law, and all orders, rules and regulations of the New York
Board of Fire Underwriters, or the Insurance Services Office, or any similar
body which shall impose any violation, order or duty upon Owner or Tenant with
respect to the demised premises, whether or not arising out of Tenant's use or
manner of use thereof, or, with respect to the building, if arising out of
Tenant's use or manner of use of the demised premises of the building (including
the use permitted under the lease). Except as provided in Article 30 hereof,
nothing herein shall require Tenant to make structural repairs or alterations
unless Tenant has, by its manner of use of the demised premises or method of
operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant shall not do or
<PAGE>
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. If by reason of failure to comply with the foregoing the
fire insurance rate shall, at the beginning of this lease or at any time
thereafter, be higher than it otherwise would be, then Tenant shall reimburse
Owner, as additional rent hereunder, for that portion of all fire insurance
premiums thereafter paid by Owner which shall have been charged because of such
failure by Tenant. In any action or proceeding wherein Owner and Tenant are
parties, a schedule or "make-up" or rate for the building or demised premises
issued by a body making fire insurance rates applicable to said premises shall
be conclusive evidence of the facts therein stated and of the several items and
charges in the fire insurance rates then applicable to said premises. Tenant
shall not place a load upon any floor of the demised premises exceeding the
floor load per square foot area which it was designed to carry and which is
allowed by law. Owner reserves the right to prescribe the weight and position of
all safes, business machines and mechanical equipment. Such installations shall
be placed and maintained by Tenant, at Tenant's expense, in settings sufficient,
in Owner's judgement, to absorb and prevent vibration, noise and annoyance.
SUBORDINATION: 7. This lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which demised premises are a part and to all
renewals, modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
TENANT'S LIABILITY INSURANCE PROPERTY LOSS, DAMAGE INDEMNITY: 8. Owner or its
agents shall not be liable for any damage to property of Tenant or of others
entrusted to employees of the building, nor for loss of or damage to any
property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees; Owner
or its agents shall not be liable for any damage caused by other tenants or
persons in, upon or about said building or caused by operations in connection of
any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitee or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
DESTRUCTION, FIRE AND OTHER CASUALTY: 9. (a) If the demised premises or any part
thereof shall be damaged by fire or other casualty, Tenant shall give immediate
notice thereof to Owner and this lease shall continue in full force and effect
except as hereinafter set forth. (b) If the demised premises are partially
damaged or rendered partially unusable by fire or other casualty, the damages
thereto shall be repaired by and at the expense of Owner and the rent and other
items of additional rent, until such repair shall be substantially completed,
shall be apportioned from the day following the casualty according to the part
of the premises which is usable. (c) If the demised premises are totally damaged
or rendered wholly unusable by fire or other casualty, then the rent and other
items of additional rent as hereinafter expressly provided shall be
proportionately paid up to the time of the casualty and thenceforth shall cease
until the date when the premises shall have been repaired and restored by Owner
(or sooner occupied in part by Tenant then rent shall be apportioned as provided
in subsection (b) above), subject to Owner's right to elect not to restore the
same as hereinafter provided. (d) If the demised premises are rendered wholly
unusable or (whether or not the demised premises are damaged in whole or in
part) if the building shall be so damaged that Owner shall decide to demolish it
or to rebuild it, then, in any of such events, Owner may elect to terminate this
lease by written notice to Tenant, given within 90 days after such fire or
casualty, or 30 days after adjustment of the insurance claim for such fire or
casualty, whichever is sooner, specifying a date for the expiration of the
lease, which date shall not be more than 60 days after the giving of such
notice, and upon the date specified in such notice the term of this lease shall
expire as fully and completely as if such date were the date set forth above for
the termination of this lease and Tenant shall forthwith quit, surrender and
vacate the premises without prejudice however, to Owner's rights and remedies
against Tenant under the lease provisions in effect prior to such termination,
and any rent owing shall be paid up to such date and any payments of rent made
by Tenant which were on account of any period subsequent to such date shall be
returned to Tenant. Unless Owner shall serve a termination notice as provided
for herein, Owner shall make the repairs and restorations under the conditions
of (b) and (c) hereof, with all reasonable expedition, subject to delays due to
adjustment of insurance claims, labor troubles and causes beyond Owner's
control. After any such casualty, Tenant shall cooperate with Owner's
restoration by removing from the premises as promptly as reasonably possible,
all of Tenant's salvageable inventory and movable equipment, furniture, and
other property. Tenant's liability for rent shall resume five (5) days after
written notice from Owner that the premises are substantially ready for Tenant's
occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability
that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, including Owner's obligation to restore under
paragraph (b) above, each party shall look first to any insurance in its favor
before making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Owner and Tenant
each hereby releases and waives all right of recovery with respect to
subparagraphs (b), (d) and (e) above, against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The release
and waiver herein referred to shall be deemed to include any loss or damage to
the demised premises and/or to any personal property, equipment, trade fixtures,
goods and merchandise located therein. The foregoing release and waiver shall be
in force only if both releasors' insurance policies contain a clause providing
that such a release or waiver shall not invalidate the insurance. If, and to the
extent, that such waiver can be obtained only by the payment of additional
premiums, then the party benefitting from the waiver shall pay such premium
within ten days after written demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under
the provisions hereof with respect to waiver of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant's furniture and or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Owner will not be obligated to repair any damage thereto or
replace the same. (f) Tenant hereby waives the provisions of Section 227 of the
Real Property Law and agrees that the provisions of this article shall govern
and control in lieu thereof.
EMINENT DOMAIN: 10. If the whole or any part of the demised premises shall be
acquired or condemned by Eminent Domain for any public or quasi public use or
purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease. Tenant shall
have the right to make an independent claim to the condemning authority for the
value of Tenant's moving expenses and personal property, trade fixtures and
equipment, provided Tenant is entitled pursuant to the terms of the lease to
remove such property, trade fixtures and equipment at the end of the term and
provided further such claim does not reduce Owner's award.
ASSIGNMENT, MORTGAGE, ETC.: 11. Tenant, for itself, its heirs, distributees,
executors, administrators, legal representatives, successors and assigns,
expressly covenants that it shall not assign, mortgage or encumber this
agreement, nor underlet, or suffer or permit the demised premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance. Transfer of the majority of the stock of a corporate Tenant or the
majority partnership interest of a partnership Tenant shall be deemed an
assignment. If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
ELECTRIC CURRENT: 12. Rates and conditions in respect to submetering or rent
inclusion, as the case may be, to be added in RIDER attached hereto. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no wise make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
ACCESS TO PREMISES: 13. Owner or Owner's agents shall have the right (but shall
not be obligated) to enter the demised premises in any emergency at any time,
and, at other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to any portion of the building or which Owner may elect to perform in
the premises after Tenant's failure to make repairs or perform any work which
Tenant is obligated to perform under this lease, or for the purpose of complying
with laws, regulations and other directions of governmental authorities. Tenant
shall permit Owner to use and maintain and replace pipes and conduits in and
through the demised premises and to erect new pipes and conduits therein
provided, wherever possible, they are within walls or otherwise concealed. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants and may, during said six months period, place upon
<PAGE>
the demised premises the usual notices "To Let" and "For Sale" which notices
Tenant shall permit to remain thereon without molestation. If Tenant is not
present to open and permit an entry into the demised premises, Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided reasonable care is exercised to safeguard
Tenant's property, such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of the term Tenant shall have removed all or
substantially all of Tenant's property therefrom. Owner may immediately enter,
alter, renovate or redecorate the demised premises without limitation or
abatement of rent, or incurring liability to Tenant for any compensation and
such act shall have no effect on this lease or Tenant's obligation hereunder.
VAULT, VAULT SPACE, AREA: 14. No Vaults, vault space or area, whether or not
enclosed or covered, not within the property line of the building is leased
hereunder anything contained in or indicated on any sketch, blue print or plan,
or anything contained elsewhere in this lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant, if used by
Tenant, whether or not specifically leased hereunder.
OCCUPANCY: 15. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the building of which the
demised premises are a part. Tenant has inspected the premises and accepts them
as is, subject to the riders annexed hereto with respect to Owner's work, if
any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record. If any governmental license or permit shall be required for the
proper and lawful conduct of Tenant's business, Tenant shall be responsible for
and shall procure and maintain such license or permit.
BANKRUPTCY: 16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the debtor; or (2) the making by Tenant
of an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interests in this lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rental reserved hereunder the for unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
DEFAULT: 17. (1) If Tenant defaults in fulfilling any of the covenants of this
lease other than the covenants for the payment of rent or additional rent; or if
the demised premises becomes vacant or deserted "or if this lease be rejected
under ss. 235 of Title 11 of the U.S. Code (bankruptcy code);" or if any
execution or attachment shall be issued against Tenant or any of Tenant's
property whereupon the demised premises shall be taken or occupied by someone
other than Tenant; or if Tenant shall make default with respect to any other
lease between Owner and Tenant; or if Tenant shall have failed, after five (5)
days written notice, to redeposit with Owner any portion of the security
deposited hereunder which Owner has applied to the payment of any rent and
additional rent due and payable hereunder or failed to move into or take
possession of the premises within thirty (30) days after the commencement of the
term of this lease, of which fact Owner shall be the sole judge; then in any one
or more of such events, upon Owner serving a written fifteen (15) days notice
upon Tenant specifying the nature of said default and upon the expiration of
said fifteen (15) days, if Tenant shall have failed to comply with or remedy
such default, or if the said default or omission complained of shall be of a
nature that the same cannot be completely cured or remedied within said fifteen
(15) day period, and if Tenant shall not have diligently commenced during such
default within such fifteen (15) day period, and shall not thereafter with
reasonable diligence and in good faith, proceed to remedy or cure such default,
then Owner may serve a written five (5) days' notice of cancellation of this
lease upon Tenant, and upon the expiration of said five (5) days this lease and
the term thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the demised premises to Owner but Tenant shall remain liable
as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given,
and the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
REMEDIES OF OWNER AND WAIVER OF REDEMPTION: 18. In case of any such default,
re-entry, expiration and/or dispossess by summary proceedings or other wise, (a)
the rent, and additional rent, shall become due thereupon and be paid up to the
time of such re-entry, dispossess and/or expiration, (b) Owner may re-let the
premises or any part or parts thereof, either in the name of Owner or otherwise,
for a term or terms, which may at Owner's option be less than or exceed the
period which would otherwise have constituted the balance of the term of this
lease and may grant concessions or free rent or charge a higher rental than that
in this lease, (c) Tenant or the legal representatives of Tenant shall also pay
Owner as liquidated damages for the failure of Tenant to observe and perform
said Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and or covenanted to be paid and the net amount, if any, of the rents
collected on account of the subsequent lease or leases of the demised premises
for each month of the period which would otherwise have constituted the balance
of the term of this lease. The failure of Owner to re-let the premises or any
part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency such expenses as Owner may incur in connection with re-letting, such
as legal expenses, reasonable attorneys' fees, brokerage, advertising and for
keeping the demised premises in good order or for preparing the same for
re-letting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent day specified in this lease and any suit brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Owner to collect the deficiency for any subsequent month by a similar
proceeding. Owner, in putting the demised premises in good order or preparing
the same for re-rental may, at Owner's option, make such alterations, repairs,
replacements, and/or decorations in the demised premises as Owner, in Owner's
sole judgment, considers advisable and necessary for the purpose of re-letting
the demised premises, and the making of such alterations, repairs, replacements,
and/or decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
FEES AND EXPENSES: 19. If Tenant shall default in the observance or performance
of any term or covenant on Tenant's part to be observed or performed under or by
virtue of any of the terms or provisions in any article of this lease, after
notice if required and upon expiration of any applicable grace period if any,
(except in an emergency), then, unless otherwise provided elsewhere in this
lease, Owner may immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in connection with the
foregoing or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment
of money, including but not limited to reasonable attorney's fees, in
instituting, prosecuting or defending any action or proceedings, and prevails in
any such action or proceeding, then Tenant will reimburse Owner for such sums so
paid or obligations incurred with interest and costs. The foregoing expenses
incurred by reason of Tenant's default shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Owner within ten (10) days of rendition
of any bill or statement to Tenant therefor. If Tenant's lease term shall have
expired at the time of making of such expenditures or incurring of such
obligations, such sums shall be recoverable by Owner as damages.
BUILDING ALTERATIONS AND MANAGEMENT: 20. Owner shall have the right at any time
without the same constituting an eviction and without incurring liability to
Tenant therefor to change the arrangement and or location of public entrances,
passageways, doors, doorways, corridors, elevators, stairs, toilets or other
public parts of the building and to change the name, number or designation by
which the building may be known. There shall be no allowance to Tenant for
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner or other
Tenant making any repairs in the building or any such alterations, additions and
improvements. Furthermore, Tenant shall not have any claim against Owner by
reason of Owner's imposition of any controls of the manner of access to the
building by Tenant's social or business visitors as the Owner may deem necessary
for the security of the building and its occupants.
<PAGE>
NO REPRESENTATIONS BY OWNER: 21. Neither Owner nor Owner's agents have made any
representations or promises with respect to the physical condition of the
building, the land upon which it is erected or the demised premises, the rents,
leases, expenses of operation or any other matter or thing affecting or related
to the demised premises or the building except as herein expressly set forth and
no rights, easements or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in the provisions of this lease. Tenant
has inspected the building and the demised premises and is thoroughly acquainted
with their condition and agrees to take the same "as is" on the date possession
is tendered and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
END OF TERM: 22. Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Owner the demised premises, broom
clean, in good order and condition, ordinary wear and damages which Tenant is
not required to repair as provided elsewhere in this lease excepted, and Tenant
shall remove all its property from the demised premises. Tenant's obligations to
observe or perform this covenant shall survive the expiration or other
termination of this lease. If the last day of the term of this Lease or any
renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
QUIET ENJOYMENT: 23. Owner covenants and agrees with Tenant that upon Tenant
paying the rent and additional rent and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 34 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
FAILURE TO GIVE POSSESSION: 24. If Owner is unable to give possession of the
demised premises on the date of the commencement of the term hereof, because of
the holding-over or retention of possession of any tenant, undertenant or
occupants or if the demised premises are located in a building being
constructed, because such building has not been sufficiently completed to make
the premises ready for occupancy or because of the fact that a certificate of
occupancy has not been procured or if Owner has not completed any work required
to be performed by Owner, or for any other reason, Owner shall not be subject to
any liability for failure to give possession on said date and the validity of
the lease shall not be impaired under such circumstances, nor shall the same be
construed in any wise to extend the term of this lease, but the rent payable
hereunder shall be abated (provided Tenant is not responsible for Owner's
inability to obtain possession or complete any work required) until after Owner
shall have given Tenant notice that Owner is able to deliver possession in the
condition required by this lease. If permission is given to Tenant to enter into
the possession of the demised premises or to occupy premises other than the
demised premises prior to the date specified as the commencement of the term of
this lease, Tenant covenants and agrees that such possession and/or occupancy
shall be deemed to be under all the terms, covenants, conditions and provisions
of this lease, except the obligation to pay the fixed annual rent set forth in
page one of this lease. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of Section
223-a of the New York Real Property Law.
NO WAIVER: 25. The failure of Owner to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of this lease or
of any of the Rules or Regulations, set forth or hereafter adopted by Owner,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Owner of rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Owner unless such waiver be in writing
signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this lease provided. All checks tendered to Owner as and for the
rent of the demised premises shall be deemed payments for the account of Tenant.
Acceptance by Owner of rent from anyone other than Tenant shall not be deemed to
operate as an attornment to Owner by the payor of such rent or as a consent by
Owner to an assignment or subletting by Tenant of the demised premises to such
payor, or as a modification of the provisions of this lease. No act or thing
done by Owner or Owner's agents during the term hereby demised shall be deemed
an acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of Owner
or Owner's agent shall have any power to accept the keys of said premises prior
to the termination of the lease and the delivery of keys to any such agent or
employee shall not operate as a termination of the lease or a surrender of the
premises.
WAIVER OF TRIAL BY JURY: 26. It is mutually agreed by and between Owner and
Tenant that the respective parties hereto shall and they hereby do waive trial
by jury in any action [first several words of first line of column 2 are cut off
photocopy] brought by either of the parties hereto against the other (except for
personal injury or property damage) on any matters whatsoever arising out of or
in any way connected with this lease, the relationship of Owner and Tenant,
Tenant's use of or occupancy of said premises, and any emergency statutory or
any other statutory remedy. It is further mutually agreed that in the event
Owner commences any proceeding or action for possession including a summary
proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding including
a counterclaim under Article 4 except for statutory mandatory counterclaims.
INABILITY TO PERFORM: 27. This Lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in no wise be affected, impaired or excused
because Owner is unable to fulfill any of its obligations under this lease or to
supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repair, additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment, fixtures or other materials if Owner is prevented or delayed from
doing so by reason of strike or labor troubles or any cause whatsoever beyond
Owner's sole control including, but not limited to, government preemption or
restrictions or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions
which have been or are affected, either directly or indirectly, by war or other
emergency.
BILLS AND NOTICES: 28. Except as otherwise in this lease provided, a bill
statement, notice or communication which Owner may desire or be required to give
to Tenant, shall be deemed sufficiently given or rendered if, in writing,
delivered to Tenant personally or sent by registered or certified mail addressed
to Tenant at the building of which the demised premises form a part or at the
last known residence address or business address of Tenant or left at any of the
aforesaid premises addressed to Tenant, and the time of the rendition of such
bill or statement and of the giving of such notice or communication shall be
deemed to be the time when the same is delivered to Tenant, mailed, or left at
the premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
WATER CHARGES: 29. If Tenant requires, uses or consumes water for any purpose in
addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner
to be the sole judge) Owner may install a water meter and thereby measure
Tenant's water consumption for all purposes. Tenant shall pay Owner for the cost
of the meter and the cost of the installation, thereof and throughout the
duration of Tenant's occupancy Tenant shall keep said meter and installation
equipment in good working order and repair at Tenant's own cost and expense in
default of which Owner may cause such meter and equipment to be replaced or
repaired and collect the cost thereof from Tenant, as additional rent. Tenant
agrees to pay for water consumed, as shown on said meter as and when bills are
rendered, and on default in making such payment Owner may pay such charges and
collect the same from Tenant, as additional rent. Tenant covenants and agrees to
pay, as additional rent, the sewer rent, charge or any other tax, rent, levy or
charge which now or hereafter is assessed, imposed or a lien upon the demised
premises or the realty of which they are part pursuant to law, order or
regulation made or issued in connection with the use, consumption, maintenance
or supply of water, water system or sewage or sewage connection or system. If
the building or the demised premises or any part thereof is supplied with water
through a meter through which water is also supplied to other premises Tenant
shall pay to Owner, as additional rent, on the first day of each month,
% ($22.50) of the total meter charges as Tenant's portion.
Independently of and in addition to any of the remedies reserved to Owner
hereinabove or elsewhere in this lease, Owner may sue for and collect any monies
to be paid by Tenant or paid by Owner for any of the reasons or purposes
hereinabove set forth.
SPRINKLERS: 30. Anything elsewhere in this lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the New York Fire
Insurance Exchange or any bureau, department or official of the federal, state
or city government recommend or require the installation of a sprinkler system
or that any changes, modifications, alterations, or additional sprinkler heads
or other equipment be made or supplied in an existing sprinkler system by reason
of Tenant's business, or the location of partitions, trade fixtures, or other
contents of the demised premises, or for any other reason, or if any such
sprinkler system installations, modifications, alterations, additional sprinkler
heads or other such equipment, become necessary to prevent the imposition of a
penalty or charge against the full allowance for a sprinkler system in the fire
insurance rate set by any said Exchange or by any fire insurance company, Tenant
shall, at Tenant's expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be structural or
non-structural in nature. Tenant shall pay to Owner as additional rent the sum
of $7.50, on the first day of each month during the term of this lease, as
Tenant's portion of the contract price for sprinkler supervisory service.
ELEVATORS, HEAT, CLEANING: 31. As long as Tenant is not in default under any the
covenants of this lease beyond the applicable grace period provided in this
lease for the curing of such defaults, Owner shall: (a) provide necessary
passenger elevator facilities on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m.; (b) if freight elevator service is provided,
same shall be provided only on regular business days Monday through Friday
inclusive, and on those days only between the hours of 9 a.m. and 12 noon and
between 1 p.m. and 5 p.m.; (c) furnish heat, water and other services supplied
by Owner to the demised premises, when and as required by law, on business days
from 8 a.m. to 6 p.m. and on Saturdays from 8
<PAGE>
a.m. to 1 p.m.; (d) clean the public halls and public portions of the building
which are used in common by all tenants. Tenant shall, at Tenant's expense, keep
the demised premises, including the windows, clean and in order, to the
reasonable satisfaction of Owner, and for that purpose shall employ the person
or persons, or corporation approved by Owner. Tenant shall pay to Owner the cost
of removal of any of Tenant's refuse and rubbish from the building. Bills for
the same shall be rendered by Owner to Tenant at such time as Owner may elect
and shall be due and payable hereunder, and the amount of such bills shall be
deemed to be, and be paid as, additional rent. Tenant shall, however, have the
option of independently contracting for the removal of such rubbish and refuse
in the event that Tenant does not wish to have same done by employees of Owner.
Under such circumstances, however, the removal of such refuse and rubbish by
others shall be subject to such rules and regulations as, in the judgment of
Owner, are necessary for the proper operation of the building. Owner reserves
the right to stop service of the heating, elevator, plumbing and electric
systems, when necessary, by reason of accident, or emergency, or for repairs,
alterations, replacements or improvements, in the judgment of Owner desirable or
necessary to be made, until said repairs, alterations, replacements or
improvements shall have been completed. If the building of which the demised
premises are a part supplies manually operated elevator service, Owner may
proceed diligently with alterations necessary to substitute automatic control
elevator service without in any way affecting the obligations of Tenant
hereunder.
SECURITY: 32. Tenant has deposited with Owner the sum of $ as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the reletting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
CAPTIONS: 33. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
DEFINITIONS: 34. The term "Owner" as used in this lease means only the owner of
the fee or of the leasehold of the building, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land and building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to Owner from Tenant under this lease, in addition to the annual
rental rate. The term "business days" as used in this lease, shall exclude
Saturdays, Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.
ADJACENT EXCAVATION-SHORING: 35. If an excavation shall be made upon land
adjacent to the demised premises, or shall be authorized to be made, Tenant
shall afford to the person causing or authorized to cause such excavation,
license to enter upon the demised premises for the purposes of doing such work
as said person shall deem necessary to preserve the wall or the building of
which demised premises form a part from injury or damage and to support the same
by proper foundations without any claim for damages or indemnity against Owner,
or diminution or abatement of rent.
RULES AND REGULATIONS: 36. Tenant and Tenant's servants, employees, agents,
visitors, and licensees shall observe faithfully, and comply strictly with, the
Rules and Regulations annexed hereto and such other and further reasonable Rules
and Regulations as Owner or Owner's agents may from time to time adopt. Notice
of any additional rules or regulations shall be given in such manner as Owner
may elect. In case Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter made or adopted by Owner or Owner's agents, the parties
hereto agree to submit the question of the reasonableness of such Rule or
Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within fifteen (15) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against any
other tenant and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.
GLASS: 37. Owner shall replace, at the expense of the Tenant, any and all plate
and other glass damaged or broken from any cause whatsoever in and about the
demised premises. Owner may insure, and keep insured, at Tenant's expense, all
plate and other glass in the demised premises for and in the name of Owner.
Bills for the premiums therefor shall be rendered by Owner to Tenant at such
times as Owner may elect, and shall be due from, and payable by, Tenant when
rendered, and the amount thereof shall be deemed to be, and be paid, as
additional rent.
ESTOPPEL CERTIFICATE: 38. Tenant, at any time, and from time to time, upon at
least 10 days' prior notice by Owner, shall execute, acknowledge and deliver to
Owner, and/or to any other person, firm or corporation specified by Owner, a
statement certifying that this Lease is unmodified in full force and effect (or,
if there have been modifications, that the same is in full force and effect as
modified and stating the modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying each such default.
39. DIRECTORY BOARD LISTING: If, at the request of and as accommodation to
Tenant, Owner shall place upon the directory board in the lobby of the building,
one or more names of persons other than Tenant, such directory board listing
shall not be construed as the consent by Owner to an assignment or subletting by
Tenant to such person or persons.
SUCCESSORS AND ASSIGNS: 40. The covenants, conditions and agreements contained
in this lease shall bind and inure to the benefit of Owner and Tenant and their
respective heirs, distributees, executors, administrators, successors, and
except as otherwise provided in this lease, their assigns. Tenant shall look
only to Owner's estate and interest in the land and building for the
satisfaction of Tenant's remedies for the collection of a judgement (or other
judicial process) against Owner in the event of any default by Owner hereunder,
and no other property or assets of such Owner (or any partner, member, officer
or director thereof, disclosed or undisclosed), shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this lease, the relationship of Owner and
Tenant hereunder, or Tenant's use and occupancy of the demised premises.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
Witness for Owner: S.N.Y., INC.
-------------------------
- ------------------------------- /s/ Richard J. Sirota
-------------------------[L.S.]
Witness for Tenant: KWIK INTERNATIONAL COLOR , LTD.
-------------------------
- ------------------------------- /s/ Walter Berkower
-------------------------[L.S.]
<PAGE>
ACKNOWLEDGMENTS
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of New York
On this 1st day of March, 1997, before me personally came Walter
Berkower to me known, who being by me duly sworn, did depose and say that he
resides in that he is the Secretary/Treasurer of Kwik International Color Ltd.
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
/s/Cheryl Ann C. Meredith
------------------------------
Notary Public, State of New York
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally came
to be known and known to me to be the individual
described in and who, as TENANT, executed the foregoing instrument and
acknowledged to me that he executed the same.
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash cloths and plumbing fixtures shall not be used
for any purposes other than those for which they were designed or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors of halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the inside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any
part of the demised premises or the building of which they form a part. No
boring, cutting or stringing of wires shall be permitted, except with the prior
written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the premises only on
the freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. No Tenant shall obtain for use upon the demised premises ice,
drinking water, towel and other similar services, or accept barbering or
bootblacking services in the demised premises, except from persons authorized by
Owner, and at hours and under regulations fixed by Owner. Canvassing, soliciting
and peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building all persons
who do not present a pass to the building signed by Owner. Owner will furnish
passes to persons for whom any Tenant requests same in writing. Each Tenant
shall be responsible for all persons for whom he requests such pass and shall be
liable to Owner for all acts of such persons. Notwithstanding the foregoing,
Owner shall not be required to allow Tenant or any person to enter or remain in
the building, except on business days from 8:00 a.m. to 6:00 p.m. and on
Saturdays from 8:00 a.m. to 1:00 p.m. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by any
Tenant which in Owner's opinion, tends to impair the reputation of the building
or its desirability as a loft building, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, or explosive, or hazardous
fluid, material, chemical or substance, or cause or permit any odors of cooking
or other processes, or any unusual or other objectionable odors to permeate in
or emanate from the demised premises.
13. Tenant shall not use the demised premises in a manner which
disturbs or interferes with other Tenants in the beneficial use of their
premises.
<PAGE>
Address
Premises
TO
STANDARD FORM OF
LOFT
LEASE
THE REAL ESTATE BOARD OF NEW YORK, INC.
(C)Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
Dated 19
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Rent Per Year
Rent Per Month
Term
From
To
Drawn by
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Checked by
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Entered by
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Approved by
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2/94
STANDARD FORM OF LOFT LEASE The Real Estate Board of
New York, Inc.
AGREEMENT OF LEASE, made as of this 1ST day of MARCH 1997, between S.N.Y.,
INC., a New York corporation having an office at 229 W. 28th St, NY, party of
the first part, hereinafter referred to as OWNER, and KWIK INTERNATIONAL COLOR,
LTD., a New York corporation, having an office at 229 W. 28th St., NY, NY 10001
party of the second part, hereinafter referred to as TENANT,
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from
Owner a portion of the Seventh Floor, known as Room 706-714 and 707-713 with
square footage of approximately 6,900 square feet. in the building known as 229
West 28th Street in the Borough of Manhattan, City of New York, for the term of
Twelve (12) years (or until such term shall sooner cease and expire as
hereinafter provided) to commence on the 1st day of March nineteen hundred and
ninety-seven, and to end on the 28th day of February, Two Thousand Nine both
dates inclusive, at an annual rental rate of One Hundred Ten Thousand Four
Hundred ($110,400) Dollars from March 1, 1997 to February 28, 2003; One Hundred
Seventeen Thousand Three Hundred ($117,300) Dollars from March 1, 2003 to
February 28, 2009.
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first monthly installment(s) on the execution hereof (unless this lease
be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
RENT: 1. Tenant shall pay the rent as above and as hereinafter provided.
OCCUPANCY: 2. Tenant shall use and occupy demised premises for printing and
graphic services provided such use is in accordance with the certificate of
occupancy for the building, if any, and for no other purpose.
ALTERATIONS: 3. Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, tenant, at Tenant's
expense, may make alterations, installations, additions or improvements which
are nonstructural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
at its expense, before making any alterations, additions, installations or
improvements obtain all permits, approval and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner. Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have been done
for, or materials furnished to, Tenant, whether or not done pursuant to this
article, the same shall be discharged by Tenant within thirty days thereafter,
at Tenant's expense, by payment or filing the bond required by law or otherwise.
All fixtures and all paneling, partitions, railings and like installations,
installed in the premises at any time, either by Tenant or by Owner on Tenant's
behalf, shall, upon installation, become the property of Owner and shall remain
upon and be surrendered with the demised premises unless Owner, by notice to
Tenant no later than twenty days prior to the date fixed as the termination of
this lease, elects to relinquish Owner's right thereto and to have them removed
by Tenant, in which event the same shall be removed from the demised premises by
Tenant prior to the expiration of the lease, at Tenant's expense. Nothing in
this Article shall be construed to give Owner title to or to prevent Tenant's
removal of trade fixtures, moveable office furniture and equipment, but upon
removal of any such from the premises or upon removal of other installations as
may be required by Owner, Tenant shall immediately and at its expense, repair
and restore the premises to the condition existing prior to installation and
repair any damage to the demised premises or the building due to such removal.
All property permitted or required to be removed by Tenant at the end of the
term remaining in the premises after Tenant's removal shall be deemed abandoned
and may, at the election of Owner, either be retained as Owner's property or
removed from the premises by Owner, at Tenant's expense.
REPAIRS: 4. Owner shall maintain and repair the exterior of and the public
portions of the building. Tenant shall, throughout the term of this lease, take
good care of the demised premises including the bathrooms and lavatory
facilities (if the demised premises encompass the entire floor of the building)
and the windows and window frames and, the fixtures and appurtenances therein
and at Tenant's sole cost and expense promptly make all repairs thereto and to
the building, whether structural or non-structural in nature, caused by or
resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the original work or construction. If Tenant fails, after ten days
notice, to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Owner at the expense of Tenant, and the
expenses thereof incurred by Owner shall be collectible, as additional rent,
after rendition of a bill or statement therefor. If the demised premises be or
become infested with vermin, Tenant shall, at its expense, cause the same to be
exterminated. Tenant shall give Owner prompt notice of any defective condition
in any plumbing, heating system or electrical lines located in the demised
premises and following such notice, Owner shall remedy the condition with due
diligence, but at the expense of Tenant, if repairs are necessitated by damage
or injury attributable to Tenant, Tenant's servants, agents, employees, invitees
or licensees as aforesaid. Except as specifically provided in Article 9 or
elsewhere in this lease, there shall be no allowance to the Tenant for a
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. It is specifically
agreed that Tenant shall not be entitled to any set off or reduction of rent by
reason of any failure of Owner to comply with the covenants of this or any other
article of this lease. Tenant agrees that Tenant's sole remedy at law in such
instance will be by way of any action for damages for breach of contract. The
provisions of this Article 4 with respect to the making of repairs shall not
apply in the case of fire or other casualty with regard to which Article 9
hereof shall apply.
WINDOW: 5. Tenant will not clean nor require, permit, suffer or allow any window
in the demised premises to be cleaned from the outside in violation of Section
202 of the New York State Labor Law or any other applicable law or of the Rules
of the Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
REQUIREMENTS OF LAW, FIRE INSURANCE: 6. Prior to the commencement of the lease
term, if Tenant is then in possession, and at all times thereafter Tenant shall,
at Tenant's sole cost and expense, promptly comply with all present and future
laws, orders and regulations of all state, federal, municipal and local
governments, departments, commissions and boards and any direction of any public
officer pursuant to law, and all orders, rules and regulations of the New York
Board of Fire Underwriters, or the Insurance Services Office, or any similar
body which shall impose any violation, order or duty upon Owner or Tenant with
respect to the demised premises, whether or not arising out of Tenant's use or
manner of use thereof, or, with respect to the building, if arising out of
Tenant's use or manner of use of the demised premises of the building (including
the use permitted under the lease). Except as provided in Article 30 hereof,
nothing herein shall require Tenant to make structural repairs or alterations
unless Tenant has, by its manner of use of the demised premises or method of
operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant shall not do or
<PAGE>
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. If by reason of failure to comply with the foregoing the
fire insurance rate shall, at the beginning of this lease or at any time
thereafter, be higher than it otherwise would be, then Tenant shall reimburse
Owner, as additional rent hereunder, for that portion of all fire insurance
premiums thereafter paid by Owner which shall have been charged because of such
failure by Tenant. In any action or proceeding wherein Owner and Tenant are
parties, a schedule or "make-up" or rate for the building or demised premises
issued by a body making fire insurance rates applicable to said premises shall
be conclusive evidence of the facts therein stated and of the several items and
charges in the fire insurance rates then applicable to said premises. Tenant
shall not place a load upon any floor of the demised premises exceeding the
floor load per square foot area which it was designed to carry and which is
allowed by law. Owner reserves the right to prescribe the weight and position of
all safes, business machines and mechanical equipment. Such installations shall
be placed and maintained by Tenant, at Tenant's expense, in settings sufficient,
in Owner's judgement, to absorb and prevent vibration, noise and annoyance.
SUBORDINATION: 7. This lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which demised premises are a part and to all
renewals, modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
TENANT'S LIABILITY INSURANCE PROPERTY LOSS, DAMAGE INDEMNITY: 8. Owner or its
agents shall not be liable for any damage to property of Tenant or of others
entrusted to employees of the building, nor for loss of or damage to any
property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees; Owner
or its agents shall not be liable for any damage caused by other tenants or
persons in, upon or about said building or caused by operations in connection of
any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitee or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
DESTRUCTION, FIRE AND OTHER CASUALTY: 9. (a) If the demised premises or any part
thereof shall be damaged by fire or other casualty, Tenant shall give immediate
notice thereof to Owner and this lease shall continue in full force and effect
except as hereinafter set forth. (b) If the demised premises are partially
damaged or rendered partially unusable by fire or other casualty, the damages
thereto shall be repaired by and at the expense of Owner and the rent and other
items of additional rent, until such repair shall be substantially completed,
shall be apportioned from the day following the casualty according to the part
of the premises which is usable. (c) If the demised premises are totally damaged
or rendered wholly unusable by fire or other casualty, then the rent and other
items of additional rent as hereinafter expressly provided shall be
proportionately paid up to the time of the casualty and thenceforth shall cease
until the date when the premises shall have been repaired and restored by Owner
(or sooner occupied in part by Tenant then rent shall be apportioned as provided
in subsection (b) above), subject to Owner's right to elect not to restore the
same as hereinafter provided. (d) If the demised premises are rendered wholly
unusable or (whether or not the demised premises are damaged in whole or in
part) if the building shall be so damaged that Owner shall decide to demolish it
or to rebuild it, then, in any of such events, Owner may elect to terminate this
lease by written notice to Tenant, given within 90 days after such fire or
casualty, or 30 days after adjustment of the insurance claim for such fire or
casualty, whichever is sooner, specifying a date for the expiration of the
lease, which date shall not be more than 60 days after the giving of such
notice, and upon the date specified in such notice the term of this lease shall
expire as fully and completely as if such date were the date set forth above for
the termination of this lease and Tenant shall forthwith quit, surrender and
vacate the premises without prejudice however, to Owner's rights and remedies
against Tenant under the lease provisions in effect prior to such termination,
and any rent owing shall be paid up to such date and any payments of rent made
by Tenant which were on account of any period subsequent to such date shall be
returned to Tenant. Unless Owner shall serve a termination notice as provided
for herein, Owner shall make the repairs and restorations under the conditions
of (b) and (c) hereof, with all reasonable expedition, subject to delays due to
adjustment of insurance claims, labor troubles and causes beyond Owner's
control. After any such casualty, Tenant shall cooperate with Owner's
restoration by removing from the premises as promptly as reasonably possible,
all of Tenant's salvageable inventory and movable equipment, furniture, and
other property. Tenant's liability for rent shall resume five (5) days after
written notice from Owner that the premises are substantially ready for Tenant's
occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability
that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, including Owner's obligation to restore under
paragraph (b) above, each party shall look first to any insurance in its favor
before making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Owner and Tenant
each hereby releases and waives all right of recovery with respect to
subparagraphs (b), (d) and (e) above, against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The release
and waiver herein referred to shall be deemed to include any loss or damage to
the demised premises and/or to any personal property, equipment, trade fixtures,
goods and merchandise located therein. The foregoing release and waiver shall be
in force only if both releasors' insurance policies contain a clause providing
that such a release or waiver shall not invalidate the insurance. If, and to the
extent, that such waiver can be obtained only by the payment of additional
premiums, then the party benefitting from the waiver shall pay such premium
within ten days after written demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under
the provisions hereof with respect to waiver of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant's furniture and or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Owner will not be obligated to repair any damage thereto or
replace the same. (f) Tenant hereby waives the provisions of Section 227 of the
Real Property Law and agrees that the provisions of this article shall govern
and control in lieu thereof.
EMINENT DOMAIN: 10. If the whole or any part of the demised premises shall be
acquired or condemned by Eminent Domain for any public or quasi public use or
purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease. Tenant shall
have the right to make an independent claim to the condemning authority for the
value of Tenant's moving expenses and personal property, trade fixtures and
equipment, provided Tenant is entitled pursuant to the terms of the lease to
remove such property, trade fixtures and equipment at the end of the term and
provided further such claim does not reduce Owner's award.
ASSIGNMENT, MORTGAGE, ETC.: 11. Tenant, for itself, its heirs, distributees,
executors, administrators, legal representatives, successors and assigns,
expressly covenants that it shall not assign, mortgage or encumber this
agreement, nor underlet, or suffer or permit the demised premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance. Transfer of the majority of the stock of a corporate Tenant or the
majority partnership interest of a partnership Tenant shall be deemed an
assignment. If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
ELECTRIC CURRENT: 12. Rates and conditions in respect to submetering or rent
inclusion, as the case may be, to be added in RIDER attached hereto. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no wise make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
ACCESS TO PREMISES: 13. Owner or Owner's agents shall have the right (but shall
not be obligated) to enter the demised premises in any emergency at any time,
and, at other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to any portion of the building or which Owner may elect to perform in
the premises after Tenant's failure to make repairs or perform any work which
Tenant is obligated to perform under this lease, or for the purpose of complying
with laws, regulations and other directions of governmental authorities. Tenant
shall permit Owner to use and maintain and replace pipes and conduits in and
through the demised premises and to erect new pipes and conduits therein
provided, wherever possible, they are within walls or otherwise concealed. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants and may, during said six months period, place upon
<PAGE>
the demised premises the usual notices "To Let" and "For Sale" which notices
Tenant shall permit to remain thereon without molestation. If Tenant is not
present to open and permit an entry into the demised premises, Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided reasonable care is exercised to safeguard
Tenant's property, such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of the term Tenant shall have removed all or
substantially all of Tenant's property therefrom. Owner may immediately enter,
alter, renovate or redecorate the demised premises without limitation or
abatement of rent, or incurring liability to Tenant for any compensation and
such act shall have no effect on this lease or Tenant's obligation hereunder.
VAULT, VAULT SPACE, AREA: 14. No Vaults, vault space or area, whether or not
enclosed or covered, not within the property line of the building is leased
hereunder anything contained in or indicated on any sketch, blue print or plan,
or anything contained elsewhere in this lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant, if used by
Tenant, whether or not specifically leased hereunder.
OCCUPANCY: 15. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the building of which the
demised premises are a part. Tenant has inspected the premises and accepts them
as is, subject to the riders annexed hereto with respect to Owner's work, if
any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record. If any governmental license or permit shall be required for the
proper and lawful conduct of Tenant's business, Tenant shall be responsible for
and shall procure and maintain such license or permit.
BANKRUPTCY: 16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the debtor; or (2) the making by Tenant
of an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interests in this lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rental reserved hereunder the for unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
DEFAULT: 17. (1) If Tenant defaults in fulfilling any of the covenants of this
lease other than the covenants for the payment of rent or additional rent; or if
the demised premises becomes vacant or deserted "or if this lease be rejected
under ss. 235 of Title 11 of the U.S. Code (bankruptcy code);" or if any
execution or attachment shall be issued against Tenant or any of Tenant's
property whereupon the demised premises shall be taken or occupied by someone
other than Tenant; or if Tenant shall make default with respect to any other
lease between Owner and Tenant; or if Tenant shall have failed, after five (5)
days written notice, to redeposit with Owner any portion of the security
deposited hereunder which Owner has applied to the payment of any rent and
additional rent due and payable hereunder or failed to move into or take
possession of the premises within thirty (30) days after the commencement of the
term of this lease, of which fact Owner shall be the sole judge; then in any one
or more of such events, upon Owner serving a written fifteen (15) days notice
upon Tenant specifying the nature of said default and upon the expiration of
said fifteen (15) days, if Tenant shall have failed to comply with or remedy
such default, or if the said default or omission complained of shall be of a
nature that the same cannot be completely cured or remedied within said fifteen
(15) day period, and if Tenant shall not have diligently commenced during such
default within such fifteen (15) day period, and shall not thereafter with
reasonable diligence and in good faith, proceed to remedy or cure such default,
then Owner may serve a written five (5) days' notice of cancellation of this
lease upon Tenant, and upon the expiration of said five (5) days this lease and
the term thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the demised premises to Owner but Tenant shall remain liable
as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given,
and the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
REMEDIES OF OWNER AND WAIVER OF REDEMPTION: 18. In case of any such default,
re-entry, expiration and/or dispossess by summary proceedings or other wise, (a)
the rent, and additional rent, shall become due thereupon and be paid up to the
time of such re-entry, dispossess and/or expiration, (b) Owner may re-let the
premises or any part or parts thereof, either in the name of Owner or otherwise,
for a term or terms, which may at Owner's option be less than or exceed the
period which would otherwise have constituted the balance of the term of this
lease and may grant concessions or free rent or charge a higher rental than that
in this lease, (c) Tenant or the legal representatives of Tenant shall also pay
Owner as liquidated damages for the failure of Tenant to observe and perform
said Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and or covenanted to be paid and the net amount, if any, of the rents
collected on account of the subsequent lease or leases of the demised premises
for each month of the period which would otherwise have constituted the balance
of the term of this lease. The failure of Owner to re-let the premises or any
part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency such expenses as Owner may incur in connection with re-letting, such
as legal expenses, reasonable attorneys' fees, brokerage, advertising and for
keeping the demised premises in good order or for preparing the same for
re-letting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent day specified in this lease and any suit brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Owner to collect the deficiency for any subsequent month by a similar
proceeding. Owner, in putting the demised premises in good order or preparing
the same for re-rental may, at Owner's option, make such alterations, repairs,
replacements, and/or decorations in the demised premises as Owner, in Owner's
sole judgment, considers advisable and necessary for the purpose of re-letting
the demised premises, and the making of such alterations, repairs, replacements,
and/or decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
FEES AND EXPENSES: 19. If Tenant shall default in the observance or performance
of any term or covenant on Tenant's part to be observed or performed under or by
virtue of any of the terms or provisions in any article of this lease, after
notice if required and upon expiration of any applicable grace period if any,
(except in an emergency), then, unless otherwise provided elsewhere in this
lease, Owner may immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in connection with the
foregoing or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment
of money, including but not limited to reasonable attorney's fees, in
instituting, prosecuting or defending any action or proceedings, and prevails in
any such action or proceeding, then Tenant will reimburse Owner for such sums so
paid or obligations incurred with interest and costs. The foregoing expenses
incurred by reason of Tenant's default shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Owner within ten (10) days of rendition
of any bill or statement to Tenant therefor. If Tenant's lease term shall have
expired at the time of making of such expenditures or incurring of such
obligations, such sums shall be recoverable by Owner as damages.
BUILDING ALTERATIONS AND MANAGEMENT: 20. Owner shall have the right at any time
without the same constituting an eviction and without incurring liability to
Tenant therefor to change the arrangement and or location of public entrances,
passageways, doors, doorways, corridors, elevators, stairs, toilets or other
public parts of the building and to change the name, number or designation by
which the building may be known. There shall be no allowance to Tenant for
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner or other
Tenant making any repairs in the building or any such alterations, additions and
improvements. Furthermore, Tenant shall not have any claim against Owner by
reason of Owner's imposition of any controls of the manner of access to the
building by Tenant's social or business visitors as the Owner may deem necessary
for the security of the building and its occupants.
<PAGE>
NO REPRESENTATIONS BY OWNER: 21. Neither Owner nor Owner's agents have made any
representations or promises with respect to the physical condition of the
building, the land upon which it is erected or the demised premises, the rents,
leases, expenses of operation or any other matter or thing affecting or related
to the demised premises or the building except as herein expressly set forth and
no rights, easements or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in the provisions of this lease. Tenant
has inspected the building and the demised premises and is thoroughly acquainted
with their condition and agrees to take the same "as is" on the date possession
is tendered and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
END OF TERM: 22. Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Owner the demised premises, broom
clean, in good order and condition, ordinary wear and damages which Tenant is
not required to repair as provided elsewhere in this lease excepted, and Tenant
shall remove all its property from the demised premises. Tenant's obligations to
observe or perform this covenant shall survive the expiration or other
termination of this lease. If the last day of the term of this Lease or any
renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
QUIET ENJOYMENT: 23. Owner covenants and agrees with Tenant that upon Tenant
paying the rent and additional rent and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 34 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
FAILURE TO GIVE POSSESSION: 24. If Owner is unable to give possession of the
demised premises on the date of the commencement of the term hereof, because of
the holding-over or retention of possession of any tenant, undertenant or
occupants or if the demised premises are located in a building being
constructed, because such building has not been sufficiently completed to make
the premises ready for occupancy or because of the fact that a certificate of
occupancy has not been procured or if Owner has not completed any work required
to be performed by Owner, or for any other reason, Owner shall not be subject to
any liability for failure to give possession on said date and the validity of
the lease shall not be impaired under such circumstances, nor shall the same be
construed in any wise to extend the term of this lease, but the rent payable
hereunder shall be abated (provided Tenant is not responsible for Owner's
inability to obtain possession or complete any work required) until after Owner
shall have given Tenant notice that Owner is able to deliver possession in the
condition required by this lease. If permission is given to Tenant to enter into
the possession of the demised premises or to occupy premises other than the
demised premises prior to the date specified as the commencement of the term of
this lease, Tenant covenants and agrees that such possession and/or occupancy
shall be deemed to be under all the terms, covenants, conditions and provisions
of this lease, except the obligation to pay the fixed annual rent set forth in
page one of this lease. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of Section
223-a of the New York Real Property Law.
NO WAIVER: 25. The failure of Owner to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of this lease or
of any of the Rules or Regulations, set forth or hereafter adopted by Owner,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Owner of rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Owner unless such waiver be in writing
signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this lease provided. All checks tendered to Owner as and for the
rent of the demised premises shall be deemed payments for the account of Tenant.
Acceptance by Owner of rent from anyone other than Tenant shall not be deemed to
operate as an attornment to Owner by the payor of such rent or as a consent by
Owner to an assignment or subletting by Tenant of the demised premises to such
payor, or as a modification of the provisions of this lease. No act or thing
done by Owner or Owner's agents during the term hereby demised shall be deemed
an acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of Owner
or Owner's agent shall have any power to accept the keys of said premises prior
to the termination of the lease and the delivery of keys to any such agent or
employee shall not operate as a termination of the lease or a surrender of the
premises.
WAIVER OF TRIAL BY JURY: 26. It is mutually agreed by and between Owner and
Tenant that the respective parties hereto shall and they hereby do waive trial
by jury in any action [first several words of first line of column 2 are cut off
photocopy] brought by either of the parties hereto against the other (except for
personal injury or property damage) on any matters whatsoever arising out of or
in any way connected with this lease, the relationship of Owner and Tenant,
Tenant's use of or occupancy of said premises, and any emergency statutory or
any other statutory remedy. It is further mutually agreed that in the event
Owner commences any proceeding or action for possession including a summary
proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding including
a counterclaim under Article 4 except for statutory mandatory counterclaims.
INABILITY TO PERFORM: 27. This Lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in no wise be affected, impaired or excused
because Owner is unable to fulfill any of its obligations under this lease or to
supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repair, additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment, fixtures or other materials if Owner is prevented or delayed from
doing so by reason of strike or labor troubles or any cause whatsoever beyond
Owner's sole control including, but not limited to, government preemption or
restrictions or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions
which have been or are affected, either directly or indirectly, by war or other
emergency.
BILLS AND NOTICES: 28. Except as otherwise in this lease provided, a bill
statement, notice or communication which Owner may desire or be required to give
to Tenant, shall be deemed sufficiently given or rendered if, in writing,
delivered to Tenant personally or sent by registered or certified mail addressed
to Tenant at the building of which the demised premises form a part or at the
last known residence address or business address of Tenant or left at any of the
aforesaid premises addressed to Tenant, and the time of the rendition of such
bill or statement and of the giving of such notice or communication shall be
deemed to be the time when the same is delivered to Tenant, mailed, or left at
the premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
WATER CHARGES: 29. If Tenant requires, uses or consumes water for any purpose in
addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner
to be the sole judge) Owner may install a water meter and thereby measure
Tenant's water consumption for all purposes. Tenant shall pay Owner for the cost
of the meter and the cost of the installation, thereof and throughout the
duration of Tenant's occupancy Tenant shall keep said meter and installation
equipment in good working order and repair at Tenant's own cost and expense in
default of which Owner may cause such meter and equipment to be replaced or
repaired and collect the cost thereof from Tenant, as additional rent. Tenant
agrees to pay for water consumed, as shown on said meter as and when bills are
rendered, and on default in making such payment Owner may pay such charges and
collect the same from Tenant, as additional rent. Tenant covenants and agrees to
pay, as additional rent, the sewer rent, charge or any other tax, rent, levy or
charge which now or hereafter is assessed, imposed or a lien upon the demised
premises or the realty of which they are part pursuant to law, order or
regulation made or issued in connection with the use, consumption, maintenance
or supply of water, water system or sewage or sewage connection or system. If
the building or the demised premises or any part thereof is supplied with water
through a meter through which water is also supplied to other premises Tenant
shall pay to Owner, as additional rent, on the first day of each month,
% ($35.93) of the total meter charges as Tenant's portion.
Independently of and in addition to any of the remedies reserved to Owner
hereinabove or elsewhere in this lease, Owner may sue for and collect any monies
to be paid by Tenant or paid by Owner for any of the reasons or purposes
hereinabove set forth.
SPRINKLERS: 30. Anything elsewhere in this lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the New York Fire
Insurance Exchange or any bureau, department or official of the federal, state
or city government recommend or require the installation of a sprinkler system
or that any changes, modifications, alterations, or additional sprinkler heads
or other equipment be made or supplied in an existing sprinkler system by reason
of Tenant's business, or the location of partitions, trade fixtures, or other
contents of the demised premises, or for any other reason, or if any such
sprinkler system installations, modifications, alterations, additional sprinkler
heads or other such equipment, become necessary to prevent the imposition of a
penalty or charge against the full allowance for a sprinkler system in the fire
insurance rate set by any said Exchange or by any fire insurance company, Tenant
shall, at Tenant's expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be structural or
non-structural in nature. Tenant shall pay to Owner as additional rent the sum
of $18.00, on the first day of each month during the term of this lease, as
Tenant's portion of the contract price for sprinkler supervisory service.
ELEVATORS, HEAT, CLEANING: 31. As long as Tenant is not in default under any the
covenants of this lease beyond the applicable grace period provided in this
lease for the curing of such defaults, Owner shall: (a) provide necessary
passenger elevator facilities on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m.; (b) if freight elevator service is provided,
same shall be provided only on regular business days Monday through Friday
inclusive, and on those days only between the hours of 9 a.m. and 12 noon and
between 1 p.m. and 5 p.m.; (c) furnish heat, water and other services supplied
by Owner to the demised premises, when and as required by law, on business days
from 8 a.m. to 6 p.m. and on Saturdays from 8
<PAGE>
a.m. to 1 p.m.; (d) clean the public halls and public portions of the building
which are used in common by all tenants. Tenant shall, at Tenant's expense, keep
the demised premises, including the windows, clean and in order, to the
reasonable satisfaction of Owner, and for that purpose shall employ the person
or persons, or corporation approved by Owner. Tenant shall pay to Owner the cost
of removal of any of Tenant's refuse and rubbish from the building. Bills for
the same shall be rendered by Owner to Tenant at such time as Owner may elect
and shall be due and payable hereunder, and the amount of such bills shall be
deemed to be, and be paid as, additional rent. Tenant shall, however, have the
option of independently contracting for the removal of such rubbish and refuse
in the event that Tenant does not wish to have same done by employees of Owner.
Under such circumstances, however, the removal of such refuse and rubbish by
others shall be subject to such rules and regulations as, in the judgment of
Owner, are necessary for the proper operation of the building. Owner reserves
the right to stop service of the heating, elevator, plumbing and electric
systems, when necessary, by reason of accident, or emergency, or for repairs,
alterations, replacements or improvements, in the judgment of Owner desirable or
necessary to be made, until said repairs, alterations, replacements or
improvements shall have been completed. If the building of which the demised
premises are a part supplies manually operated elevator service, Owner may
proceed diligently with alterations necessary to substitute automatic control
elevator service without in any way affecting the obligations of Tenant
hereunder.
SECURITY: 32. Tenant has deposited with Owner the sum of $ as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the reletting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
CAPTIONS: 33. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
DEFINITIONS: 34. The term "Owner" as used in this lease means only the owner of
the fee or of the leasehold of the building, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land and building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to Owner from Tenant under this lease, in addition to the annual
rental rate. The term "business days" as used in this lease, shall exclude
Saturdays, Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.
ADJACENT EXCAVATION-SHORING: 35. If an excavation shall be made upon land
adjacent to the demised premises, or shall be authorized to be made, Tenant
shall afford to the person causing or authorized to cause such excavation,
license to enter upon the demised premises for the purposes of doing such work
as said person shall deem necessary to preserve the wall or the building of
which demised premises form a part from injury or damage and to support the same
by proper foundations without any claim for damages or indemnity against Owner,
or diminution or abatement of rent.
RULES AND REGULATIONS: 36. Tenant and Tenant's servants, employees, agents,
visitors, and licensees shall observe faithfully, and comply strictly with, the
Rules and Regulations annexed hereto and such other and further reasonable Rules
and Regulations as Owner or Owner's agents may from time to time adopt. Notice
of any additional rules or regulations shall be given in such manner as Owner
may elect. In case Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter made or adopted by Owner or Owner's agents, the parties
hereto agree to submit the question of the reasonableness of such Rule or
Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within fifteen (15) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against any
other tenant and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.
GLASS: 37. Owner shall replace, at the expense of the Tenant, any and all plate
and other glass damaged or broken from any cause whatsoever in and about the
demised premises. Owner may insure, and keep insured, at Tenant's expense, all
plate and other glass in the demised premises for and in the name of Owner.
Bills for the premiums therefor shall be rendered by Owner to Tenant at such
times as Owner may elect, and shall be due from, and payable by, Tenant when
rendered, and the amount thereof shall be deemed to be, and be paid, as
additional rent.
ESTOPPEL CERTIFICATE: 38. Tenant, at any time, and from time to time, upon at
least 10 days' prior notice by Owner, shall execute, acknowledge and deliver to
Owner, and/or to any other person, firm or corporation specified by Owner, a
statement certifying that this Lease is unmodified in full force and effect (or,
if there have been modifications, that the same is in full force and effect as
modified and stating the modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying each such default.
39. DIRECTORY BOARD LISTING: If, at the request of and as accommodation to
Tenant, Owner shall place upon the directory board in the lobby of the building,
one or more names of persons other than Tenant, such directory board listing
shall not be construed as the consent by Owner to an assignment or subletting by
Tenant to such person or persons.
SUCCESSORS AND ASSIGNS: 40. The covenants, conditions and agreements contained
in this lease shall bind and inure to the benefit of Owner and Tenant and their
respective heirs, distributees, executors, administrators, successors, and
except as otherwise provided in this lease, their assigns. Tenant shall look
only to Owner's estate and interest in the land and building for the
satisfaction of Tenant's remedies for the collection of a judgement (or other
judicial process) against Owner in the event of any default by Owner hereunder,
and no other property or assets of such Owner (or any partner, member, officer
or director thereof, disclosed or undisclosed), shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this lease, the relationship of Owner and
Tenant hereunder, or Tenant's use and occupancy of the demised premises.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
Witness for Owner: S.N.Y., INC.
-------------------------
- ------------------------------- /s/ Richard J. Sirota
-------------------------[L.S.]
Witness for Tenant: KWIK INTERNATIONAL COLOR , LTD.
-------------------------
- ------------------------------- /s/ Walter Berkower
-------------------------[L.S.]
<PAGE>
ACKNOWLEDGMENTS
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of New York
On this 1st day of March, 1997, before me personally came Walter
Berkower to me known, who being by me duly sworn, did depose and say that he
resides in that he is the Secretary/Treasurer of Kwik International Color Ltd.
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
/s/Cheryl Ann C. Meredith
------------------------------
Notary Public, State of New York
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally came
to be known and known to me to be the individual
described in and who, as TENANT, executed the foregoing instrument and
acknowledged to me that he executed the same.
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash cloths and plumbing fixtures shall not be used
for any purposes other than those for which they were designed or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors of halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the inside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any
part of the demised premises or the building of which they form a part. No
boring, cutting or stringing of wires shall be permitted, except with the prior
written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the premises only on
the freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. No Tenant shall obtain for use upon the demised premises ice,
drinking water, towel and other similar services, or accept barbering or
bootblacking services in the demised premises, except from persons authorized by
Owner, and at hours and under regulations fixed by Owner. Canvassing, soliciting
and peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building all persons
who do not present a pass to the building signed by Owner. Owner will furnish
passes to persons for whom any Tenant requests same in writing. Each Tenant
shall be responsible for all persons for whom he requests such pass and shall be
liable to Owner for all acts of such persons. Notwithstanding the foregoing,
Owner shall not be required to allow Tenant or any person to enter or remain in
the building, except on business days from 8:00 a.m. to 6:00 p.m. and on
Saturdays from 8:00 a.m. to 1:00 p.m. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by any
Tenant which in Owner's opinion, tends to impair the reputation of the building
or its desirability as a loft building, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, or explosive, or hazardous
fluid, material, chemical or substance, or cause or permit any odors of cooking
or other processes, or any unusual or other objectionable odors to permeate in
or emanate from the demised premises.
13. Tenant shall not use the demised premises in a manner which
disturbs or interferes with other Tenants in the beneficial use of their
premises.
<PAGE>
Address
Premises
TO
STANDARD FORM OF
LOFT
LEASE
THE REAL ESTATE BOARD OF NEW YORK, INC.
(C)Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
Dated 19
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Rent Per Year
Rent Per Month
Term
From
To
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Entered by
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Approved by
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2/94
STANDARD FORM OF LOFT LEASE The Real Estate Board of
New York, Inc.
AGREEMENT OF LEASE, made as of this 1ST day of MARCH 1997, between S.N.Y.,
INC., a New York corporation having an office at 229 W. 28th St, NY, party of
the first part, hereinafter referred to as OWNER, and KWIK INTERNATIONAL COLOR,
LTD., a New York corporation, having an office at 229 W. 28th St., NY, NY 10001
party of the second part, hereinafter referred to as TENANT,
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from
Owner the entire eighth floor in the building known as 229 West 28th Street in
the Borough of Manhattan, City of New York, for the term of Twelve (12) years
(or until such term shall sooner cease and expire as hereinafter provided) to
commence on the 1st day of March nineteen hundred and ninety-seven, and to end
on the 28th day of February, Two Thousand Nine both dates inclusive, at an
annual rental rate of One Hundred Eighty Four Thousand ($184,000) Dollars from
March 1, 1997 to February 28, 2003; One Hundred Ninety Five Thousand Five
Hundred ($195,500) Dollars from March 1, 2003 to February 28, 2009.
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first monthly installment(s) on the execution hereof (unless this lease
be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
RENT: 1. Tenant shall pay the rent as above and as hereinafter provided.
OCCUPANCY: 2. Tenant shall use and occupy demised premises for printing and
graphic services provided such use is in accordance with the certificate of
occupancy for the building, if any, and for no other purpose.
ALTERATIONS: 3. Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, tenant, at Tenant's
expense, may make alterations, installations, additions or improvements which
are nonstructural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
at its expense, before making any alterations, additions, installations or
improvements obtain all permits, approval and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner. Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have been done
for, or materials furnished to, Tenant, whether or not done pursuant to this
article, the same shall be discharged by Tenant within thirty days thereafter,
at Tenant's expense, by payment or filing the bond required by law or otherwise.
All fixtures and all paneling, partitions, railings and like installations,
installed in the premises at any time, either by Tenant or by Owner on Tenant's
behalf, shall, upon installation, become the property of Owner and shall remain
upon and be surrendered with the demised premises unless Owner, by notice to
Tenant no later than twenty days prior to the date fixed as the termination of
this lease, elects to relinquish Owner's right thereto and to have them removed
by Tenant, in which event the same shall be removed from the demised premises by
Tenant prior to the expiration of the lease, at Tenant's expense. Nothing in
this Article shall be construed to give Owner title to or to prevent Tenant's
removal of trade fixtures, moveable office furniture and equipment, but upon
removal of any such from the premises or upon removal of other installations as
may be required by Owner, Tenant shall immediately and at its expense, repair
and restore the premises to the condition existing prior to installation and
repair any damage to the demised premises or the building due to such removal.
All property permitted or required to be removed by Tenant at the end of the
term remaining in the premises after Tenant's removal shall be deemed abandoned
and may, at the election of Owner, either be retained as Owner's property or
removed from the premises by Owner, at Tenant's expense.
REPAIRS: 4. Owner shall maintain and repair the exterior of and the public
portions of the building. Tenant shall, throughout the term of this lease, take
good care of the demised premises including the bathrooms and lavatory
facilities (if the demised premises encompass the entire floor of the building)
and the windows and window frames and, the fixtures and appurtenances therein
and at Tenant's sole cost and expense promptly make all repairs thereto and to
the building, whether structural or non-structural in nature, caused by or
resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the original work or construction. If Tenant fails, after ten days
notice, to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Owner at the expense of Tenant, and the
expenses thereof incurred by Owner shall be collectible, as additional rent,
after rendition of a bill or statement therefor. If the demised premises be or
become infested with vermin, Tenant shall, at its expense, cause the same to be
exterminated. Tenant shall give Owner prompt notice of any defective condition
in any plumbing, heating system or electrical lines located in the demised
premises and following such notice, Owner shall remedy the condition with due
diligence, but at the expense of Tenant, if repairs are necessitated by damage
or injury attributable to Tenant, Tenant's servants, agents, employees, invitees
or licensees as aforesaid. Except as specifically provided in Article 9 or
elsewhere in this lease, there shall be no allowance to the Tenant for a
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. It is specifically
agreed that Tenant shall not be entitled to any set off or reduction of rent by
reason of any failure of Owner to comply with the covenants of this or any other
article of this lease. Tenant agrees that Tenant's sole remedy at law in such
instance will be by way of any action for damages for breach of contract. The
provisions of this Article 4 with respect to the making of repairs shall not
apply in the case of fire or other casualty with regard to which Article 9
hereof shall apply.
WINDOW: 5. Tenant will not clean nor require, permit, suffer or allow any window
in the demised premises to be cleaned from the outside in violation of Section
202 of the New York State Labor Law or any other applicable law or of the Rules
of the Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
REQUIREMENTS OF LAW, FIRE INSURANCE: 6. Prior to the commencement of the lease
term, if Tenant is then in possession, and at all times thereafter Tenant shall,
at Tenant's sole cost and expense, promptly comply with all present and future
laws, orders and regulations of all state, federal, municipal and local
governments, departments, commissions and boards and any direction of any public
officer pursuant to law, and all orders, rules and regulations of the New York
Board of Fire Underwriters, or the Insurance Services Office, or any similar
body which shall impose any violation, order or duty upon Owner or Tenant with
respect to the demised premises, whether or not arising out of Tenant's use or
manner of use thereof, or, with respect to the building, if arising out of
Tenant's use or manner of use of the demised premises of the building (including
the use permitted under the lease). Except as provided in Article 30 hereof,
nothing herein shall require Tenant to make structural repairs or alterations
unless Tenant has, by its manner of use of the demised premises or method of
operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant shall not do or
<PAGE>
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. If by reason of failure to comply with the foregoing the
fire insurance rate shall, at the beginning of this lease or at any time
thereafter, be higher than it otherwise would be, then Tenant shall reimburse
Owner, as additional rent hereunder, for that portion of all fire insurance
premiums thereafter paid by Owner which shall have been charged because of such
failure by Tenant. In any action or proceeding wherein Owner and Tenant are
parties, a schedule or "make-up" or rate for the building or demised premises
issued by a body making fire insurance rates applicable to said premises shall
be conclusive evidence of the facts therein stated and of the several items and
charges in the fire insurance rates then applicable to said premises. Tenant
shall not place a load upon any floor of the demised premises exceeding the
floor load per square foot area which it was designed to carry and which is
allowed by law. Owner reserves the right to prescribe the weight and position of
all safes, business machines and mechanical equipment. Such installations shall
be placed and maintained by Tenant, at Tenant's expense, in settings sufficient,
in Owner's judgement, to absorb and prevent vibration, noise and annoyance.
SUBORDINATION: 7. This lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which demised premises are a part and to all
renewals, modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
TENANT'S LIABILITY INSURANCE PROPERTY LOSS, DAMAGE INDEMNITY: 8. Owner or its
agents shall not be liable for any damage to property of Tenant or of others
entrusted to employees of the building, nor for loss of or damage to any
property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees; Owner
or its agents shall not be liable for any damage caused by other tenants or
persons in, upon or about said building or caused by operations in connection of
any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitee or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
DESTRUCTION, FIRE AND OTHER CASUALTY: 9. (a) If the demised premises or any part
thereof shall be damaged by fire or other casualty, Tenant shall give immediate
notice thereof to Owner and this lease shall continue in full force and effect
except as hereinafter set forth. (b) If the demised premises are partially
damaged or rendered partially unusable by fire or other casualty, the damages
thereto shall be repaired by and at the expense of Owner and the rent and other
items of additional rent, until such repair shall be substantially completed,
shall be apportioned from the day following the casualty according to the part
of the premises which is usable. (c) If the demised premises are totally damaged
or rendered wholly unusable by fire or other casualty, then the rent and other
items of additional rent as hereinafter expressly provided shall be
proportionately paid up to the time of the casualty and thenceforth shall cease
until the date when the premises shall have been repaired and restored by Owner
(or sooner occupied in part by Tenant then rent shall be apportioned as provided
in subsection (b) above), subject to Owner's right to elect not to restore the
same as hereinafter provided. (d) If the demised premises are rendered wholly
unusable or (whether or not the demised premises are damaged in whole or in
part) if the building shall be so damaged that Owner shall decide to demolish it
or to rebuild it, then, in any of such events, Owner may elect to terminate this
lease by written notice to Tenant, given within 90 days after such fire or
casualty, or 30 days after adjustment of the insurance claim for such fire or
casualty, whichever is sooner, specifying a date for the expiration of the
lease, which date shall not be more than 60 days after the giving of such
notice, and upon the date specified in such notice the term of this lease shall
expire as fully and completely as if such date were the date set forth above for
the termination of this lease and Tenant shall forthwith quit, surrender and
vacate the premises without prejudice however, to Owner's rights and remedies
against Tenant under the lease provisions in effect prior to such termination,
and any rent owing shall be paid up to such date and any payments of rent made
by Tenant which were on account of any period subsequent to such date shall be
returned to Tenant. Unless Owner shall serve a termination notice as provided
for herein, Owner shall make the repairs and restorations under the conditions
of (b) and (c) hereof, with all reasonable expedition, subject to delays due to
adjustment of insurance claims, labor troubles and causes beyond Owner's
control. After any such casualty, Tenant shall cooperate with Owner's
restoration by removing from the premises as promptly as reasonably possible,
all of Tenant's salvageable inventory and movable equipment, furniture, and
other property. Tenant's liability for rent shall resume five (5) days after
written notice from Owner that the premises are substantially ready for Tenant's
occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability
that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, including Owner's obligation to restore under
paragraph (b) above, each party shall look first to any insurance in its favor
before making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Owner and Tenant
each hereby releases and waives all right of recovery with respect to
subparagraphs (b), (d) and (e) above, against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The release
and waiver herein referred to shall be deemed to include any loss or damage to
the demised premises and/or to any personal property, equipment, trade fixtures,
goods and merchandise located therein. The foregoing release and waiver shall be
in force only if both releasors' insurance policies contain a clause providing
that such a release or waiver shall not invalidate the insurance. If, and to the
extent, that such waiver can be obtained only by the payment of additional
premiums, then the party benefitting from the waiver shall pay such premium
within ten days after written demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under
the provisions hereof with respect to waiver of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant's furniture and or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Owner will not be obligated to repair any damage thereto or
replace the same. (f) Tenant hereby waives the provisions of Section 227 of the
Real Property Law and agrees that the provisions of this article shall govern
and control in lieu thereof.
EMINENT DOMAIN: 10. If the whole or any part of the demised premises shall be
acquired or condemned by Eminent Domain for any public or quasi public use or
purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease. Tenant shall
have the right to make an independent claim to the condemning authority for the
value of Tenant's moving expenses and personal property, trade fixtures and
equipment, provided Tenant is entitled pursuant to the terms of the lease to
remove such property, trade fixtures and equipment at the end of the term and
provided further such claim does not reduce Owner's award.
ASSIGNMENT, MORTGAGE, ETC.: 11. Tenant, for itself, its heirs, distributees,
executors, administrators, legal representatives, successors and assigns,
expressly covenants that it shall not assign, mortgage or encumber this
agreement, nor underlet, or suffer or permit the demised premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance. Transfer of the majority of the stock of a corporate Tenant or the
majority partnership interest of a partnership Tenant shall be deemed an
assignment. If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
ELECTRIC CURRENT: 12. Rates and conditions in respect to submetering or rent
inclusion, as the case may be, to be added in RIDER attached hereto. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no wise make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
ACCESS TO PREMISES: 13. Owner or Owner's agents shall have the right (but shall
not be obligated) to enter the demised premises in any emergency at any time,
and, at other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to any portion of the building or which Owner may elect to perform in
the premises after Tenant's failure to make repairs or perform any work which
Tenant is obligated to perform under this lease, or for the purpose of complying
with laws, regulations and other directions of governmental authorities. Tenant
shall permit Owner to use and maintain and replace pipes and conduits in and
through the demised premises and to erect new pipes and conduits therein
provided, wherever possible, they are within walls or otherwise concealed. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants and may, during said six months period, place upon
<PAGE>
the demised premises the usual notices "To Let" and "For Sale" which notices
Tenant shall permit to remain thereon without molestation. If Tenant is not
present to open and permit an entry into the demised premises, Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided reasonable care is exercised to safeguard
Tenant's property, such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of the term Tenant shall have removed all or
substantially all of Tenant's property therefrom. Owner may immediately enter,
alter, renovate or redecorate the demised premises without limitation or
abatement of rent, or incurring liability to Tenant for any compensation and
such act shall have no effect on this lease or Tenant's obligation hereunder.
VAULT, VAULT SPACE, AREA: 14. No Vaults, vault space or area, whether or not
enclosed or covered, not within the property line of the building is leased
hereunder anything contained in or indicated on any sketch, blue print or plan,
or anything contained elsewhere in this lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant, if used by
Tenant, whether or not specifically leased hereunder.
OCCUPANCY: 15. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the building of which the
demised premises are a part. Tenant has inspected the premises and accepts them
as is, subject to the riders annexed hereto with respect to Owner's work, if
any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record. If any governmental license or permit shall be required for the
proper and lawful conduct of Tenant's business, Tenant shall be responsible for
and shall procure and maintain such license or permit.
BANKRUPTCY: 16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the debtor; or (2) the making by Tenant
of an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interests in this lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rental reserved hereunder the for unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
DEFAULT: 17. (1) If Tenant defaults in fulfilling any of the covenants of this
lease other than the covenants for the payment of rent or additional rent; or if
the demised premises becomes vacant or deserted "or if this lease be rejected
under ss. 235 of Title 11 of the U.S. Code (bankruptcy code);" or if any
execution or attachment shall be issued against Tenant or any of Tenant's
property whereupon the demised premises shall be taken or occupied by someone
other than Tenant; or if Tenant shall make default with respect to any other
lease between Owner and Tenant; or if Tenant shall have failed, after five (5)
days written notice, to redeposit with Owner any portion of the security
deposited hereunder which Owner has applied to the payment of any rent and
additional rent due and payable hereunder or failed to move into or take
possession of the premises within thirty (30) days after the commencement of the
term of this lease, of which fact Owner shall be the sole judge; then in any one
or more of such events, upon Owner serving a written fifteen (15) days notice
upon Tenant specifying the nature of said default and upon the expiration of
said fifteen (15) days, if Tenant shall have failed to comply with or remedy
such default, or if the said default or omission complained of shall be of a
nature that the same cannot be completely cured or remedied within said fifteen
(15) day period, and if Tenant shall not have diligently commenced during such
default within such fifteen (15) day period, and shall not thereafter with
reasonable diligence and in good faith, proceed to remedy or cure such default,
then Owner may serve a written five (5) days' notice of cancellation of this
lease upon Tenant, and upon the expiration of said five (5) days this lease and
the term thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the demised premises to Owner but Tenant shall remain liable
as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given,
and the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
REMEDIES OF OWNER AND WAIVER OF REDEMPTION: 18. In case of any such default,
re-entry, expiration and/or dispossess by summary proceedings or other wise, (a)
the rent, and additional rent, shall become due thereupon and be paid up to the
time of such re-entry, dispossess and/or expiration, (b) Owner may re-let the
premises or any part or parts thereof, either in the name of Owner or otherwise,
for a term or terms, which may at Owner's option be less than or exceed the
period which would otherwise have constituted the balance of the term of this
lease and may grant concessions or free rent or charge a higher rental than that
in this lease, (c) Tenant or the legal representatives of Tenant shall also pay
Owner as liquidated damages for the failure of Tenant to observe and perform
said Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and or covenanted to be paid and the net amount, if any, of the rents
collected on account of the subsequent lease or leases of the demised premises
for each month of the period which would otherwise have constituted the balance
of the term of this lease. The failure of Owner to re-let the premises or any
part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency such expenses as Owner may incur in connection with re-letting, such
as legal expenses, reasonable attorneys' fees, brokerage, advertising and for
keeping the demised premises in good order or for preparing the same for
re-letting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent day specified in this lease and any suit brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Owner to collect the deficiency for any subsequent month by a similar
proceeding. Owner, in putting the demised premises in good order or preparing
the same for re-rental may, at Owner's option, make such alterations, repairs,
replacements, and/or decorations in the demised premises as Owner, in Owner's
sole judgment, considers advisable and necessary for the purpose of re-letting
the demised premises, and the making of such alterations, repairs, replacements,
and/or decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
FEES AND EXPENSES: 19. If Tenant shall default in the observance or performance
of any term or covenant on Tenant's part to be observed or performed under or by
virtue of any of the terms or provisions in any article of this lease, after
notice if required and upon expiration of any applicable grace period if any,
(except in an emergency), then, unless otherwise provided elsewhere in this
lease, Owner may immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in connection with the
foregoing or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment
of money, including but not limited to reasonable attorney's fees, in
instituting, prosecuting or defending any action or proceedings, and prevails in
any such action or proceeding, then Tenant will reimburse Owner for such sums so
paid or obligations incurred with interest and costs. The foregoing expenses
incurred by reason of Tenant's default shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Owner within ten (10) days of rendition
of any bill or statement to Tenant therefor. If Tenant's lease term shall have
expired at the time of making of such expenditures or incurring of such
obligations, such sums shall be recoverable by Owner as damages.
BUILDING ALTERATIONS AND MANAGEMENT: 20. Owner shall have the right at any time
without the same constituting an eviction and without incurring liability to
Tenant therefor to change the arrangement and or location of public entrances,
passageways, doors, doorways, corridors, elevators, stairs, toilets or other
public parts of the building and to change the name, number or designation by
which the building may be known. There shall be no allowance to Tenant for
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner or other
Tenant making any repairs in the building or any such alterations, additions and
improvements. Furthermore, Tenant shall not have any claim against Owner by
reason of Owner's imposition of any controls of the manner of access to the
building by Tenant's social or business visitors as the Owner may deem necessary
for the security of the building and its occupants.
<PAGE>
NO REPRESENTATIONS BY OWNER: 21. Neither Owner nor Owner's agents have made any
representations or promises with respect to the physical condition of the
building, the land upon which it is erected or the demised premises, the rents,
leases, expenses of operation or any other matter or thing affecting or related
to the demised premises or the building except as herein expressly set forth and
no rights, easements or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in the provisions of this lease. Tenant
has inspected the building and the demised premises and is thoroughly acquainted
with their condition and agrees to take the same "as is" on the date possession
is tendered and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
END OF TERM: 22. Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Owner the demised premises, broom
clean, in good order and condition, ordinary wear and damages which Tenant is
not required to repair as provided elsewhere in this lease excepted, and Tenant
shall remove all its property from the demised premises. Tenant's obligations to
observe or perform this covenant shall survive the expiration or other
termination of this lease. If the last day of the term of this Lease or any
renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
QUIET ENJOYMENT: 23. Owner covenants and agrees with Tenant that upon Tenant
paying the rent and additional rent and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 34 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
FAILURE TO GIVE POSSESSION: 24. If Owner is unable to give possession of the
demised premises on the date of the commencement of the term hereof, because of
the holding-over or retention of possession of any tenant, undertenant or
occupants or if the demised premises are located in a building being
constructed, because such building has not been sufficiently completed to make
the premises ready for occupancy or because of the fact that a certificate of
occupancy has not been procured or if Owner has not completed any work required
to be performed by Owner, or for any other reason, Owner shall not be subject to
any liability for failure to give possession on said date and the validity of
the lease shall not be impaired under such circumstances, nor shall the same be
construed in any wise to extend the term of this lease, but the rent payable
hereunder shall be abated (provided Tenant is not responsible for Owner's
inability to obtain possession or complete any work required) until after Owner
shall have given Tenant notice that Owner is able to deliver possession in the
condition required by this lease. If permission is given to Tenant to enter into
the possession of the demised premises or to occupy premises other than the
demised premises prior to the date specified as the commencement of the term of
this lease, Tenant covenants and agrees that such possession and/or occupancy
shall be deemed to be under all the terms, covenants, conditions and provisions
of this lease, except the obligation to pay the fixed annual rent set forth in
page one of this lease. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of Section
223-a of the New York Real Property Law.
NO WAIVER: 25. The failure of Owner to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of this lease or
of any of the Rules or Regulations, set forth or hereafter adopted by Owner,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Owner of rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Owner unless such waiver be in writing
signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this lease provided. All checks tendered to Owner as and for the
rent of the demised premises shall be deemed payments for the account of Tenant.
Acceptance by Owner of rent from anyone other than Tenant shall not be deemed to
operate as an attornment to Owner by the payor of such rent or as a consent by
Owner to an assignment or subletting by Tenant of the demised premises to such
payor, or as a modification of the provisions of this lease. No act or thing
done by Owner or Owner's agents during the term hereby demised shall be deemed
an acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of Owner
or Owner's agent shall have any power to accept the keys of said premises prior
to the termination of the lease and the delivery of keys to any such agent or
employee shall not operate as a termination of the lease or a surrender of the
premises.
WAIVER OF TRIAL BY JURY: 26. It is mutually agreed by and between Owner and
Tenant that the respective parties hereto shall and they hereby do waive trial
by jury in any action [first several words of first line of column 2 are cut off
photocopy] brought by either of the parties hereto against the other (except for
personal injury or property damage) on any matters whatsoever arising out of or
in any way connected with this lease, the relationship of Owner and Tenant,
Tenant's use of or occupancy of said premises, and any emergency statutory or
any other statutory remedy. It is further mutually agreed that in the event
Owner commences any proceeding or action for possession including a summary
proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding including
a counterclaim under Article 4 except for statutory mandatory counterclaims.
INABILITY TO PERFORM: 27. This Lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in no wise be affected, impaired or excused
because Owner is unable to fulfill any of its obligations under this lease or to
supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repair, additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment, fixtures or other materials if Owner is prevented or delayed from
doing so by reason of strike or labor troubles or any cause whatsoever beyond
Owner's sole control including, but not limited to, government preemption or
restrictions or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions
which have been or are affected, either directly or indirectly, by war or other
emergency.
BILLS AND NOTICES: 28. Except as otherwise in this lease provided, a bill
statement, notice or communication which Owner may desire or be required to give
to Tenant, shall be deemed sufficiently given or rendered if, in writing,
delivered to Tenant personally or sent by registered or certified mail addressed
to Tenant at the building of which the demised premises form a part or at the
last known residence address or business address of Tenant or left at any of the
aforesaid premises addressed to Tenant, and the time of the rendition of such
bill or statement and of the giving of such notice or communication shall be
deemed to be the time when the same is delivered to Tenant, mailed, or left at
the premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
WATER CHARGES: 29. If Tenant requires, uses or consumes water for any purpose in
addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner
to be the sole judge) Owner may install a water meter and thereby measure
Tenant's water consumption for all purposes. Tenant shall pay Owner for the cost
of the meter and the cost of the installation, thereof and throughout the
duration of Tenant's occupancy Tenant shall keep said meter and installation
equipment in good working order and repair at Tenant's own cost and expense in
default of which Owner may cause such meter and equipment to be replaced or
repaired and collect the cost thereof from Tenant, as additional rent. Tenant
agrees to pay for water consumed, as shown on said meter as and when bills are
rendered, and on default in making such payment Owner may pay such charges and
collect the same from Tenant, as additional rent. Tenant covenants and agrees to
pay, as additional rent, the sewer rent, charge or any other tax, rent, levy or
charge which now or hereafter is assessed, imposed or a lien upon the demised
premises or the realty of which they are part pursuant to law, order or
regulation made or issued in connection with the use, consumption, maintenance
or supply of water, water system or sewage or sewage connection or system. If
the building or the demised premises or any part thereof is supplied with water
through a meter through which water is also supplied to other premises Tenant
shall pay to Owner, as additional rent, on the first day of each month,
% ($42.49) of the total meter charges as Tenant's portion.
Independently of and in addition to any of the remedies reserved to Owner
hereinabove or elsewhere in this lease, Owner may sue for and collect any monies
to be paid by Tenant or paid by Owner for any of the reasons or purposes
hereinabove set forth.
SPRINKLERS: 30. Anything elsewhere in this lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the New York Fire
Insurance Exchange or any bureau, department or official of the federal, state
or city government recommend or require the installation of a sprinkler system
or that any changes, modifications, alterations, or additional sprinkler heads
or other equipment be made or supplied in an existing sprinkler system by reason
of Tenant's business, or the location of partitions, trade fixtures, or other
contents of the demised premises, or for any other reason, or if any such
sprinkler system installations, modifications, alterations, additional sprinkler
heads or other such equipment, become necessary to prevent the imposition of a
penalty or charge against the full allowance for a sprinkler system in the fire
insurance rate set by any said Exchange or by any fire insurance company, Tenant
shall, at Tenant's expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be structural or
non-structural in nature. Tenant shall pay to Owner as additional rent the sum
of $30.00, on the first day of each month during the term of this lease, as
Tenant's portion of the contract price for sprinkler supervisory service.
ELEVATORS, HEAT, CLEANING: 31. As long as Tenant is not in default under any the
covenants of this lease beyond the applicable grace period provided in this
lease for the curing of such defaults, Owner shall: (a) provide necessary
passenger elevator facilities on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m.; (b) if freight elevator service is provided,
same shall be provided only on regular business days Monday through Friday
inclusive, and on those days only between the hours of 9 a.m. and 12 noon and
between 1 p.m. and 5 p.m.; (c) furnish heat, water and other services supplied
by Owner to the demised premises, when and as required by law, on business days
from 8 a.m. to 6 p.m. and on Saturdays from 8
<PAGE>
a.m. to 1 p.m.; (d) clean the public halls and public portions of the building
which are used in common by all tenants. Tenant shall, at Tenant's expense, keep
the demised premises, including the windows, clean and in order, to the
reasonable satisfaction of Owner, and for that purpose shall employ the person
or persons, or corporation approved by Owner. Tenant shall pay to Owner the cost
of removal of any of Tenant's refuse and rubbish from the building. Bills for
the same shall be rendered by Owner to Tenant at such time as Owner may elect
and shall be due and payable hereunder, and the amount of such bills shall be
deemed to be, and be paid as, additional rent. Tenant shall, however, have the
option of independently contracting for the removal of such rubbish and refuse
in the event that Tenant does not wish to have same done by employees of Owner.
Under such circumstances, however, the removal of such refuse and rubbish by
others shall be subject to such rules and regulations as, in the judgment of
Owner, are necessary for the proper operation of the building. Owner reserves
the right to stop service of the heating, elevator, plumbing and electric
systems, when necessary, by reason of accident, or emergency, or for repairs,
alterations, replacements or improvements, in the judgment of Owner desirable or
necessary to be made, until said repairs, alterations, replacements or
improvements shall have been completed. If the building of which the demised
premises are a part supplies manually operated elevator service, Owner may
proceed diligently with alterations necessary to substitute automatic control
elevator service without in any way affecting the obligations of Tenant
hereunder.
SECURITY: 32. Tenant has deposited with Owner the sum of $ as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the reletting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
CAPTIONS: 33. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
DEFINITIONS: 34. The term "Owner" as used in this lease means only the owner of
the fee or of the leasehold of the building, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land and building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to Owner from Tenant under this lease, in addition to the annual
rental rate. The term "business days" as used in this lease, shall exclude
Saturdays, Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.
ADJACENT EXCAVATION-SHORING: 35. If an excavation shall be made upon land
adjacent to the demised premises, or shall be authorized to be made, Tenant
shall afford to the person causing or authorized to cause such excavation,
license to enter upon the demised premises for the purposes of doing such work
as said person shall deem necessary to preserve the wall or the building of
which demised premises form a part from injury or damage and to support the same
by proper foundations without any claim for damages or indemnity against Owner,
or diminution or abatement of rent.
RULES AND REGULATIONS: 36. Tenant and Tenant's servants, employees, agents,
visitors, and licensees shall observe faithfully, and comply strictly with, the
Rules and Regulations annexed hereto and such other and further reasonable Rules
and Regulations as Owner or Owner's agents may from time to time adopt. Notice
of any additional rules or regulations shall be given in such manner as Owner
may elect. In case Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter made or adopted by Owner or Owner's agents, the parties
hereto agree to submit the question of the reasonableness of such Rule or
Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within fifteen (15) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against any
other tenant and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.
GLASS: 37. Owner shall replace, at the expense of the Tenant, any and all plate
and other glass damaged or broken from any cause whatsoever in and about the
demised premises. Owner may insure, and keep insured, at Tenant's expense, all
plate and other glass in the demised premises for and in the name of Owner.
Bills for the premiums therefor shall be rendered by Owner to Tenant at such
times as Owner may elect, and shall be due from, and payable by, Tenant when
rendered, and the amount thereof shall be deemed to be, and be paid, as
additional rent.
ESTOPPEL CERTIFICATE: 38. Tenant, at any time, and from time to time, upon at
least 10 days' prior notice by Owner, shall execute, acknowledge and deliver to
Owner, and/or to any other person, firm or corporation specified by Owner, a
statement certifying that this Lease is unmodified in full force and effect (or,
if there have been modifications, that the same is in full force and effect as
modified and stating the modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying each such default.
39. DIRECTORY BOARD LISTING: If, at the request of and as accommodation to
Tenant, Owner shall place upon the directory board in the lobby of the building,
one or more names of persons other than Tenant, such directory board listing
shall not be construed as the consent by Owner to an assignment or subletting by
Tenant to such person or persons.
SUCCESSORS AND ASSIGNS: 40. The covenants, conditions and agreements contained
in this lease shall bind and inure to the benefit of Owner and Tenant and their
respective heirs, distributees, executors, administrators, successors, and
except as otherwise provided in this lease, their assigns. Tenant shall look
only to Owner's estate and interest in the land and building for the
satisfaction of Tenant's remedies for the collection of a judgement (or other
judicial process) against Owner in the event of any default by Owner hereunder,
and no other property or assets of such Owner (or any partner, member, officer
or director thereof, disclosed or undisclosed), shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this lease, the relationship of Owner and
Tenant hereunder, or Tenant's use and occupancy of the demised premises.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
Witness for Owner: S.N.Y., INC.
-------------------------
- ------------------------------- /s/ Richard J. Sirota
-------------------------[L.S.]
Witness for Tenant: KWIK INTERNATIONAL COLOR , LTD.
-------------------------
- ------------------------------- /s/ Walter Berkower
-------------------------[L.S.]
<PAGE>
ACKNOWLEDGMENTS
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of New York
On this 1st day of March, 1997, before me personally came Walter
Berkower to me known, who being by me duly sworn, did depose and say that he
resides in that he is the Secretary/Treasurer of Kwik International Color Ltd.
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
/s/Cheryl Ann C. Meredith
------------------------------
Notary Public, State of New York
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally came
to be known and known to me to be the individual
described in and who, as TENANT, executed the foregoing instrument and
acknowledged to me that he executed the same.
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash cloths and plumbing fixtures shall not be used
for any purposes other than those for which they were designed or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors of halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the inside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any
part of the demised premises or the building of which they form a part. No
boring, cutting or stringing of wires shall be permitted, except with the prior
written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the premises only on
the freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. No Tenant shall obtain for use upon the demised premises ice,
drinking water, towel and other similar services, or accept barbering or
bootblacking services in the demised premises, except from persons authorized by
Owner, and at hours and under regulations fixed by Owner. Canvassing, soliciting
and peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building all persons
who do not present a pass to the building signed by Owner. Owner will furnish
passes to persons for whom any Tenant requests same in writing. Each Tenant
shall be responsible for all persons for whom he requests such pass and shall be
liable to Owner for all acts of such persons. Notwithstanding the foregoing,
Owner shall not be required to allow Tenant or any person to enter or remain in
the building, except on business days from 8:00 a.m. to 6:00 p.m. and on
Saturdays from 8:00 a.m. to 1:00 p.m. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by any
Tenant which in Owner's opinion, tends to impair the reputation of the building
or its desirability as a loft building, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, or explosive, or hazardous
fluid, material, chemical or substance, or cause or permit any odors of cooking
or other processes, or any unusual or other objectionable odors to permeate in
or emanate from the demised premises.
13. Tenant shall not use the demised premises in a manner which
disturbs or interferes with other Tenants in the beneficial use of their
premises.
<PAGE>
Address
Premises
TO
STANDARD FORM OF
LOFT
LEASE
THE REAL ESTATE BOARD OF NEW YORK, INC.
(C)Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
Dated 19
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Rent Per Year
Rent Per Month
Term
From
To
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Entered by
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Approved by
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2/94
STANDARD FORM OF LOFT LEASE The Real Estate Board of
New York, Inc.
AGREEMENT OF LEASE, made as of this 1ST day of MARCH 1997, between S.N.Y.,
INC., a New York corporation having an office at 229 W. 28th St, NY, party of
the first part, hereinafter referred to as OWNER, and KWIK INTERNATIONAL COLOR,
LTD., a New York corporation, having an office at 229 W. 28th St., NY, NY 10001
party of the second part, hereinafter referred to as TENANT,
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from
Owner the entire Ninth Floor in the building known as 229 West 28th Street in
the Borough of Manhattan, City of New York, for the term of Twelve (12) years
(or until such term shall sooner cease and expire as hereinafter provided) to
commence on the 1st day of March nineteen hundred and ninety-seven, and to end
on the 28th day of February, Two Thusand Nine both dates inclusive, at an annual
rental rate of One Hundred Eighty-Four Thousand ($184,000) Dollars from March 1,
1997 to February 28, 2003; One Hundred Ninety-Five Thousand Five Hundred
($195,500) Dollars from March 1, 2003 to February 28, 2009.
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first monthly installment(s) on the execution hereof (unless this lease
be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
RENT: 1. Tenant shall pay the rent as above and as hereinafter provided.
OCCUPANCY: 2. Tenant shall use and occupy demised premises for printing and
graphic services provided such use is in accordance with the certificate of
occupancy for the building, if any, and for no other purpose.
ALTERATIONS: 3. Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, tenant, at Tenant's
expense, may make alterations, installations, additions or improvements which
are nonstructural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
at its expense, before making any alterations, additions, installations or
improvements obtain all permits, approval and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner. Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have been done
for, or materials furnished to, Tenant, whether or not done pursuant to this
article, the same shall be discharged by Tenant within thirty days thereafter,
at Tenant's expense, by payment or filing the bond required by law or otherwise.
All fixtures and all paneling, partitions, railings and like installations,
installed in the premises at any time, either by Tenant or by Owner on Tenant's
behalf, shall, upon installation, become the property of Owner and shall remain
upon and be surrendered with the demised premises unless Owner, by notice to
Tenant no later than twenty days prior to the date fixed as the termination of
this lease, elects to relinquish Owner's right thereto and to have them removed
by Tenant, in which event the same shall be removed from the demised premises by
Tenant prior to the expiration of the lease, at Tenant's expense. Nothing in
this Article shall be construed to give Owner title to or to prevent Tenant's
removal of trade fixtures, moveable office furniture and equipment, but upon
removal of any such from the premises or upon removal of other installations as
may be required by Owner, Tenant shall immediately and at its expense, repair
and restore the premises to the condition existing prior to installation and
repair any damage to the demised premises or the building due to such removal.
All property permitted or required to be removed by Tenant at the end of the
term remaining in the premises after Tenant's removal shall be deemed abandoned
and may, at the election of Owner, either be retained as Owner's property or
removed from the premises by Owner, at Tenant's expense.
REPAIRS: 4. Owner shall maintain and repair the exterior of and the public
portions of the building. Tenant shall, throughout the term of this lease, take
good care of the demised premises including the bathrooms and lavatory
facilities (if the demised premises encompass the entire floor of the building)
and the windows and window frames and, the fixtures and appurtenances therein
and at Tenant's sole cost and expense promptly make all repairs thereto and to
the building, whether structural or non-structural in nature, caused by or
resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the original work or construction. If Tenant fails, after ten days
notice, to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Owner at the expense of Tenant, and the
expenses thereof incurred by Owner shall be collectible, as additional rent,
after rendition of a bill or statement therefor. If the demised premises be or
become infested with vermin, Tenant shall, at its expense, cause the same to be
exterminated. Tenant shall give Owner prompt notice of any defective condition
in any plumbing, heating system or electrical lines located in the demised
premises and following such notice, Owner shall remedy the condition with due
diligence, but at the expense of Tenant, if repairs are necessitated by damage
or injury attributable to Tenant, Tenant's servants, agents, employees, invitees
or licensees as aforesaid. Except as specifically provided in Article 9 or
elsewhere in this lease, there shall be no allowance to the Tenant for a
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. It is specifically
agreed that Tenant shall not be entitled to any set off or reduction of rent by
reason of any failure of Owner to comply with the covenants of this or any other
article of this lease. Tenant agrees that Tenant's sole remedy at law in such
instance will be by way of any action for damages for breach of contract. The
provisions of this Article 4 with respect to the making of repairs shall not
apply in the case of fire or other casualty with regard to which Article 9
hereof shall apply.
WINDOW: 5. Tenant will not clean nor require, permit, suffer or allow any window
in the demised premises to be cleaned from the outside in violation of Section
202 of the New York State Labor Law or any other applicable law or of the Rules
of the Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
REQUIREMENTS OF LAW, FIRE INSURANCE: 6. Prior to the commencement of the lease
term, if Tenant is then in possession, and at all times thereafter Tenant shall,
at Tenant's sole cost and expense, promptly comply with all present and future
laws, orders and regulations of all state, federal, municipal and local
governments, departments, commissions and boards and any direction of any public
officer pursuant to law, and all orders, rules and regulations of the New York
Board of Fire Underwriters, or the Insurance Services Office, or any similar
body which shall impose any violation, order or duty upon Owner or Tenant with
respect to the demised premises, whether or not arising out of Tenant's use or
manner of use thereof, or, with respect to the building, if arising out of
Tenant's use or manner of use of the demised premises of the building (including
the use permitted under the lease). Except as provided in Article 30 hereof,
nothing herein shall require Tenant to make structural repairs or alterations
unless Tenant has, by its manner of use of the demised premises or method of
operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant shall not do or
<PAGE>
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. If by reason of failure to comply with the foregoing the
fire insurance rate shall, at the beginning of this lease or at any time
thereafter, be higher than it otherwise would be, then Tenant shall reimburse
Owner, as additional rent hereunder, for that portion of all fire insurance
premiums thereafter paid by Owner which shall have been charged because of such
failure by Tenant. In any action or proceeding wherein Owner and Tenant are
parties, a schedule or "make-up" or rate for the building or demised premises
issued by a body making fire insurance rates applicable to said premises shall
be conclusive evidence of the facts therein stated and of the several items and
charges in the fire insurance rates then applicable to said premises. Tenant
shall not place a load upon any floor of the demised premises exceeding the
floor load per square foot area which it was designed to carry and which is
allowed by law. Owner reserves the right to prescribe the weight and position of
all safes, business machines and mechanical equipment. Such installations shall
be placed and maintained by Tenant, at Tenant's expense, in settings sufficient,
in Owner's judgement, to absorb and prevent vibration, noise and annoyance.
SUBORDINATION: 7. This lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which demised premises are a part and to all
renewals, modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
TENANT'S LIABILITY INSURANCE PROPERTY LOSS, DAMAGE INDEMNITY: 8. Owner or its
agents shall not be liable for any damage to property of Tenant or of others
entrusted to employees of the building, nor for loss of or damage to any
property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees; Owner
or its agents shall not be liable for any damage caused by other tenants or
persons in, upon or about said building or caused by operations in connection of
any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitee or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
DESTRUCTION, FIRE AND OTHER CASUALTY: 9. (a) If the demised premises or any part
thereof shall be damaged by fire or other casualty, Tenant shall give immediate
notice thereof to Owner and this lease shall continue in full force and effect
except as hereinafter set forth. (b) If the demised premises are partially
damaged or rendered partially unusable by fire or other casualty, the damages
thereto shall be repaired by and at the expense of Owner and the rent and other
items of additional rent, until such repair shall be substantially completed,
shall be apportioned from the day following the casualty according to the part
of the premises which is usable. (c) If the demised premises are totally damaged
or rendered wholly unusable by fire or other casualty, then the rent and other
items of additional rent as hereinafter expressly provided shall be
proportionately paid up to the time of the casualty and thenceforth shall cease
until the date when the premises shall have been repaired and restored by Owner
(or sooner occupied in part by Tenant then rent shall be apportioned as provided
in subsection (b) above), subject to Owner's right to elect not to restore the
same as hereinafter provided. (d) If the demised premises are rendered wholly
unusable or (whether or not the demised premises are damaged in whole or in
part) if the building shall be so damaged that Owner shall decide to demolish it
or to rebuild it, then, in any of such events, Owner may elect to terminate this
lease by written notice to Tenant, given within 90 days after such fire or
casualty, or 30 days after adjustment of the insurance claim for such fire or
casualty, whichever is sooner, specifying a date for the expiration of the
lease, which date shall not be more than 60 days after the giving of such
notice, and upon the date specified in such notice the term of this lease shall
expire as fully and completely as if such date were the date set forth above for
the termination of this lease and Tenant shall forthwith quit, surrender and
vacate the premises without prejudice however, to Owner's rights and remedies
against Tenant under the lease provisions in effect prior to such termination,
and any rent owing shall be paid up to such date and any payments of rent made
by Tenant which were on account of any period subsequent to such date shall be
returned to Tenant. Unless Owner shall serve a termination notice as provided
for herein, Owner shall make the repairs and restorations under the conditions
of (b) and (c) hereof, with all reasonable expedition, subject to delays due to
adjustment of insurance claims, labor troubles and causes beyond Owner's
control. After any such casualty, Tenant shall cooperate with Owner's
restoration by removing from the premises as promptly as reasonably possible,
all of Tenant's salvageable inventory and movable equipment, furniture, and
other property. Tenant's liability for rent shall resume five (5) days after
written notice from Owner that the premises are substantially ready for Tenant's
occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability
that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, including Owner's obligation to restore under
paragraph (b) above, each party shall look first to any insurance in its favor
before making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Owner and Tenant
each hereby releases and waives all right of recovery with respect to
subparagraphs (b), (d) and (e) above, against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The release
and waiver herein referred to shall be deemed to include any loss or damage to
the demised premises and/or to any personal property, equipment, trade fixtures,
goods and merchandise located therein. The foregoing release and waiver shall be
in force only if both releasors' insurance policies contain a clause providing
that such a release or waiver shall not invalidate the insurance. If, and to the
extent, that such waiver can be obtained only by the payment of additional
premiums, then the party benefitting from the waiver shall pay such premium
within ten days after written demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under
the provisions hereof with respect to waiver of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant's furniture and or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Owner will not be obligated to repair any damage thereto or
replace the same. (f) Tenant hereby waives the provisions of Section 227 of the
Real Property Law and agrees that the provisions of this article shall govern
and control in lieu thereof.
EMINENT DOMAIN: 10. If the whole or any part of the demised premises shall be
acquired or condemned by Eminent Domain for any public or quasi public use or
purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease. Tenant shall
have the right to make an independent claim to the condemning authority for the
value of Tenant's moving expenses and personal property, trade fixtures and
equipment, provided Tenant is entitled pursuant to the terms of the lease to
remove such property, trade fixtures and equipment at the end of the term and
provided further such claim does not reduce Owner's award.
ASSIGNMENT, MORTGAGE, ETC.: 11. Tenant, for itself, its heirs, distributees,
executors, administrators, legal representatives, successors and assigns,
expressly covenants that it shall not assign, mortgage or encumber this
agreement, nor underlet, or suffer or permit the demised premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance. Transfer of the majority of the stock of a corporate Tenant or the
majority partnership interest of a partnership Tenant shall be deemed an
assignment. If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
ELECTRIC CURRENT: 12. Rates and conditions in respect to submetering or rent
inclusion, as the case may be, to be added in RIDER attached hereto. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no wise make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
ACCESS TO PREMISES: 13. Owner or Owner's agents shall have the right (but shall
not be obligated) to enter the demised premises in any emergency at any time,
and, at other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to any portion of the building or which Owner may elect to perform in
the premises after Tenant's failure to make repairs or perform any work which
Tenant is obligated to perform under this lease, or for the purpose of complying
with laws, regulations and other directions of governmental authorities. Tenant
shall permit Owner to use and maintain and replace pipes and conduits in and
through the demised premises and to erect new pipes and conduits therein
provided, wherever possible, they are within walls or otherwise concealed. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants and may, during said six months period, place upon
<PAGE>
the demised premises the usual notices "To Let" and "For Sale" which notices
Tenant shall permit to remain thereon without molestation. If Tenant is not
present to open and permit an entry into the demised premises, Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided reasonable care is exercised to safeguard
Tenant's property, such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of the term Tenant shall have removed all or
substantially all of Tenant's property therefrom. Owner may immediately enter,
alter, renovate or redecorate the demised premises without limitation or
abatement of rent, or incurring liability to Tenant for any compensation and
such act shall have no effect on this lease or Tenant's obligation hereunder.
VAULT, VAULT SPACE, AREA: 14. No Vaults, vault space or area, whether or not
enclosed or covered, not within the property line of the building is leased
hereunder anything contained in or indicated on any sketch, blue print or plan,
or anything contained elsewhere in this lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant, if used by
Tenant, whether or not specifically leased hereunder.
OCCUPANCY: 15. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the building of which the
demised premises are a part. Tenant has inspected the premises and accepts them
as is, subject to the riders annexed hereto with respect to Owner's work, if
any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record. If any governmental license or permit shall be required for the
proper and lawful conduct of Tenant's business, Tenant shall be responsible for
and shall procure and maintain such license or permit.
BANKRUPTCY: 16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the debtor; or (2) the making by Tenant
of an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interests in this lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rental reserved hereunder the for unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
DEFAULT: 17. (1) If Tenant defaults in fulfilling any of the covenants of this
lease other than the covenants for the payment of rent or additional rent; or if
the demised premises becomes vacant or deserted "or if this lease be rejected
under ss. 235 of Title 11 of the U.S. Code (bankruptcy code);" or if any
execution or attachment shall be issued against Tenant or any of Tenant's
property whereupon the demised premises shall be taken or occupied by someone
other than Tenant; or if Tenant shall make default with respect to any other
lease between Owner and Tenant; or if Tenant shall have failed, after five (5)
days written notice, to redeposit with Owner any portion of the security
deposited hereunder which Owner has applied to the payment of any rent and
additional rent due and payable hereunder or failed to move into or take
possession of the premises within thirty (30) days after the commencement of the
term of this lease, of which fact Owner shall be the sole judge; then in any one
or more of such events, upon Owner serving a written fifteen (15) days notice
upon Tenant specifying the nature of said default and upon the expiration of
said fifteen (15) days, if Tenant shall have failed to comply with or remedy
such default, or if the said default or omission complained of shall be of a
nature that the same cannot be completely cured or remedied within said fifteen
(15) day period, and if Tenant shall not have diligently commenced during such
default within such fifteen (15) day period, and shall not thereafter with
reasonable diligence and in good faith, proceed to remedy or cure such default,
then Owner may serve a written five (5) days' notice of cancellation of this
lease upon Tenant, and upon the expiration of said five (5) days this lease and
the term thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the demised premises to Owner but Tenant shall remain liable
as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given,
and the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
REMEDIES OF OWNER AND WAIVER OF REDEMPTION: 18. In case of any such default,
re-entry, expiration and/or dispossess by summary proceedings or other wise, (a)
the rent, and additional rent, shall become due thereupon and be paid up to the
time of such re-entry, dispossess and/or expiration, (b) Owner may re-let the
premises or any part or parts thereof, either in the name of Owner or otherwise,
for a term or terms, which may at Owner's option be less than or exceed the
period which would otherwise have constituted the balance of the term of this
lease and may grant concessions or free rent or charge a higher rental than that
in this lease, (c) Tenant or the legal representatives of Tenant shall also pay
Owner as liquidated damages for the failure of Tenant to observe and perform
said Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and or covenanted to be paid and the net amount, if any, of the rents
collected on account of the subsequent lease or leases of the demised premises
for each month of the period which would otherwise have constituted the balance
of the term of this lease. The failure of Owner to re-let the premises or any
part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency such expenses as Owner may incur in connection with re-letting, such
as legal expenses, reasonable attorneys' fees, brokerage, advertising and for
keeping the demised premises in good order or for preparing the same for
re-letting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent day specified in this lease and any suit brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Owner to collect the deficiency for any subsequent month by a similar
proceeding. Owner, in putting the demised premises in good order or preparing
the same for re-rental may, at Owner's option, make such alterations, repairs,
replacements, and/or decorations in the demised premises as Owner, in Owner's
sole judgment, considers advisable and necessary for the purpose of re-letting
the demised premises, and the making of such alterations, repairs, replacements,
and/or decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
FEES AND EXPENSES: 19. If Tenant shall default in the observance or performance
of any term or covenant on Tenant's part to be observed or performed under or by
virtue of any of the terms or provisions in any article of this lease, after
notice if required and upon expiration of any applicable grace period if any,
(except in an emergency), then, unless otherwise provided elsewhere in this
lease, Owner may immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in connection with the
foregoing or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment
of money, including but not limited to reasonable attorney's fees, in
instituting, prosecuting or defending any action or proceedings, and prevails in
any such action or proceeding, then Tenant will reimburse Owner for such sums so
paid or obligations incurred with interest and costs. The foregoing expenses
incurred by reason of Tenant's default shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Owner within ten (10) days of rendition
of any bill or statement to Tenant therefor. If Tenant's lease term shall have
expired at the time of making of such expenditures or incurring of such
obligations, such sums shall be recoverable by Owner as damages.
BUILDING ALTERATIONS AND MANAGEMENT: 20. Owner shall have the right at any time
without the same constituting an eviction and without incurring liability to
Tenant therefor to change the arrangement and or location of public entrances,
passageways, doors, doorways, corridors, elevators, stairs, toilets or other
public parts of the building and to change the name, number or designation by
which the building may be known. There shall be no allowance to Tenant for
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner or other
Tenant making any repairs in the building or any such alterations, additions and
improvements. Furthermore, Tenant shall not have any claim against Owner by
reason of Owner's imposition of any controls of the manner of access to the
building by Tenant's social or business visitors as the Owner may deem necessary
for the security of the building and its occupants.
<PAGE>
NO REPRESENTATIONS BY OWNER: 21. Neither Owner nor Owner's agents have made any
representations or promises with respect to the physical condition of the
building, the land upon which it is erected or the demised premises, the rents,
leases, expenses of operation or any other matter or thing affecting or related
to the demised premises or the building except as herein expressly set forth and
no rights, easements or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in the provisions of this lease. Tenant
has inspected the building and the demised premises and is thoroughly acquainted
with their condition and agrees to take the same "as is" on the date possession
is tendered and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
END OF TERM: 22. Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Owner the demised premises, broom
clean, in good order and condition, ordinary wear and damages which Tenant is
not required to repair as provided elsewhere in this lease excepted, and Tenant
shall remove all its property from the demised premises. Tenant's obligations to
observe or perform this covenant shall survive the expiration or other
termination of this lease. If the last day of the term of this Lease or any
renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
QUIET ENJOYMENT: 23. Owner covenants and agrees with Tenant that upon Tenant
paying the rent and additional rent and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 34 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
FAILURE TO GIVE POSSESSION: 24. If Owner is unable to give possession of the
demised premises on the date of the commencement of the term hereof, because of
the holding-over or retention of possession of any tenant, undertenant or
occupants or if the demised premises are located in a building being
constructed, because such building has not been sufficiently completed to make
the premises ready for occupancy or because of the fact that a certificate of
occupancy has not been procured or if Owner has not completed any work required
to be performed by Owner, or for any other reason, Owner shall not be subject to
any liability for failure to give possession on said date and the validity of
the lease shall not be impaired under such circumstances, nor shall the same be
construed in any wise to extend the term of this lease, but the rent payable
hereunder shall be abated (provided Tenant is not responsible for Owner's
inability to obtain possession or complete any work required) until after Owner
shall have given Tenant notice that Owner is able to deliver possession in the
condition required by this lease. If permission is given to Tenant to enter into
the possession of the demised premises or to occupy premises other than the
demised premises prior to the date specified as the commencement of the term of
this lease, Tenant covenants and agrees that such possession and/or occupancy
shall be deemed to be under all the terms, covenants, conditions and provisions
of this lease, except the obligation to pay the fixed annual rent set forth in
page one of this lease. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of Section
223-a of the New York Real Property Law.
NO WAIVER: 25. The failure of Owner to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of this lease or
of any of the Rules or Regulations, set forth or hereafter adopted by Owner,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Owner of rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Owner unless such waiver be in writing
signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this lease provided. All checks tendered to Owner as and for the
rent of the demised premises shall be deemed payments for the account of Tenant.
Acceptance by Owner of rent from anyone other than Tenant shall not be deemed to
operate as an attornment to Owner by the payor of such rent or as a consent by
Owner to an assignment or subletting by Tenant of the demised premises to such
payor, or as a modification of the provisions of this lease. No act or thing
done by Owner or Owner's agents during the term hereby demised shall be deemed
an acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of Owner
or Owner's agent shall have any power to accept the keys of said premises prior
to the termination of the lease and the delivery of keys to any such agent or
employee shall not operate as a termination of the lease or a surrender of the
premises.
WAIVER OF TRIAL BY JURY: 26. It is mutually agreed by and between Owner and
Tenant that the respective parties hereto shall and they hereby do waive trial
by jury in any action [first several words of first line of column 2 are cut off
photocopy] brought by either of the parties hereto against the other (except for
personal injury or property damage) on any matters whatsoever arising out of or
in any way connected with this lease, the relationship of Owner and Tenant,
Tenant's use of or occupancy of said premises, and any emergency statutory or
any other statutory remedy. It is further mutually agreed that in the event
Owner commences any proceeding or action for possession including a summary
proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding including
a counterclaim under Article 4 except for statutory mandatory counterclaims.
INABILITY TO PERFORM: 27. This Lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in no wise be affected, impaired or excused
because Owner is unable to fulfill any of its obligations under this lease or to
supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repair, additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment, fixtures or other materials if Owner is prevented or delayed from
doing so by reason of strike or labor troubles or any cause whatsoever beyond
Owner's sole control including, but not limited to, government preemption or
restrictions or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions
which have been or are affected, either directly or indirectly, by war or other
emergency.
BILLS AND NOTICES: 28. Except as otherwise in this lease provided, a bill
statement, notice or communication which Owner may desire or be required to give
to Tenant, shall be deemed sufficiently given or rendered if, in writing,
delivered to Tenant personally or sent by registered or certified mail addressed
to Tenant at the building of which the demised premises form a part or at the
last known residence address or business address of Tenant or left at any of the
aforesaid premises addressed to Tenant, and the time of the rendition of such
bill or statement and of the giving of such notice or communication shall be
deemed to be the time when the same is delivered to Tenant, mailed, or left at
the premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
WATER CHARGES: 29. If Tenant requires, uses or consumes water for any purpose in
addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner
to be the sole judge) Owner may install a water meter and thereby measure
Tenant's water consumption for all purposes. Tenant shall pay Owner for the cost
of the meter and the cost of the installation, thereof and throughout the
duration of Tenant's occupancy Tenant shall keep said meter and installation
equipment in good working order and repair at Tenant's own cost and expense in
default of which Owner may cause such meter and equipment to be replaced or
repaired and collect the cost thereof from Tenant, as additional rent. Tenant
agrees to pay for water consumed, as shown on said meter as and when bills are
rendered, and on default in making such payment Owner may pay such charges and
collect the same from Tenant, as additional rent. Tenant covenants and agrees to
pay, as additional rent, the sewer rent, charge or any other tax, rent, levy or
charge which now or hereafter is assessed, imposed or a lien upon the demised
premises or the realty of which they are part pursuant to law, order or
regulation made or issued in connection with the use, consumption, maintenance
or supply of water, water system or sewage or sewage connection or system. If
the building or the demised premises or any part thereof is supplied with water
through a meter through which water is also supplied to other premises Tenant
shall pay to Owner, as additional rent, on the first day of each month,
% ($59.80) of the total meter charges as Tenant's portion.
Independently of and in addition to any of the remedies reserved to Owner
hereinabove or elsewhere in this lease, Owner may sue for and collect any monies
to be paid by Tenant or paid by Owner for any of the reasons or purposes
hereinabove set forth.
SPRINKLERS: 30. Anything elsewhere in this lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the New York Fire
Insurance Exchange or any bureau, department or official of the federal, state
or city government recommend or require the installation of a sprinkler system
or that any changes, modifications, alterations, or additional sprinkler heads
or other equipment be made or supplied in an existing sprinkler system by reason
of Tenant's business, or the location of partitions, trade fixtures, or other
contents of the demised premises, or for any other reason, or if any such
sprinkler system installations, modifications, alterations, additional sprinkler
heads or other such equipment, become necessary to prevent the imposition of a
penalty or charge against the full allowance for a sprinkler system in the fire
insurance rate set by any said Exchange or by any fire insurance company, Tenant
shall, at Tenant's expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be structural or
non-structural in nature. Tenant shall pay to Owner as additional rent the sum
of $30.00, on the first day of each month during the term of this lease, as
Tenant's portion of the contract price for sprinkler supervisory service.
ELEVATORS, HEAT, CLEANING: 31. As long as Tenant is not in default under any the
covenants of this lease beyond the applicable grace period provided in this
lease for the curing of such defaults, Owner shall: (a) provide necessary
passenger elevator facilities on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m.; (b) if freight elevator service is provided,
same shall be provided only on regular business days Monday through Friday
inclusive, and on those days only between the hours of 9 a.m. and 12 noon and
between 1 p.m. and 5 p.m.; (c) furnish heat, water and other services supplied
by Owner to the demised premises, when and as required by law, on business days
from 8 a.m. to 6 p.m. and on Saturdays from 8
<PAGE>
a.m. to 1 p.m.; (d) clean the public halls and public portions of the building
which are used in common by all tenants. Tenant shall, at Tenant's expense, keep
the demised premises, including the windows, clean and in order, to the
reasonable satisfaction of Owner, and for that purpose shall employ the person
or persons, or corporation approved by Owner. Tenant shall pay to Owner the cost
of removal of any of Tenant's refuse and rubbish from the building. Bills for
the same shall be rendered by Owner to Tenant at such time as Owner may elect
and shall be due and payable hereunder, and the amount of such bills shall be
deemed to be, and be paid as, additional rent. Tenant shall, however, have the
option of independently contracting for the removal of such rubbish and refuse
in the event that Tenant does not wish to have same done by employees of Owner.
Under such circumstances, however, the removal of such refuse and rubbish by
others shall be subject to such rules and regulations as, in the judgment of
Owner, are necessary for the proper operation of the building. Owner reserves
the right to stop service of the heating, elevator, plumbing and electric
systems, when necessary, by reason of accident, or emergency, or for repairs,
alterations, replacements or improvements, in the judgment of Owner desirable or
necessary to be made, until said repairs, alterations, replacements or
improvements shall have been completed. If the building of which the demised
premises are a part supplies manually operated elevator service, Owner may
proceed diligently with alterations necessary to substitute automatic control
elevator service without in any way affecting the obligations of Tenant
hereunder.
SECURITY: 32. Tenant has deposited with Owner the sum of $ as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the reletting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
CAPTIONS: 33. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
DEFINITIONS: 34. The term "Owner" as used in this lease means only the owner of
the fee or of the leasehold of the building, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land and building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to Owner from Tenant under this lease, in addition to the annual
rental rate. The term "business days" as used in this lease, shall exclude
Saturdays, Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.
ADJACENT EXCAVATION-SHORING: 35. If an excavation shall be made upon land
adjacent to the demised premises, or shall be authorized to be made, Tenant
shall afford to the person causing or authorized to cause such excavation,
license to enter upon the demised premises for the purposes of doing such work
as said person shall deem necessary to preserve the wall or the building of
which demised premises form a part from injury or damage and to support the same
by proper foundations without any claim for damages or indemnity against Owner,
or diminution or abatement of rent.
RULES AND REGULATIONS: 36. Tenant and Tenant's servants, employees, agents,
visitors, and licensees shall observe faithfully, and comply strictly with, the
Rules and Regulations annexed hereto and such other and further reasonable Rules
and Regulations as Owner or Owner's agents may from time to time adopt. Notice
of any additional rules or regulations shall be given in such manner as Owner
may elect. In case Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter made or adopted by Owner or Owner's agents, the parties
hereto agree to submit the question of the reasonableness of such Rule or
Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within fifteen (15) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against any
other tenant and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.
GLASS: 37. Owner shall replace, at the expense of the Tenant, any and all plate
and other glass damaged or broken from any cause whatsoever in and about the
demised premises. Owner may insure, and keep insured, at Tenant's expense, all
plate and other glass in the demised premises for and in the name of Owner.
Bills for the premiums therefor shall be rendered by Owner to Tenant at such
times as Owner may elect, and shall be due from, and payable by, Tenant when
rendered, and the amount thereof shall be deemed to be, and be paid, as
additional rent.
ESTOPPEL CERTIFICATE: 38. Tenant, at any time, and from time to time, upon at
least 10 days' prior notice by Owner, shall execute, acknowledge and deliver to
Owner, and/or to any other person, firm or corporation specified by Owner, a
statement certifying that this Lease is unmodified in full force and effect (or,
if there have been modifications, that the same is in full force and effect as
modified and stating the modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying each such default.
39. DIRECTORY BOARD LISTING: If, at the request of and as accommodation to
Tenant, Owner shall place upon the directory board in the lobby of the building,
one or more names of persons other than Tenant, such directory board listing
shall not be construed as the consent by Owner to an assignment or subletting by
Tenant to such person or persons.
SUCCESSORS AND ASSIGNS: 40. The covenants, conditions and agreements contained
in this lease shall bind and inure to the benefit of Owner and Tenant and their
respective heirs, distributees, executors, administrators, successors, and
except as otherwise provided in this lease, their assigns. Tenant shall look
only to Owner's estate and interest in the land and building for the
satisfaction of Tenant's remedies for the collection of a judgement (or other
judicial process) against Owner in the event of any default by Owner hereunder,
and no other property or assets of such Owner (or any partner, member, officer
or director thereof, disclosed or undisclosed), shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this lease, the relationship of Owner and
Tenant hereunder, or Tenant's use and occupancy of the demised premises.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
Witness for Owner: S.N.Y., INC.
-------------------------
- ------------------------------- /s/ Richard J. Sirota
-------------------------[L.S.]
Witness for Tenant: KWIK INTERNATIONAL COLOR , LTD.
-------------------------
- ------------------------------- /s/ Walter Berkower
-------------------------[L.S.]
<PAGE>
ACKNOWLEDGMENTS
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of New York
On this 1st day of March, 1997, before me personally came Walter
Berkower to me known, who being by me duly sworn, did depose and say that he
resides in that he is the Secretary/Treasurer of Kwik International Color Ltd.
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
/s/Cheryl Ann C. Meredith
------------------------------
Notary Public, State of New York
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally came
to be known and known to me to be the individual
described in and who, as TENANT, executed the foregoing instrument and
acknowledged to me that he executed the same.
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash cloths and plumbing fixtures shall not be used
for any purposes other than those for which they were designed or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors of halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the inside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any
part of the demised premises or the building of which they form a part. No
boring, cutting or stringing of wires shall be permitted, except with the prior
written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the premises only on
the freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. No Tenant shall obtain for use upon the demised premises ice,
drinking water, towel and other similar services, or accept barbering or
bootblacking services in the demised premises, except from persons authorized by
Owner, and at hours and under regulations fixed by Owner. Canvassing, soliciting
and peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building all persons
who do not present a pass to the building signed by Owner. Owner will furnish
passes to persons for whom any Tenant requests same in writing. Each Tenant
shall be responsible for all persons for whom he requests such pass and shall be
liable to Owner for all acts of such persons. Notwithstanding the foregoing,
Owner shall not be required to allow Tenant or any person to enter or remain in
the building, except on business days from 8:00 a.m. to 6:00 p.m. and on
Saturdays from 8:00 a.m. to 1:00 p.m. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by any
Tenant which in Owner's opinion, tends to impair the reputation of the building
or its desirability as a loft building, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, or explosive, or hazardous
fluid, material, chemical or substance, or cause or permit any odors of cooking
or other processes, or any unusual or other objectionable odors to permeate in
or emanate from the demised premises.
13. Tenant shall not use the demised premises in a manner which
disturbs or interferes with other Tenants in the beneficial use of their
premises.
<PAGE>
Address
Premises
TO
STANDARD FORM OF
LOFT
LEASE
THE REAL ESTATE BOARD OF NEW YORK, INC.
(C)Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
Dated 19
---
Rent Per Year
Rent Per Month
Term
From
To
Drawn by
--------------------------------
Checked by
------------------------------
Entered by
------------------------------
Approved by
-----------------------------
================================================================================
CREDIT AGREEMENT
among
UNIDIGITAL INC.,
Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
Dated as of March 24, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. DEFINITIONS................................................... 1
1.1 Defined Terms.............................................. 1
1.2 Other Definitional Provisions..............................20
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS.....................21
2.1 Term Loan Commitments......................................21
2.2 Term Notes.................................................21
2.3 Procedure for Term Loan Borrowing..........................21
SECTION 3. AMOUNT AND TERMS OF ACQUISITION LOAN COMMITMENTS..............22
3.1 Acquisition Loan Commitments...............................22
3.2 Acquisition Notes..........................................22
3.3 Procedure for Acquisition Loan Borrowing...................22
3.4 Commitment Fee.............................................23
3.5 Termination or Reduction of Acquisition Loan Commitments...23
SECTION 4. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS..............24
4.1 Revolving Credit Commitments...............................24
4.2 Revolving Credit Notes.....................................24
4.3 Procedure for Revolving Credit Borrowing...................25
4.4 Commitment Fee.............................................25
4.5 Termination or Reduction of Revolving Credit
Commitments..............................................26
SECTION 5. LETTERS OF CREDIT.............................................26
5.1 L/C Commitment.............................................26
5.2 Procedure for Issuance of Letters of Credit................27
5.3 Fees, Commissions and Other Charges........................27
5.4 L/C Participations.........................................27
5.5 Reimbursement Obligations of the Borrower..................28
5.6 Obligations Absolute.......................................29
5.7 Letter of Credit Payments..................................29
5.8 Application................................................29
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS........................30
6.1 Interest Rates and Payment Dates...........................30
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6.2 Conversion and Continuation Options........................30
6.3 Maximum Number of Tranches.................................31
6.4 Optional Prepayments.......................................31
6.5 Mandatory Prepayments......................................31
6.6 Computation of Interest and Fees...........................33
6.7 Inability to Determine Interest Rate.......................33
6.8 Pro Rata Treatment and Payments............................33
6.9 Illegality.................................................34
6.10 Requirements of Law.......................................35
6.11 Taxes.....................................................36
6.12 Indemnity.................................................37
6.13 Lending Offices; Change of Lending Office.................38
SECTION 7. REPRESENTATIONS AND WARRANTIES................................38
7.1 Financial Condition........................................38
7.2 No Change..................................................39
7.3 Existence; Compliance with Law.............................39
7.4 Power; Authorization; Enforceable Obligations..............40
7.5 No Legal Bar...............................................40
7.6 No Material Litigation.....................................40
7.7 No Default.................................................40
7.8 Ownership of Property; Liens...............................41
7.9 Intellectual Property......................................41
7.10 No Burdensome Restrictions................................41
7.11 Taxes.....................................................41
7.12 Federal Regulations.......................................41
7.13 ERISA.....................................................43
7.14 Investment Company Act; Other Regulations.................42
7.15 Subsidiaries..............................................42
7.16 Security Documents........................................42
7.17 Accuracy and Completeness of Information..................43
7.18 Labor Relations...........................................43
7.19 Insurance.................................................43
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7.20 Solvency..................................................43
7.21 Purpose of Loans..........................................44
7.22 Environmental Matters.....................................44
7.23 Regulation H..............................................45
7.24 Existing Indebtedness.....................................45
7.25 No Warehouse Inventory....................................45
7.26 Collateral Certificate....................................45
SECTION 8. CONDITIONS PRECEDENT..........................................45
8.1 Conditions to Initial Loans................................45
8.2 Conditions to Acquisition Loans............................50
8.3 Conditions to Each Loan....................................54
SECTION 9. AFFIRMATIVE COVENANTS.........................................55
9.1 Financial Statements.......................................55
9.2 Certificates; Other Information............................56
9.3 Payment of Obligations.....................................57
9.4 Conduct of Business and Maintenance of Existence...........57
9.5 Maintenance of Property; Insurance.........................57
9.6 Inspection of Property; Books and Records; Discussions.....57
9.7 Notices....................................................57
9.8 Environmental Laws.........................................58
9.9 Additional Collateral; Additional Guarantors...............59
9.10 Audit.....................................................59
9.11 Filing of Mortgage........................................59
9.12 Filing of Leasehold Mortgage..............................60
9.13 Execution of Leasehold Mortgages..........................61
SECTION 10. NEGATIVE COVENANTS...........................................61
10.1 Financial Condition Covenants.............................61
10.2 Limitation on Indebtedness................................64
10.3 Limitation on Liens.......................................65
10.4 Limitation on Guarantee Obligations.......................66
10.5 Limitation on Fundamental Changes.........................66
10.6 Limitation on Sale of Assets..............................67
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10.7 Limitation on Leases......................................67
10.8 Limitation on Dividends...................................67
10.9 Limitation on Capital Expenditures........................68
10.10 Limitation on Investments, Loans and Advances............68
10.11 Limitation on Optional Payments and Modifications
of Debt Instruments....................................69
10.12 Limitation on Transactions with Affiliates...............69
10.13 Limitation on Sales and Leasebacks.......................69
10.14 Limitation on Changes in Fiscal Year.....................69
10.15 Limitation on Negative Pledge Clauses....................69
10.16 Limitation on Lines of Business..........................70
10.17 Governing Documents......................................70
10.18 Limitation on Subsidiary Formation.......................70
10.19 Limitation on Securities Issuances.......................70
10.20 Inventory................................................70
SECTION 11. EVENTS OF DEFAULT............................................70
SECTION 12. THE ADMINISTRATIVE AGENT.....................................74
12.1 Appointment...............................................74
12.2 Delegation of Duties......................................74
12.3 Exculpatory Provisions....................................74
12.4 Reliance by Administrative Agent..........................74
12.5 Notice of Default.........................................75
12.6 Non-Reliance on Administrative Agent and Other Lenders....75
12.7 Indemnification...........................................76
12.8 Administrative Agent in Its Individual Capacity...........76
12.9 Successor Administrative Agent............................76
SECTION 13. MISCELLANEOUS................................................77
13.1 Amendments and Waivers....................................77
13.2 Notices...................................................77
13.3 No Waiver; Cumulative Remedies............................78
13.4 Survival of Representations and Warranties................78
13.5 Payment of Expenses and Taxes.............................78
13.6 Successors and Assigns; Participations and Assignments....79
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13.7 Adjustments; Set-off......................................81
13.8 Counterparts..............................................82
13.9 Severability..............................................82
13.10 Integration..............................................82
13.11 GOVERNING LAW............................................82
13.12 Submission To Jurisdiction; Waivers......................82
13.13 Acknowledgments..........................................83
13.14 WAIVERS OF JURY TRIAL....................................83
13.15 Confidentiality..........................................83
SCHEDULES
Schedule I Lenders, Commitments, and Lending Offices
Schedule 1.1. Pro Forma Consolidated EBITDA for the Kwik Acquisition
Schedule 2.1 Scheduled Term Loan Repayments
Schedule 3.2 Scheduled Acquisition Loan Repayments
Schedule 7.2 Dividends and Distributions
Schedule 7.4 Consents, Authorizations, Notices and Filings
Schedule 7.6 Material Litigation
Schedule 7.16 Filing Jurisdictions
Schedule 7.22 Environmental Matters
Schedule 8.1 Mortgaged Properties
Schedule 10.2 Indebtedness
EXHIBITS
Exhibit A-1 Form of Term Note
Exhibit A-2 Form of Acquisition Note
Exhibit A-3 Form of Revolving Credit Note
Exhibit B Form of Landlord Agreement
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Exhibit C Form of Pledge Agreement (U.S.)
Exhibit D Form of Pledge Agreement (U.K.)
Exhibit E Form of Security Agreement
Exhibit F Form of Borrowing Notice
Exhibit G Form of Leasehold Mortgage
Exhibit H Form of Mortgage
Exhibit I Form of Subsidiaries Guarantee
Exhibit J Form of Non-Bank Status Certificate
Exhibit K-1 Form of Opinion of Counsel to the Borrower
Exhibit K-2 Form of Opinion of Special Counsel to the Borrower for the
U.K.
Exhibit L Form of Assignment and Acceptance
Exhibit M-1 Form of Secretary's Certificate (Borrower)
Exhibit M-2 Form of Secretary's Certificate (Officer)
Exhibit N Form of Responsible Officer's Certificate
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<PAGE>
CREDIT AGREEMENT, dated as of March 24, 1998, among UNIDIGITAL INC., a
Delaware corporation (the "Borrower"), the lenders from time to time parties to
this Agreement (the "Lenders") and CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"),
as administrative agent for the Lenders hereunder (in such capacity, the
"Administrative Agent").
RECITALS
The Borrower intends to acquire all or substantially all of the assets of,
and assume certain liabilities of, Kwik International Color, Ltd., a New York
corporation ("Kwik"), pursuant to the Kwik Acquisition Agreement (as hereinafter
defined; such acquisition of assets and assumption of liabilities, the "Kwik
Acquisition"). The Borrower further intends to refinance certain existing
indebtedness of the Borrower and its subsidiaries, and to seek additional
financing for its working capital needs and for additional potential
acquisitions. The Borrower has requested (a) that the Lenders make a term loan
to the Borrower, in the principal amount of $25,000,000, the proceeds of which
term loans would be used to finance a portion of the purchase price of the Kwik
Acquisition and fees and expenses incurred in connection therewith, to refinance
existing indebtedness of the Borrower and its subsidiaries and to pay fees and
expenses incurred in connection herewith, (b) that the Lenders make available an
acquisition credit facility in the principal amount of $5,000,000 the proceeds
of which would be used to finance acquisitions (other than the Kwik Acquisition)
and fees and expenses incurred in connection therewith and (c) that the Lenders
make available to the Borrower revolving credit loans and letters of credit in
an aggregate principal and/or face amount at any one time outstanding not to
exceed $10,000,000, the proceeds of which would be used to finance a portion of
the purchase price of the Kwik Acquisition and fees and expenses incurred in
connection therewith, to refinance existing indebtedness of the Borrower and its
subsidiaries, to finance the working capital requirements of the Borrower and
its subsidiaries in the ordinary course of business and to pay fees and expenses
incurred in connection herewith.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Acquired Business": with respect to any Permitted Acquisition, the
Person the common stock or other ownership interest which is acquired in
such Permitted Acquisition, or the business unit, division or subdivision
the assets of which are acquired in such Permitted Acquisition, as the case
may be.
"Acquisition Closing Date": in respect of any Acquisition Loan, the
date on which all of the conditions described on Section 8.2 shall have
been satisfied for the Permitted Acquisition to be financed thereby.
<PAGE>
"Acquisition Documents": with respect to any Permitted Acquisition,
the stock purchase agreement, asset purchase agreement, agreement and plan
of merger, or similar agreement regarding such Permitted Acquisition, and
all other agreements, instruments and documents delivered in connection
with the consummation thereof (including, without limitation, any equity
financing documents related thereto).
"Acquisition Loan": as defined in Section 3.1.
"Acquisition Loan Commitment": as to any Lender, its obligation to
make Acquisition Loans to the Borrower pursuant to Section 3.1 in the
amount set forth opposite such Lender's name on Schedule I under the
caption "Acquisition Loans" or in an Assignment and Acceptance, as such
amount may be reduced from time to time in accordance with the provisions
of this Agreement.
"Acquisition Loan Commitment Percentage": as to any Lender, the
percentage equal to the quotient of such Lender's Acquisition Loan
Commitment divided by the aggregate Acquisition Loan Commitments.
"Acquisition Loan Commitment Period": the period from and including
the date hereof to but excluding the Acquisition Loan Commitment
Termination Date, or such earlier date as the Acquisition Loan Commitments
terminate as provided herein.
"Acquisition Loan Commitment Termination Date": March 24, 2000.
"Acquisition Note": as defined in Section 3.2.
"Adjusted EBITDA": for any period, the Consolidated EBITDA of the
Borrower for such period plus, for each Permitted Acquisition consummated
(or proposed to be consummated during such period), the Consolidated EBITDA
of the Acquired Business in respect of such Permitted Acquisition for such
period, calculated on a pro forma basis without duplication, as if such
Permitted Acquisition had occurred on the first day of such period (and for
purposes of this definition, "Consolidated EBITDA of the Acquired Business"
shall mean the sum of (i) Consolidated Net Income for such period
(substituting such Acquired Business for the Borrower), (ii) the sum of
provisions for such period for income taxes, interest expense, and
depreciation and amortization expense used in determining such Consolidated
Net Income, (iii) other amounts deducted in such period in respect of
non-cash expenses in accordance with GAAP, (iv) non-capitalized transaction
costs deducted in such period in connection with such Permitted
Acquisition, (v) the amount of any aggregate net loss (or minus the amount
of any gain) during such periods arising from the sale, exchange or other
disposition of capital assets, (vi) non-cash expenses deducted in such
period in connection with any earn-out agreements, stock appreciation
rights, "phantom" stock plans, employment agreements, non-competition
agreements, subscription and stockholders agreements and other incentive
and bonus plans and similar arrangements made in connection with
acquisitions of Persons or businesses by such Acquired Business or the
retention of executives, officers or employees by such Acquired
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Business and (vii) other non-recurring, non-operating expenses as shall
have been approved by the Administrative Agent as exclusions from the
determination of Adjusted EBITDA; provided that Adjusted EBITDA shall in
any event exclude the amount of any non-cash income recognized during any
period for which Consolidated EBITDA is determined; provided further that
for purposes of computing Consolidated EBITDA of the Acquired Business,
there shall be added thereto the amount by which the compensation (whether
in the form of salary, bonus, dividend or other distribution) paid to the
principal owner(s) and/or manager(s) of the Acquired Business prior to such
Permitted Acquisition will be reduced, following such Permitted
Acquisition, as set forth in a certificate of the Borrower reasonably
acceptable to the Administrative Agent; and provided further; in the case
of the period prior to the Closing Date Adjusted EBITDA shall be calculated
by taking into account the amounts and periods set forth on Schedule 1.1.
"Administrative Agent": CIBC, together with its affiliates, as the
arranger of the Commitments and as the administrative agent for the Lenders
under this Agreement and the other Loan Documents.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person (including, with its correlative
meanings, "controlled by" and "under common control with") means the power,
directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person
or (b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Aggregate Outstanding RC Extensions of Credit": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount
of all Revolving Credit Loans made by such Lender then outstanding and (b)
such Lender's Revolving Credit Commitment Percentage of the L/C Obligations
then outstanding.
"Applicable Lending Office": for each Lender and for each Type of
Loan, the lending office of such Lender designated for such Type of Loan on
Schedule I hereto (or any other lending office from time to time notified
to the Administrative Agent by such Lender ) as the office at which its
Loans of such Type are to be made and maintained.
"Applicable Margin": prior to the date on which financial statements
for the second full fiscal quarter following the Closing Date are required
to be delivered pursuant to Section 9.1(a) or (b), 3.00% with respect to
Eurodollar Loans and 1.75% with respect to Base Rate Loans, and thereafter
with respect to each Type of Loans shall be the margin set forth opposite
the applicable ratio of Consolidated Funded Debt
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to Adjusted EBITDA for the period of four consecutive fiscal quarters most
recently ended, as follows:
-------------------------------------------------
Consolidated
Funded Debt/ Base Rate Eurodollar
Adjusted EBITDA Loans Loans
-------------------------------------------------
Greater than or 1.75% 3.00%
equal to 3.00
-------------------------------------------------
Less than 3.00 1.50% 2.75%
but greater than
or equal to 2.50
-------------------------------------------------
Less than 2.50 1.25% 2.50%
but greater than
or equal to 2.00
-------------------------------------------------
Less than 2.00 1.00% 2.25%
but greater than
or equal to 1.50
-------------------------------------------------
Less than 1.50 0.75% 2.00%
-------------------------------------------------
The Applicable Margin shall be adjusted on and as of the date on which the
consolidated financial statements are delivered pursuant to Section 9.1(a)
or (b) provided, however, that if such financial statements are not
delivered when required pursuant to such Section, then until such financial
statements are so delivered for purposes of calculating the Applicable
Margin the ratio of Consolidated Funded Debt to Adjusted EBITDA shall be
deemed to be greater than 3.00 to 1.
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"Assignee": as defined in Section 13.6(c).
"Assignment and Acceptance": as defined in Section 13.6(c).
"Available RC Commitment": as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Revolving
Credit Commitment at such time over (b) the Aggregate Outstanding RC
Extensions of Credit by such Lender at such time.
"Base Rate": for any day, the rate per annum (rounded upward, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced by CIBC in New York,
New York from time to time as its base rate (the base rate not being
intended to be the lowest rate of interest charged by CIBC in connection
with extensions of credit to debtors).
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"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Borrower": as defined in the heading to this Agreement.
"Borrower Security Documents": the collective reference to the
Mortgage executed and delivered by the Borrower, the Pledge Agreements, and
the Security Agreement.
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.3, 3.3 or 4.3 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Business": as defined in Section 7.22(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close, and, if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, or a Conversion of or into, or
an Interest Period for, a Eurodollar Loan or a notice by the Borrower with
respect to any such borrowing, payment, prepayment, Conversion or Interest
Period, which is also a day on which dealings in Dollar deposits are
carried out in the London interbank market.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all similar ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a
term of not more than seven days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper
of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent thereof
by Moody's Investors Service, Inc. ("Moody's") and in either case maturing
within six months after the day of acquisition, (e) securities with
maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of
which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's, (f) securities with maturities of six months or
less
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from the date of acquisition backed by standby letters of credit issued by
any Lender or any commercial bank satisfying the requirements of clause (b)
of this definition or (g) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.
"Closing Date": the date on which the conditions precedent set forth
in Section 8.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all property and interests in property of the Loan
Parties, now owned or hereinafter acquired, upon which a Lien is purported
to be created by any Security Document.
"Commitments": the collective reference to the Revolving Credit
Commitments, the Acquisition Loan Commitments and the Term Loan
Commitments.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Consolidated Current Assets": at a particular date, all amounts which
would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such
date; provided, however, that such amounts shall not include (a) any
amounts for any Indebtedness owing by an Affiliate of the Borrower, unless
such Indebtedness arose in connection with the sale of goods or other
property in the ordinary course of business and would otherwise constitute
current assets in conformity with GAAP, (b) any shares of stock issued by
an Affiliate of the Borrower, or (c) the cash surrender value of any life
insurance policy.
"Consolidated Current Liabilities": at a particular date, all amounts
which would, in conformity with GAAP, be included under current liabilities
on a consolidated balance sheet of the Borrower and its Subsidiaries as at
such date (excluding the current portion of any Loans).
"Consolidated EBITDA": for any period, the sum, for the Borrower and
its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), for such period of (a) Consolidated Net Income for
such period, (b) the sum of provisions for such period for income taxes,
interest expense, and depreciation and amortization expense used in
determining such Consolidated Net Income, (c) amounts deducted in such
period in respect of non-cash expenses in accordance with GAAP, (d)
non-capitalized transaction costs deducted in such period in connection
with the Kwik Acquisition and any Permitted Acquisitions and the financings
relating thereto, (e) the amount of any aggregate net loss (or minus the
amount of any gain) during such period arising from the sale, exchange or
other disposition of capital assets,
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(f) non-cash expenses deducted in such period in connection with any
earn-out agreements, stock appreciation rights, "phantom" stock plans,
employment agreements, non-competition agreements, subscription and
stockholders agreements and other incentive and bonus plans and similar
arrangements made in connection with acquisitions of Persons or businesses
by the Borrower or its Subsidiaries or the retention of executives,
officers or employees by the Borrower or its Subsidiaries, including (but
without duplication) any Person that has become a Subsidiary during such
specified period, on a pro forma basis as if such acquisition had occurred
on the first day of such period plus other non-recurring, non-operating
expenses as shall have been approved by the Administrative Agent as
exclusions from the determination of Consolidated EBITDA; provided, that
Consolidated EBITDA shall in any event exclude, from and after the Closing
Date, (x) the effect of any write-up of the assets of Kwik or any of its
Subsidiaries or any other assets acquired in any Permitted Acquisitions and
(y) the amount of any non-cash income recognized during any period for
which Consolidated EBITDA is determined.
"Consolidated Fixed Charges": for any period, the sum of (i) the
amounts deducted for the cash portion of Consolidated Interest Expense in
determining Consolidated Net Income for such period, (ii) the amount of
scheduled payments of principal of Indebtedness during such period, (iii)
all amounts of capital expenditures made during such period (other than
capital expenditures in respect of Financing Leases to the extent the same
are included in clauses (i) or (ii) of this definition), and (iv) the
amount of cash income taxes paid during such period.
"Consolidated Funded Debt": as of any date, the sum of all aggregate
indebtedness of the Borrower and its Subsidiaries of the types set forth in
clauses (a), (b), (c), (d), (e) and (g) of Indebtedness, determined on a
consolidated basis in accordance with GAAP, including, in any event, the
Term Loans, the Acquisition Loans, Revolving Credit Loans and any purchase
money Indebtedness.
"Consolidated Indebtedness": at any time, the aggregate Indebtedness
of the Borrower and its consolidated Subsidiaries at such time determined
on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense": for any period, the amount which, in
conformity with GAAP, would be set forth opposite the caption "interest
expense" or any like caption (including without limitation, imputed
interest included in payments under Financing Leases) on a consolidated
income statement of the Borrower and the Subsidiaries for such period
excluding the amortization of any original issue discount.
"Consolidated Lease Expense": for any period, the aggregate amount of
fixed or contingent rentals payable by the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, for such period
with respect to leases of real and personal property.
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"Consolidated Net Income": for any period, the consolidated net income
(or deficit) of the Borrower and the Subsidiaries for such period (taken as
a cumulative whole), determined in accordance with GAAP; provided that
there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated
with the Borrower or any Subsidiary, (b) the income (or deficit) of any
Person (other than a Subsidiary) in which the Borrower or any Subsidiary
has an ownership interest, except to the extent that any such income has
been actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions, (c) the undistributed earnings of any
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation or Requirement of Law applicable to
such Subsidiary, (d) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period, (e) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or
other disposition of capital assets (such term to include all fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), (f) any write-up of any
asset, (g) any net gain from the collection of the proceeds of life
insurance policies, (h) any gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of the
Borrower or any Subsidiary, (i) in the case of a successor to the Borrower
by consolidation or merger or as a transferee of its assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets, and (j) any deferred credit representing the excess of
equity in any Subsidiary at the date of acquisition over the cost of the
investment in such Subsidiary.
"Continue", "Continuation" and "Continued" shall refer to the
continuation of a Eurodollar Loan from one Interest Period to the next
Interest Period.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convert", "Conversion" and "Converted" shall refer to a conversion of
Base Rate Loans into Eurodollar Loans or of Eurodollar Loans into Base Rate
Loans, which may be accompanied by the transfer by a Lender (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"Credit Exposure": as to any Lender at any time, the sum of (a) its
Revolving Credit Commitment (or, if the Revolving Credit Commitments shall
have expired or been terminated, the aggregate unpaid principal amount of
its Revolving Credit Loans), (b) the sum (without duplication) of the
aggregate unpaid principal amount of the Acquisition Loans made by such
Lender and its Acquisition Loan Commitment (or, if the Acquisition Loan
Commitments shall have expired or been terminated, the
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<PAGE>
aggregate unpaid principal amount of its Acquisition Loans) and (c) the
unpaid principal amount of its Term Loan.
"Credit Exposure Percentage": as to any Lender at any time, the
fraction (expressed as a percentage), the numerator of which is the Credit
Exposure of such Lender at such time and the denominator of which is the
aggregate Credit Exposures of all of the Lenders at such time.
"Default": any of the events specified in Section 11, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Person": any individual resident of the United States or any
other Person organized under the laws of a jurisdiction in the United
States of America, any State thereof or the District of Columbia.
"Domestic Subsidiary": any Subsidiary of the Borrower other than a
Foreign Subsidiary.
"Elements UK": Elements (UK) Limited, a United Kingdom corporation.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
corresponding rate appearing at page 3750 of the Dow Jones Telerate Service
at or about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period,
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or if such rate no longer so appears, the rate per annum at which CIBC is
offered Dollar deposits at or about 10:00 a.m., local time, two Business
Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 11;
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Excess Cash Flow": as to the Borrower for any applicable fiscal year:
(a) Consolidated EBITDA for such fiscal year;
plus (b) the decrease (if any) in the amount of the excess of
Consolidated Current Assets (excluding cash and Cash Equivalents) over
Consolidated Current Liabilities at the end of such fiscal year compared to
the amount of the excess of Consolidated Current Assets (excluding cash and
Cash Equivalents) over Consolidated Current Liabilities at the end of the
immediately preceding fiscal year of the Borrower;
minus (c) the sum of (i) the amount of (A) all regularly scheduled
payments of principal of the Term Loans and Acquisition Loans actually made
during such fiscal year, (B) any voluntary prepayment of principal of the
Term Loans and Acquisition Loans made during such fiscal year, (C) any
permanent reduction in the Revolving Credit Commitments made during such
fiscal year to the extent that, before giving effect to such reduction, the
average outstanding principal balance of the Revolving Credit Loans for the
thirty (30) days prior to such reduction exceeds the aggregate Revolving
Credit Commitments after giving effect to such reduction and (D) any
voluntary prepayment of other permitted Indebtedness to the extent not
subject to reborrowing, made during such fiscal year, (ii) the amount of
all interest payments actually made in cash during such fiscal year by the
Borrower and its consolidated Subsidiaries, (iii) the amount of capital
expenditures (other than capital expenditures in respect of Financing
Leases) actually made during such fiscal year to the extent permitted by
Section 10.9, (iv) cash income taxes paid during such fiscal year and
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(v) the increase (if any) in the amount of the excess of Consolidated
Current Assets (excluding cash and Cash Equivalents) over Consolidated
Current Liabilities at the end of such fiscal year compared to the amount
of the excess of Consolidated Current Assets (excluding cash and Cash
Equivalents) over Consolidated Current Liabilities at the end of the
immediately preceding fiscal year of the Borrower.
"Existing Creditor": any creditor under an Existing Financing
Document.
"Existing Financing Documents": all credit agreements, indentures,
notes, guarantees and other financing documents, in each case as amended to
the extent permitted hereunder, evidencing or governing the Indebtedness
listed on Schedule 10.2.
"Existing Indebtedness": all Indebtedness of the Borrower, Kwik and
their respective Subsidiaries outstanding immediately prior to the Closing
Date pursuant to the Existing Financing Documents.
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Administrative Agent from three federal funds brokers of recognized
standing selected by it.
"Fee Letter": that certain Fee Letter, dated March 5, 1998, between
CIBC and the Borrower, as amended, supplemented or otherwise modified from
time to time.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Subsidiary": any Subsidiary of the Borrower organized under
the laws of a jurisdiction other than the United States of America, any
State thereof or the District of Columbia.
"GAAP": generally accepted accounting principles in the United States
of America.
"Governing Documents": as to any Person, its articles or certificate
of incorporation and by-laws, its partnership agreement, its certificate of
formation and operating agreement, and/or the other organizational or
governing documents of such Person.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb shall have
a correlative meaning. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of letters of credit, acceptances or similar instruments issued or
created for the account of such Person, (e) all liabilities secured by any
Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, (f) all other
items which, in accordance with GAAP, would be included as liabilities on
the liability side of the balance sheet of such Person as of the date at
which Indebtedness is to be determined and (g) all Guarantee Obligations of
such Person in respect of any of the foregoing.
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"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of
each March, June, September and December, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any Eurodollar having an Interest Period
longer than three months, (i) each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period, and (ii) the
last day of such Interest Period.
"Interest Period": (a) with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
Conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of Conversion, as
the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business
Day;
(2) any Interest Period in respect of Revolving Credit
Loans, Acquisition Loans or Term Loans, as the case may be, that
would otherwise extend beyond the Revolving Credit Termination
Date or beyond the date final payment is due on the Acquisition
Loans or the Term Loans shall end on the Revolving Credit
Termination Date or such date of final payment, as the case may
be;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the
calendar month at the end of
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such Interest Period) shall end on the last Business Day of a
calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Intercreditor and Subordination Agreement": the Intercreditor and
Subordination Agreement to be entered into by the Borrower, the
Administrative Agent and Kwik International Color, Ltd., as the same may be
amended, supplemented or otherwise modified from time to time.
"Inventory": as defined in the Uniform Commercial Code in effect in
the State of New York.
"Issuing Lender": CIBC, in its capacity as issuer of any Letter of
Credit.
"Kwik Acquisition": as defined in the recitals hereto.
"Kwik Acquisition Agreement": the Asset Purchase Agreement, dated as
of March 19, 1998, among the Borrower, Unison (NY), Inc., a Delaware
corporation and wholly-owned Subsidiary of the Borrower, Kwik and Richard
J. Sirota, the sole shareholder of Kwik, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"Kwik Acquisition Documents": the Kwik Acquisition Agreement and all
other agreements, instruments and documents delivered in connection with
the consummation thereof (including, without limitation, any equity
financing documents related thereto).
"Landlord Agreement": each landlord agreement executed and delivered
by the lessor of premises leased by the Borrower or any other Loan Party,
substantially in the form of Exhibit B or such other form as the
Administrative Agent may approve, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the terms
hereof.
"L/C Commitment": $1,000,000.
"L/C Fee Payment Date": the last Business Day of each March, June,
September and December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn amount of the then outstanding Letters of Credit and
(b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed.
"L/C Participants": the collective reference to all the Lenders other
than the Issuing Lender.
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"Leasehold Mortgage": each Leasehold Mortgage to be executed and
delivered by any Loan Party, substantially in the form of Exhibit G, as the
same may be amended, supplemented or otherwise modified from time to time.
"Letters of Credit": as defined in Section 5.1(a).
"Leverage Ratio": at any time, the ratio of Consolidated Funded Debt
to Adjusted EBITDA for the immediately preceding period of four consecutive
fiscal quarters; provided that, in calculating the Leverage Ratio for any
period during which a Permitted Acquisition was consummated, Adjusted
EBITDA shall be substituted for Consolidated EBITDA.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing), and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing.
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes, the Applications, the
Subsidiaries Guarantee and the Security Documents.
"Loan Parties": the Borrower and each Subsidiary of the Borrower which
is or becomes a party to a Loan Document.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this or any of the other Loan Documents or
the rights or remedies of the Administrative Agent or the Lenders hereunder
or thereunder.
"Material Environmental Amount": an amount payable by the Borrower
and/or its Subsidiaries in excess of $100,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
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"Mortgage": each Mortgage to be executed and delivered by any Loan
Party, substantially in the form of Exhibit H, as the same may be amended,
supplemented or otherwise modified from time to time.
"Mortgages": collectively, the reference to the Mortgages executed by
the Borrower or any Subsidiary and any fee or leasehold mortgage or deed of
trust, in form and substance satisfactory to the Administrative Agent, that
may be required by the Required Lenders in connection with a Permitted
Acquisition.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA with respect to which the Borrower or any
Commonly Controlled Entity is, or ever has been, obligated to contribute.
"Net Proceeds": (i) the aggregate cash consideration received by the
Borrower or a Subsidiary in connection with any transaction referred to in
Section 6.5(b) less (ii) the expenses (including out-of-pocket expenses)
incurred by the Borrower or such Subsidiary in connection with such
transaction (including, in the case of any issuance of debt or equity
securities, underwriters' commissions and fees) and the amount of any
federal and state taxes incurred in connection with such transaction, in
each case as certified by a Responsible Officer to the Administrative Agent
at the time of such transaction.
"Non-Bank Status Certificate": as defined in Section 6.11(b)(i)(B).
"Non-Excluded Taxes": as defined in Section 6.11.
"Notes": the collective reference to the Revolving Credit Notes, the
Acquisition Credit Notes and the Term Notes.
"Obligations": the unpaid principal amount of, and interest
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) on the Loans, and all
other obligations and liabilities of the Loan Parties to the Administrative
Agent and the Lenders, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, or out of or in connection with this Agreement, the Notes, the
Guarantees, the Security Documents and any other Loan Documents and any
other document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Lenders that are required to be paid by a Loan Party
pursuant to the terms of the Loan Documents) or otherwise.
"Participant": as defined in Section 13.6(b).
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"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Acquisition": an acquisition of (a) 100% of the common
stock or other ownership interests of a Domestic Person or (b) the assets
of a Domestic Person, or of a business unit, division or subdivision of a
Domestic Person, in each case engaged in or relating to a line of business
substantially similar to the line of business engaged in by the Borrower on
the Closing Date; provided that (i) the Ratio for the most recent period of
four consecutive fiscal quarters preceding such Permitted Acquisition
(calculated on a pro-forma basis as if such Permitted Acquisition had been
consummated as of the first day of such four quarter period) of
Consolidated Funded Debt as of the last day of such period to Adjusted
EBITDA for such period is not greater than the required Leverage Ratio less
0.25 set forth in Section 10.1(a) for such period, (ii) no later than five
Business Days prior to the consummation of such acquisition, the
Administrative Agent shall have received a certificate of a Responsible
Officer with detailed calculations establishing to the reasonable
satisfaction of the Administrative Agent that the foregoing requirement has
been satisfied and (iii) each Loan Party shall have granted a security
interest in favor of the Administrative Agent to assets acquired in
accordance with Section 9.9.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreement (U.S.)": the Pledge Agreement to be executed and
delivered by the Borrower, substantially in the form of Exhibit C-1, as the
same may be amended, supplemented or otherwise modified from time to time.
"Pledge Agreement (U.K.)": the Mortgage to be executed and delivered
by the Borrower with respect to the shares of Elements U.K. substantially
in the form of Exhibit D, as the same may be amended, supplemented or
otherwise modified from time to time.
"Pledge Agreements": the collective reference to the Pledge Agreement
(U.S.) and the Pledge Agreement (U.K.).
"Post-Closing Agreement": the Post-Closing Agreement to be executed
and delivered by the Borrower, as the same may be amended, supplemented or
otherwise modified from time to time.
"Properties": as defined in Section 7.22.
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"Refinancing": the refinancing of all of the Existing Indebtedness
(other than Existing Indebtedness listed in Part B of Schedule 10.2) with
the proceeds of the Loans to be made on the Closing Date.
"Register": as defined in Section 13.6(d).
"Regulation G": Regulation G of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Bank pursuant to Section 5.5(a) for amounts drawn
under a Letter of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss. 4043.
"Required Lenders": at any time, Lenders the Credit Exposure
Percentage of which aggregate 51% or more.
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or Governing Documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": as to any Person, the chief executive officer
and the president of such Person or, with respect to financial matters, the
chief financial officer of such Person. Unless otherwise specified,
"Responsible Officer" refers to a Responsible Officer of the Borrower.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender to make Revolving Credit Loans to the Borrower pursuant to
Section 4.1 and/or to issue or participate in Letters of Credit issued on
behalf of the Borrower hereunder in an aggregate principal and/or face
amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule I under the caption "Revolving
Credit Loan" or in an Assignment and Acceptance, as such amount may be
reduced from time to time in accordance with the provisions of this
Agreement. The original aggregate principal amount of the Revolving Credit
Commitment is $10,000,000.
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"Revolving Credit Commitment Percentage": as to any Lender at any
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Credit Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Credit Loans then outstanding).
"Revolving Credit Commitment Period": the period from and including
the date hereof to but not including the Revolving Credit Termination Date
or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein.
"Revolving Credit Loans": as defined in Section 4.1.
"Revolving Credit Note": as defined in Section 4.2.
"Revolving Credit Termination Date": March 24, 2003.
"Security Agreement": the Security Agreement to be executed and
delivered by the Borrower and each domestic Subsidiary of the Borrower,
substantially in the form of Exhibit E, as the same may be amended,
supplemented or otherwise modified from time to time.
"Security Documents": the collective reference to the Leasehold
Mortgages, the Mortgage, the Pledge Agreements, the Security Agreement, and
all other security documents hereafter delivered to the Administrative
Agent granting a Lien on any asset or assets of any Person to secure any of
the Obligations or to secure any guarantee of any such Obligations.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Subsidiaries Guarantee": the Guarantee to be executed and delivered
by each Domestic Subsidiary of the Borrower, substantially in the form of
Exhibit I, as the same may be amended, supplemented or otherwise modified
from time to time.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
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"Subsidiary Guarantor": any Subsidiary party to the Subsidiaries
Guarantee as a guarantor.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, its obligation to make a
Term Loan to the Borrower pursuant to Section 2.1 in the amount set forth
opposite such Lender's name on Schedule I under the caption "Term Loan".
"Term Loan Commitment Percentage": as to any Lender, the percentage
equal to the quotient of such Lender's Term Loan Commitment divided by the
aggregate Term Loan Commitments.
"Term Note": as defined in Section 2.2.
"Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Transferee": as defined in Section 13.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any Notes or any certificate or other document made or delivered pursuant
hereto.
(b) As used herein and in any Notes, and any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Borrower and
its Subsidiaries not defined in Section 1.1 and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
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SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions hereof, each
Lender severally agrees to make a term loan (a "Term Loan") to the Borrower on
the Closing Date in an amount not to exceed the amount of the Term Loan
Commitment of such Lender then in effect; provided, that the Term Loan
Commitments shall terminate at 3:00 p.m., New York City time, on March 31, 1998,
if the Term Loans have not been made prior to that time. The Term Loans may from
time to time be (a) Eurodollar Loans, (b) Base Rate Loans or (c) a combination
thereof, as determined by the Borrower and notified to the Administrative Agent
in accordance with Sections 2.3 and 6.2.
2.2 Term Notes. The Term Loan of each Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit A-1 with
appropriate insertions as to payee, date and principal amount (a "Term Note"),
payable to the order of such Lender and representing the obligation of the
Borrower to pay the amount of the Term Loan made by such Lender. Each Lender is
hereby authorized to record the date, Type and amount of its Term Loan and the
date and amount of each payment or prepayment of principal thereof and each
Conversion of all or a portion thereof to another Type and, and in the case of
Eurodollar Loans, the Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Term Note, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
recorded; provided, that the failure of such Lender to make any such recordation
shall not impair or otherwise affect the validity or enforceability of its Term
Note. Each Term Note shall (a) be dated the Closing Date, (b) be stated to
mature in installments in amounts equal to such Lender's Term Loan Commitment
Percentage of the amounts, and payable on the dates, set forth on Schedule 2.2,
and (c) bear interest for the period from the date thereof on the unpaid
principal amount thereof at the applicable interest rates per annum specified in
Section 6.1. Interest on the Term Notes shall be payable on the dates specified
in Section 6.1(d).
2.3 Procedure for Term Loan Borrowing. The Borrower shall give the
Administrative Agent irrevocable written notice substantially in the form of
Exhibit A-4 (which notice must be received by the Administrative Agent prior to
10:00 a.m., New York City time, (a) three Business Days prior to the Closing
Date, if all or any part of the Term Loans are to be initially Eurodollar Loans
or (b) one Business Day prior to the Closing Date, otherwise) requesting that
the Lenders make the Term Loans on the Closing Date and specifying (i) the
Closing Date, (ii) the amount to be borrowed, (iii) whether the Term Loans are
to be initially Eurodollar Loans, Base Rate Loans or a combination thereof, and
(iv) if the Term Loans are to be entirely or partly Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor. Upon receipt of such notice the
Administrative Agent shall promptly notify each Lender thereof. Not later than
11:00 a.m. on the Closing Date each Lender shall make available to the
Administrative Agent at its office specified in Section 13.2 the amount of such
Lender's pro rata share of such borrowing in immediately available funds. The
Administrative Agent shall on such date credit the account of the Borrower on
the books of such office of the Administrative Agent with the aggregate of
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the amounts made available to the Administrative Agent by the Lenders and in
like funds as received by the Administrative Agent.
SECTION 3. AMOUNT AND TERMS OF ACQUISITION LOAN COMMITMENTS
3.1 Acquisition Loan Commitments. Subject to the terms and conditions
hereof, each Lender severally agrees to make term loans (each, an "Acquisition
Loan") to the Borrower from time to time during the Acquisition Loan Commitment
Period in an amount not to exceed, together with the aggregate amount of all
other Acquisition Loans theretofore made by such Lender, the amount of the
Acquisition Loan Commitment of such Lender then in effect; provided, that the
Acquisition Loan Commitments shall terminate at 3:00 p.m., New York City time,
on March 31, 1998, if the Term Loans have not been made prior to that time. The
Acquisition Loans may from time to time be (a) Eurodollar Loans, (b) Base Rate
Loans or (c) a combination thereof, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 3.3 and 6.2.
3.2 Acquisition Notes. The Acquisition Loans of each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit A-2 with appropriate insertions as to payee, date and principal amount
(an "Acquisition Note"), payable to the order of such Lender and representing
the obligation of the Borrower to pay the amount of the Acquisition Loan made by
such Lender. Each Lender is hereby authorized to record the date, Type and
amount of its Acquisition Loan and the date and amount of each payment or
prepayment of principal thereof and each Conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the Interest Period with
respect thereto, on the schedule annexed to and constituting a part of its
Acquisition Note, and any such recordation shall constitute prima facie evidence
of the accuracy of the information so recorded; provided, that the failure of
such Lender to make any such recordation shall not impair or otherwise affect
the validity or enforceability of its Acquisition Note. Each Acquisition Note
shall (a) be dated the Closing Date, (b) be stated to mature in installments in
amounts equal to such Lender's Acquisition Loan Commitment Percentage of the
amounts, and payable on the dates, calculated as set forth on Schedule 3.2, and
(c) bear interest for the period from the date thereof on the unpaid principal
amount thereof at the applicable interest rates per annum specified in Section
6.1. Interest on the Acquisition Notes shall be payable on the dates specified
in Section 6.1(d).
3.3 Procedure for Acquisition Loan Borrowing. The Borrower may borrow under
the Acquisition Loan Commitments during the Acquisition Loan Commitment Period
on any Business Day, provided that the Borrower shall give the Administrative
Agent irrevocable notice substantially in the form of Exhibit A-4 (which notice
must be received by the Administrative Agent prior to 10:00 a.m., New York City
time, in the case of Base Rate Loans and 11:00 a.m., New York City time, in the
case of Eurodollar Loans, (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Acquisition Loans are to be
initially Eurodollar Loans or (b) one Business Day prior to the requested
Borrowing Date, otherwise) requesting that the Lenders make such Acquisition
Loans on the proposed
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Acquisition Closing Date and specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) the Permitted Acquisition to be financed with
the proceeds of such Acquisition Loans, (iv) whether the borrowing is to be of
Eurodollar Loans, Base Rate Loans or a combination thereof, and (v) if the
borrowing is to be entirely or partly of Eurodollar Loans, the amounts of each
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Acquisition Loan Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans, $500,000 or a whole multiple
of $100,000 in excess thereof (or, if the then remaining unused Acquisition Loan
Commitments are less than $500,000 such lesser amount) and (y) in the case of
Eurodollar Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any such notice from the Borrower, the Administrative Agent
shall promptly notify each Lender thereof. Each Lender will make the amount of
its pro rata share of each borrowing of Acquisition Loans available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in Section 13.2 prior to 11:00 a.m., New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
3.4 Commitment Fee. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee for the period from and
including the first day of the Acquisition Loan Commitment Period to but not
including the Acquisition Loan Commitment Termination Date, computed at the rate
of 1/2 of 1% per annum on the average daily amount of the unutilized Acquisition
Loan Commitment of such Lender during the period for which payment is made,
payable quarterly in arrears on the last Business Day of each March, June,
September and December and on the Acquisition Loan Commitment Termination Date
or such earlier date as the Acquisition Loan Commitments shall terminate as
provided herein, commencing on the first of such dates to occur after the date
hereof. The rate per annum at which such commitment fee shall be calculated for
each day during any period of computation shall be equal to (a) 3/8 of 1% per
annum, if the ratio of Consolidated Funded Debt as of the last day in the period
of four consecutive fiscal quarters of the Borrower most recently ended prior to
such day for which financial statements have been delivered pursuant to Section
9.1(a) or (b) to Adjusted EBITDA for such period was less than 2.00 to 1, and
(b) 1/2 of 1% per annum, if otherwise. The rate at which such commitment fee is
calculated shall be adjusted on and as of the date on which the consolidated
financial statements for each period of four consecutive fiscal quarters of the
Borrower and its Subsidiaries are delivered pursuant to Section 9.1(a) or (b),
provided, however, that if such financial statements are not delivered when
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required pursuant to such Section, then until such financial statements are so
delivered for purposes of calculating the rate at which such commitment fee is
calculated the ratio of Consolidated Funded Debt to Adjusted EBITDA for such
period shall be deemed to be greater than 2.00 to 1.
3.5 Termination or Reduction of Acquisition Loan Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
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Administrative Agent, to terminate the Acquisition Loan Commitments or, from
time to time, to reduce the amount of the Acquisition Loan Commitments. Any such
reduction shall be in an amount equal to $1,000,000 or a whole multiple thereof
and shall reduce permanently the Acquisition Loan Commitments then in effect.
SECTION 4. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
4.1 Revolving Credit Commitments. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make revolving credit loans ("Revolving
Credit Loans") to the Borrower from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Credit Commitment Percentage of the
outstanding L/C Obligations, does not exceed the amount of such Lender's
Revolving Credit Commitment then in effect; provided, that the Revolving Credit
Commitments shall terminate at 3:00 p.m., New York City time, on March 31, 1998,
if the Term Loans have not been made prior to that time. During the Revolving
Credit Commitment Period the Borrower may use the Revolving Credit Commitments
by borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
4.3 and 6.2, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
4.2 Revolving Credit Notes. The Revolving Credit Loans made by each Lender
shall be evidenced by a promissory note of the Borrower, substantially in the
form of Exhibit A-3 with appropriate insertions as to payee, date and principal
amount (a "Revolving Credit Note"), payable to the order of such Lender and
evidencing the obligation of the Borrower to pay a principal amount equal to the
lesser of (a) the amount of the Revolving Credit Commitment of such Lender and
(b) the aggregate unpaid principal amount of all Revolving Credit Loans made by
such Lender. Each Lender is hereby authorized to record the date, Type and
amount of each Revolving Credit Loan made or Converted by such Lender, the date
and amount of each payment or prepayment of principal thereof, and, in the case
of Eurodollar Loans, the Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Revolving Credit Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Each Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Revolving Credit Termination Date
and (z) bear interest on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum determined as provided in
Section 6.1. Interest on each Revolving Credit Note shall be payable on the
dates specified in Section 6.1(d).
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4.3 Procedure for Revolving Credit Borrowing. The Borrower may borrow under
the Revolving Credit Commitments during the Revolving Credit Commitment Period
on any Business Day in an aggregate principal amount not exceeding the aggregate
Available RC Commitments then in effect, provided that the Borrower shall give
the Administrative Agent irrevocable written notice, substantially in the form
of Exhibit A-4 (which notice must be received by the Administrative Agent prior
to 10:00 a.m., New York City time in the case of Base Loan Rates and 11:00 a.m.,
New York City time, in the case of Eurodollar Loans), (a) three Business Days
prior to the requested Borrowing Date, as to any part of the requested Revolving
Credit Loans that are to be initially Eurodollar Loans or (b) one Business Day
prior to the requested Borrowing Date, otherwise) specifying (i) the amount to
be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is
to be of Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if
the borrowing is to be entirely or partly of Eurodollar Loans, the amounts of
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans, $500,000 or a whole multiple
thereof (or, if the then Available RC Commitments are less than $500,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $1,000,000 or a whole
multiple of $100,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Lender thereof.
Each Lender will make the amount of its pro rata share of each borrowing
available to the Administrative Agent for the account of the Borrower at the
office of the Administrative Agent specified in Section 13.2 prior to 11:00
a.m., New York City time, on the Borrowing Date requested by the Borrower in
funds immediately available to the Administrative Agent. Such borrowing will
then be made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Lenders and in like
funds as received by the Administrative Agent.
4.4 Commitment Fee. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee for the period from and
including the first day of the Revolving Credit Commitment Period to the
Revolving Credit Termination Date, computed at the rate per annum calculated as
provided in the next succeeding sentence on the average daily amount of the
Available RC Commitment of such Lender during the period for which payment is
made, payable quarterly in arrears on the last day of each March, June,
September and December and on the Revolving Credit Termination Date or such
earlier date as the Revolving Credit Commitments shall terminate as provided
herein, commencing on the first of such dates to occur after the date hereof.
The rate per annum at which such commitment fee shall be calculated for each day
during any period of computation shall be equal to (a) 3/8 of 1% per annum, if
the ratio of Consolidated Funded Debt as of the last day in the period of four
consecutive fiscal quarters of the Borrower most recently ended prior to such
day for which financial statements have been delivered pursuant to Section
9.1(a) or (b) to Adjusted EBITDA for such period was less than 2.00 to 1, and
(b) 1/2 of 1% per annum, if otherwise. The rate at which such commitment fee is
calculated shall be adjusted on and as of the date on which the consolidated
financial statements for each period of four consecutive fiscal quarters of the
Borrower and its Subsidiaries are delivered pursuant to Section 9.1(a) or (b),
provided, however, that if such financial statements are not delivered when
required
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pursuant to such Section, then until such financial statements are so delivered
for purposes of calculating the rate at which such commitment fee is calculated
the ratio of Consolidated Funded Debt to Adjusted EBITDA for such period shall
be deemed to be greater than 2.00 to 1.
4.5 Termination or Reduction of Revolving Credit Commitments. The Borrower
shall have the right, upon not less than five Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; provided
that no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Revolving Credit Loans made on the
effective date thereof, the Aggregate Outstanding RC Extensions of Credit would
exceed the Revolving Credit Commitments then in effect. Any such reduction shall
be in an amount equal to $1,000,000 or a whole multiple thereof and shall reduce
permanently the Revolving Credit Commitments then in effect.
SECTION 5. LETTERS OF CREDIT
5.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Lenders set forth in
Section 5.4(a), agrees to issue letters of credit ("Letters of Credit") for the
account of the Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by the
Issuing Lender; provided that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (1) the L/C
Obligations would exceed the L/C Commitment or (2) the aggregate Available RC
Commitments would be less than zero.
(b) Each Letter of Credit shall:
(1) be denominated in Dollars and shall be a standby letter of credit
issued to support obligations of the Borrower and/or the Subsidiaries,
contingent or otherwise, in respect of insurance obligations, to workman's
compensation board or similar Governmental Authority for workman's
compensation liabilities of the Borrower and/or the Subsidiaries, and for
such other purposes as may be approved by the Issuing Lender and the
Administrative Agent (such consent not to be unreasonably withheld), and
(2) expire no later than the earlier of (i) the Revolving Credit
Termination Date and (ii) 364 days from the date of issuance (subject to
renewal).
(c) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
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5.2 Procedure for Issuance of Letters of Credit. The Borrower may from time
to time request that the Issuing Lender issue a Letter of Credit by delivering
to the Issuing Lender at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may request. Upon receipt of any Application, the Issuing Lender will process
such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof.
5.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the
Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit commission with respect to each Letter of
Credit, computed for the period from the date of such payment to the date upon
which the next such payment is due hereunder at a rate equal to the sum of the
Applicable Margin for Eurodollar Loans then in effect and 0.25% per annum,
calculated on the basis of the actual days elapsed over a 360 day year, of the
aggregate amount available to be drawn under such Letter of Credit on the date
on which such fee is calculated. One-quarter of one percent (.25%) of such fee
shall be payable to the Issuing Lender, and the remainder of such fee shall be
payable to the L/C Participants and the Issuing Lender to be shared ratably
among them in accordance with their respective Revolving Credit Commitment
Percentages. Such commissions shall be payable in arrears on each L/C Fee
Payment Date to occur after the issuance of each Letter of Credit and shall be
nonrefundable.
(b) In addition to the foregoing fees and commissions, the Borrower shall
pay or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
5.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk, an undivided interest equal to such L/C Participant's
Revolving Credit Commitment Percentage in the Issuing Lender's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with
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the Issuing Lender that, if a draft is paid under any Letter of Credit for which
the Issuing Lender is not reimbursed in full by the Borrower in accordance with
the terms of this Agreement, such L/C Participant shall pay to the Issuing
Lender upon demand at the Issuing Lender's address for notices specified herein
an amount equal to such L/C Participant's Revolving Credit Commitment Percentage
of the amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the Issuing
Lender pursuant to Section 5.4(a) in respect of any unreimbursed portion of any
payment made by the Issuing Lender under any Letter of Credit is paid to the
Issuing Lender within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Lender on demand an amount equal
to the product of (1) such amount, times (2) the daily average Federal funds
rate, as quoted by the Issuing Lender, during the period from and including the
date such payment is required to the date on which such payment is immediately
available to the Issuing Lender, times (3) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any L/C Participant pursuant
to Section 5.4(a) is not in fact made available to the Issuing Lender by such
L/C Participant within three Business Days after the date such payment is due,
the Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans hereunder. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with Section 5.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
5.5 Reimbursement Obligations of the Borrower. (a) The Borrower agrees to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender or, if later, on each date on which such
draft is paid by the Issuing Lender for the amount of (1) such draft so paid and
(2) any taxes and any reasonable fees, charges or other costs or expenses
incurred by the Issuing Lender in connection with such payment at its address
for notices specified herein in lawful money of the United States of America and
in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this Section from the date such amounts become payable
(whether at stated
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maturity, by acceleration or otherwise) until payment in full at the rate which
would be payable on any outstanding Base Rate Loans which were then overdue.
(c) Each drawing under any Letter of Credit shall constitute a request by
the Borrower to the Administrative Agent for a borrowing pursuant to Section 4.3
of Base Rate Loans in the amount of such drawing. The Borrowing Date with
respect to such borrowing shall be the date of such drawing.
5.6 Obligations Absolute. (a) The Borrower's obligations under this Section
5 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender that the Issuing
Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 5.5(a) shall not be affected by, among other things,
(1) the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or (2) any dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter of Credit may be
transferred or (3) any claims whatsoever of the Borrower against any beneficiary
of such Letter of Credit or any such transferee.
(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct.
(d) The Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender to the Borrower.
5.7 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
5.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 5, the provisions of this Section 5 shall apply.
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SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS
6.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any interest
payable thereon, (iii) any commitment fee or (iv) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus 2%
or (y) in the case of any such overdue interest, commitment fee or other amount,
the rate described in paragraph (b) of this Section plus 2%, in each case from
the date of such non-payment until such overdue principal, interest, commitment
fee or other amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.
6.2 Conversion and Continuation Options. (a) The Borrower may elect from
time to time to Convert Eurodollar Loans to Base Rate Loans, by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such Conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to Convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election. Any such notice of Conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods therefor.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Loans and Base
Rate Loans may be Converted as provided herein, provided that (i) no Loan may be
Converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined that such a Conversion is not appropriate, (ii) any such Conversion
may only be made if, after giving effect thereto, Section 6.3 shall not have
been contravened, and (iii) no Loan may be Converted into a Eurodollar Loan
after the date that is one month prior to the Revolving Credit Termination Date
(in the case of Conversions of Revolving Credit Loans) or the date of the final
installment of principal (in the case of Conversions of Term Loans and
Acquisition Loans).
(b) Any Eurodollar Loan may be Continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Administrative Agent, in accordance with the applicable provisions of the
term "Interest
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Period" set forth in Section 1.1, of the length of the next Interest Period to
be applicable to such Loans, provided that no Eurodollar Loan may be Continued
as such (i) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined that such a
Continuation is not appropriate, (ii) if, after giving effect thereto, Section
6.3 would be contravened or (iii) after the date that is one month prior to the
Revolving Credit Termination Date (in the case of Continuations of Revolving
Credit Loans) or the date of the final installment of principal (in the case of
Continuations of Term Loans and Acquisition Loans) and provided, further, that
if the Borrower shall fail to give such notice or if such Continuation is not
permitted pursuant to this Section 6.2, such Loans shall be automatically
converted to Base Rate Loans on the last day of such then expiring Interest
Period.
6.3 Maximum Number of Tranches. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, in no event shall there be more than eight
Tranches outstanding at any time.
6.4 Optional Prepayments. The Borrower may on the last day of any Interest
Period with respect thereto, in the case of Eurodollar Loans or at any time and
from time to time, in the case of Base Rate Loans, prepay the Loans, in whole or
in part, without premium or penalty, upon at least three Business Days'
irrevocable written notice to the Administrative Agent, specifying the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans, Base
Rate Loans or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to Section 6.12
and, in the case of prepayments of the Term Loans and Acquisition Loans only,
accrued interest to such date on the amount prepaid. Partial prepayments of the
Term Loans and Acquisition Loans pursuant to this Section shall be applied to
the installments of principal thereof in the inverse order of their scheduled
maturities. Amounts prepaid on account of the Term Loans and Acquisition Loans
may not be reborrowed. Partial prepayments pursuant to this Section shall be in
an aggregate principal amount of $1,000,000 or a whole multiple thereof.
6.5 Mandatory Prepayments. (a) Subject to Section 6.12, if on any date the
Aggregate Outstanding RC Extensions of Credit exceeds the Revolving Credit
Commitments, the Borrower shall immediately prepay the Revolving Credit Loans
and cash collateralize or replace Letters of Credit in an amount equal to the
amount of such excess.
(b) Unless the Required Lenders otherwise agree, the Borrower shall prepay
the Loans and reduce the Commitments in an amount equal to (i) 100% of the Net
Proceeds of any sale or issuance of debt securities, and 75% of the Net Proceeds
of any sale or issuance of any equity securities, in either case by the Borrower
or any Subsidiary, whether in a public offering, a private placement or
otherwise and (ii) 100% of the Net Proceeds of any sale, lease, assignment,
exchange or other disposition for cash of any asset or group of assets not
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made in the ordinary course of business (including, without limitation, but
subject to clause (d) of this Section 6.5, insurance proceeds paid as a result
of any destruction, casualty or taking of any property of the Borrower or any
Subsidiary and the proceeds of key person life insurance required by the terms
hereof), by the Borrower or any Subsidiary of the Borrower, in any such case no
later than three Business Days following receipt by the Borrower or such
Subsidiary of such proceeds, together with accrued interest to such date on the
amount prepaid; provided that no such prepayment shall be required pursuant to
subclause (ii) of this Section 6.5(b) unless the aggregate amount of such Net
Proceeds received by the Borrower and its Subsidiaries and not previously
applied to prepayment of the Loans and the reduction of the Commitments pursuant
to Section 6.5(b)(ii) is at least $100,000 for any single disposition or
$500,000 in the aggregate for all dispositions in any year. Amounts prepaid
pursuant to this Section 6.5(b) shall be applied first to the Term Loans and the
Acquisition Loans (or, if no Acquisition Loans are then outstanding, to the
reduction of the Acquisition Credit Commitments), pro rata, until paid in full,
and second to the reduction of the Revolving Credit Commitments and the
prepayment of the Revolving Credit Loans and/or cash collateralization of the
Letters of Credit. Prepayments of installments of Term Loans and Acquisition
Loans shall be applied in the inverse order of maturity and such amounts so
prepaid may not be reborrowed. Nothing in this Section 6.5(b) shall be construed
to derogate any restriction or limitation contained in any Loan Document imposed
on any transaction of the types described in this Section 6.5(b), including
without limitation the restrictions set forth in Sections 10.2, 10.5 and 10.6
hereof.
(c) On or before the earlier of the date on which the financial statements
referred to in Section 9.1(a) are required to be delivered in respect of a
fiscal year of the Borrower, beginning with the fiscal year ending August 31,
2000, and the date on which such financial statements are actually delivered,
the Borrower shall prepay the Term Loans and Acquisition Loans and permanently
reduce the Commitments in the amount of 50% of Excess Cash Flow for the fiscal
year covered by such financial statements, together with accrued interest to
such date on the amount prepaid. Amounts prepaid pursuant to this Section 6.5(c)
shall be applied first to the Term Loans and the Acquisition Loans (or, if no
Acquisition Loans are then outstanding, to the reduction of the Acquisition
Credit Commitments), pro rata, until paid in full, and second to the reduction
of the Revolving Credit Commitments and the prepayment of the Revolving Credit
Loans and/or cash collateralization of the Letters of Credit. Prepayments of
installments of Term Loans and Acquisition Loans shall be applied in the inverse
order of maturity and such amounts so prepaid may not be reborrowed.
(d) Net Proceeds received by the Borrower or any Subsidiary as proceeds of
insurance upon any destruction, casualty or taking with respect to any property
of the Borrower or any Subsidiary need not be applied as set forth in Section
6.5(b) to the extent that such Net Proceeds are applied to the repair,
rebuilding or replacement of the property which was the subject of such
destruction, casualty or taking within 60 days after the receipt of such Net
Proceeds. If required by the Administrative Agent, such Net Proceeds shall be
held in a special collateral account, subject to the sole dominion and control
of the Administrative Agent and in a manner reasonably satisfactory to the
Administrative Agent, as additional Collateral for the Obligations and the
Subsidiaries Guarantee, until such time as it is to be applied to such repair,
rebuilding or replacement.
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6.6 Computation of Interest and Fees. (a) Commitment fees and, whenever it
is calculated on the basis of the Prime Rate, interest shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed; and, otherwise, interest shall be calculated on the basis of a 360-day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the Lenders of the effective date and the amount of each such
change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 6.1(a) or (c).
6.7 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans Loan requested to be made on the first day of
such Interest Period shall be made as Base Rate Loans, (y) any Loans that were
to have been Converted on the first day of such Interest Period to Eurodollar
Loans shall be Converted to or Continued as Base Rate Loans and (z) any
outstanding Eurodollar Loans shall be Converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or Continued as
such, nor shall the Borrower have the right to Convert Loans to Eurodollar
Loans.
6.8 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower
from the Lenders hereunder, each payment by the Borrower on account of any
commitment fee hereunder and any reduction of the Term Loan Commitments, the
Acquisition Loan Commitments or the Revolving Credit Commitments of the Lenders
shall be made pro rata according to the respective Term Loan Commitment
Percentages, Acquisition Loan
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Commitment Percentages or Revolving Credit Commitment Percentages, as
applicable, of the Lenders. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Term Loans, Acquisition
Loans or the Revolving Credit Loans shall be made pro rata according to the
respective outstanding principal amounts of the Term Loans, Acquisition Loans or
the Revolving Credit Loans, as applicable, then held by the Lenders. All
payments (including prepayments) to be made by the Borrower hereunder, whether
on account of principal, interest, fees or otherwise, shall be made without
set-off or counterclaim and shall be made prior to 12:00 noon, New York City
time, on the due date thereof to the Administrative Agent, for the account of
the Lenders, at the Administrative Agent's office specified in Section 13.2, in
Dollars and in immediately available funds. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its Term Loan Commitment Percentage, Acquisition Loan
Commitment Percentage or Revolving Credit Commitment Percentage, as applicable,
of such borrowing available to the Administrative Agent, the Administrative
Agent may assume that such Lender is making such amount available to the
Administrative Agent, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Administrative Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this Section shall be conclusive in the absence of manifest error. If such
Lender's Term Loan Commitment Percentage, Acquisition Loan Commitment Percentage
or Revolving Credit Commitment Percentage, as applicable, of such borrowing is
not made available to the Administrative Agent by such Lender within three
Business Days of such Borrowing Date, the Administrative Agent shall also be
entitled to recover such amount with interest thereon at the rate per annum
applicable to Base Rate Loans hereunder, on demand, from the Borrower.
6.9 Illegality. Notwithstanding any other provision herein, if the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, Continue Eurodollar Loans as such and
Convert Base Rate Loans to Eurodollar Loans shall forthwith be
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canceled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be Converted automatically to Base Rate Loans on the respective last
days of the then current Interest Periods with respect to such Loans or within
such earlier period as required by law. If any such Conversion of a Eurodollar
Loan occurs on a day which is not the last day of the then current Interest
Period with respect thereto, the Borrower shall pay to such Lender such amounts,
if any, as may be required pursuant to Section 6.12.
6.10 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 6.11 and changes in the
rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, Converting into,
Continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on such
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, the
Borrower shall promptly pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction.
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(c) If any Lender becomes entitled to claim any additional amounts pursuant
to this Section, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
A certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender to the Borrower (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. The agreements in
this Section shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
6.11 Taxes. (a) All payments made by the Borrower under this Agreement and
any Notes shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any Note). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Administrative Agent or any Lender hereunder or under any Note, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of America or a state thereof if such Lender fails to comply with the
requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) (A) if such Lender is a "bank" within the meaning of Section
881(c)(3)(A) of the Code, deliver to the Borrower and the Administrative
Agent (x) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor
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applicable form, as the case may be, and (y) an Internal Revenue Service
Form W-8 or W-9, or successor applicable form, as the case may be, or (B)
if such Lender is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code and cannot deliver either Internal Revenue Service Form 1001 or
4224, deliver (x) a certificate substantially in the form of Exhibit J (a
"Non-Bank Status Certificate") and (y) two completed and signed copies of
Internal Revenue Service Form W-8 or successor applicable form;
(ii) deliver to the Borrower and the Administrative Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or
the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, (ii) in the
case of a Non-Bank Status Certificate, that it is not a "bank" as such term is
defined in Section 881(c)(3)(A) of the Code, and (iii) in the case of a Form W-8
or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to Section 13.6 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms and statements required pursuant to this
Section, provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.
6.12 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of,
Conversion into or Continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, Converted or Continued, for the period from the date of such
prepayment or of such failure to borrow, Convert or Continue to the last day of
such Interest Period (or, in the case of a failure to borrow, Convert or
Continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable
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rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Bank on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
6.13 Lending Offices; Change of Lending Office. (a) Loans of each Type made
by any Lender shall be made and maintained at such Lender's Applicable Lending
Office for Loans of such Type.
(b) Each Lender agrees that if it makes any demand for payment under
Section 6.10 or 6.11(a), or if any adoption or change of the type described in
Section 6.9 shall occur with respect to it, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrower to make payments
under Section 6.10 or 6.11(a), or would eliminate or reduce the effect of any
adoption or change described in Section 6.9.
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and warrants to
the Administrative Agent and each Lender that:
7.1 Financial Condition. (a) The consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at November 30, 1997 and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, reported on by Ernst and Young, LLP, copies of which have heretofore
been furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at February 28, 1998 and the related unaudited consolidated statements of income
and of cash flows for the three-month period ended on such date, certified by a
Responsible Officer, copies of which have heretofore been furnished to each
Lender, are complete and correct and present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their consolidated cash flows
for the three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). Neither the
Borrower nor any of its consolidated Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent
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liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other financial derivative,
which is not reflected in the foregoing statements or in the notes thereto.
During the period from August 31, 1997 to and including the date hereof there
has been no sale, transfer or other disposition by the Borrower or any of its
consolidated Subsidiaries of any material part of its business or property and
no purchase or other acquisition of any business or property (including any
Capital Stock of any other Person) material in relation to the consolidated
financial condition of the Borrower and its consolidated Subsidiaries at August
31, 1997.
(b) The pro forma consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at November 30, 1997, certified by a Responsible
Officer of the Borrower (the "Pro Forma Balance Sheet"), a copy of which has
been provided to the Administrative Agent and each Lender, is the unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries
adjusted to give effect (as if such events had occurred on such date) to (i) the
Kwik Acquisition, (ii) the Refinancing, (iii) the making of the Term Loans, (iv)
the making of the Revolving Credit Loans to be made on the Closing Date, (v) the
application of the proceeds of the foregoing in accordance with the terms of the
Loan Documents and (vi) the payment of all fees and expenses related to the
foregoing transactions, as estimated in good faith as of the date of the Pro
Forma Balance Sheet. The Pro Forma Balance Sheet, together with the notes
thereto, presents fairly, on a pro forma basis, the consolidated financial
position of the Borrower and its Subsidiaries as at November 30, 1997, assuming
that the events specified in the preceding sentence had actually occurred on
such date.
(c) The operating forecast and cash flow projections of the Borrower and
its consolidated Subsidiaries, copies of which have heretofore been furnished to
the Lenders, have been prepared in good faith under the direction of a
Responsible Officer of the Borrower, and in accordance with GAAP. The Borrower
has no reason to believe that as of the date of delivery thereof such operating
forecast and cash flow projections are materially incorrect or misleading in any
material respect, or omit to state any material fact which would render them
misleading in any material respect.
7.2 No Change. (a) Since August 31, 1997 there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect, and (b) except as set forth on Schedule 7.2, during the period from
August 31, 1997 to and including the date hereof no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Borrower nor has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by the Borrower or any of its
Subsidiaries.
7.3 Existence; Compliance with Law. Each of the Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the
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business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
7.4 Power; Authorization; Enforceable Obligations. The Borrower has the
corporate power and authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party and to borrow hereunder and has taken
all necessary corporate action to authorize the borrowings on the terms and
conditions of this Agreement and any Notes and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which the
Borrower is a party other than those consents, authorizations, notices and
filings which have been obtained, are in full force and effect and are set forth
on Schedule 7.4. This Agreement has been, and each other Loan Document to which
it is a party will be, duly executed and delivered on behalf of the Borrower.
This Agreement constitutes, and each other Loan Document to which it is a party
when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
7.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents to which the Borrower is a party, the borrowings hereunder and the use
of the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than Liens created by the Security Documents in
favor of the Administrative Agent).
7.6 No Material Litigation. Except as set forth on Schedule 7.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect.
7.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
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7.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries
has good record and marketable title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to any
Lien except as permitted by Section 10.3.
7.9 Intellectual Property. The Borrower and each of its Subsidiaries owns,
or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which could not have a
Material Adverse Effect (the "Intellectual Property"). No claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does the Borrower know of any valid basis for any
such claim. The use of such Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, do not have a Material Adverse
Effect.
7.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries has a Material Adverse
Effect.
7.11 Taxes. Each of the Borrower and its Subsidiaries has filed or caused
to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
7.12 Federal Regulations. No part of the proceeds of any Loans will be used
for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation G or Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect, or for any purpose which violates, or which would be inconsistent
with, the provisions of the regulations of such Board of Governors. If requested
by any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
said Regulation G or Regulation U, as the case may be.
7.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-
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year period. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
7.14 Investment Company Act; Other Regulations. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
7.15 Subsidiaries. Schedule 7.15 sets forth the name of each direct or
indirect Subsidiary of the Borrower, its form of organization, its jurisdiction
of organization, the total number of issued and outstanding shares or other
interests of Capital Stock thereof, the classes and number of issued and
outstanding shares or other interests of Capital Stock of each such class, the
name of each holder of Capital Stock thereof and the number of shares or other
interests of such Capital Stock held by each such holder and the percentage of
all outstanding shares or other interests of such class of Capital Stock held by
such holders.
7.16 Security Documents. (a) The provisions of each Security Document are
effective to create in favor of the Administrative Agent for the ratable benefit
of the Lenders a legal, valid and enforceable security interest in all right,
title and interest of the Loan Party thereto in the "Collateral" described
therein.
(b) (i) When financing statements have been filed in the offices in the
jurisdictions listed in Schedule 7.16, the Security Agreements shall each
constitute a fully perfected first Lien on, and security interest in, all right,
title and interest of each of the Borrower and its Subsidiaries in the
"Collateral" described therein, which can be perfected by such filing.
(ii) When certificates representing the Pledged Stock (as defined in the
Pledge Agreements) are delivered to the Administrative Agent, together with
stock powers endorsed in blank by a duly authorized officer of the pledgors
thereof, the Pledge Agreements shall constitute a fully perfected first Lien on,
and security interest in, all right, title and interest of the pledgors parties
thereto in the "Collateral" described therein.
(c) Neither the Borrower nor any Subsidiary owns any property, or has any
interest in any property, that is not subject to a fully perfected first
priority Lien on, or security interest in, such property in favor of the
Administrative Agent, other than any such property having an aggregate fair
market value at any one time not exceeding $250,000.
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7.17 Accuracy and Completeness of Information. (a) All factual information,
reports and other papers and data with respect to the Loan Parties (other than
projections) furnished, and all factual statements and representations made, to
the Administrative Agent or the Lenders by a Loan Party, or on behalf of a Loan
Party, were, at the time the same were so furnished or made, when taken together
with all such other factual information, reports and other papers and data
previously so furnished and all such other factual statements and
representations previously so made, complete and correct in all material
respects, to the extent necessary to give the Administrative Agent and the
Lenders true and accurate knowledge of the subject matter thereof in all
material respects, and did not, as of the date so furnished or made, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained therein not misleading in light of the
circumstances in which the same were made.
(b) All projections with respect to the Loan Parties furnished by or on
behalf of a Loan Party to the Administrative Agent or the Lenders were prepared
and presented in good faith by or on behalf of such Loan Party. No fact is known
to a Loan Party which materially and adversely affects or in the future is
reasonably likely (so far as such Loan Party can reasonably foresee) to have a
Material Adverse Effect which has not been set forth in the financial statements
referred to in Section 7.1 or in such information, reports, papers and data or
otherwise disclosed in writing to the Administrative Agent or the Lenders prior
to the Closing Date.
7.18 Labor Relations. No Loan Party is engaged in any unfair labor practice
which could reasonably be expected to have a Material Adverse Effect. There is
(a) no unfair labor practice compliant pending or, to the best knowledge of each
Loan Party and each of the Subsidiaries, threatened against a Loan Party before
the National Labor Relations Board which could reasonably be expected to have a
Material Adverse Effect and no grievance or arbitration proceeding arising out
of or under a collective bargaining agreement is so pending or threatened; (b)
no strike, labor dispute, slowdown or stoppage pending or, to the best knowledge
of each Loan Party, threatened against a Loan Party; and (c) no union
representation question existing with respect to the employees of a Loan Party
and no union organizing activities are taking place with respect to any thereof.
7.19 Insurance. Each Loan Party has, with respect to its properties and
business, insurance covering the risks, in the amounts, with the deductible or
other retention amounts, and with the carriers, listed on Schedule 7.19, which
insurance meets the requirements of Section 9.5 hereof and Section 5(m) of the
Security Agreements and Section 5 of the Mortgages as of the date hereof and the
Closing Date.
7.20 Solvency. On the Closing Date, after giving effect to the consummation
of the Kwik Acquisition and the Refinancing and to the incurrence of all
indebtedness and obligations being incurred on or prior to such date in
connection herewith and therewith, (i) the amount of the "present fair saleable
value" of the assets of the Borrower and of the Borrower and its Subsidiaries,
taken as a whole, will, as of such date, exceed the amount of all "liabilities
of the Borrower and of the Borrower and its Subsidiaries, taken as a whole,
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contingent or otherwise", as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (ii) the present fair saleable value of the assets of
the Borrower and of the Borrower and its Subsidiaries, taken as a whole, will,
as of such date, be greater than the amount that will be required to pay the
liabilities of the Borrower and of the Borrower and its Subsidiaries, taken as a
whole, on their respective debts as such debts become absolute and matured,
(iii) neither the Borrower nor the Borrower and its Subsidiaries, taken as a
whole, will have, as of such date, an unreasonably small amount of capital with
which to conduct their respective businesses, and (iv) each of the Borrower and
the Borrower and its Subsidiaries, taken as a whole, will be able to pay their
respective debts as they mature. For purposes of this Section 7.20, "debt" means
"liability on a claim", "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, and (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
7.21 Purpose of Loans. The proceeds of the Term Loans shall be used by the
Borrower to finance in part the Kwik Acquisition and the Refinancing, and to pay
fees and expenses incurred in connection therewith. The proceeds of the
Revolving Credit Loans shall be used to finance in part the Refinancing, for the
working capital requirements of the Borrower in the ordinary course of business
and to pay fees and expenses incurred in connection herewith. The proceeds of
the Acquisition Loans shall be used to finance in part the purchase price of
Permitted Acquisitions, and to pay fees and expenses incurred in connection
therewith.
7.22 Environmental Matters. Except as set forth on Schedule 7.22:
(a) The facilities and properties owned, leased or operated by the Borrower
or any of its Subsidiaries (the "Properties") do not contain, and have not
previously contained, any Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a violation of, or (ii) could
give rise to liability under, any Environmental Law except in either case
insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are in compliance,
and have in the last five years been in compliance, in all material respects
with all applicable Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with respect to
the Properties or the business operated by the Borrower or any of its
Subsidiaries (the "Business") which could interfere with the continued operation
of the Properties or impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the
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Properties or the Business, nor does the Borrower have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could [reasonably] give rise to liability under
Environmental Laws.
7.23 Regulation H. No Mortgage or Leasehold Mortgage encumbers improved
real property which is located in an area that has been identified by the
Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968.
7.24 Existing Indebtedness. Schedule 10.2 is a true and complete list of
all Indebtedness of the Borrower and its Subsidiaries as of the date hereof.
Immediately after giving effect to the Refinancing, the only Indebtedness of the
Borrower and its Subsidiaries will be that listed under Part B of Schedule 10.2,
"Indebtedness to Remain Outstanding".
7.25 No Warehouse Inventory. No Inventory of any Loan Party is held in a
warehouse operated by any Person.
7.26 Collateral Certificate. As of the Closing Date, the information in the
Collateral Certificate provided by or on behalf of the Loan Parties is true and
correct in all material respects.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to Initial Loans. The agreement of each Lender to make the
initial Loan requested to be made by it is subject to the satisfaction,
immediately prior to or
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concurrently with the making of such Loan on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received:
(i) this Agreement, executed and delivered by a duly authorized
officer of the Borrower, with a counterpart for each Lender,
(ii) for the account of each Lender having a Term Loan
Commitment, a Term Note of the Borrower conforming to the requirements
hereof and executed by a duly authorized officer of the Borrower,
(iii) for the account of each Lender having an Acquisition
Loan Commitment, an Acquisition Note of the Borrower conforming to
the requirements hereof and executed by a duly authorized officer of
the Borrower,
(iv) for the account of each Lender having a Revolving Credit
Commitment, a Revolving Credit Note of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
(v) each of the Pledge Agreements, each executed and delivered by
a duly authorized officer of the party thereto, with a counterpart or
a conformed copy for each Lender,
(vi) the Subsidiaries Guarantee, executed and delivered by a duly
authorized officer of the parties thereto, with a counterpart or a
conformed copy for each Lender,
(vii) the Security Agreement, executed and delivered by a duly
authorized officer of the party thereto, with a counterpart or a
conformed copy for each Lender,
(viii) the Mortgage, with respect to the property listed on
Schedule 8.1, executed and delivered by a duly authorized officer of
the party thereto, with a counterpart or a conformed copy for each
Lender,
(ix) a Blocked Account Agreement (as defined in the Security
Agreement), executed and delivered by a duly authorized officer of the
parties thereto, with respect to each Bank Account (as defined in the
Security Agreement) of each Loan Party,
(x) a certificate of insurance naming the Administrative Agent
additional insured and loss payee with respect to the key person life
insurance policy for William E. Dye and with respect to each other
policy of insurance maintained by the Loan Parties,
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(xi) the Intercreditor and Subordination Agreement executed and
delivered by a duly authorized officer of each party thereto, with a
counterpart or a conformed copy for each Lender, and
(xii) the Post-Closing Agreement, executed and delivered by a
duly authorized officer of the party thereto, with a counterpart or a
conformed copy for each Lender.
(b) Related Agreements. The Administrative Agent shall have received,
with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of the Kwik Acquisition Documents and such
other documents or instruments as may be reasonably requested by the
Administrative Agent, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which the
Borrower or its Subsidiaries may be a party.
(c) Concurrent Transactions. (i) The Kwik Acquisition shall have been,
or shall be concurrently with the making of the initial Loans, consummated
for a total consideration, including fees and expenses thereof, not to
exceed $27,000,000 pursuant to satisfactory documentation, without any
amendment, modification or waiver thereof except with the consent of the
Required Lenders, and the Administrative Agent shall have received evidence
satisfactory to it to that effect.
(ii) All amounts owing to the Existing Creditors under the Existing
Financing Documents listed on Part A of Schedule 10.2, "Indebtedness to be
Repaid" shall have been, or shall be concurrently with the making of the
initial Loans, repaid in full, and any Liens created pursuant to such
Existing Financing Documents shall have been or shall be, concurrently with
the making of the initial Loans, released, and such Existing Financing
Documents shall terminate and be of no further force and effect upon such
repayment; in each case pursuant to such payout letters, Lien releases,
termination statements, mortgage satisfactions and other documents as the
Administrative Agent may require, each of which shall be in form and
substance satisfactory to the Administrative Agent.
(d) Corporate Proceedings of the Borrower. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, (ii) the borrowings contemplated
hereunder and (iii) the granting by it of the Liens created pursuant to the
Borrower Security Documents, certified by the Secretary or an Assistant
Secretary of the Borrower as of the Closing Date, which certificate shall
be in substantially in the form of Exhibit M-1 and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(e) Borrower Incumbency Certificate. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of the
Borrower, dated the
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Closing Date, as to the incumbency and signature of the officers of the
Borrower executing any Loan Document, which certificate shall be
substantially in the form of Exhibit M-1, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(f) Corporate Proceedings of Subsidiaries. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each Subsidiary of the Borrower which
is a party to a Loan Document authorizing (i) the execution, delivery and
performance of the Loan Documents to which it is a party and (ii) the
granting by it of the Liens created pursuant to the Security Documents to
which it is a party, certified by the Secretary or an Assistant Secretary
of each such Subsidiary as of the Closing Date, which certificate shall be
substantially in the form of Exhibit M-2 and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(g) Subsidiary Incumbency Certificates. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower which is a Loan Party, dated the Closing Date,
as to the incumbency and signature of the officers of such Subsidiaries
executing any Loan Document, satisfactory, which certificate shall be
substantially in the form of Exhibit M-2, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of each such
Subsidiary.
(h) Corporate Documents. The Administrative Agent shall have received,
with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each Loan Party, certified as
of the Closing Date as complete and correct copies thereof by the Secretary
or an Assistant Secretary of such Loan Party.
(i) Good Standing Certificates. The Administrative Agent shall have
received, with a copy for each Lender, certificates dated as of a recent
date from the Secretary of State or other appropriate authority, evidencing
the good standing of each Loan Party (i) in the jurisdiction of its
organization and (ii) in each other jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires it to
qualify as a foreign Person except, as to this subclause (ii), where the
failure to so qualify could not have a Material Adverse Effect.
(j) Consents, Licenses and Approvals. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of a
Responsible Officer of the Borrower, substantially in the form of Exhibit
O, (i) attaching copies of all consents, authorizations and filings
referred to in Section 7.4, and (ii) stating that such consents, licenses
and filings are in full force and effect, and each such consent,
authorization and filing shall be in form and substance satisfactory to the
Administrative Agent.
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(k) Fees. The Administrative Agent shall have received the fees and
other compensation, and reimbursement of expenses, to be received on the
Closing Date referred to in the Fee Letter.
(l) Legal Opinions. The Administrative Agent shall have received, with
a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Buchanan Ingersoll, special
counsel to the Borrower and the other Loan Parties, substantially in
the form of Exhibit K - 1;
(ii) the executed legal opinion of Wilde Sapte, special United
Kingdom counsel to Elements UK, substantially in the form of Exhibit
K-2; and
(iii) the executed legal opinion of Kantor, Davidoff, Wolfe,
Mandelker & Kass, P.C., counsel to Kwik and its Subsidiaries in
connection with the Kwik Acquisition, in form and substance
satisfactory to the Administrative Agent, accompanied by a letter from
such counsel authorizing the Lenders and the Administrative Agent to
rely on such opinion as if it were addressed to the Lenders and the
Administrative Agent as of the Closing Date.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(m) Pledged Stock; Stock Powers. The Administrative Agent shall have
received the certificates representing the shares pledged pursuant to each
of the Pledge Agreements (limited to 2/3 of the shares of Elements UK),
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof. Each Issuer
referred to in each Pledge Agreement shall have delivered an acknowledgment
of and consent to such Pledge Agreement, executed by a duly authorized
officer of such Issuer, in substantially the form appended to such Pledge
Agreement. All necessary action shall have been taken under English law to
provide the Administrative Agent with a fixed charge over the shares of
Elements UK to be pledged to the Administrative Agent.
(n) Actions to Perfect Liens. The Administrative Agent shall have
received evidence in form and substance satisfactory to it that all
filings, recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form UCC-1,
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the Liens created by the Security Documents shall have been
completed or will be completed promptly following the making of the initial
Loans hereunder.
(o) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person satisfactory to the Administrative
Agent, of the Uniform Commercial Code, judgment and tax lien filings which
may have been filed with
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respect to personal property of the Borrower, and the results of such
search shall be satisfactory to the Administrative Agent.
(p) Insurance. The Administrative Agent shall have received evidence
in form and substance satisfactory to it that all of the requirements of
Section 9.5 hereof and Section 5(m) of the Security Agreements and Section
5 of the Mortgages shall have been satisfied; provided, however, that such
evidence regarding the life insurance policy of William E. Dye shall be
delivered pursuant to the terms set forth in the Post-Closing Agreement.
(q) Historical Financial Information. The Lenders shall have received
copies of the audited annual financial statements and quarterly financial
statements for the Borrower and its Subsidiaries for (i) the fiscal years
ended August 31, 1996 and 1997, and (ii) each fiscal quarter ended
subsequent to August 31, 1997 for which financial statements are available
and for Kwik and its Subsidiaries for (i) the fiscal year ended December
31, 1996 and 1997, and (ii) each fiscal quarter subsequent to December 31,
1997 for which financial statements are available.
(r) Pro Forma Financial Information. The Lenders shall have received
the Pro Forma Balance Sheet referenced in Section 7.1(b) above.
(s) Maximum Expenses. The Administrative Agent shall have received
evidence reasonably satisfactory to it that the aggregate fees and expenses
incurred by the Borrower in connection with the Kwik Acquisition, the
Refinancing and the financing thereof shall not exceed $2,000,000.
(t) Landlord Agreements. The Administrative Agent shall have received
a Landlord Agreement with respect to each of the Properties leased by any
Loan Party as of the date set forth on the Post-Closing Agreement, duly
executed and delivered on behalf of the lessor of such real property.
(u) Senior Managers. The Lenders shall be satisfied that senior
managers acceptable to them shall be available to manage the Borrower and
its Subsidiaries and that all management incentive plans relating to the
Borrower and its Subsidiaries are satisfactory to the Lenders.
8.2 Conditions to Acquisition Loans. The agreement of each Lender having an
Acquisition Loan Commitment to make any Acquisition Loan requested to be made by
it is subject to the satisfaction, immediately prior to or concurrently with the
making of such Acquisition Loan, of the following conditions precedent:
(a) Acquisition Documents. (i) The Administrative Agent shall have
received, not later than five (5) Business Days prior to the proposed
Borrowing Date for such Permitted Acquisition, drafts of each of the
Acquisition Documents substantially in the form as will be executed at the
closing of the Permitted Acquisition to be financed with such requested
Acquisition Loans (and thereafter copies of
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subsequent drafts marked to show changes) and on the Borrowing Date the
Administrative Agent shall have received copies of the executed material
Acquisition Documents certified as to authenticity by the Borrower on the
date of borrowing, and such other documents or instruments as may be
reasonably requested by the Administrative Agent, including, without
limitation, a copy of any debt instrument, security agreement or other
material contract to which the Borrower or any Subsidiary of the Borrower
may be a party, and if requested by the Administrative Agent, Borrower
shall use its best efforts to obtain reliance letters from counsel
rendering opinions pursuant to such Acquisition Documents.
(ii) The Administrative Agent shall have received a certificate from a
duly authorized officer of each of the Loan Parties party to such
Acquisition Documents and each of the Persons which are sellers in such
Permitted Acquisition, addressed to the Administrative Agent and the
Lenders, to the effect that none of the Acquisition Documents as delivered
to the Administrative Agent has been amended, supplemented or otherwise
modified except as approved by the Administrative Agent, that each of the
representations and warranties set forth in such Acquisition Documents
continue to be true, complete and correct in all material respects as of
the Acquisition Closing Date as if made on and as of the Acquisition
Closing Date, that the Administrative Agent and the Lenders may rely on
such representations and warranties as if such representations and
warranties were made to the Administrative Agent and Lenders directly, and
that no default, breach or violation of any of the Acquisition Documents
has occurred and is continuing.
(b) Pro Forma Financial Condition. The Administrative Agent shall have
received, with a copy for each Lender, not later than five Business Days
prior to the proposed Borrowing Date of such Acquisition Loan, the
certificate of a Responsible Officer of the Borrower, in form and substance
satisfactory to the Lenders, referenced in clause (ii) of the proviso to
the definition of "Permitted Acquisition".
(c) Supplements to Loan Documents; Additional Loan Documents. The
Administrative Agent shall have received:
(i) if there shall be any new Subsidiary acquired or formed in
connection with the proposed Permitted Acquisition to be financed with such
Acquisition Loans, Supplements to the Borrower Pledge Agreement and/or
Subsidiaries Pledge Agreement, substantially in the form of Exhibit A
thereto, executed and delivered by a duly authorized officer of the party
thereto, with a counterpart or a conformed copy for each Lender,
(ii) if there shall be any new Subsidiary acquired or formed in
connection with the proposed Permitted Acquisition to be financed with such
Acquisition Loans, Supplements to the Subsidiaries Guarantee, substantially
in the form of Exhibit A thereto, executed and delivered by a duly
authorized officer of the party thereto, with a counterpart or a conformed
copy for each Lender,
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(iii) if there shall be any new Subsidiary acquired or formed in
connection with the proposed Permitted Acquisition to be financed with such
Acquisition Loans, Supplements to the Security Agreement, substantially in
the form of Annex A thereto, executed and delivered by a duly authorized
officer of the party thereto, with a counterpart or a conformed copy for
each Lender,
(iv) if the proposed Permitted Acquisition included the acquisition of
any leasehold, fee, or other interests in real property and if requested by
the Required Lenders, one or more Mortgages or Leasehold Mortgages on such
real property, together with such title insurance, surveys, flood
insurance, and legal opinions as the Required Lenders may request, and
(d) Consummation of Acquisition. The Permitted Acquisition shall have
been, or shall be concurrently with the making of such Acquisition Loans,
consummated in accordance with the terms of the Acquisition Documents
therefor, without any material amendment thereto or modification or waiver
thereof, except with the consent of the Required Lenders and with notice of
all amendments thereto and modifications and waivers thereof, and the
Administrative Agent shall have received evidence satisfactory to it to
that effect.
(e) Corporate Proceedings of the Borrower. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors of the Borrower authorizing
(i) the execution, delivery and performance of the Acquisition Documents
and the Loan Documents and supplements thereto to which it is a party being
executed and delivered in connection with the Acquisition Loans requested
in connection with such Permitted Acquisition and (ii) the granting by it
of the Liens created pursuant to the Security Documents and supplements
thereto being executed and delivered in connection with the Acquisition
Loans requested in connection with such Permitted Acquisition, certified by
the Secretary or an Assistant Secretary of the Borrower as of the
Acquisition Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(f) Borrower Incumbency Certificate. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of the
Borrower, dated such Acquisition Closing Date, as to the incumbency and
signature of the officers of the Borrower executing any Loan Document being
executed and delivered in connection with the Acquisition Loans requested
in connection with such Permitted Acquisition, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
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(g) Corporate Proceedings of Subsidiaries. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors of each Subsidiary of the
Borrower which is a party to an Acquisition Document authorizing (i) the
execution, delivery and performance of the Acquisition Documents and the
Loan Documents and supplements thereto to which it is a party being
executed and delivered in connection with the Acquisition Loans requested
in connection with such Permitted Acquisition and (ii) the granting by it
of the Liens created pursuant to the Security Documents and supplements
thereto being executed and delivered in connection with the Acquisition
Loans requested in connection with such Permitted Acquisition, certified by
the Secretary or an Assistant Secretary of such Subsidiary as of the
Acquisition Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(h) Subsidiary Incumbency Certificate. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower, dated such Acquisition Closing Date, as to the
incumbency and signature of the officers of such Subsidiary executing any
Loan Document being executed and delivered in connection with the
Acquisition Loans requested in connection with such Permitted Acquisition,
satisfactory in form and substance to the Administrative Agent, executed by
the President or any Vice President and the Secretary or any Assistant
Secretary of such Subsidiary.
(i) Corporate Documents. The Administrative Agent shall have received,
with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each Loan Party as to which
such corporate documents were not theretofore delivered, certified as of
the Acquisition Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of such Loan Party.
(j) Good Standing Certificates. The Administrative Agent shall have
received, with a copy for each Lender, certificates dated as of a recent
date from the Secretary of State or other appropriate authority, evidencing
the good standing of each Person becoming a Loan Party as of such
Acquisition Closing Date (i) in the jurisdiction of its organization and
(ii) in each other jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires it to qualify as a foreign
Person except, as to this subclause (ii), where the failure to so qualify
could not have a Material Adverse Effect.
(k) Legal Opinions. The Administrative Agent shall have received, with
a counterpart for each Lender, copies of such executed legal opinions with
respect to, and to the extent delivered in connection with, such Permitted
Acquisition, and the Borrower shall use its best efforts to obtain letters
from counsel delivering such opinions permitting the Administrative Agent
and the Lenders to rely thereon.
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(l) Pledged Stock; Stock Powers; Pledged Interests. The Administrative
Agent shall have received the certificates representing the shares or other
equity interests of each Subsidiary formed or acquired in connection with
such Permitted Acquisition or which otherwise shall not theretofore have
been delivered to the Administrative Agent, which are to be pledged
pursuant to the Pledge Agreements, together with an undated stock or
transfer power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof. Each such Subsidiary shall have
delivered an acknowledgment of and consent to such respective Pledge
Agreement, executed by a duly authorized officer of such Subsidiary, in
substantially the form appended to such Pledge Agreement.
(n) Actions to Perfect Liens. The Administrative Agent shall have
received all financing statements on form UCC-1, and all other actions
shall have been taken, in each case which are necessary or, in the opinion
of the Administrative Agent, desirable to perfect the Liens created by the
Security Documents as supplemented in connection with such Acquisition
Loans shall have been completed or will be completed promptly following the
making of the initial Loans hereunder.
(o) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person satisfactory to the Administrative
Agent, of the Uniform Commercial Code, judgment and tax lien filings which
may have been filed with respect to personal property of each Subsidiary
formed or acquired in connection with such Permitted Acquisition, the
Borrower, to the extent that such Permitted Acquisition results in the
Borrower owning property or conducting operations in new jurisdictions, and
if requested by the Administrative Agent the seller of the property to be
acquired in such Permitted Acquisition, and the results of such search
shall be satisfactory to the Administrative Agent.
(p) Chief Financial Officer. The Borrower shall have retained a Chief
Financial Officer reasonably acceptable to the Administrative Agent.
8.3 Conditions to Each Loan. The agreement of each Lender to make any Loan
requested to be made by it on any date (including, without limitation, its
initial Loan) is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material respects on
and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Loans requested to
be made on such date.
(c) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions
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contemplated by this Agreement, the other Loan Documents, the Kwik
Acquisition Documents and any other Acquisition Documents shall be
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
paragraphs (a) and (b) of this Section 8.3 have been satisfied.
SECTION 9. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments remain
in effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall and (except in
the case of delivery of financial information, reports and notices) shall cause
each of its Subsidiaries to:
9.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by Ernst & Young, LLP or other
independent certified public accountants of nationally recognized standing;
and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and
(c) within 20 days after the end of each calendar month, (i) an
accounts receivable aging schedule for the Borrower and its Subsidiaries on
a consolidated basis and (ii) a schedule of each Domestic Subsidiary's
billings for the immediately preceding calendar month (without giving
effect to any intercompany adjustments);
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all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
9.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 9.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 9.1(a), (b) and (c), a certificate of a Responsible
Officer (i) stating that, to the best of such Officer's knowledge, the
Borrower during such period has observed or performed all of its covenants
and other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to be observed, performed or
satisfied by it, and that such Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and
(ii) showing in detail the calculations supporting such Officer's
certification of the Borrower's compliance with the requirements of Section
10.1(a) through 10.1(c);
(c) not later than thirty days prior to the end of each fiscal year of
the Borrower, a copy of the projections by the Borrower of the operating
budget and cash flow budget of the Borrower and its Subsidiaries for the
succeeding fiscal year, such projections to be accompanied by a certificate
of a Responsible Officer to the effect that such projections have been
prepared on the basis of sound financial planning practice and that such
Officer has no reason to believe they are incorrect or misleading in any
material respect;
(d) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(e) during the month of March in each calendar year, a report of a
reputable insurance broker with respect to the insurance maintained by the
Borrower and its Subsidiaries in accordance with Section 9.5 of this
Agreement and Section 5(m) of the Security Agreement and Section 5 of each
Mortgage, and such supplemental reports with respect to insurance
maintained by the Borrower and its Subsidiaries as the Administrative Agent
may from time to time reasonably request; and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
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9.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
9.4 Conduct of Business and Maintenance of Existence. Continue to engage in
business of the same general type as now conducted by it and preserve, renew and
keep in full force and effect its corporate existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business except as otherwise permitted pursuant to
Section 10.5; comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
9.5 Maintenance of Property; Insurance. (a) Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business, and maintain key person life insurance for William
E. Dye at not less than level of coverage maintained on the Closing Date, which
insurance shall name the Administrative Agent as lender loss payee, in the case
of property or casualty insurance, and as an additional insured, in the case of
liability insurance; and furnish to each Lender, upon written request, full
information as to the insurance carried.
(b) on or before April 24, 1998, the Administrative Agent shall have
received evidence of being named as loss payee on the life insurance policy of
William E. Dye.
9.6 Inspection of Property; Books and Records; Discussions. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
9.7 Notices. Promptly give notice to the Administrative Agent and each
-------
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any
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Governmental Authority, which in either case, if not cured or if adversely
determined, as the case may be, would have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $500,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the acquisition by any Loan Party of any property or interest in
property (including, without limitation, real property), that is not
subject to a perfected Lien in favor of the Administrative Agent pursuant
to the Security Documents;
(e) the occurrence of any transaction or occurrence referred to in
Section 6.5(b), and the receipt of any Net Proceeds or any insurance
proceeds as a result thereof (whether or not such Net Proceeds or proceeds
are then required to be applied to the repayment of Loans and reduction of
Revolving Credit Commitments as specified in Section 6.5(b));
(f) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
or the termination, Reorganization or Insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan; and
(g) any material adverse change in the business, operations, property,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
9.8 Environmental Laws. (a) Comply with, and ensure compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.
(b) Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions required under Environmental Laws
and promptly comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws.
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9.9 Additional Collateral; Additional Guarantors. (a) In the event that the
Borrower or any Subsidiary acquires any property or interest in property
(including, without limitation, real property) other than property made subject
to a Lien permitted under Section 10.3(g), that is not subject to a perfected
Lien in favor of the Administrative Agent pursuant to the Security Documents,
the Borrower shall, and shall cause any such Subsidiary to, take such action
(including, without limitation, the preparation and filing of mortgages or deeds
of trust in form and substance satisfactory to the Administrative Agent) as the
Administrative Agent shall request in order to create and/or perfect a Lien in
favor of the Administrative Agent on such property.
(b) In the event that the Borrower is permitted to acquire or form any
additional Subsidiary in accordance with the terms of this Agreement and the
other Loan Documents, such Subsidiary shall execute a guarantee and a security
agreement, or supplements to the Subsidiaries Guarantee and the Subsidiaries
Security Agreement, and the Borrower and/or any Subsidiary which is a holder of
any Capital Stock of such Subsidiary shall execute such pledge agreements or
supplements to the Pledge Agreements, each in form and substance satisfactory to
the Administrative Agent, and shall take such other action as shall be necessary
or advisable (including, without limitation, the execution of financing
statements on form UCC-1) in order to perfect the Liens granted by such
Subsidiary in favor of the Administrative Agent for the benefit of the Lenders
and to effect and perfect the pledge of all of the Capital Stock of such
Subsidiary in favor of the Administrative Agent for the benefit of the Lenders.
Such Subsidiary shall thereupon become a Guarantor for all purposes under the
Loan Documents, including, without limitation, Section 9.9(a) of this Agreement.
The Administrative Agent shall be entitled to receive legal opinions of one or
more counsel to the Borrower and such Subsidiary addressing such matters as the
Administrative Agent or its counsel may reasonably request, including, without
limitation, the enforceability of the guaranty and the security agreement to
which such Subsidiary becomes a party and the pledge of the Capital Stock of
such Subsidiary, and the creation, validity and perfection of the Liens so
granted by such Subsidiary and the Borrower and/or other Subsidiaries to the
Administrative Agent for the benefit of the Lenders.
9.10 Audit. Upon the request of the Administrative Agent, a field audit
shall be conducted by CIBC or a Person satisfactory to the Administrative Agent,
of the accounts receivable, inventory of the Borrower, Kwik and their respective
Subsidiaries, which audit shall be in form and substance satisfactory to the
Administrative Agent, and the results of such audit shall be delivered to the
Administrative Agent; provided, that unless an Event of Default has occurred,
the Administrative Agent may request no more than one such audit each calendar
year.
9.11 Filing of Mortgage. In the event that the Borrower or any of its
Subsidiaries is the beneficial owner of the real property located at 545 West
45th Street, New York, New York as of the date which is six months after the
Closing Date, the Mortgage which has been executed and delivered to the
Administrative Agent pursuant to Section 8.1(a)(viii) of this Credit Agreement
shall be filed in the appropriate recording office, the Borrower shall cause to
be provided title insurance of the type called for by Section 9.12
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hereof and a legal opinion with respect to the Mortgage acceptable to the
Administrative Agent, and the Borrower shall pay all applicable recording taxes
and other fees and expenses in connection therewith.
9.12 Filing of Leasehold Mortgage. In the event that the Borrower or any of
its Subsidiaries enters into a lease of real property with a term greater than
or equal to five years, the Borrower shall:
(a) cause a Leasehold Mortgage, satisfactory to the Administrative Agent,
to be executed by the parties to such lease for the benefit of the
Administrative Agent and filed in the appropriate recording office;
(b) provide to the Administrative Agent and the title insurance company
issuing the policies referred to in 9.12(c) (the "Title Insurance Company") maps
or plats of an as-built survey of the sites of the property covered by such
Leasehold Mortgage certified to the Administrative Agent and the Title Insurance
Company in a manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative Agent and
the Title Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1962, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following: (i)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites or necessary or desirable to use the sites;
(iv) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building
structures and improvements on the sites; and (vi) if the site is described as
being on a filed map, a legend relating the survey to said map;
(c) provide to the Administrative Agent in respect of each parcel covered
by each Leasehold Mortgage a mortgagee's title policy (or policies) or marked up
unconditional binder for such insurance dated the Closing Date. Each such policy
shall (i) be in an amount satisfactory to the Administrative Agent; (ii) be
issued at ordinary rates; (iii) insure that the Leasehold Mortgages insured
thereby creates a valid first Lien on such parcel (or such leasehold interest)
free and clear of all defects and encumbrances, except such as may be approved
by the Administrative Agent; (iv) name the Administrative Agent for the benefit
of the Lenders as the insured thereunder; (v) be in the form of ALTA Loan Policy
- - 1970 (Amended 10/17/70); (vi) contain such endorsements and affirmative
coverage as the Administrative Agent may request and (vii) be issued by title
companies satisfactory to the Administrative Agent (including any such title
companies acting as co-insurers or reinsurers, at the option of the
Administrative Agent). The Administrative Agent shall have received
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evidence satisfactory to it that all premiums in respect of each such policy,
and all charges for mortgage recording tax, if any, have been paid;
(d) if requested by the Administrative Agent, provide (i) a policy of flood
insurance which (A) covers any parcel of improved real property which is
encumbered by any Leasehold Mortgage, (B) is written in an amount not less than
the outstanding principal amount of the indebtedness secured by such Leasehold
Mortgage which is reasonably allocable to such real property or the maximum
limit of coverage made available with respect to the particular type of property
under the Act, whichever is less, and (C) has a term ending not later than the
maturity of the indebtedness secured by such Leasehold Mortgage and (ii)
confirmation that the Company has received the notice required pursuant to
Section 208(e)(3) of Regulation H of the Board of Governors of the Federal
Reserve System;
(e) provide a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in Section
9.12(c) and a copy, certified by such parties as the Administrative Agent may
deem appropriate, of all other documents affecting the property covered by each
Leasehold Mortgage;
(f) pay all applicable recording taxes and other fees and expenses in
connection therewith; and
(g) deliver to the Administrative Agent a Landlord Agreement with respect
to the real property encumbered by any such Leasehold Mortgage.
9.13 Execution of Leasehold Mortgages. On or before April 30, 1998 and in
accordance with Section 9.12, the Borrower shall cause Leasehold Mortgages,
substantially in the form of Exhibit G to be executed for each of the four
leases of real property at 28th Street, New York, New York, as more fully
described on Schedule 9.13.
SECTION 10. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments remain
in effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall not, and (except
with respect to Section 10.1) shall not permit any of its Subsidiaries to,
directly or indirectly:
10.1 Financial Condition Covenants.
(a) Maximum Leverage Ratio. Permit the ratio of Consolidated Funded Debt of
the Borrower and its Subsidiaries as of the last day of any fiscal quarter of
the Borrower ending during any test period set forth on the table below, to
Adjusted EBITDA for the period of four consecutive fiscal quarters ending on the
same day, to be greater than the ratio set forth opposite such test period
below:
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Four Fiscal Quarters Ending Ratio
------------------------------------ -----------------
5/31/98 3.45
8/31/98 3.35
11/30/98 3.25
2/28/99 3.25
5/31/99 3.25
8/31/99 3.25
11/30/99 2.75
2/28/00 2.75
5/31/00 2.75
8/31/00 2.75
11/30/00 2.25
2/28/01 2.25
5/31/01 2.25
8/31/01 2.25
11/30/01 and thereafter 2.00
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(b) Minimum EBITDA. Permit the amount of Consolidated EBITDA for any period
of four consecutive fiscal quarters of the Borrower ending during any test
period set forth on the table below to be less than the amount set forth
opposite such test period below:
Four Fiscal Quarters Ending Amount
---------------------------------- ---------------
5/31/98 $11,000,000
8/31/98 11,000,000
11/30/98 11,500,000
2/28/99 11,500,000
5/31/99 11,500,000
8/31/99 11,500,000
11/30/99 12,500,000
2/28/00 12,500,000
5/31/00 12,500,000
8/31/00 12,500,000
11/30/00 14,000,000
2/28/01 14,000,000
5/31/01 14,000,000
8/31/01 14,000,000
11/30/01 15,000,000
2/28/02 15,000,000
5/31/02 15,000,000
8/31/02 15,000,000
11/30/02 16,500,000
2/28/03 16,500,000
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(c) Minimum Fixed Charge Coverage. Permit the ratio of Consolidated EBITDA
of the Borrower and its Subsidiaries to Consolidated Fixed Charges for any test
period of the Borrower set forth on the table below to be less than the ratio
set forth opposite such test period below:
Test Period Ratio
---------------------------- --------------
3/1/98 - 5/31/98 1.50
3/1/98 - 8/31/98 1.30
3/1/98 - 11/30/98 1.20
3/1/98 - 2/28/99 1.20
(and for each period of
four quarters thereafter)
10.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary Guarantor and of
any Subsidiary Guarantor to the Borrower or any other Subsidiary Guarantor;
(c) Indebtedness of the Borrower and any of its Subsidiaries incurred
to finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a Financing Lease or otherwise) in an aggregate principal amount
not exceeding as to the Borrower and its Subsidiaries $7,500,000 at any
time outstanding;
(d) long-term Indebtedness for borrowed money of any Foreign
Subsidiary, together with similar such Indebtedness listed on Schedule
10.2, not to exceed $3,000,000 at any one time outstanding;
(e) short-term Indebtedness of Foreign Subsidiaries incurred for
working capital purposes, together with similar such Indebtedness listed on
Schedule 10.2, not to exceed $5,000,000 at any one time outstanding;
(f) Indebtedness outstanding on the date hereof and listed on Part B
of Schedule 10.2, and prior to the Closing Date only, Indebtedness
outstanding on the date hereof and listed on Part A of Schedule 10.2;
(g) Indebtedness of a corporation which becomes a Subsidiary after the
date hereof, provided that (i) such Indebtedness existed at the time such
corporation became a Subsidiary and was not created in anticipation thereof
and (ii) immediately after giving effect to the acquisition of such
corporation by the Borrower no Default or Event of Default shall have
occurred and be continuing;
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(h) additional Indebtedness not exceeding $500,000 in aggregate
principal amount at any one time outstanding;
(i) Indebtedness in an amount and having terms approved by the
Required Lenders which is subordinated on terms approved by the Required
Lenders in each case in their sole discretion; and
(j) all Guarantee Obligations permitted under Section 10.4.
10.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP (or, in the case
of Foreign Subsidiaries, generally accepted accounting principles in effect
from time to time in their respective jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 10.3,
securing Indebtedness permitted by Section 10.2(f), provided that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries
permitted by Section 10.2(c) incurred to finance the acquisition of fixed
or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with
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the acquisition of such fixed or capital assets, (ii) such Liens do not at
any time encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the principal amount of Indebtedness secured by any such
Lien shall at no time exceed 90% of the original purchase price of such
property of such property at the time it was acquired;
(h) Liens on assets of any Foreign Subsidiary securing Indebtedness of
such Foreign Subsidiary permitted by Sections 10.2(d) and (e);
(i) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by Section
10.2(g), provided that (i) such Liens existed at the time such corporation
became a Subsidiary and were not created in anticipation thereof, (ii) any
such Lien is not spread to cover any property or assets of such corporation
after the time such corporation becomes a Subsidiary, and (iii) the amount
of Indebtedness secured thereby is not increased;
(j) Liens (not otherwise permitted hereunder) which secure obligations
not exceeding (as to the Borrower and all Subsidiaries) $100,000 in
aggregate amount at any time outstanding; and
(k) Liens created pursuant to the Security Documents.
10.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer
to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 10.4;
(b) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed (i) $100,000 at any one time outstanding for
the Borrower and its Domestic Subsidiaries and (ii) $100,000 at any one
time outstanding for the Borrower's Foreign Subsidiaries; and
(c) the Guarantees.
10.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Domestic Subsidiaries of the Borrower (provided that the wholly owned
Domestic Subsidiary or Domestic Subsidiaries shall be the continuing or
surviving corporation); and
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(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any other wholly owned Domestic Subsidiary of
the Borrower.
10.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), except as set forth on
Schedule 10.6, whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person other than the Borrower or any wholly owned Subsidiary except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business; provided that the Net Proceeds of each
such transaction are applied to the prepayment of the Loans as provided in
Section 6.5(b);
(b) the sale or other disposition of any property in the ordinary
course of business, provided that (other than inventory) the aggregate book
value of all assets so sold or disposed of in any period of twelve
consecutive months shall not exceed 2 1/2% of consolidated total assets of
the Borrower and its Subsidiaries as at the beginning of such twelve-month
period;
(c) the sale of inventory in the ordinary course of business;
(d) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(e) as permitted by Section 10.5(b); and
(f) the sale or disposition of any other property (not including
Accounts) not in the ordinary course of business provided that all such
sales shall not exceed, in the aggregate $100,000 and that the proceeds of
such sales shall be subject to the mandatory prepayment requirements of
Section 6.5 of this Agreement.
10.7 Limitation on Leases. Permit Consolidated Lease Expense (other than
Capital Leases) for any fiscal year of the Borrower to exceed $1,500,000.
10.8 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Stock, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any Subsidiary
[(such declarations, payments, setting apart, purchases, redemptions,
defeasances, retirements, acquisitions and distributions being herein called
"Restricted Payments"), except that: any
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wholly-owned Subsidiary may declare and pay dividends to the Borrower or, in the
case of any Subsidiary that is wholly-owned by any other Subsidiary, to such
Subsidiary.
10.9 Limitation on Capital Expenditures. Make or commit to make (by way of
the acquisition of securities of a Person or otherwise) any expenditure in
respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding, in the aggregate
for the Borrower and its Subsidiaries during any of the fiscal years of the
Borrower set forth below, the amount set forth opposite such fiscal year below:
Fiscal Year Amount/Category of Expenditures Total Amount
- ------------------ ------------------------------------- ------------------
1998 Financing Leases - $2,250,000 $3,000,000
Other - 750,000
1999 Financing Leases - $2,250,000 $3,000,000
Other - 750,000
2000 Financing Leases - $2,625,000 $3,500,000
Other - 875,000
2001 Financing Leases - $3,000,000 $4,000,000
Other $1,000,000
2002 Financing Leases - $3,000,000 $4,000,000
Other - $1,000,000
provided, that up to 50% of any such amount if not so expended in the fiscal
year for which it is permitted above, may be carried over for expenditure in the
next following fiscal year (but not subsequent years).
10.10 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except :
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Permitted Acquisitions;
(d) Capital Stock of any Subsidiary;
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(e) loans and advances by the Borrower to its wholly-owned
Subsidiaries and by such Subsidiaries to the Borrower not to exceed
$200,000 in the aggregate at any one time outstanding;
(f) investments by the Borrower in Subsidiary Guarantors and
investments by such Subsidiary Guarantors in the Borrower and in other
Subsidiary Guarantors;
(g) loans and advances to employees of the Borrower or its
Subsidiaries in the ordinary course of business, in an aggregate amount not
to exceed $250,000 in the aggregate at any one time outstanding; and
(h) intercompany loans listed on Schedule 10.2 Part B hereto.
10.11 Limitation on Optional Payments and Modifications of Debt
Instruments. (a) Make any optional payment or prepayment on or redemption or
purchase of any Indebtedness (other than the Loans), (b) amend, modify or
change, or consent or agree to any amendment, modification or change to any of
the terms of any such Indebtedness or any Acquisition Documents (other than any
such amendment, modification or change which would extend the maturity or reduce
the amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon), or (c) amend, modify or change
the terms of, consent or otherwise agree to any amendment, modification or
change to the terms of, or waive or otherwise relinquish any rights or causes of
action under or arising out of, any Kwik Acquisition Document, or any Landlord
Agreement.
10.12 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
10.13 Limitation on Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
10.14 Limitation on Changes in Fiscal Year. Permit the fiscal year of the
Borrower to end on a day other than August 31.
10.15 Limitation on Negative Pledge Clauses. Enter into with any Person any
agreement, other than (a) this Agreement and (b) any industrial revenue bonds,
purchase money mortgages or Financing Leases permitted by this Agreement (in
which cases, any prohibition or limitation shall only be effective against the
assets financed thereby), which
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prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
10.16 Limitation on Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or which
are directly related thereto.
10.17 Governing Documents. Amend its certificate of incorporation (except
to increase the number of authorized shares of common stock), partnership
agreement or other Governing Documents, without the prior written consent of the
Required Lenders, which shall not be unreasonably withheld or delayed.
10.18 Limitation on Subsidiary Formation. Form any Subsidiaries unless,
immediately upon the formation of such Subsidiary, all requirements of Section
9.9 shall have been satisfied.
10.19 Limitation on Securities Issuances. (A) Permit any Subsidiary to
issue any shares of Capital Stock that are not "certificated securities" (as
defined in ss. 8-102 of the Uniform Commercial Code as in effect in the State of
New York on the date hereof) and are not pledged to the Administrative Agent
pursuant to a Pledge Agreement or (B) issue, or permit any Subsidiary to issue,
any shares of preferred stock.
10.20 Inventory. No inventory of any Loan Party shall be held in a
warehouse unless a warehouse bailment agreement form satisfactory to the
Administrative Agent has been entered into by the Loan Party intending to place
such inventory in a warehouse, the Person operating such warehouse and the
Administrative Agent.
SECTION 11. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Loan, or any other amount payable hereunder or
under the other Loan Documents or the Fee Letter, within five days after
any such interest or other amount becomes due in accordance with the terms
thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
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(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 10, Section
5 of the Pledge Agreement (U.S.), or Sections 5(h), 5(i), 5(j), 5(k), 5(p),
5(s) or 5(t) of the Security Agreement]; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation, beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created, if the aggregate amount of the Indebtedness and/or Guarantee
Obligations in respect of which such default or defaults shall have
occurred is at least $500,000; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in
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furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
the Borrower or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
involve an aggregate amount in excess of $100,000; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $100,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect, or the Borrower or any other Loan Party which
is a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby; or
(j) Any Guarantee shall cease, for any reason, to be in full force and
effect or any Guarantor shall so assert; or
(k) William E. Dye shall cease to maintain beneficial ownership of 10%
or more of the outstanding class of Capital Stock having ordinary voting
power in the election of directors of the Borrower, unless such cessation
is the result of a testamentary disposition upon his death; or
(l) (i) Any Person or "group" (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended) other than
William E. Dye or Richard J. Sirota (A) shall have acquired beneficial
ownership of 20% or more of any
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outstanding class of Capital Stock having ordinary voting power in the
election of directors of the Borrower or (B) shall obtain the power
(whether or not exercised) to elect a majority of the Borrower's directors
or (ii) the Board of Directors of the Borrower shall not consist of a
majority of Continuing Directors; "Continuing Directors" shall mean the
directors of the Borrower on the Closing Date and each other director, if
such other director's nomination for election to the Board of Directors of
the Borrower is recommended by a majority of the then Continuing Directors,
provided that notwithstanding anything in this Section 11 to the contrary,
the transfer of Capital Stock owned by either William E. Dye or Richard J.
Sirota upon their death shall not be deemed an Event of Default hereunder;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit have presented the documents required thereunder)
to be due and payable forthwith, whereupon the same shall immediately become due
and payable.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the Notes. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower. The Borrower shall execute and deliver to the Administrative Agent,
for the account of the Issuing Lender and the L/C Participants, such further
documents and instruments as the Administrative Agent may request to evidence
the creation and perfection of the within security interest in such cash
collateral account.
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Except as expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
SECTION 12. THE ADMINISTRATIVE AGENT
12.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
12.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
12.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
12.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon
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advice and statements of legal counsel (including, without limitation, counsel
to the Borrower or any other Loan Party), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may deem
and treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
12.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
12.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of the Borrower or
any other Loan Party, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Loan Parties and
made its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished
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to the Lenders by the Administrative Agent hereunder or under the other Loan
Documents, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower or any other Loan Party which may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Credit Exposure Percentages in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
12.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower and the other Loan Parties as
though the Administrative Agent were not the Administrative Agent hereunder and
under the other Loan Documents. With respect to the Loans made by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall
include the Administrative Agent in its individual capacity.
12.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be approved by the
Borrower, whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon such appointment and approval, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions
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of this Section 12 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 13.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) reduce the amount or extend the scheduled date of
maturity of any Loan or of any installment thereof, or reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the aggregate amount or extend the expiration date
of any Lender's Commitments, in each case without the consent of each Lender
affected thereby, or (ii) amend, modify or waive any provision of this Section
13.1 or reduce the percentage specified in the definition of Required Lenders,
or consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement and the other Loan Documents or release all
or substantially all of the Collateral or release all or substantially all of
the Guarantors from their obligations under the Guarantees, in each case without
the written consent of each of the Lenders, or (iii) amend, modify or waive any
provision of Section 12 without the written consent of the then Administrative
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Borrower, the Lenders and the Administrative Agent shall
be restored to their former positions and rights hereunder and under the other
Loan Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
13.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made (a) in the case of delivery by hand, when
delivered, (b) in the case of delivery by mail, three days after being deposited
in the mails, postage prepaid, or (c) in the case of delivery by facsimile
transmission, when sent and receipt has been electronically confirmed, addressed
as follows in the case of the Borrower and the Administrative Agent, and as set
forth in Schedule I in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto:
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The Borrower: Unidigital Inc.
545 West 45th Street
New York, New York 10036
Attention: William Dye
Fax: (212) 262-1830
The Administrative Agent: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: William Koslo
Fax: 212/856-3991
Telephone: 212/856-3545
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.3, 3.3, 3.5, 4.3, 4.5, 6.2, 6.4 or 6.8(b)
shall not be effective until received.
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
13.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or reimburse
each Lender and the Administrative Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to each Lender and of counsel
to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
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payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Administrative Agent harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents, the
Kwik Acquisition Documents, the Kwik Acquisition, any Acquisition Documents, any
Permitted Acquisition, or the use of the proceeds of the Loans in connection
with the Kwik Acquisition or any Permitted Acquisition and any such other
documents, including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower any of its Subsidiaries or any of
the Properties (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), provided, that the Borrower shall have no obligation
hereunder to the Administrative Agent or any Lender with respect to indemnified
liabilities arising from (i) the gross negligence or willful misconduct of the
Administrative Agent or any such Lender or (ii) legal proceedings commenced
against the Administrative Agent or any such Lender by any security holder or
creditor thereof arising out of and based upon rights afforded any such security
holder or creditor solely in its capacity as such. The agreements in this
Section shall survive repayment of the Loans and all other amounts payable
hereunder.
13.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Agreement are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest,
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such Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 13.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 6.10, 6.11, and 6.12 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 6.11, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof or, with the consent of the
Administrative Agent and the Issuing Lender (which in each case shall not be
unreasonably withheld), to an additional bank or financial institution ("an
Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit L, with appropriate completions (an
"Assignment and Acceptance"), executed by such Assignee, such assigning Lender
(and, in the case of an Assignee that is not then a Lender or an affiliate
thereof, by the Administrative Agent and the Issuing Lender) and delivered to
the Administrative Agent for its acceptance and recording in the Register,
provided that, in the case of any such assignment to an additional bank or
financial institution, the sum of the aggregate principal amount of the Loans,
the aggregate amount of the L/C Obligations and the aggregate amount of the
unused Revolving Credit Commitment being assigned are not less than $5,000,000
(or such lesser amount as may be agreed to by the Borrower and the
Administrative Agent). Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with Commitments as set forth therein, and (y)
the assigning Lender thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this Section, the consent
of the Borrower shall not be required, and, unless requested by the Assignee
and/or the assigning Lender, new Notes shall not be required to be executed and
delivered by the Borrower, for any assignment which occurs at any time when any
of the events described in Section 11(f) shall have occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower, shall maintain at
the address of the Administrative Agent referred to in Section 13.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amounts of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Administrative Agent and the Lenders
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may (and, in the case of any Loan or other obligation hereunder not evidenced by
a Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents. Any assignment of any
Loan or other obligation hereunder not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in the Register.
The Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Administrative Agent and the
Issuing Lender) together with payment to the Administrative Agent of a
registration and processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee, subject to the
provisions of Section 13.15, any and all financial information in such Lender's
possession concerning the Borrower and its Affiliates which has been delivered
to such Lender by or on behalf of the Borrower pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this Section concerning assignments of Loans and Notes relate
only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
13.7 Adjustments; Set-off. (a) If any Lender (a "benefited Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 11(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loan may exercise all rights of payment
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(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
13.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission of signature pages hereto), and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Borrower and the Administrative Agent.
13.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13.10 Integration. This Agreement and the other Loan Documents represent
the agreement of the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to the subject matter hereof not expressly set forth or referred to herein or in
the other Loan Documents.
13.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the
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United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 13.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
13.13 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Borrower and the other Loan Parties, on one hand,
and Administrative Agent and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
13.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
13.15 Confidentiality. Each Lender agrees to keep confidential all
non-public information provided to it by the Borrower pursuant to this Agreement
that is designated by the
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Borrower in writing as confidential; provided that nothing herein shall prevent
any Lender from disclosing any such information (i) to the Administrative Agent
or any other Lender, (ii) to any Transferee which receives such information
having been made aware of the confidential nature thereof, (iii) to its
employees, directors, agents, attorneys, accountants and other professional
advisors, (iv) upon the request or demand of any examiner or other Governmental
Authority having jurisdiction over such Lender, (v) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (vi) which has been publicly disclosed other
than in breach of this Agreement, or (vii) in connection with the exercise of
any remedy hereunder.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
UNIDIGITAL INC.
By:/s/ William E. Dye
-------------------------------------
Title: Chief Executive Officer
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent and as a Lender
By:/s/ William Koslo
-------------------------------------
Title: Executive Director
Credit Agreement: Signature Page
TERM NOTE
$25,000,000 New York, New York
March 24, 1998
FOR VALUE RECEIVED, the undersigned UNIDIGITAL INC., a
Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of CANADIAN IMPERIAL BANK OF COMMERCE (the "Lender"), at the office of
Canadian Imperial Bank of Commerce located at 425 Lexington Avenue, New York,
New York 10017, in lawful money of the United States of America and in
immediately available funds, the principal amount of TWENTY-FIVE MILLION DOLLARS
($25,000,000). The principal amount of this Term Note shall be payable in
installments in amounts equal to the Lender's Term Loan Commitment Percentage of
the amounts set forth on Schedule 2.2 to the Credit Agreement. Such installments
shall be payable on the dates set forth on Schedule 2.2 to the Credit Agreement.
The undersigned further agrees to pay interest in like money
at such office on the unpaid principal amount hereof from time to time from the
date hereof at the rates per annum and on the dates as provided in Section 6.1
of the Credit Agreement referred to below, until paid in full (both before and
after judgment).
The holder of this Term Note is authorized to, and so long as
it holds this Term Note shall, record the date, Type and amount of each Term
Loan made by the Lender pursuant to Section 2.1 of the Credit Agreement, each
Continuation thereof and each Conversion of all or a portion thereof to another
Type pursuant to Section 6.2 of the Credit Agreement, the date and amount of
each payment or prepayment of principal thereof and, in the case of Eurodollar
Loans, the length of each Interest Period and the Eurodollar Rate with respect
thereto, on the schedules annexed hereto and constituting a part hereof, or on a
continuation thereof which shall be annexed hereto and constitute a part hereof,
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded, provided that failure of the Lender to make any
such recordation (or any error in such recordation) shall not affect the
obligations of the Borrower under this Term Note or under the Credit Agreement.
This Term Note is one of the Term Notes referred to in the
Credit Agreement, dated as of March 24, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the lenders from time to time parties thereto (the "Lenders") and
Canadian Imperial Bank of Commerce, as Administrative Agent for the Lenders
thereunder, is entitled to the benefits thereof, is secured as provided therein
<PAGE>
and is subject to optional and mandatory prepayment in whole or in part as
provided therein. Terms used herein which are defined in the Credit Agreement
shall have such defined meanings unless otherwise defined herein or unless the
context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
The Borrower expressly waives diligence, presentment, protest,
demand and other notices of any kind.
This Term Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
UNIDIGITAL INC.
By /s/ William E. Dye
---------------------------------
Name: William E. Dye
Title: Chief Executive Officer
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A to
Term Note
---------
LOANS, CONVERSIONS AND PAYMENTS
OF BASE RATE LOANS
Amount of
Amount of Base Rate
Eurodollar Loans Unpaid
Amount Loans Converted Principal
of Base Converted into Amount of Balance of
Rate into Base Eurodollar Principal Base Rate Notation
Date Loan Rate Loans Loans Repaid Loans Made by
- ---- ------- ---------- ---------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- -------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- -------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE B to
Term Note
---------
LOANS, CONVERSIONS AND PAYMENTS
OF EURODOLLAR LOANS
Amount
of
Euro- Amount of
dollar Amount of Interest Eurodollar
Loan Base Rate Period and Loans Unpaid
(and Loans Eurodollar Converted Amount Principal
Contin- Converted Rate with into Base of Prin- Balance of
uations into Euro- Respect Rate cipal Eurodollar Notation
Date Thereof) dollar Loans Thereto Loans Repaid Loans Made by
- ---- -------- ------------ --------- --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
</TABLE>
ACQUISITION NOTE
$5,000,000 New York, New York
March 24, 1998
FOR VALUE RECEIVED, the undersigned UNIDIGITAL INC., a
Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of CANADIAN IMPERIAL BANK OF COMMERCE (the "Lender"), at the office of
Canadian Imperial Bank of Commerce located at 425 Lexington Avenue, New York,
New York 10017 in lawful money of the United States of America and in
immediately available funds, the principal amount of the lesser of (a) FIVE
MILLION DOLLARS ($5,000,000) and (b) the aggregate unpaid principal amount of
all Acquisition Loans made by the Lender to the undersigned pursuant to Section
3.1 of the Credit Agreement referred to below. Such installments shall be
payable on the dates and in the amounts set forth on Schedule 3.2 to the Credit
Agreement.
The undersigned further agrees to pay interest in like money
at such office on the unpaid principal amount hereof from time to time from the
date hereof at the rates per annum and on the dates as provided in Section 6.1
of the Credit Agreement referred to below, until paid in full (both before and
after judgment).
The holder of this Acquisition Note is authorized to, and so
long as it holds this Note shall, record the date, Type and amount of each
Acquisition Loan made by the Lender pursuant to Section 3.1 of the Credit
Agreement, each Continuation thereof and each Conversion of all or a portion
thereof to another Type pursuant to Section 6.2 of the Credit Agreement, the
date and amount of each payment or prepayment of principal thereof and, in the
case of Eurodollar Loans, the length of each Interest Period and the Eurodollar
Rate with respect thereto, on the schedules annexed hereto and constituting a
part hereof, or on a continuation thereof which shall be annexed hereto and
constitute a part hereof, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded, provided that failure
of the Lender to make any such recordation (or any error in such recordation)
shall not affect the obligations of the Borrower under this Acquisition Note or
under the Credit Agreement.
This Acquisition Note is one of the Acquisition Notes referred
to in the Credit Agreement, dated as of March 24, 1998 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the lenders from time to time parties thereto (the "Lenders") and
Canadian Imperial Bank of Commerce, as Administrative Agent for the Lenders
thereunder, is entitled to the benefits thereof, is secured as provided therein
and is subject to optional and mandatory prepayment in whole or in part as
provided therein. Terms used herein which are defined in the Credit Agreement
shall have such defined meanings unless otherwise defined herein or unless the
context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
The Borrower expressly waives diligence, presentment, protest,
demand and other notices of any kind.
This Acquisition Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
UNIDIGITAL INC.
By/s/ William E. Dye
---------------------------------
Name: William E. Dye
Title: Chief Executive Officer
<PAGE>
<TABLE>
SCHEDULE A to
Acquisition Note
----------------
LOANS, CONVERSIONS AND PAYMENTS
OF BASE RATE LOANS
<CAPTION>
Amount of
Amount of Base Rate
Eurodollar Loans Unpaid
Amount Loans Converted Principal
of Base Converted into Amount of Balance of
Rate into Base Eurodollar Principal Base Rate Notation
Date Loan Rate Loans Loans Repaid Loans Made by
- ---- ------- ---------- ---------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- -------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- -------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
</TABLE>
<PAGE>
<TABLE>
SCHEDULE B to
Acquisition Note
----------------
LOANS, CONVERSIONS AND PAYMENTS
OF EURODOLLAR LOANS
<CAPTION>
Amount
of
Euro- Amount of
dollar Amount of Interest Eurodollar
Loan Base Rate Period and Loans Unpaid
(and Loans Eurodollar Converted Amount Principal
Contin- Converted Rate with into Base of Prin- Balance of
uations into Euro- Respect Rate cipal Eurodollar Notation
Date Thereof) dollar Loans Thereto Loans Repaid Loans Made by
- ---- -------- ------------ --------- --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
</TABLE>
REVOLVING CREDIT NOTE
$10,000,000 New York, New York
March 24, 1998
FOR VALUE RECEIVED, the undersigned UNIDIGITAL INC., a
Delaware corporation (the "Borrower"), hereby unconditionally promises to pay on
the Revolving Credit Termination Date to the order of CANADIAN IMPERIAL BANK OF
COMMERCE (the "Lender"), at the office of Canadian Imperial Bank of Commerce
located at 425 Lexington Avenue, New York, New York 10017, in lawful money of
the United States of America and in immediately available funds, the principal
amount of the lesser of (a) TEN MILLION DOLLARS ($10,000,000) and (b) the
aggregate unpaid principal amount of all Revolving Credit Loans made by the
Lender to the undersigned pursuant to Section 4.1 of the Credit Agreement
referred to below.
The undersigned further agrees to pay interest in like money
at such office on the unpaid principal amount hereof from time to time from the
date hereof at the rates per annum and on the dates as provided in Section 4.1
of the Credit Agreement referred to below, until paid in full (both before and
after judgment).
The holder of this Revolving Credit Note is authorized to, and
so long as it holds this Note shall, record the date, Type and amount of each
Revolving Credit Loan made by the Lender pursuant to Section 4.1 of the Credit
Agreement, each Continuation thereof and each Conversion of all or a portion
thereof to another Type pursuant to Section 6.2 of the Credit Agreement, the
date and amount of each payment or prepayment of principal thereof and, in the
case of Eurodollar Loans, the length of each Interest Period and the Eurodollar
Rate with respect thereto, on the schedules annexed hereto and constituting a
part hereof, or on a continuation thereof which shall be annexed hereto and
constitute a part hereof, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded, provided that failure
of the Lender to make any such recordation (or any error in such recordation)
shall not affect the obligations of the Borrower under this Revolving Credit
Note or under the Credit Agreement.
This Revolving Credit Note is one of the Revolving Credit
Notes referred to in the Credit Agreement, dated as of March 24, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time parties thereto
(the "Lenders") and Canadian Imperial Bank of Commerce, as Administrative Agent
for the Lenders thereunder, is entitled to the benefits thereof, is secured as
provided therein and is subject to optional and mandatory prepayment in whole or
in part as provided therein. Terms used herein which are defined in the Credit
Agreement shall have such defined meanings unless otherwise defined herein or
unless the context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
The Borrower expressly waives diligence, presentment, protest,
demand and other notices of any kind.
This Revolving Credit Note shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.
UNIDIGITAL INC.
By /s/ William E. Dye
---------------------------------
Name: William E. Dye
Title: Chief Executive Officer
<PAGE>
<TABLE>
SCHEDULE A to
Revolving Credit Note
---------------------
LOANS, CONVERSIONS AND PAYMENTS
OF BASE RATE LOANS
<CAPTION>
Amount of
Amount of Base Rate
Eurodollar Loans Unpaid
Amount Loans Converted Principal
of Base Converted into Amount of Balance of
Rate into Base Eurodollar Principal Base Rate Notation
Date Loan Rate Loans Loans Repaid Loans Made by
- ---- ------- ---------- ---------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- -------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- -------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
- ---- ------- ---------- ---------- --------- ---------- --------
</TABLE>
<PAGE>
<TABLE>
SCHEDULE B to
Revolving Credit Note
---------------------
LOANS, CONVERSIONS AND PAYMENTS
OF EURODOLLAR LOANS
<CAPTION>
Amount
of
Euro- Amount of
dollar Amount of Interest Eurodollar
Loan Base Rate Period and Loans Unpaid
(and Loans Eurodollar Converted Amount Principal
Contin- Converted Rate with into Base of Prin- Balance of
uations into Euro- Respect Rate cipal Eurodollar Notation
Date Thereof) dollar Loans Thereto Loans Repaid Loans Made by
- ---- -------- ------------ --------- --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
- ---- -------- ------------ --------- --------- ------- ----------- --------
</TABLE>
STOCK PLEDGE AGREEMENT (U.S.)
STOCK PLEDGE AGREEMENT, dated as of March 24, 1998, made by UNIDIGITAL
INC., a Delaware corporation (the "Borrower"), in favor of CANADIAN IMPERIAL
BANK OF COMMERCE, as administrative agent (in such capacity, the "Administrative
Agent") for the lenders (the "Lenders") parties to the Credit Agreement referred
to below.
RECITALS
Pursuant to the Credit Agreement, dated as of March 24, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Lenders, the Issuing Lender and the
Administrative Agent, the Lenders have severally agreed to make loans to and the
Issuing Lender has agreed to issue letters of credit for the account of the
Borrower upon the terms and subject to the conditions set forth therein, such
loans to be evidenced by the Notes issued by the Borrower thereunder. It is a
condition precedent to the obligation of the Lenders to make their respective
loans to the Borrower, and of the Issuing Lender to issue its letters of credit,
under the Credit Agreement that the Borrower shall have executed and delivered
this Pledge Agreement to the Administrative Agent for the ratable benefit of the
Lenders and the Issuing Lender.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective loans to the Borrower, and the
Issuing Lender to issue its letters of credit, under the Credit Agreement, the
Borrower hereby agrees with the Administrative Agent, for the ratable benefit of
the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms which
are defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
"Additional Pledged Stock" shall have the meaning provided
in any supplement to this Pledge Agreement delivered pursuant to Section 5(e)
hereof.
"Code" means the Uniform Commercial Code from time to time
in effect in the State of New York.
<PAGE>
"Collateral" means the Pledged Stock and all Proceeds.
"Collateral Account" means any account established to hold
money Proceeds, maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Lenders only as provided in Section 8 of this Pledge Agreement.
"Hedge Agreement": as to any Person, any swap, cap, collar
or similar arrangement entered into by such Person providing for protection
against fluctuations in interest rates or currency exchange rates or the
exchange of nominal interest obligations, either generally or under specific
contingencies.
"Issuer" means each of the corporations identified on
Schedule I as an issuer of Pledged Stock.
"Pledge Agreement" means this Stock Pledge Agreement, as
amended, supplemented or otherwise modified from time to time.
"Pledged Stock" means the shares of capital stock listed on
Schedule I hereto, together with all stock certificates, options or rights of
any nature whatsoever which may be issued or granted by any of the Issuers to
the Borrower in respect of the Pledged Stock while this Pledge Agreement is in
effect, together with any Additional Pledged Stock at any time pledged pursuant
to Section 5(e).
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the State of New
York on the date hereof and, in any event, shall include, without limitation,
all dividends or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
"Secured Obligations" is the collective reference to (a) the
Obligations, and (b) all obligations and liabilities of the Borrower to the
Administrative Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of or in connection with any Hedge Agreement entered into
by the Borrower with any Lender and any other document made, delivered or given
in connection therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Lenders that are required to be paid by the Borrower pursuant to
the terms of such Hedge Agreement or other documents) or otherwise.
"Securities Act" means the Securities Act of 1933, as
amended.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not to any particular provision of this Pledge
Agreement, and Section, Schedule. Annex, and Exhibit references are to this
Pledge Agreement unless otherwise specified. The meanings
- 2 -
<PAGE>
given to terms defined herein shall be equally applicable to both the singular
and plural forms of such terms.
2. Pledge; Grant of Security Interest. The Borrower hereby delivers to
the Administrative Agent all the Pledged Stock and hereby grants to the
Administrative Agent, for the ratable benefit of the Lenders, a first security
interest in the Collateral, as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations.
3. Stock Powers. Concurrently with the delivery to the Administrative
Agent of each certificate representing one or more shares of the Pledged Stock,
the Borrower shall deliver an undated stock power covering such certificate,
duly executed in blank with, if the Administrative Agent so requests, signature
guaranteed.
4. Representations and Warranties. The Borrower represents and
warrants that:
(a) the shares of Pledged Stock listed on Schedule I constitute all
the issued and outstanding shares of all classes of the Capital Stock of
the Issuers which are not Foreign Subsidiaries and 66 2/3% of the Capital
Stock of the Issuers which are Foreign Subsidiaries and are represented by
the certificates listed thereon;
(b) all the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(c) the Borrower is the record and beneficial owner of, and has title
to, the Pledged Stock, free of any and all Liens or options in favor of, or
claims of, any other Person, except the Lien created by this Pledge
Agreement; and
(d) upon delivery to the Administrative Agent of the stock
certificates evidencing the Pledged Stock (and assuming the continuing
possession by Administrative Agent of such stock certificate in accordance
with the requirements of applicable law), the Lien granted pursuant to this
Pledge Agreement will constitute a valid, perfected first priority Lien on
the Collateral in favor of the Administrative Agent, for the ratable
benefit of the Lenders and the Issuing Lender, enforceable as such against
all creditors of the Borrower and any Persons purporting to purchase any
Collateral from the Borrower.
5. Covenants. The Borrower covenants and agrees with the
Administrative Agent that, from and after the date of this Pledge Agreement
until the Secured Obligations are paid in full and the Commitments have been
terminated:
(a) If the Borrower shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in
- 3 -
<PAGE>
connection with any reorganization), option or rights, whether in addition
to, in substitution for, as a conversion of, or in exchange for any shares
of the Pledged Stock, or otherwise in respect thereof, the Borrower shall
accept the same as the Administrative Agent's and the Lenders'
Administrative Agent, hold the same in trust for the Administrative Agent
and the Lenders and deliver the same forthwith to the Administrative Agent
in the exact form received, duly indorsed by the Borrower to the
Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank and with, if the
Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, for the ratable benefit of the Lenders, subject to
the terms hereof as additional collateral security for the Secured
Obligations. Any sums paid upon or in respect of the Pledged Stock upon the
liquidation or dissolution of any of the Issuers shall be paid over to the
Administrative Agent to be held by it hereunder for the ratable benefit of
the Lenders as additional collateral security for the Secured Obligations,
and in case any distribution of capital shall be made on or in respect of
the Pledged Stock or any property shall be distributed upon or with respect
to the Pledged Stock pursuant to the recapitalization or reclassification
of the capital of any of the Issuers or pursuant to the reorganization
thereof, the property so distributed shall be delivered to the
Administrative Agent to be held by it for the ratable benefit of the
Lenders and the Issuer, subject to the terms hereof, as additional
collateral security for the Secured Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Stock shall be
received by the Borrower, the Borrower shall, until such money or property
is paid or delivered to the Administrative Agent, hold such money or
property in trust for the Administrative Agent and the Lenders segregated
from other funds of the Borrower, as additional collateral security for the
Secured Obligations.
(b) Without the prior written consent of the Administrative Agent, the
Borrower will not (i) vote to enable, or take any other action to permit,
any of the Issuers to issue any stock or other equity securities of any
nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of
any of the Issuers, or (ii) sell, assign, transfer, exchange or otherwise
dispose of, or grant any option with respect to, the Collateral, or (iii)
create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Collateral, or any interest
therein, except for the Lien provided for by this Pledge Agreement, or (iv)
enter into any agreement or undertaking restricting the right or ability of
the Borrower or the Administrative Agent to sell, assign or transfer any of
the Collateral.
(c) The Borrower shall maintain the security interest created by this
Pledge Agreement as a first, perfected security interest and shall defend
such security interest against the claims and demands of all Persons
whomsoever. At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purposes of obtaining
or preserving the full benefits of
- 4 -
<PAGE>
this Pledge Agreement and of the rights and powers herein granted. If any
amount payable under or in connection with any of the Collateral shall be
or become evidenced by any promissory note, other instrument or chattel
paper, such note, instrument or chattel paper shall be immediately
delivered to the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant
to this Pledge Agreement.
(d) The Borrower agrees to pay, and to save the Administrative Agent,
the Lenders and the Issuing Lender harmless from, any and all liabilities
with respect to, or resulting from any delay in paying, any and all stamp,
excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Pledge Agreement.
(e) Pursuant to Section 9.9 of the Credit Agreement, if the
Borrower shall at any time acquire any shares of Capital Stock of any
Subsidiary which is not an Issuer hereunder, the Borrower shall (i)
immediately deliver such shares of Capital Stock, and all stock
certificates evidencing the same, to the Administrative Agent to be
held as additional collateral security for the Secured Obligations
hereunder, (ii) promptly deliver to the Administrative Agent a
supplement to this Pledge Agreement, substantially in the form of
Exhibit A to this Pledge Agreement, duly completed, adding such shares
of Capital Stock to Schedule I hereto, and (iii) promptly cause such
Subsidiary to execute and deliver an acknowledgment and consent
substantially in the form appended as Annex I to Exhibit A to this
Pledge Agreement.
6. Cash Dividends; Voting Rights. Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the Borrower of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 7 below, the Borrower shall be
permitted to receive all cash dividends paid in the normal course of business of
the Issuers and consistent with past practice, to the extent permitted in the
Credit Agreement, in respect of the Pledged Stock and to exercise all voting and
corporate rights with respect to the Pledged Stock; provided, however, that no
vote shall be cast or corporate right exercised or other action taken which
would impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, the Notes, this Pledge
Agreement or the other Loan Documents.
7. Rights of the Administrative Agent. (a) All money Proceeds received
by the Administrative Agent hereunder shall be held by the Administrative Agent
for the benefit of the Lenders and the Issuing Lender in a Collateral Account.
All Proceeds while held by the Administrative Agent in a Collateral Account (or
by the Borrower in trust for the Administrative Agent and the Lenders and the
Issuing Lender) shall continue to be held as collateral security for all the
Secured Obligations and shall not constitute payment thereof until applied as
provided in Section 8(a).
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the Borrower: (i) the
- 5 -
<PAGE>
Administrative Agent shall have the right to receive any and all cash dividends
paid in respect of the Pledged Stock and make application thereof to the Secured
Obligations in such order as it may determine, and (ii) at the request of the
Administrative Agent, all shares of the Pledged Stock shall be registered in the
name of the Administrative Agent or its nominee, and the Administrative Agent or
its nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of shareholders of
any of the Issuers or otherwise and (B) any and all rights of conversion,
exchange, subscription and any other rights, privileges or options pertaining to
such shares of the Pledged Stock as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
of the Issuers, or upon the exercise by the Borrower or the Administrative Agent
of any right, privilege or option pertaining to such shares of the Pledged
Stock, and in connection therewith, the right to deposit and deliver any and all
of the Pledged Stock with any committee, depository, transfer Administrative
Agent, registrar or other designated agency upon such terms and conditions as it
may determine), all without liability except to account for property actually
received by it, but the Administrative Agent shall have no duty to exercise any
such right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
(c) The rights of the Administrative Agent hereunder shall not be
conditioned or contingent upon the pursuit by the Administrative Agent of any
right or remedy against any of the Issuers or against any other Person which may
be or become liable in respect of all or any part of the Obligations or against
any other collateral security therefor, guarantee thereof or right of offset
with respect thereto. The Administrative Agent shall not be liable for any
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so, nor shall it be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Borrower or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
8. Remedies. (a) If an Event of Default shall have occurred and be
continuing, at any time at the Administrative Agent's election, the
Administrative Agent may apply all or any part of the Proceeds held in any
Collateral Account in payment of the Secured Obligations in such order as the
Administrative Agent may elect.
(b) If an Event of Default shall occur and be continuing, the
Administrative Agent may exercise, in addition to all other rights and remedies
granted in this Pledge Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the Code. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Borrower, the Issuers
or any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the
- 6 -
<PAGE>
foregoing), in one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange, broker's board or office of the
Administrative Agent or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The Administrative Agent,
any Lender or the Issuing Lender shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Borrower, which right or equity is hereby
waived or released. The Administrative Agent shall apply any Proceeds from time
to time held by it and the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Secured Obligations, in such order as the
Administrative Agent may elect, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Administrative Agent account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the Borrower waives all
claims, damages and demands it may acquire against the Administrative Agent, any
Lender or the Issuing Lender arising out of the exercise by the Administrative
Agent of any of its rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition. The Borrower shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are insufficient to pay the
Secured Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent, any Lender or the Issuing Lender to collect such
deficiency.
9. Registration Rights; Private Sales.
(a) The Borrower recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. The
Borrower acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the Administrative Agent than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Administrative Agent shall be under no obligation to delay a sale of
any of the Pledged Stock for the period of time necessary to permit the Issuers
to register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Issuers would agree to do so.
- 7 -
<PAGE>
(b) The Borrower further agrees to use its reasonable efforts to do or
cause to be done all such other acts as may be necessary to make any sale or
sales of all or any portion of the Pledged Stock pursuant to this Pledge
Agreement valid and binding and in compliance with any and all other applicable
Requirements of Law. The Borrower further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to the
Administrative Agent, the Lenders and the Issuing Lender, that the
Administrative Agent, the Lenders and the Issuing Lender have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section shall be specifically enforceable against the
Borrower, and the Borrower hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.
10. Irrevocable Authorization and Instruction to Issuers. The Borrower
hereby authorizes and instructs each Issuer to comply with any instruction
received by it from the Administrative Agent in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Borrower, and the Borrower agrees that each Issuer shall be fully protected in
so complying.
11. Administrative Agent's Appointment as Attorney-in-Fact. (a) The
Borrower hereby irrevocably constitutes and appoints the Administrative Agent
and any officer of the Administrative Agent, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Borrower and in the name of the Borrower or in the
Administrative Agent's own name, from time to time in the Administrative Agent's
discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Pledge Agreement, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) The Borrower hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
Section 11(a). All powers, authorizations and agencies contained in this Pledge
Agreement are coupled with an interest and are irrevocable until this Pledge
Agreement is terminated and the security interest created hereby are released.
12. Limitation on Duties Regarding Collateral. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account, except that the Administrative Agent shall have no obligation to invest
funds held in any Collateral Account and may hold the same as demand deposits.
None of the Administrative Agent, any Lender, the Issuing Lender or any of their
respective directors, officers, employees or Administrative Agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation
- 8 -
<PAGE>
to sell or otherwise dispose of any Collateral upon the request of the Borrower
or any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section 9-402 of
the Code, the Borrower hereby authorizes the Administrative Agent to file
financing statements with respect to the Collateral without the signature of the
Borrower in such form and in such filing offices as the Administrative Agent
reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Pledge Agreement. A carbon, photographic or
other reproduction of this Pledge Agreement shall be sufficient as a financing
statement for filing in any jurisdiction.
14. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
15. Notices. Notices, requests and demands to or upon the
Administrative Agent or the Borrower hereunder shall be effected in the manner
set forth in Section 13.2 of the Credit Agreement.
16. Authority of Administrative Agent. The Borrower acknowledges that
the rights and responsibilities of the Administrative Agent under this Pledge
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Pledge Agreement shall, as between the Administrative Agent
and the Lenders and the Issuing Lender, be governed by the Credit Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Borrower, the
Administrative Agent shall be conclusively presumed to be acting as
Administrative Agent for the Lenders and the Issuing Lender with full and valid
authority so to act or refrain from acting, and neither the Borrower nor any
Issuer shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
17. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. Paragraph Headings. The paragraph headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
19. No Waiver; Cumulative Remedies. The Administrative Agent, any
Lender or the Issuing Lender shall not by any act (except by a written
instrument pursuant to Section 20 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
- 9 -
<PAGE>
exercising, on the part of the Administrative Agent, any Lender or the Issuing
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent,
any Lender or the Issuing Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, any Lender or the Issuing Lender would otherwise have on
any future occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
20. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Borrower, and the Administrative Agent, provided that any provision of this
Pledge Agreement may be waived by the Administrative Agent in a letter or
agreement executed by the Administrative Agent or by telex or facsimile
transmission from the Administrative Agent. This Pledge Agreement shall be
binding upon the successors and assigns of the Borrower and shall inure to the
benefit of the Administrative Agent, the Lenders and the Issuing Lender and
their respective successors and assigns. THIS PLEDGE AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
[SIGNATURE PAGE FOLLOWS]
- 10 -
<PAGE>
Borrower Pledge Agreement
IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
UNIDIGITAL INC.
By:/s/ William E. Dye
-------------------------------
Name:William E. Dye
Title:Chief Executive Officer
<PAGE>
Borrower Pledge Agreement
ACKNOWLEDGMENT AND CONSENT
The undersigned, the Issuers referred to in the foregoing Pledge
Agreement, hereby acknowledge receipt of a copy thereof and agree to be bound
thereby and to comply with the terms thereof insofar as such terms are
applicable to it. The undersigned agree to notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5(a) of the Pledge Agreement. The undersigned further agree that the terms of
Section 9(c) of the Pledge Agreement shall apply to them, mutatis mutandis, with
respect to all actions that may be required of them under or pursuant to or
arising out of Section 9 of the Pledge Agreement.
UNIDIGITAL INC.
By:/s/ William E. Dye
-------------------------------
Name:William E. Dye
Title:Chief Executive Officer
UNIDIGITAL ELEMENTS (SF), INC.
By:/s/ William E. Dye
-------------------------------
Name:William E. Dye
Title:Chief Executive Officer
UNISON (NY), INC.
By:/s/ William E. Dye
-------------------------------
Name:William E. Dye
Title:Chief Executive Officer
UNISON (MA), INC.
By:/s/ William E. Dye
-------------------------------
Name:William E. Dye
Title:Chief Executive Officer
<PAGE>
Borrower Pledge Agreement
SCHEDULE I to
Pledge Agreement
DESCRIPTION OF PLEDGED STOCK
Stock
Name of Class of Certificate No. of
Issuer Stock No. Shares
- ------ -------- ----------- ------
Unidigital Elements (NY), Inc. Common 1 20
Unidigital Elements (SF), Inc. Common 1 3
Unison (NY), Inc. Common 1 100
Unison (MA), Inc. Common 1 100
<PAGE>
Borrower Pledge Agreement
EXHIBIT A to
Stock Pledge Agreement
STOCK PLEDGE AGREEMENT SUPPLEMENT
STOCK PLEDGE AGREEMENT SUPPLEMENT, dated as of March 24 1998 (this
"Supplement"), made by UNIDIGITAL INC., a Delaware corporation (the "Borrower"),
in favor of CANADIAN IMPERIAL BANK OF COMMERCE, as administrative agent (in such
capacity, the "Administrative Agent") under the Credit Agreement (as defined in
the Pledge Agreement referred to below) for the benefit of the Lenders (as so
defined).
1. Reference is hereby made to that certain Stock Pledge Agreement,
dated as of March 24, 1998, made by the Borrower in favor of the Administrative
Agent (as amended, supplemented or otherwise modified as of the date hereof, the
"Pledge Agreement"). Terms defined in the Pledge Agreement are used herein as
therein defined.
2. The Borrower hereby confirms and reaffirms the security interest in
the Collateral granted to the Administrative Agent for the benefit of the
Lenders and the Issuing Lender under the Pledge Agreement, and, as additional
collateral security for the prompt and complete payment when due (whether at
stated maturity, by acceleration or otherwise) of the Secured Obligations and in
order to induce the Lenders to make their Loans and the Issuing Lender to issue
Letters of Credit under the Credit Agreement and the other Loan Documents, the
Borrower hereby delivers to the Administrative Agent, for the ratable benefit of
the Lenders and the Issuing Lender, all of the shares of Capital Stock of
[INSERT NAME OF NEW ISSUER], a corporation (the "New Issuer") listed in
Schedule I hereto, together with all stock certificates, options, or rights of
any nature whatsoever which may be issued or granted by the New Issuer in
respect of such Capital Stock while the Pledge Agreement, as supplemented
hereby, is in force (the "Additional Pledged Stock") and hereby grants to the
Administrative Agent, for the ratable benefit of the Lenders [and the Issuing
Lender] a first security interest in the Additional Pledged Stock and all
Proceeds thereof. From and after the date of this Supplement, as used in the
Pledge Agreement as supplemented by this Supplement and for all purposes of the
Pledge Agreement as so supplemented, "Pledged Stock" shall be deemed to include
the Additional Pledged Stock and "Issuers" shall be deemed to include the New
Issuer.
3. The Borrower hereby represents and warrants that the
representations and warranties contained in Section 4 of the Pledge Agreement
are true and correct on the date of this Supplement with references therein to
the "Pledged Stock" to include the Additional Pledged Stock, with references to
the "Issuers" therein to include the New Issuer, and with references to the
Pledge Agreement to mean the Pledge Agreement as supplemented hereby.
4. This Supplement is supplemental to the Pledge Agreement, forms a
part thereof and is subject to the terms thereof. From and after the date of
this Supplement,
<PAGE>
Borrower Pledge Agreement
Schedule I to the Pledge Agreement shall be deemed to include each item listed
on Schedule I to this Supplement. This Supplement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered as of the date first above written.
UNIDIGITAL INC.
By:
-------------------------------
Name:
Title:
<PAGE>
Borrower Pledge Agreement
SCHEDULE I to
Supplement
DESCRIPTION OF ADDITIONAL PLEDGED STOCK
Stock
Name of Class of Certificate No. of
Issuer Stock No. Shares
- ------ -------- ----------- ------
<PAGE>
Borrower Pledge Agreement
ANNEX I to Supplement
ACKNOWLEDGMENT AND CONSENT
The undersigned, the New Issuer referred to in the foregoing
Supplement to Stock Pledge Agreement, hereby acknowledges receipt of a copy
thereof and of the Pledge Agreement referred to therein and agrees to be bound
thereby and to comply with the terms thereof insofar as such terms are
applicable to it. The undersigned agrees to notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5(a) of the Pledge Agreement. The undersigned further agrees that the terms of
Section 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of Section 9 of the Pledge Agreement.
[NAME OF NEW ISSUER]
By:
--------------------------
Name:
Title:
A MORTGAGE made on March 24, 1998
BETWEEN
UNIDIGITAL INC. (the "Mortgagor"), a company incorporated
under the laws of the State of Delaware (registered number ) and whose
registered office is at 545 West 45th Street, New York, New York 10036
and
CANADIAN IMPERIAL BANK OF COMMERCE (the "Administrative Agent"
pursuant to the Credit Agreement, dated as of March 24, 1998 among Unidigital
Inc., the several lenders from time to time party thereto, and the
Administrative Agent (the "Credit Agreement")) of 425 Lexington Avenue, New
York, New York 10017.
IT IS AGREED as follows
INTERPRETATION
1.1 In this Mortgage:
"Original Securities" means:
the securities listed in Schedule 1, which are all registered
in the name of the Mortgagor;
"Sale Event" means any of the events mentioned in clause 8.1;
"Secured Amounts" means the moneys and liabilities which the
Mortgagor covenants in clause 2 to pay or discharge; and references to the
Secured Amounts include (save in clauses 4.3 and 10.1) references to any part of
them;
"Security Shares" means the Original Securities and all and
any other shares, securities, rights, moneys and property for the time being
mortgaged or charged to the Administrative Agent pursuant to clause 3;
"Security Interest" means any mortgage, charge, pledge, lien,
right of set off or any security interest, howsoever created or arising;
references to the Original Securities or to the Security
Shares include references to any of them; and
"mortgage" includes a transfer or assignment by way of
mortgage.
1.2 Clause headings are for ease of reference only and shall
not affect the interpretation of this Mortgage.
<PAGE>
1.3 References in this Mortgage to any statute or other
legislative provision shall include any statutory or legislative modification or
re-enactment thereof, or any substitution therefor.
1.4 References to the Mortgagor or the Administrative Agent
include references to any person for the time being deriving title under each of
them respectively.
1.5 References to this Mortgage are references to the same as
from time to time varied, supplemented or amended in any manner or respect
whatsoever, and in particular by variations which increase or otherwise affect
the liability of the Mortgagor.
COVENANT TO PAY SECURED AMOUNTS
2.1 The Mortgagor covenants with the Administrative Agent that
it will on demand pay to the Administrative Agent and discharge all moneys and
liabilities whatsoever which now are or at any time hereafter (whether on or
after any such demand) may become due, owning or payable, in any currency, to
the Administrative Agent by the Mortgagor, actually or contingently, solely or
jointly and/or severally with another or others, as principal or surety, on any
current or other account, with reference to any bill, note or other security, in
connection with any advance, loan, credit, instrument, guarantee or indemnity
made or issued to, for or at the request of the Mortgagor or in any other manner
whatsoever, including all amounts which may become payable or for which the
Mortgagor may become liable under this Mortgage and all commission, discount and
all banking, legal and other costs, charges and expenses whatsoever (on a full
indemnity basis) and also all losses and damages that may be sustained, suffered
or incurred by the Administrative Agent arising out of or in connection with any
act, matter or thing done or to be done by the Mortgagor under this Mortgage or
any document, arrangement or agreement between the Mortgagor and the
Administrative Agent or any disclaimer of any of its contracts, agreements or
arrangements or any of its liabilities or obligations to the Administrative
Agent, and interest on the foregoing from the date of demand for payment being
made until the date of actual payment or discharge.
2.2 Interest under clause 2.1 shall be payable at such rate or
rates and upon such terms as may from time to time be agreed, and interest shall
be computed and compounded according to the usual practice fro the time being of
the Administrative Agent and shall be payable as well after as before any demand
made, judgment obtained or liquidation or administration of the Mortgagor.
MORTGAGE
3.1 The Mortgagor, with full title guarantee, hereby assigns
and transfers absolutely by way of the first fixed mortgage and agrees to
mortgage and charges and agrees to charge to the Administrative Agent as a
continuing security for the payment and discharge of the Secured Amounts:
(a) the Original Securities; and
- 2 -
<PAGE>
(b) all other securities and all rights, moneys (including,
without limitation, dividends) and property whatsoever which may from time to
time at any time be derived from, accrue on or be offered in respect of the
Original Securities whether by way of redemption, exchange, conversion, rights,
bonus, capital reorganisation or otherwise howsoever, but in each case so that
the covenants implied by the Law of Property (Miscellaneous Provisions) Act 1994
(the "LP (MP) Act") in the mortgages and charges contained in or created
pursuant to this Mortgage, are construed with the omission of:
(A) the words "other than any charges, encumbrances or rights
which that person does not and could not reasonably be expected to know about"
in section 3(1) LP MP Act; and
(B) section 6 (2) LP (MP) Act.
3.2 The Mortgagor shall procure that as soon as is practicable
all the Original Securities and as soon as is practicable all and any other
registered or registrable Security Shares shall be transferred to and registered
in the name of the Administrative Agent (or such nominee as the Administrative
Agent may direct) to be held on trust for the Administrative Agent.
CONTINUING AND PRIMARY SECURITY
4.1 This Mortgage shall be a continuing security, and shall be
in addition to and shall not affect any continuing liens or other Security
Interests to which the Administrative Agent is or will be entitled on such of
the certificates or other documents of title to the Security Shares as may have
been or may be deposited with or to the order of the Administrative Agent, which
liens and other Security Interests shall remain in force independently of this
Mortgage.
4.2 The Security Shares are hereby deposited and mortgaged to
the Administrative Agent as primary and not as collateral security. Although, as
between the Mortgagor and a third party, the Mortgagor may be only a surety for
the third party in respect of the Secured Amounts and the Security Shares may be
only a secondary or collateral security, nevertheless, as between the Mortgagor
and the Administrative Agent, the Mortgagor shall be deemed to be a principal
debtor, and the Security Shares shall be deemed to be a principal security for
the Secured Amounts.
4.3 The liabilities and obligations of the Mortgagor under
this Mortgage and the security constituted by this Mortgage shall remain in
force notwithstanding any act, omission, neglect, event or matter whatsoever,
except the proper and valid payment and discharge of all the Secured Amounts
and, subject to clause 4.4 below, an absolute discharge or release of the
Mortgagor signed by the Administrative Agent; and without prejudice to its
generality, the foregoing shall apply in relation to anything which would have
discharged the Mortgagor (wholly or in part) or which would have afforded the
Mortgagor any legal or equitable defence, and in relation to any winding up or
dissolution of, or any change in constitution or corporate identity or loss or
of corporate identity by, the Mortgagor, or any
- 3 -
<PAGE>
other person; and, in addition, the Mortgagor further covenants with the
Administrative Agent that if, by reason of any moneys or liabilities expressed
or intended to be guaranteed to the Administrative Agent by the Mortgagor not
being legally recoverable from such third party or for any other reason
whatsoever, such moneys or liabilities (or any part of them) would not be
recoverable from the Mortgagor as a surety then (notwithstanding that it was
known to the Administrative Agent) they shall be fully recoverable from the
Mortgagor as sole, original and independent obligor and the Mortgagor will pay
or discharge them to the Administrative Agent upon demand.
4.4 Any such discharge or release referred to in clauses 4.3
or 10.1 and any composition or arrangement which the Mortgagor may effect with
the Administrative Agent, shall be deemed to be made subject to the condition
that it will be void, if any payment or security which the Administrative Agent
may previously have received or may thereafter receive from any person in
respect of the Secured Amounts is set aside under any applicable law or proves
to have become or been for any reason invalid.
4.5 Without prejudice to the generality of clause 4.3, none of
the liabilities or obligations of the Mortgagor under this Mortgage shall be
impaired, and the security constituted by this Mortgage shall not be impaired,
by the Administrative Agent:
(a) releasing or granting any time or any indulgence
whatsoever to the Mortgagor or any other person and, in particular, entering
into any transaction or arrangements whatsoever with or in relation to the
Mortgagor and/or any third party;
(b) taking, accepting, varying, dealing with, enforcing,
abstaining from enforcing, surrendering or releasing any security for the
Secured Amounts in such manner as it thinks fit, or claiming, proving for,
accepting or transferring any payment in respect of the Secured Amounts in any
composition by, or winding up of, the Mortgagor, and/or any third party or
abstaining from so claiming, proving, accepting or transferring.
4.6 Rights may be exercised and demands may be under this
Mortgage from time to time, and the liabilities and obligations of the Mortgagor
and the rights and security contained in this Mortgage under this Mortgage may
be exercised and enforced, irrespective of:
(a) whether any demands, steps or proceedings are being or
have been taken against the Mortgagor and/or any third party; or
(b) whether or in what order any security to which the
Administrative Agent may be entitled in respect of the Secured Amounts is
enforced.
- 4 -
<PAGE>
WARRANTIES AND UNDERTAKINGS
5.1 The Mortgagor represents and warrants that:
(a) it is the sole legal and beneficial owner of all the
Original Securities free of all Security Interests, encumbrances, trusts,
equities and claims whatsoever (save under this Mortgage) and that all the
Original Securities are fully paid up;
(b) it is or will be at such later time at which the relevant
Security Shares (other than the Original Securities) become the subject of this
Mortgage the sole legal and beneficial owner of all the Security Shares (other
than the Original Securities) free from all Security Interests, encumbrances,
trusts, equities and claims whatsoever (save under this Mortgage) and that all
the Security Shares are or will at such date be fully paid-up;
(c) the Original Securities are all currently registered
in the name of the Mortgagor; and
5.2 The Mortgagor undertakes that, for so long as any Secured
Amounts remain outstanding, it shall:
(a) pay to the Administrative Agent, upon demand, the amount
of all expenses which it may incur in, about or with a view to perfecting or
enforcing this security or otherwise in connection with this security, together
with interest on the amount of any payments made by the Administrative Agent in
respect of such expenses in accordance with clause 2.2 from the date of payment
until the date of repayment and as well after as before judgment and so that any
amount payable hereunder may be debited to any account of the Mortgagor with the
Administrative Agent;
(b) promptly pay all calls, instalments and other payments
which may be made or become due in respect of the Security Shares and so that,
in the event of default by the Mortgagor, the Administrative Agent may do so on
behalf of the Mortgagor and clause 5.2(a) shall apply accordingly;
(c) forthwith sign, seal, deliver and complete all transfers,
renunciations, proxies, mandates, assignments, deeds and documents and do all
acts and things which the Administrative Agent may, in its absolute discretion,
at any time and from time to time specify:
(i) for enabling or assisting the Administrative
Agent to perfect or improve its title to and security over the Security
Shares;
(ii) to vest the Security Shares in the
Administrative Agent or its nominee or nominees;
(iii) to exercise (or enable its nominee or nominees
to exercise) any rights or powers attaching to the Security Shares;
- 5 -
<PAGE>
(iv) (after the occurrence of a Sale Event) to sell
or dispose of the Security Shares; or
(v) otherwise to enforce any of the rights of the
Administrative Agent under or in connection with this Mortgage;
(d) not (without the written consent of the Administrative
Agent):
(i) create or permit to exist over all or part of the
Security Shares (or any interest therein) any Security Interest (other than
this Mortgage) whether ranking prior to, pari passu with or behind the
security contained in this Mortgage;
(ii) sell, transfer or otherwise dispose of the
Security Shares or any interest therein or attempt or agree to so dispose;
or
(iii) permit any person other than the Mortgagor to
be registered as or become the holder of the Security Shares;
(e) forward to the Administrative Agent all notices, reports,
accounts, circulars and other documents relating to the Security Shares or which
are sent to the holders of the Security Shares as soon as they are received;
(f) take such action as the Administrative Agent may in its
absolute discretion direct, in respect of any proposed compromise, arrangement,
capital reorganisation, conversion, exchange, repayment or take-over offer
affecting or in respect of the Security Shares or any of them or any proposal
made for varying or abrogating any rights attaching to the Security Shares or
any of them;
(g) indemnify the Administrative Agent (and any of its
nominees) on demand from and against all losses, actions, claims and liabilities
which any of them may incur as holders of the Security Shares or any interest in
the Security Shares; and
(h) ensure that other registered Security Shares which are not
registered in the name of the Mortgagor or the Administrative Agent (or its
nominee) are at all times registered in the names of persons who have executed
declarations of trust in favour of the Mortgagor and the Administrative Agent in
such forms as the Administrative Agent may specify, being (if at any time the
Administrative Agent so requires) persons nominated by the Administrative Agent.
DIVIDENDS AND VOTING
6.1 Until a Sale Event shall have occurred, then:
(a) all and any cash dividends paid in respect of the Security
Shares or any of them received by the Agent (or its nominee) shall, on request
by the Mortgagor, be released to the Mortgagor; and
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<PAGE>
(b) subject to clause 5.2(f), the Administrative Agent will
exercise all voting and other rights and powers attached to the Security Shares
as the Mortgagor may from time to time in writing reasonably direct, and the
Administrative Agent shall instruct any nominee for the time being registered as
holder for the Security Shares accordingly.
6.2 Subject to clause 6.1:
(a) all and any dividends and other distributions accruing on
or deriving from the Security Shares (notwithstanding that they may have accrued
in respect of an earlier period) shall:
(i) if received by the Mortgagor (or any nominee
of the Mortgagor) be held on trust and forthwith paid and transferred to
the Administrative Agent; and
(ii) when and if received by the Administrative Agent
(or its nominee) shall form part of the Security Shares and be held by the
Administrative Agent on the terms of this Mortgage as additional security
(and, if cash, be paid into a cash collateral deposit account and may be
applied by the Administrative Agent at any time and from time to time
thereafter in or towards the discharge of the Secured Amounts as the
Administrative Agent thinks fit);
(b) the Administrative Agent may from time to time exercise
(and may from time to time direct the exercise of) all voting and other rights
and powers (by statute or otherwise) attached to or conferred on the Security
Shares in such manner as the Administrative Agent (in its absolute discretion)
thinks fit and the Mortgagor shall, and shall procure that any nominee of the
Mortgagor shall, comply with any such directions of the Administrative Agent;
and
(c) the Mortgagor shall (and shall procure that any nominee of
the Mortgagor shall) forthwith agree to accept short notice for and to attend
all or any meetings or class meetings of the holders of the Security Shares, to
appoint proxies and exercise all voting and other rights and powers which may at
any time be exercisable by the holders of the Security Shares as the
Administrative Agent may from time to time direct.
6.3 The rights and powers attached to the Security Shares
shall, for the purposes of clause 6.2(b), include (without limitation) all
powers given to trustees by sections 10(3) and 10(4) of the Trustee Act 1925 (as
amended) in respect of securities subject to a trust and shall be exercisable
without any need for any further consent of authority of the Mortgagor.
POWER OF ATTORNEY
7. The Mortgagor hereby irrevocably and by way of security for
the payment by it of the Secured Amounts and the performance of its obligations
under this Mortgage appoints the Administrative Agent as its true and lawful
attorney (with full power to appoint substitutes and to sub-delegate) on behalf
of the Mortgagor and in the Mortgagor's
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own name or otherwise, at any time and from time to time, to sign, seal, deliver
and complete all transfers, renunciations, proxies, mandates, assignments, deeds
and documents and do all acts and things which the Administrative Agent may, in
its sole and absolute discretion, consider to be necessary or advisable to
perfect or improve its security over the Security Shares or to give proper
effect to the intent and purposes of this Mortgage or to enable or assist in any
way in the exercise of any power of sale of the Security Shares (whether arising
under this Mortgage or implied by statute or otherwise).
SALE
8.1 The following shall constitute Sale Events under this
Mortgage:
(a) if the Mortgagor fails to pay on demand any of the
Secured Amounts or any sum due to the Administrative Agent, under this Mortgage
or otherwise;
(b) if the Mortgagor otherwise fails to comply with any of its
obligations under this Mortgage; or
(c) if an Event of Default under the Credit Agreement has
occurred and is continuing.
8.2 On the occurrence of a Sale Event, the Secured Amounts
shall become due and on or any time after the occurrence of a Sale Event and
without prior notice to the Mortgagor, the Administrative Agent exercise all the
powers and rights of a mortgagee conferred by statute or otherwise and (without
prejudice to the generality of the foregoing) may sell or otherwise dispose (and
instruct any nominee of the Administrative Agent or the Mortgagor to sell or
otherwise dispose) of all the title to and interest in the Security Shares or
(as the Administrative Agent may elect and without prejudice to any later
exercise of this power) the whole or part of the equitable interest divested of
the legal title for such consideration (which may comprise or include shares or
debentures), upon such terms and generally in such manner as the Administrative
Agent may, in its sole and absolute discretion, think fit.
8.3 The provisions of the Law of Property Act 1925 (or any
statutory re-enactment, variation or modification thereof or any law of similar
effect in any jurisdiction) relating to the power of sale conferred by that Act
are hereby varied so that section 103 shall not apply, and such provisions are
hereby extended as set out in clause 8.2.
8.4 The Administrative Agent shall not be liable for any loss
or damage occasioned by any sale or disposal of the Security Shares (or interest
therein) or arising out of the exercise of or failure to exercise any of its
powers under this Mortgage or for any neglect or default to pay any instalment
or accept any offer or notify the Mortgagor of any such matter or for any other
loss of any nature whatsoever in connection with the Security Shares.
8.5 The Administrative Agent shall be entitled to apply moneys
arising from the exercise of its powers under this Mortgage or in respect of the
Secured Amounts towards
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<PAGE>
the discharge of the Secured Amounts in such manner and order as the
Administrative Agent may in its sole and absolute discretion think fit, with
(subject to any rights of set off, combination or retention) any surplus being
paid to the Mortgagor or any other person who may be entitled to it.
8.6 All moneys from time to time received by the
Administrative Agent from the Mortgagor or any person or persons in respect of
the Secured Amounts or otherwise on the realisation or enforcement of the
security contained in this Mortgage may be applied by the Administrative Agent
either as a whole or in such proportion as the Administrative Agent shall think
fit to any account or item of account or any transaction and, without
limitation, the Administrative Agent may in its absolute discretion at all times
pending the payment to the Administrative Agent of all the Secured Amounts place
and keep to the credit of a separate or suspense account any money received by
the Administrative Agent from the Mortgagor or such other persons for so long
and in such manner as the Administrative Agent may determine without any
obligation to apply the same or any part thereof in or towards the discharge of
any of the Secured Amounts.
OTHER SECURITY ETC.
9.1 Section 93 of the Law of Property Act 1925 (restricting
rights of consolidation of mortgages) (or any statutory re-enactment, variation
or modification thereof or any law of similar effect in any jurisdiction) shall
not apply in relation to this Mortgage.
9.2 This security is in addition to and shall not affect or be
merged in any bills, notes, guarantees, indemnities, undertakings, Security
Interests, or other security whatsoever which Administrative Agent may hold now
or hereafter in connection with the Secured Amounts or the obligations of any
other person liable for any of the Secured Amounts and the Administrative Agent
shall be under no obligation to take any steps to call in or to enforce any
security for the Secured Amounts or the obligations of any other person liable
for any of the Secured Amounts and shall not be liable to the Mortgagor or any
other person for any loss arising from any omission on the part of the
Administrative Agent to take any such steps or for the manner in which the
Administrative Agent shall enforce or refrain from enforcing any such security.
9.3 Without prejudice to clause 5.2(d) (restriction on
Security Interests), if the Administrative Agent receives notice of any Security
Interest or any other interest affecting the Security Shares:
(a) the Administrative Agent may open a new account with the
Mortgagor and, if it does not, it shall nevertheless be deemed to have done so
at the time it received such notice; and
(b) all payments received by the Administrative Agent from the
Mortgagor or, in respect of the Secured Amounts, from any other person after the
Administrative Agent receives such notice shall be credited or deemed to have
been credited to the new account, and
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<PAGE>
in no circumstances whatsoever shall operate to reduce the Secured Amounts as at
the time the Administrative Agent received such notice.
9.4 If there are any Security Interests having priority to the
security contained in this Mortgage in respect of all or any part of the
Security Shares then:
(a) if any proceedings or steps are being taken to exercise or
enforce any powers or remedies conferred by such prior Security Interest against
the Security Shares, the Administrative Agent may (but without prejudice to any
rights the Administrative Agent may have under statute or otherwise) redeemed
such prior Security Interest or procure the transfer thereof to itself and may
settle and pass the accounts of the prior charges and any accounts so settled
and passed shall be conclusive and binding on the Mortgagor and the principal,
interest, costs, charges and expenses of and incidental to such redemption or
transfer shall be paid to the Administrative Agent on demand with interest in
accordance with clause 2.2 and, until payment, the Security Shares shall stand
as a security for the amount to be paid; and
(b) all the powers, authorities and discretions conferred by a
prior Security Interest upon the chargee or any receiver thereunder shall be
exercisable by the Administrative Agent in like manner as if the same were
expressly included herein and the Administrative Agent shall be entitled to
exercise all the powers, authorities and discretions of an administrative
receiver, receiver, manager or receiver and manager appointed thereunder.
9.5 If the Mortgagor has more than one account with the
Administrative Agent, the Administrative Agent may, at any time and without
prior notice to the Mortgagor, transfer all or part of any credit balance on any
such account to any other account which may then be in debit or otherwise apply
the credit balance in or towards satisfying the Secured Amounts, whether or not
the credit balance and the account in debit or the Secured Amounts are expressed
in the same currency, and the Administrative Agent is hereby authorised to
effect any necessary conversions at its prevailing rates of exchange.
REASSIGNMENT
10.1 At such time as the Mortgagor has no further obligations,
(actual or contingent, present or future, joint or several) to the
Administrative Agent and none of the Secured Amounts remains outstanding, the
Administrative Agent shall at the request and cost of the Mortgagor execute such
documents and procure that its nominees execute such documents as the Mortgagor
may reasonably request and which may be required to reassign (subject to the
provisions of clause 4.4) all its then right, title and interest in and to such
of the Security Shares then held by the Administrative Agent (or its nominee) to
the person entitled to the Security Shares.
10.2 If the Administrative Agent or its nominee or nominees
shall be required to transfer the Security Shares pursuant to clause 10.1 or
otherwise, the Administrative Agent may require the transferee to accept
delivery, transfer or registration of other securities of the
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<PAGE>
same type, class and denomination in lieu of the Security Shares and ensure that
its nominees (if any) do likewise.
EXPENSES AND INDEMNITY
11.1 The Mortgagor further covenants with the Administrative
Agent to reimburse or pay to the Administrative Agent (on the basis of a full
indemnity) the amount of all costs (including legal costs), charges and expenses
incurred by the Administrative Agent in connection with:
(a) the preparation, registration or perfecting of this
Mortgage (or the security therein contained), or any other document entered into
between the Mortgagor and the Administrative Agent;
(b) the exercise, or the attempted or purported exercise, or
the consideration of the exercise, by or on behalf of the Administrative Agent
of any of the powers of the Administrative Agent, and the enforcement,
preservation or attempted preservation of this Mortgage or the Security Shares
of any other action taken by or on behalf of the Administrative Agent with a
view to or in connection with the recovery by the Administrative Agent of the
Secured Amounts from the Mortgagor or any other person; and
(c) the carrying out or consideration of any other act or
matter which the Administrative Agent may consider to be for the preservation,
improvement or benefit of the Security Shares.
11.2 The Mortgagor hereby agrees to indemnify the
Administrative Agent against all losses, claims, costs (including legal costs)
expenses, demands and liabilities whether in contract, tort, or otherwise now or
hereafter sustained or incurred by the Administrative Agent or by any person for
whose liability, act or omission the Administrative Agent may be answerable for
or in connection with anything done or omitted under this Mortgage or any other
document, agreement or arrangement entered into between the Mortgagor and the
Administrative Agent or in the exercise or purported exercise of the powers
herein contained or occasioned by any breach by the Mortgagor or any of its
covenants or other obligations to the Administrative Agent or in consequence of
any payment in respect of the Secured Amounts (whether made by the Mortgagor or
a third person) being declared void or impeached for any reason whatsoever.
11.3 Any amounts for which the Company shall be liable under
sub-clauses 11.1 or 11.2 shall be payable on demand and shall bear interest in
accordance with clause 2.2 from the dates or dates on which they were paid,
incurred or charged by the Administrative Agent and such amounts and interest
may be debited by the Administrative Agent to any account of the Mortgagor, but
shall, in any event, form part of the Secured Amounts and accordingly be secured
on the Security Shares under the Security contained in this Mortgage.
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<PAGE>
11.4 All sums of whatsoever nature which are payable by the
Mortgagor under this Mortgage and which are now or at any time hereafter become
subject to Value Added Tax or any similar tax shall be deemed to be exclusive of
Value Added Tax or any similar tax and the Mortgagor in addition to such sums
will indemnify the Administrative Agent from and against all claims and
liabilities whatsoever in respect thereof.
FURTHER PROVISIONS
12.1 The Administrative Agent may at any time and from time to
time without notice and notwithstanding any settlement of account or other
matter whatsoever combine or consolidate all or any of its existing accounts
including accounts in the name of the Administrative Agent or of the Mortgagor
jointly with others and may set off or transfer any credit balance or any sum
standing to the credit of any account (whether or not the same is due to the
Mortgagor by the Administrative Agent and whether or not the credit balance and
the account in debit or the Secured Amounts are expressed in the same currency)
in or toward satisfaction of any of the Secured Amounts and may in its absolute
discretion estimate the amount of any liability of the Mortgagor which is
contingent or unascertained and thereafter set off such estimated amount and no
amount shall be payable by the Administrative Agent to the Mortgagor unless and
until all Secured Amounts have been ascertained and fully repaid or discharged.
12.2 If any amount is received or recovered by the
Administrative Agent in respect of the Secured Amounts (whether pursuant to a
judgment or otherwise) in a currency (the "other currency") other than the
currency in which the Secured Amounts are payable (the "original currency"),
then the Administrative Agent may convert the other currency into the original
currency and the Administrative Agent shall calculate the amount of the original
currency it would have received if the other currency was used to purchase the
original currency on the date of receipt or recovery and if such amount is less
than the amount payable by the Mortgagor in the original currency, the
Mortgagor, as a separate and independent obligation shall indemnify the
Administrative Agent against any loss sustained by the Administrative Agent as a
result (including any premium, commission, transfer or other costs incurred or
charged by the Administrative Agent).
12.3 If the Mortgagor fails to pay or discharge any part of
the Secured Amounts when due, the Administrative Agent from time to time may
purchase an amount of the currency in which such sum is due with any other
currency or currencies and the Mortgagor's obligation thereafter shall be to pay
to the Administrative Agent the amount of the other currency or currencies so
purchased.
12.4 Any document required to be executed under the seal of
the Administrative Agent under or in connection with this Mortgage shall be
validly executed if executed under the seal of a duly authorised attorney of the
Administrative Agent.
12.5 Any notice or demand under this Mortgage to or upon the
Mortgagor shall be in writing and shall be deemed to have been properly served
upon the Mortgagor if
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delivered personally or if sent by telex, rapifax or prepaid first-class letter
post to its registered office for the time being or to any one of its principal
places of business for the time being. Any such notice or demand:
(a) which is sent by telex or rapifax, shall be deemed to have
been properly served upon the Mortgagor two hours after the time of dispatch;
(b) which is sent by first-class prepaid letter post and is
posted before the last collection of letters from the letter box in which it was
posted has been made on any day, shall be deemed to have been properly served
upon the Mortgagor at 10:00 a.m. on the next succeeding day upon which a
delivery of letters is made.
12.6 In any action, proceedings or claim relating to this
Mortgage or the security contained in this Mortgage, a statement as to any
amount due to the Administrative Agent or of the Secured Amounts or any part
thereof which is certified as being correct by an officer of the Administrative
Agent shall, save in the case of manifest error, be conclusive evidence that
such amount is in fact due and payable.
12.7 The rights of the Administrative Agent are cumulative,
may be exercised as often as it considers appropriate and are in addition to its
rights under general law; and the rights of the Administrative Agent (whether
arising under this Mortgage or under general law) shall not be capable of being
waived or varied otherwise than by express waiver or variation in writing; and,
in particular, any failure to exercise or any delay in exercising any such
rights shall not operate as a variation or waiver of that or any other such
right; any defective or partial exercise of such rights shall not preclude any
other or further exercise of that or any other such right; and no act or course
of conduct or negotiation on its part or on its behalf shall in any way preclude
it from exercising any such right or constitute a suspension or variation of any
such right.
12.8 If any provisions of this Mortgage become invalid,
illegal or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired but shall remain in full force and effect.
12.9 The Administrative Agent may assign all or any of its
rights under this Mortgage and any successor to or assignee of the
Administrative Agent shall be entitled to the full benefits of this Mortgage and
this Mortgage shall remain valid and enforceable notwithstanding any change in
the name, composition or constitution of the Administrative Agent nor any
amalgamation or consolidation with any other company.
12.10 This Mortgage is governed by, and shall be construed in
accordance with, the law of England.
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12.11 The Mortgagor and the Administrative Agent agree that
the courts of England are to have non-exclusive jurisdiction over any matter
which may be in dispute under this Mortgage, and the Mortgagor irrevocably
submits to the jurisdiction of such court.
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<PAGE>
DULY DELIVERED AS A DEED by UNIDIGITAL INC. on the date inserted above.
EXECUTED as a DEED under the )
COMMON SEAL of UNIDIGITAL INC. )
in the presence of: )
Director:/s/ William E. Dye
---------------------------------------
Assistant Secretary:/s/ Peter Saad
--------------------------------------
OR
EXECUTED as a DEED by )
UNIDIGITAL INC. acting by two )
Directors/Director and the Secretary )
Director:
---------------------------------------
Secretary:
--------------------------------------
/s/ William J. Koslo
- -----------------------------------------------------
for and on behalf of CANADIAN IMPERIAL BANK OF
COMMERCE
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<PAGE>
SCHEDULE 1
AMOUNT OR
NUMBER OF SECURITY DESCRIPTION OF REGISTERED SECURITY
668 SHARES @(pounds)0.01 Certificate No. 10
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of March 24, 1998, made by
UNIDIGITAL Inc., a Delaware corporation (the "Borrower") and each subsidiary of
the Borrower which is a signatory hereto (together with the Borrower,
collectively, the "Loan Parties") in favor of CANADIAN IMPERIAL BANK OF
COMMERCE, as administrative agent (in such capacity, the "Administrative Agent")
for the lenders (the "Lenders") and CANADIAN IMPERIAL BANK OF COMMERCE (in such
capacity, the "Issuing Lender") parties to the Credit Agreement referred to
below.
RECITALS
Pursuant to the Credit Agreement, dated as of March 24, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the various lenders from time to time a party
thereto (the "Lenders"), the Issuing Lender and the Administrative Agent, the
Lenders have severally agreed to make loans to and the Issuing Lender has agreed
to issue letters of credit for the account of the Borrower upon the terms and
subject to the conditions set forth therein, such loans to be evidenced by the
Notes issued by the Borrower thereunder. It is a condition precedent to the
obligation of the Lenders to make their respective loans to the Borrower, and of
the Issuing Lender to issue its letters of credit, under the Credit Agreement
that the Loan Parties shall have executed and delivered this Security Agreement
to the Administrative Agent for the ratable benefit of the Lenders and the
Issuing Lender.
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders, the Issuing Lender and the Administrative Agent to enter into the
Credit Agreement and to induce the Lenders to make their respective loans to the
Borrower, and the Issuing Lender to issue its letters of credit, under the
Credit Agreement, each Loan Party hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders and the Issuing Lender, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
capitalized terms which are defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement; the following
terms which are defined in the Uniform Commercial Code in effect in the State of
New York on the date hereof are used herein as so defined: Accounts, Chattel
Paper, Documents, Equipment, Farm Products, General
<PAGE>
Intangibles, Instruments, Inventory and Proceeds; and the following terms shall
have the following meanings:
"Bank Account": a deposit, custody, or other account (whether,
in any case, time or demand or interest or non-interest bearing) maintained by a
Loan Party with any bank or other financial institution, all of which are set
forth on Schedule I.
"Bank Account Deposits": all cash and securities from time to
time standing to the credit of each Bank Account, and all interest, principal
and other distributions payable on or with respect to, such Bank Account.
"Blocked Account Agreement": an agreement, substantially in
the form attached hereto as Annex A, among a Loan Party, the Administrative
Agent and the bank at which such Loan Party maintains a Designated Bank Account.
"Code": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral": as defined in Section 2 of this Security
Agreement.
"Collateral Account": any collateral account established
by the Administrative Agent as provided in Section 3(d) or 8.
"Contracts": the contracts and agreements listed on Schedule
II hereto, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (a) all rights of any Loan
Party to receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of any Loan Party to damages arising out of, or for,
breach or default in respect thereof and (c) all rights of any Loan Party to
perform and to exercise all remedies thereunder.
"Designated Bank Account": a deposit, custody, money-market or
other account of any Loan Party for which a Blocked Account Agreement has been
executed by the Borrower, the bank at which such Designated Bank Account has
been established and the Administrative Agent.
"Hedge Agreement": as to any Person, any swap, cap, collar or
similar arrangement entered into by such Person providing for protection against
fluctuations in interest rates or currency exchange rates or the exchange of
nominal interest obligations, either generally or under specific contingencies.
"Secured Obligations": with respect to any Loan Party, the
collective reference to (a) the Obligations, and (b) all obligations and
liabilities of such Loan Party to the Administrative Agent and the Lenders,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of or in connection
with any Hedge Agreement entered into by any Loan Party with any Lender and any
other document made, delivered or given in connection therewith, whether on
account of
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principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by
such Loan Party pursuant to the terms of such Hedge Agreement or other
documents) or otherwise.
"Security Agreement": this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
"Trademarks": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, all prints or
labels on which any of the foregoing appear, and all designs and general
intangibles of a like nature, and the goodwill associated therewith or
symbolized thereby, and all other assets, rights and interests that uniquely
embody such goodwill, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof, or otherwise and (b) all
extensions or renewals thereof.
"Trademark License": any agreement, written or oral, providing
for the grant by or to the Borrower of any right to use any Trademark.
"Vehicles": all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title law of any
State and, in any event, including, without limitation, the vehicles listed on
Schedule III hereto and all tires and other appurtenances to any of the
foregoing.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Security Agreement shall refer to this Security
Agreement as a whole and not to any particular provision of this Security
Agreement, and Section, Schedule. Annex, and Exhibit references are to this
Security Agreement unless otherwise specified. The meanings given to terms
defined herein shall be equally applicable to both the singular and plural forms
of such terms.
2. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Secured Obligations, each Loan
Party hereby grants to the Administrative Agent for the ratable benefit of the
Lenders and the Issuing Lender a security interest in all of the following
property now owned or at any time hereafter acquired by any Loan Party or in
which any Loan Party now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"):
(i) all Accounts;
(ii) all Bank Accounts;
(iii) all Bank Account Deposits;
(iv) all Chattel Paper;
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<PAGE>
(v) all Contracts;
(vi) all Documents;
(vii) all Equipment;
(viii) all General Intangibles;
(ix) all Instruments;
(x) all Inventory;
(xi) all Trademarks;
(xii) all Trademark Licenses;
(xiii) all Vehicles;
(xiv) all books and records pertaining to the
Collateral; and
(xv) to the extent not otherwise included, all
Proceeds and products of any and all of the
foregoing.
3. Rights of Administrative Agent and Lenders; Limitations on
Administrative Agent's and Lenders' Obligations.
(a) Each Loan Party Remains Liable under Accounts and
Contracts. Anything herein to the contrary notwithstanding, each Loan Party
shall remain liable under each of the Accounts and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such Account and in accordance with and pursuant to the terms and
provisions of each such Contract. None of the Administrative Agent, any Lender
nor the Issuing Lender shall have any obligation or liability under any Account
(or any agreement giving rise thereto) or under any Contract by reason of or
arising out of this Security Agreement or the receipt by the Administrative
Agent any such Lender or the Issuing Lender of any payment relating to such
Account or Contract pursuant hereto, nor shall the Administrative Agent nor any
Lender nor the Issuing Lender be obligated in any manner to perform any of the
obligations of any Loan Party under or pursuant to any Account (or any agreement
giving rise thereto) or under or pursuant to any Contract, to make any payment,
to make any inquiry as to the nature or the sufficiency of any payment received
by it or as to the sufficiency of any performance by any party under any Account
(or any agreement giving rise thereto) or under any Contract, to present or file
any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(b) Notice to Account Debtors and Contracting Parties. Upon
the request of the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any Loan Party so instructed
shall notify account debtors on the Accounts and parties to the Contracts that
the Accounts and the Contracts have been assigned to the Administrative Agent
for the ratable benefit of the Lenders and the Issuing Lender and that payments
in respect thereof shall be made directly to the Administrative Agent.
(c) Analysis of Accounts and Contracts. The Administrative
Agent shall have the right to make test verifications of the Accounts in any
manner and through any medium that it reasonably considers advisable, and each
Loan Party shall furnish all such
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<PAGE>
assistance and information as the Administrative Agent may require in connection
therewith. At any time and from time to time, upon the Administrative Agent's
request and at the expense of the Loan Parties, each Loan Party so instructed
shall cause independent public accountants or others satisfactory to the
Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts. The Administrative Agent may in its own name or in the name of others
communicate with account debtors on the Accounts and parties to the Contracts to
verify with them to its satisfaction the existence, amount and terms of any
Accounts or Contracts.
(d) Collections on Accounts. The Administrative Agent hereby
authorizes each Loan Party to collect the Accounts, subject to the
Administrative Agent's direction and control, and the Administrative Agent may
curtail or terminate said authority at any time after the occurrence and during
the continuance of an Event of Default. If required by the Administrative Agent
at any time when an Event of Default shall have occurred and be continuing, any
payments of Accounts, when collected by each Loan Party, shall be forthwith
(and, in any event, within two Business Days) deposited by the Borrower in the
exact form received, duly endorsed by such Loan Party to the Administrative
Agent if required, in a special collateral account maintained by the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Lenders and the Issuing Lender only, as hereinafter provided,
and, until so turned over, shall be held by such Loan Party in trust for the
Administrative Agent, the Lenders and the Issuing Lender, in an account
segregated from other funds of such Loan Party (the "Collateral Account"). Each
deposit of any such Proceeds shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.
All Proceeds constituting collections of Accounts while held by the
Administrative Agent (or by the Loan Parties in trust for the Administrative
Agent, the Lenders and the Issuing Lender) shall continue to be collateral
security for all of the Secured Obligations and shall not constitute payment
thereof until applied as hereinafter provided. At such intervals as may be
agreed upon by the Loan Parties and the Administrative Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the Administrative
Agent's election, the Administrative Agent shall apply all or any part of the
funds on deposit in said Collateral Account on account of the Secured
Obligations in such order as the Administrative Agent may elect, and any part of
such funds which the Administrative Agent elects not so to apply and deems not
required as collateral security for the Secured Obligations shall be paid over
from time to time by the Administrative Agent to the Loan Party or to whomsoever
may be lawfully entitled to receive the same. At the Administrative Agent's
request, the Loan Parties shall deliver to the Administrative Agent all original
and other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Accounts, including, without limitation, all original
orders, invoices and shipping receipts.
(C) Upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may notify the Loan Parties in writing that
such Event of Default has occurred and is continuing, and that, pursuant to the
Blocked Account Agreement, the Administrative Agent shall have access to any or
all Designated Bank Accounts; provided that no such notice need be given by the
Administrative Agent to the Loan Parties if such Event of Default is an Event of
Default specified in either Section 11(f)(i) or (ii) of the Credit Agreement.
Upon the giving of such notice, or upon the occurrence of an Event of Default
specified in either Section 11(f)(i) or (ii) of the Credit
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Agreement, the Administrative Agent shall be entitled, at the Administrative
Agent's sole discretion, to withdraw all or any portion of funds deposited in
Designated Bank Accounts and apply such funds to the payment of the Secured
Obligations in such order as the Administrative Agent may elect.
4. Representations and Warranties. Each Loan Party hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Liens granted to the
Administrative Agent for the ratable benefit of the Lenders and the
Issuing Lender pursuant to this Security Agreement, and the other Liens
permitted to exist on the Collateral pursuant to the Credit Agreement,
each Loan Party owns each item of the Collateral free and clear of any
and all Liens or claims of others. No security agreement, financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as
may have been filed in favor of the Administrative Agent, for the
ratable benefit of the Lenders and the Issuing Lender, pursuant to this
Security Agreement or as may be permitted pursuant to the Credit
Agreement.
(b) Perfected First Priority Liens. When financing statements
have been filed in the offices in the jurisdictions listed in Schedule
7.16 to the Credit Agreement, the Liens granted pursuant to this
Security Agreement will constitute perfected Liens in favor of the
Administrative Agent, for the ratable benefit of the Lenders and the
Issuing Lender, in the Collateral, which can be perfected by such
filing, as collateral security for the Secured Obligations, which Liens
are prior to all other Liens on the Collateral created by the Loan
Parties and in existence on the date hereof and which are enforceable
as such against all creditors of and purchasers from the Loan Parties
and against any owner or purchaser of the real property where any of
the Equipment or Inventory is located and any present or future
creditor obtaining a Lien on such real property.
(c) Accounts. The amount represented by each Loan Party to the
Administrative Agent from time to time as owing by each account debtor
or by all account debtors in respect of the Accounts will at such time
be the correct amount actually owing by such account debtor or debtors
thereunder. No amount payable to any Loan Party under or in connection
with any Account is evidenced by any Instrument or Chattel Paper which
has not been delivered to the Administrative Agent. The place where
each Loan Party keeps its records concerning the Accounts is set forth
on Schedule IV.
(d) Contracts. No consent of any party (other than the Loan
Party which is a party to such Contract) to any Contract is required,
or purports to be required, in connection with the execution, delivery
and performance of this Security Agreement. Each Contract is in full
force and effect and constitutes a valid and legally enforceable
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<PAGE>
obligation of the parties thereto, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the
enforcement of creditor's rights generally and general equitable
principles (whether considered in a proceeding in equity or at law). No
consent or authorization of, filing with or other act by or in respect
of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of
the Contracts by any party thereto other than those which have been
duly obtained, made or performed, are in full force and effect and do
not subject the scope of any such Contract to any material adverse
limitation, either specific or general in nature. Neither the Loan
Party which is a party to any Contract nor (to the best of such Loan
Party's knowledge) any other party to any Contract is in default or is
likely to become in default in the performance or observance or any of
the terms thereof. Each Loan Party has fully performed all its
obligations under each Contract. The right title and interest of each
Loan Party in, to and under each Contract are not subject to any
defense, offset, counterclaim or claim which could reasonably be
expected to have a Material Adverse Effect, nor have any of the
foregoing been asserted or alleged against any Loan Party as to any
Contract. Each Loan Party has delivered to the Administrative Agent a
complete and correct copy of each Contract, including all amendments,
supplements and other modifications thereto. No amount payable to any
Loan Party under or in connection with any Contract is evidenced by any
Instrument or Chattel Paper which has not been delivered to the
Administrative Agent.
(e) Inventory and Equipment. The Inventory and the Equipment
are kept at the locations listed on Schedule V hereto.
(f) Chief Executive Office. The chief executive office and
chief place of business of each Loan Party is set forth on Schedule VI
hereto.
(g) Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
(h) Insurance Policies. None of the Collateral constitutes an
interest or claim in or under any policy of insurance or contract for
annuity, except to the extent the same constitutes Proceeds.
(i) Vehicles. Schedule III is a complete and correct list of
all Vehicles owned by each Loan Party.
(j) Governmental Obligors. None of the obligors on any
Accounts, and none of the parties to any Contracts, is a Governmental
Authority.
(k) Blocked Account Agreements. For each deposit, custody,
money-market or other accounts (whether, in any case, time or demand or
interest or non-interest bearing) maintained by each Loan Party with
any bank or any other financial institution, a Blocked Account
Agreement among such bank, such Loan Party and the Administrative Agent
shall have been executed.
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(l) Patents and Trademarks. No Credit Party has any patents or
registered trademarks.
5. Covenants. Each Loan Party covenants and agrees with the
Administrative Agent, the Lenders and the Issuing Lender that, from and after
the date of this Security Agreement until the Secured Obligations are paid in
full and the Commitments have expired or been terminated:
(a) Maintenance of Perfected Security Interests; Further
Documentation; Pledge of Instruments and Chattel Paper. Each Loan Party
shall maintain the security interest created by this Security Agreement
as a perfected security interest having at least the priority described
in Section 4(b) hereof and shall defend such security interest against
the claims and demands of all Persons whomsoever. At any time and from
time to time, upon the written request of the Administrative Agent, and
at the sole expense of the Loan Parties, the Loan Parties so instructed
will promptly and duly execute and deliver such further instruments and
documents and take such further action as the Administrative Agent may
reasonably request for the purpose of obtaining or preserving the full
benefits of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in
any jurisdiction with respect to the Liens created hereby. Each Loan
Party also hereby authorizes the Administrative Agent to file any such
financing or continuation statement without the signature of any Loan
Party to the extent permitted by applicable law. A carbon, photographic
or other reproduction of this Security Agreement shall be sufficient as
a financing statement for filing in any jurisdiction. If any amount
payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument or
Chattel Paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative
Agent, to be held as Collateral pursuant to this Security Agreement.
(b) Indemnification. Each Loan Party agrees to pay, and to
save the Administrative Agent, the Lenders and the Issuing Lender
harmless from, any and all liabilities, costs and expenses (including,
without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying, any and all excise, sales or other
taxes which may be payable or determined to be payable with respect to
any of the Collateral, (ii) with respect to, or resulting from, any
delay in complying with any Requirement of Law applicable to any of the
Collateral or (iii) in connection with any of the transactions
contemplated by this Security Agreement. In any suit, proceeding or
action brought by the Administrative Agent, any Lender or the Issuing
Lender under any Account or Contract for any sum owing thereunder, or
to enforce any provisions of any Account or Contract, each Loan Party
will save, indemnify and keep the Administrative Agent, such Lender and
the Issuing Lender harmless from and against all expense, loss or
damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor
or obligor thereunder, arising out of a breach by any Loan Party of any
obligation thereunder or
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<PAGE>
arising out of any other agreement, indebtedness or liability at any
time owing to or in favor of such account debtor or obligor or its
successors from such Loan Party.
(c) Maintenance of Records. Each Loan Party will keep and
maintain at its own cost and expense satisfactory and complete records
of the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the Accounts.
Each Loan Party will mark its books and records pertaining to the
Collateral to evidence this Security Agreement and the security
interests granted hereby. Upon the occurrence and during the
continuance of an Event of Default, the Loan Parties shall turn over
any books and records pertaining to the Collateral to the
Administrative Agent or to its representatives during normal business
hours at the request of the Administrative Agent.
(d) Right of Inspection. The Administrative Agent, the Lenders
and the Issuing Lender shall at all times have full and free access
during normal business hours to all the books, correspondence and
records of the Loan Parties, and the Administrative Agent, the Lenders
and the Issuing Lender or their respective representatives may examine
the same, take extracts therefrom and make photocopies thereof, and the
Loan Parties agree to render to the Administrative Agent, the Lenders
and the Issuing Lender, at the Borrower's cost and expense, such
clerical and other assistance as may be reasonably requested with
regard thereto. The Administrative Agent, the Lenders and the Issuing
Lender and their respective representatives shall at all times also
have the right to enter into and upon any premises where any of the
Inventory or Equipment is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests therein.
(e) Compliance with Laws, etc. Each Loan Party will comply in
all material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of any Loan Party's
business; provided, however, that any Loan Party may contest any
Requirement of Law in any reasonable manner which shall not, in the
sole opinion of the Administrative Agent, adversely affect the
Administrative Agent's, the Lenders' or the Issuing Lender's rights or
the priority of its Liens on the Collateral.
(f) Compliance with Terms of Contracts, etc. Each Loan Party
will perform and comply in all material respects with all its
obligations under the Contracts and all its other Contractual
Obligations relating to the Collateral.
(g) Payment of Obligations. Each Loan Party will pay promptly
when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such charge need be paid if
(i) the validity thereof is being contested in good faith by
appropriate proceedings, (ii) such proceedings do not involve any
material danger of the sale, forfeiture or loss of any of
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the Collateral or any interest therein and (iii) such charge is
adequately reserved against on the Borrower's books in accordance with
GAAP.
(h) Limitation on Liens on Collateral. No Loan Party will
create, incur or permit to exist, will defend the Collateral against,
and will take such other action as is necessary to remove, any Lien or
claim on or to the Collateral, other than the liens created hereby and
other than as permitted pursuant to the Credit Agreement, and will
defend the right, title and interest of the Administrative Agent, the
Lenders and the Issuing Lender in and to any of the Collateral against
the claims and demands of all Persons whomsoever.
(i) Limitations on Dispositions of Collateral. No Loan Party
will sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except for (x) sales
of Inventory in the ordinary course of its business and (y) so long as
no Default or Event of Default has occurred and is continuing, sales,
transfers and other dispositions of Collateral permitted under Section
10 of the Credit Agreement.
(j) Limitations on Modifications of Contracts and Agreements
Giving Rise to Accounts; Exercise of Rights; Notices. No Loan Party
will (i) amend, modify, terminate or waive any provision of any
Contract or any agreement giving rise to an Account in any manner which
could reasonably be expected to materially adversely affect the value
of such Contract or such Account as Collateral, (ii) other than in the
ordinary course of business as generally conducted by any such Loan
Party over a period of time, fail to exercise promptly and diligently
each and every material right which it may have under each Contract and
each agreement giving rise to an Account (other than any right of
termination) or (iii) fail to deliver to the Administrative Agent a
copy of each material demand, notice or document received by it
relating in any way to any Contract or any agreement giving rise to an
Account that questions the validity or enforceability of such Contract
or Accounts constituting more than 5% of the aggregate amount of the
Accounts.
(k) Limitations on Discounts, Compromises, Extensions of
Accounts. Other than in the ordinary course of business consistent with
its past practice, no Loan Party will (i) grant any extension of the
time of payment of any Account, (ii) compromise, compound or settle any
Account for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Account, or (iv)
allow any credit or discount whatsoever on any Account.
(l) Maintenance of Equipment. Each Loan Party will maintain
each item of Equipment in good operating condition, ordinary wear and
tear and immaterial impairments of value and damage by the elements
excepted, and will provide all maintenance, service and repairs
necessary for such purpose, except that the Loan Parties' obligations
pursuant to this Section 5(l) shall not extend to obsolete Equipment.
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<PAGE>
(m) Maintenance of Insurance. Each Loan Party will maintain,
with financially sound and reputable companies, insurance policies (i)
insuring the Inventory, Equipment and Vehicles against loss by fire,
explosion, theft and such other casualties as may be reasonably
satisfactory to the Administrative Agent in amounts comparable to
amounts of insurance coverage obtained by similar businesses of similar
size acting prudently and (ii) insuring each Loan Party, the
Administrative Agent, the Lenders and the Issuing Lender against
liability for personal injury and property damage relating to such
Inventory, Equipment and Vehicles, such policies to be in such form and
amounts and having such coverage as shall be comparable to forms,
amounts and coverage, respectively, obtained by similar businesses of
similar size acting prudently, with losses payable to the respective
Loan Party, the Administrative Agent, the Lenders and the Issuing
Lenders as their respective interests may appear or, in the case of
liability insurance, showing the Administrative Agent, the Lenders and
the Issuing Lender as additional insured parties. All such insurance
shall (i) provide that no cancellation, material reduction in amount or
material change in coverage thereof shall be effective until at least
30 days after receipt by the Administrative Agent of written notice
thereof, (ii) name the Administrative Agent, the Lenders and the
Issuing Lender as insured parties and loss payees, (iii) include a
breach of warranty clause and (iv) be reasonably satisfactory in all
other respects to the Administrative Agent. Each Loan Party shall
deliver to the Administrative Agent a report of a reputable insurance
broker with respect to such insurance during the month of March in each
calendar year and such supplemental reports with respect thereto as the
Administrative Agent may from time to time reasonably request.
(n) Further Identification of Collateral. Each Loan Party will
furnish to the Administrative Agent from time to time statements and
schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as the Administrative
Agent may reasonably request, all in reasonable detail.
(o) Notices. Each Loan Party will advise the Administrative
Agent and the Lenders promptly, in reasonable detail, at their
respective addresses set forth in the Credit Agreement, (i) of any Lien
(other than Liens created hereby or permitted under the Credit
Agreement) on, or claim asserted against, any of the Collateral and
(ii) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of
the Collateral or on the Liens created hereunder.
(p) Changes in Locations, Name, etc. No Loan Party will (i)
change the location of its chief executive office/chief place of
business from that specified in Section 4(f) or remove its books and
records concerning the Accounts from the location specified in Section
4(c), (ii) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule V hereto or (iii) change
its name, identity or corporate structure to such an extent that any
financing statement filed by the Administrative Agent in connection
with this Security Agreement would become seriously misleading.
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<PAGE>
(q) Trademarks.
(i) Each Loan Party (either itself or through
licensees) will, except with respect to any Trademark that the
Borrower shall reasonably determine is of negligible economic
value to it, (A) continue to use each Trademark on each and
every trademark class of goods applicable to its current line
as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (B) maintain as in
the past the quality of products and services offered under
such Trademark, (C) employ such Trademark with the appropriate
notice of registration, (D) not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark
unless the Administrative Agent, for the ratable benefit of
the Lenders and the Issuing Lender, shall obtain a perfected
security interest in such mark pursuant to this Security
Agreement, and (E) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any
act whereby any Trademark may become invalidated.
(ii) Each Loan Party shall from time to time execute
and deliver any and all agreements, instruments, documents,
and papers as the Administrative Agent may request to evidence
the Administrative Agent's security interest for the ratable
benefit of the Lenders and the Issuing Lender in any Trademark
and the goodwill and general intangibles of each Loan Party
relating thereto or represented thereby, and each Loan Party
hereby constitutes the Administrative Agent its
attorney-in-fact to execute and file all such writings for the
foregoing purposes, all acts of such attorney being hereby
ratified and confirmed, such power being coupled with an
interest is irrevocable until the Secured Obligations are paid
in full and the Commitments are terminated.
(r) Vehicles. Each Loan Party will maintain each Vehicle in
good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will
provide all maintenance, service and repairs necessary for such
purpose. Each Loan Party will notify the Administrative Agent of each
acquisition or sale of a Vehicle, promptly following the acquisition or
sale thereof. If an Event of Default shall occur and be continuing, at
the request of the Administrative Agent the Borrower shall, within five
Business Days after such request, file applications for certificates of
title indicating the Administrative Agent's first priority Lien for the
ratable benefit of the Lenders and the Issuing Lender on the Vehicles
covered by such certificates, together with any other necessary
documentation, in each office in each jurisdiction which the
Administrative Agent shall deem advisable to perfect its Liens on the
Vehicles.
(s) Inventory. None of the Inventory of the Borrower shall be
evidenced by a warehouse receipt.
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<PAGE>
(t) Bank Accounts. Each Credit Party will maintain all of its
Bank Accounts, as set forth on Schedule I, as Designated Bank Accounts.
6. Administrative Agent's Appointment as Attorney-in-
Fact.
(a) Powers. The Borrower hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or Administrative
Agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place
and stead of the Borrower and in the name of the Borrower or in its own
name, from time to time in the Administrative Agent's discretion, for
the purpose of carrying out the terms of this Security Agreement, to
take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to
accomplish the purposes of this Security Agreement, and, without
limiting the generality of the foregoing, the Borrower hereby gives the
Administrative Agent the power and right, on behalf of the Borrower,
without notice to or assent by the Borrower, to do the following:
(i) in the name of the Borrower or its own name, or
otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for
the payment of moneys due under any Account, Instrument,
General Intangible or Contract or with respect to any other
Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise
deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Account,
Instrument, General Intangible or Contract or with respect to
any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, to effect any
repairs or any insurance called for by the terms of this
Security Agreement and to pay all or any part of the premiums
therefor and the costs thereof;
(iii) in the case of any Trademark, to execute and
deliver any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's and the Lenders' security interest in
such Trademark and the goodwill and general intangibles of the
Borrower relating thereto or represented thereby;
(iv) to execute, in connection with any sale provided
for in Section 9 hereof, any indorsements, assignments or
other instruments of conveyance or transfer with respect to
the Collateral; and
(v) (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all
moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall
direct; (B) to ask or demand for, collect, receive payment of
and receipt
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<PAGE>
for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any
Collateral; (C) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral;
(D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (E) to
defend any suit, action or proceeding brought against the
Borrower with respect to any Collateral; (F) to settle,
compromise or adjust any such suit, action or proceeding and,
in connection therewith, to give such discharges or releases
as the Administrative Agent may deem appropriate; (G) to
assign any Trademark (along with the goodwill of the business
to which any such Trademark pertains), throughout the world
for such term or terms, on such conditions, and in such
manner, as the Administrative Agent shall in its sole
discretion determine; and (H) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner
thereof for all purposes, and to do, at the Administrative
Agent's option and the Borrower's expense, at any time, or
from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or
realize upon the Collateral and the Administrative Agent's,
Liens thereon for the ratable benefit of the Lenders and the
Issuing Lender and to effect the intent of this Security
Agreement, all as fully and effectively as the Borrower might
do.
Anything in this Section 6(a) to the contrary notwithstanding,
the Administrative Agent agrees that it will not exercise any rights
under the power of attorney provided for in this Section unless an
Event of Default has occurred and is continuing.
The Borrower hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of
attorney is a power coupled with an interest and are irrevocable.
(b) No Duty on Administrative Agent's, Lenders' or Issuing
Lender's Part. The powers conferred on the Administrative Agent, the
Lenders and the Issuing Lender hereunder are solely to protect the
Administrative Agent's, the Lenders' and the Issuing Lender's interests
in the Collateral and shall not impose any duty upon the Administrative
Agent, any Lender or Issuing Lender to exercise any such powers. Each
of the Administrative Agent, the Lenders and the Issuing Lender shall
be accountable only for amounts that it actually receives as a result
of the exercise of such powers, and neither they nor any of their
officers, directors, employees or Administrative Agents shall be
responsible to the Borrower for any act or failure to act hereunder,
except for its own gross negligence or willful misconduct.
7. Performance by Administrative Agent of Borrower's
Obligations. If the Borrower fails to perform or comply with any of its
agreements contained herein, the
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Administrative Agent, at its option, but without any obligation to do so, may
itself perform or comply, or otherwise cause performance or compliance, with
such agreement. The expenses of the Administrative Agent incurred in connection
with such performance or compliance, together with interest thereon at a rate
per annum 2.0% above the Base Rate, shall be payable by the Borrower to the
Administrative Agent on demand and shall constitute Secured Obligations secured
hereby.
8. Proceeds. In addition to the rights of the Administrative
Agent, the Lenders and the Issuing Lender specified in Section 3(d) with respect
to payments of Accounts, it is agreed that (a) all Proceeds received by the
Borrower consisting of cash, checks and other near-cash items shall be held by
the Borrower in trust for the Administrative Agent, the Lenders and the Issuing
Lender, segregated from other funds of the Borrower, and shall, forthwith upon
receipt by the Borrower, be turned over to the Administrative Agent in the exact
form received by the Borrower (duly endorsed by the Borrower to the
Administrative Agent, if required), and held by the Administrative Agent in a
Collateral Account maintained under the sole dominion and control of the
Administrative Agent. Any and all such Proceeds held by the Administrative Agent
in a Collateral Account (or by the Borrower in trust for the Administrative
Agent and the Lenders and the Issuing Lender) shall continue to be held as
collateral security for the Secured Obligations and shall not constitute payment
thereof until applied as provided in this Section. At such intervals as may be
agreed upon between the Administrative Agent and the Borrower or, if an Event of
Default shall have occurred and be continuing, at any time at the Administrative
Agent's election, the Administrative Agent may apply all or any part of the
Proceeds held in any Collateral Account or otherwise received by the
Administrative Agent against the Secured Obligations (whether matured or
unmatured), such application to be in such order as the Administrative Agent
shall elect. Any balance of such Proceeds remaining after the Secured
Obligations shall have been paid in full and the Commitments shall have expired
or been terminated shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders and the Issuing
Lender, may exercise, in addition to all other rights and remedies granted to it
in this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Borrower or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent, any Lender or
the Issuing Lender or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The
- 15 -
<PAGE>
Administrative Agent, any Lender or the Issuing Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Borrower, which right
or equity is hereby waived or released. The Borrower further agrees, at the
Administrative Agent's request, to assemble the Collateral and make it available
to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at the Borrower's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent, the Lenders and the
Issuing Lender arising out of the exercise by the Administrative Agent
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Administrative Agent may elect, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Administrative Agent account for the surplus,
if any, to the Borrower. To the extent permitted by applicable law, the Borrower
waives all claims, damages and demands it may acquire against the Administrative
Agent, any Lender or the Issuing Lender arising out of the exercise by the
Administrative Agent, any Lender or the Issuing Lender of any of its rights
hereunder. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Borrower shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations
and the fees and disbursements of any attorneys employed by the Administrative
Agent, any Lender or the Issuing Lender to collect such deficiency.
10. Grant of License to Use Trademark Collateral. For the
purpose of enabling the Administrative Agent to exercise rights and remedies
under Section 9 hereof at such time as the Administrative Agent shall be
lawfully entitled to exercise such rights and remedies, the Borrower hereby
grants to the Administrative Agent an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to the Borrower)
to use, license or sublicense any of the Trademarks, now owned or hereafter
acquired by the Borrower, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored. The use of such license by the Administrative Agent
shall be exercised, at the option of the Administrative Agent for any purpose
appropriate in connection with the exercise of remedies hereunder, only upon the
occurrence and during the continuance of an Event of Default, provided that any
license, sublicense or other transaction entered into by the Administrative
Agent in accordance herewith shall be binding upon the Borrower notwithstanding
any subsequent cure of an Event of Default. The Administrative Agent agrees to
apply the net proceeds received from any license as provided in Section 8
hereof.
11. Limitation on Duties Regarding Presentation of Collateral.
The Administrative Agent's sole duty with respect to the custody, safekeeping
and physical
- 16 -
<PAGE>
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. None of
the Administrative Agent, Lender, nor the Issuing Lender nor any of their
respective directors, officers, employees or Administrative Agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Administrative
Agent, the Lenders and the Issuing Lender hereunder are solely to protect the
Administrative Agent's, the Lenders' and the Issuing Lender's interests in the
Collateral and shall not impose any duty upon the Administrative Agent, any
Lender or the Issuing Lender to exercise any such powers. The Administrative
Agent, the Lenders and the Issuing Lender shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of their officers, directors, employees or Administrative
Agents shall be responsible to the Borrower for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.
12. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
13. Notices. Notices, requests and demands to or upon the
Administrative Agent or the Borrower hereunder shall be effected in the manner
set forth in Section 13.2 of the Credit Agreement.
14. Authority of Administrative Agent. The Borrower
acknowledges that the rights and responsibilities of the Administrative Agent
under this Security Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative Agent
of any option, voting right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Security Agreement shall, as
between the Administrative Agent, the Lenders and the Issuing Lender, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Borrower, the Administrative Agent shall be
conclusively presumed to be acting as Administrative Agent for the Lenders and
the Issuing Lender with full and valid authority so to act or refrain from
acting, and the Borrower shall be under no obligation, or entitlement, to make
any inquiry respecting such authority.
15. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
- 17 -
<PAGE>
16. Paragraph Headings. The paragraph headings used in this
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
17. No Waiver; Cumulative Remedies. None of the Administrative
Agent, any Lender nor the Issuing Lender shall by any act (except by a written
instrument pursuant to Section 18 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent, any Lender or the Issuing
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent,
any Lender or the Issuing Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, such Lender or the Issuing Lender would otherwise have on
any future occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
18. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Security Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Borrower and the Administrative Agent, provided that any
provision of this Security Agreement may be waived by the Administrative Agent
in a written instrument executed by the Administrative Agent. This Security
Agreement shall be binding upon the successors and assigns of the Borrower and
shall inure to the benefit of the Administrative Agent, the Lenders and the
Issuing Lender and their respective successors and assigns. This Security
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York.
19. Additional Grantors. Each Subsidiary of the Borrower is
required pursuant to Section 9.9 of the Credit Agreement to become party to this
Security Agreement and shall become a Grantor for all purposes of this Security
Agreement upon execution and delivery by such Subsidiary of a Supplement in the
form of Annex B hereto.
[SIGNATURE PAGE FOLLOWS]
- 18 -
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Security
Agreement to be duly executed and delivered as of the date first above written.
V-1
<PAGE>
UNIDIGITAL INC.
By /s/ William E. Dye
----------------------------
Name: William E. Dye
Title: Chief Executive Officer
UNIDIGITAL ELEMENTS (NY), INC.
By /s/ William E. Dye
----------------------------
Name: William E. Dye
Title: Chief Executive Officer
UNIDIGITAL ELEMENTS (SF), INC.
By /s/ William E. Dye
----------------------------
Name: William E. Dye
Title: Chief Executive Officer
UNISON (NY), INC.
By /s/ William E. Dye
----------------------------
Name: William E. Dye
Title: Chief Executive Officer
UNISON (MA), INC.
By /s/ William E. Dye
----------------------------
Name: William E. Dye
Title: Chief Executive Officer
V-2
<PAGE>
ANNEX A
-------
FORM OF BLOCKED ACCOUNT AGREEMENT
March , 1998
[Name of Bank]
[Address]
Re: Blocked Account Agreement
Ladies and Gentlemen:
1. We hereby notify you that we have granted a security interest
in our demand deposit account number maintained with
you (the "Bank Account") to Canadian Imperial Bank of
Commerce, as Agent, 425 Lexington Avenue, New York, New York
10021 (the "Agent").
2. We hereby irrevocably instruct you, and by your acceptance of
this Blocked Account Agreement you hereby agree, to make all
transfers of funds to be made by you after the delivery of
this Blocked Account Agreement out of or in connection with
the Bank Account in accordance with the instructions of the
Agent, subject to paragraph . If the Agent shall at any time
instruct you to make transfers of funds from the Bank
Account directly to the Agent, such transfers shall be made
to such account as the Agent shall specify maintained at
Canadian Imperial Bank of Commerce, New York, New York
10021, or otherwise in accordance with the instructions of
the Agent.
3. We also hereby notify you and agree that the Agent shall be
irrevocably entitled (until the Agent shall notify you to the
contrary) to exercise any and all rights (without notice to us
or further consent by us) in respect of or in connection with
the Bank Account including, without limitation, the right to
specify when transfers of funds are to be made out of or in
connection with the Bank Account and the withdrawal of funds
therefrom.
4. We also hereby notify you, and by your acceptance of this
Blocked Account Agreement you hereby agree, that all fees,
expenses and other charges arising out of or in connection
with the Bank Account shall remain our obligation and shall
not be an obligation of the Agent; provided that the Agent
shall
<PAGE>
be notified by you of any default in our payment of any such
obligation and the Agent shall be entitled (but shall have no
obligation) to cure any such default within a reasonable
period of time after its receipt of such notice.
5. We also hereby notify you that in the event that any provision
of any instrument, certificate or other document delivered by
or on behalf of us in connection with the Account shall be
inconsistent with any provision of this notice, the provisions
of this notice shall govern.
6. Subject to paragraph 7, you hereby waive any right that
you may now or hereafter have to security interests, bank's
or other possessory liens, rights to offset or other claims
against the funds in the Bank Account. You agree to hold the
funds in the Bank Account as the bailee and custodian for
the benefit of the Agent, to indicate on your records the
assignment of the funds in the Bank Account in favor of the
Agent and to provide the Agent, at the request of the Agent,
with information concerning the amounts on deposit in the
Bank Account. Subject to paragraph 8, you agree not to pay
to us all or any part of the funds in the Bank Account or
any income, distributions, profits or proceeds of the funds
in the Bank Account without the prior written consent of the
Agent.
7. Notwithstanding anything contained herein to the contrary, we
agree and the Agent agrees that you shall be entitled to be
reimbursed from funds in the Bank Account for your fees
related to your services in connection with the Bank Account
and for amounts in respect of returned and otherwise
uncollected items previously credited to the Bank Account.
8. By its acknowledgment and acceptance of this Agreement, the
Agent hereby instructs you, until such instruction is
rescinded by the Agent or superseded by a different
instruction from the Agent (which instruction shall be
rescinded by the Agent only so long as an Event of Default
under the Credit Agreement to which we are a party has
occurred and is continuing), to permit us to withdraw funds
standing to the credit of the Bank Account.
- 2 -
<PAGE>
Please acknowledge your agreement to the foregoing by signing in the
space provided below on two copies hereof sent herewith, and returning a one
such signed copy to the undersigned and another such signed copy to the Agent
Very truly yours,
[NAME OF CREDIT PARTY]
By
---------------------------
Name:
Title:
AGREED TO AND ACCEPTED:
[NAME OF BANK]
By
---------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By
---------------------------
Name:
Title:
- 3 -
ANNEX B to
Security Agreement
SUPPLEMENT TO SECURITY AGREEMENT
SUPPLEMENT, dated as of (this "Supplement"), made by , a
corporation (the "Additional Grantor"), in favor of CANADIAN IMPERIAL BANK OF
COMMERCE as administrative agent (in such capacity, the "Administrative Agent")
for the Lenders (the "Lenders") and Canadian Imperial Bank of Commerce as issuer
of the Letters of Credit (as defined in the Credit Agreement referenced below)
(in such capacity, the "Issuing Lender") parties to the Credit Agreement
referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in the Credit Agreement.
RECITALS
WHEREAS, reference is hereby made to that certain Credit Agreement,
dated as of March , 1998, among Unidigital Inc. (the "Borrower"), the
Administrative Agent, the Lenders and the Issuing Lender (as amended,
supplemented or otherwise modified as of the date hereof, the "Credit
Agreement");
WHEREAS, in connection with the Credit Agreement, the Subsidiaries of
the Borrower (other then the Additional Grantor) (collectively the "Grantors"
and each a "Grantor") have entered into the Security Agreement, dated as of
March , 1998, in favor of the Administrative Agent for the ratable benefit of
Lenders and the Issuing Lender (as amended, supplemented or otherwise modified
as of the date hereof, the "Subsidiaries Security Agreement");
WHEREAS, Section 9.9 of the Credit Agreement requires that should the
Borrower at any time acquire or form any Subsidiary, such Subsidiary shall
become party to the Subsidiaries Guarantee and the Security Agreement;
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Supplement in order to become a party to the Security Agreement.
NOW, THEREFORE, IT IS AGREED:
1. Security Agreement. By executing and delivering this Supplement, the
Additional Grantor, as provided in Section 19 of the Security Agreement, hereby
becomes a party to the Security Agreement as a Grantor thereunder with the same
force and effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder. The Additional Grantor
hereby represents and warrants the each of the representations and
<PAGE>
warranties contained in Section 4 of the Security Agreement is true and correct
on and as of the date hereof (after giving effect to this Supplement) as if made
on and as of such date.
2. Supplement to the Security Agreement. This Supplement is
supplemental to the Security Agreement, forms a part thereof and is subject to
the terms thereof. From and after the date of this Supplement, Schedules I, II,
III, IV, V, and VI, to the Security Agreement shall be deemed to include each
item listed on Annex D-1 to this Supplement.
3. Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Supplement
to be duly executed and delivered as of the date first above written.
[NAME OF ADDITIONAL GRANTOR],
a corporation
By
---------------------------
Name:
Title:
The place where Additional Grantor keeps its records concerning the Accounts is:
---------------------------------------------------------------------------.
The Additional Grantor's chief executive office and chief place of business is
located at:
---------------------------------------------------------------------------.
- 5 -
<PAGE>
ANNEX D-1
to Supplement
I. SUPPLEMENTS TO SCHEDULE I TO THE SUBSIDIARIES SECURITY AGREEMENT
BANK ACCOUNTS
-------------
II. SUPPLEMENTS TO SCHEDULE I TO THE SUBSIDIARIES SECURITY AGREEMENT
CONTRACTS
---------
III. SUPPLEMENTS TO SCHEDULE I TO THE SUBSIDIARIES SECURITY AGREEMENT
VEHICLES
--------
IV. SUPPLEMENTS TO SCHEDULE I TO THE SUBSIDIARIES SECURITY AGREEMENT
LOCATION OF RECORDS
-------------------
V. SUPPLEMENTS TO SCHEDULE I TO THE SUBSIDIARIES SECURITY AGREEMENT
INVENTORY AND EQUIPMENT
-----------------------
<PAGE>
VI. SUPPLEMENTS TO SCHEDULE I TO THE SUBSIDIARIES SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICE
----------------------
VII. SUPPLEMENTS TO SCHEDULE I TO THE SUBSIDIARIES SECURITY AGREEMENT
GOVERNMENTAL OBLIGORS
---------------------
VIII. SUPPLEMENTS TO SCHEDULE I TO THE SUBSIDIARIES SECURITY AGREEMENT
INSURANCE OBLIGORS
------------------
- 7 -
SUBSIDIARIES GUARANTEE
GUARANTEE, dated as of March 24, 1998, made by each of the
entities that are signatories hereto (the "Guarantors"), in favor of CANADIAN
IMPERIAL BANK OF COMMERCE, as administrative agent (in such capacity, the
"Administrative Agent") for the lenders (the "Lenders") and CANADIAN IMPERIAL
BANK OF COMMERCE (the "Issuing Lender") parties to the Credit Agreement referred
to below.
RECITALS
Pursuant to the Credit Agreement, dated as of March 24, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Lenders, the Issuing Lender and the
Administrative Agent, the Lenders have severally agreed to make loans to and the
Issuing Lender has agreed to issue letters of credit for the account of the
Borrower upon the terms and subject to the conditions set forth therein, such
loans to be evidenced by the Notes issued by the Borrower thereunder. The
Borrower owns directly or indirectly all of the issued and outstanding stock of
each Guarantor. The proceeds of the loans and extensions of credit will be used
in part to enable the Borrower to make valuable transfers (as determined as
provided herein) to some of the Guarantors in connection with the operation of
their respective businesses. The Borrower and the Guarantors are engaged in
related businesses, and each Guarantor will derive substantial direct and
indirect benefit from the making of the loans and extensions of credit. It is a
condition precedent to the obligation of the Lenders to make their respective
loans to the Borrower, and of the Issuing Lender to issue its letters of credit,
under the Credit Agreement that the Guarantors shall have executed and delivered
this Guarantee to the Administrative Agent for the ratable benefit of the
Lenders and the Issuing Lender.
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective loans to the Borrower, and the
Issuing Lender to issue its letters of credit under the Credit Agreement, the
Guarantors hereby agree with the Administrative Agent, for the ratable benefit
of the Lenders and the Issuing Lender, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any
<PAGE>
particular provision of this Guarantee, and section and paragraph references are
to this Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) Subject to the provisions of Section 2(b),
each of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Administrative Agent, for the ratable benefit of
the Lenders and the Issuing Lender and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by the
Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of the Obligations.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating to
the insolvency of debtors.
(c) Each Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, such Guarantor under this Guarantee. This
Guarantee shall remain in full force and effect until the Obligations are paid
in full and the Commitments are terminated, notwithstanding that from time to
time prior thereto the Borrower may be free from any Obligations.
(d) Each Guarantor agrees that the Obligations may at any time
and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing this Guarantee or affecting the rights and remedies
of the Administrative Agent or any Lender or the Issuing Lender hereunder.
(e) No payment or payments made by the Borrower, any of the
Guarantors, any other guarantor or any other Person or received or collected by
the Administrative Agent or any Lender from the Borrower, any of the Guarantors,
any other guarantor or any other Person by virtue of any action or proceeding or
any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment or payments other than payments made by
such Guarantor in respect of the Obligations or payments received or collected
from such Guarantor in respect of the Obligations, remain liable for the
Obligations up to the maximum liability of such Guarantor hereunder until the
Obligations are paid in full and the Commitments are terminated.
(f) Each Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender or the Issuing Lender on
- 2 -
<PAGE>
account of its liability hereunder, it will notify the Administrative Agent in
writing that such payment is made under this Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder who has not paid its
proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 5 hereof. The provisions
of this Section shall in no respect limit the obligations and liabilities of any
Guarantor to the Administrative Agent and the Lenders and the Issuing Lender,
and each Guarantor shall remain liable to the Administrative Agent and the
Lenders and the Issuing Lender for the full amount guaranteed by such Guarantor
hereunder.
4. Right of Set-off. Upon the occurrence of any Event of
Default, each Guarantor hereby irrevocably authorizes each Lender and the
Issuing Lender at any time and from time to time without notice to such
Guarantor or any other Guarantor, any such notice being expressly waived by each
Guarantor, to set-off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or the Issuing Lender to or for the credit or the account
of such Guarantor, or any part thereof in such amounts as such Lender or the
Issuing Lender may elect, against and on account of the obligations and
liabilities of such Guarantor to such Lender or the Issuing Lender hereunder and
claims of every nature and description of such Lender or the Issuing Lender
against such Guarantor, in any currency, whether arising hereunder, under the
Credit Agreement, any Note, any Loan Documents or otherwise, as such Lender or
the Issuing Lender may elect, whether or not the Administrative Agent, any
Lender or the Issuing Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
Administrative Agent, each Lender and the Issuing Lender shall notify such
Guarantor promptly of any such set-off and the application made by the
Administrative Agent, such Lender or the Issuing Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Administrative Agent, each Lender and the Issuing
Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent, such Lender or the Issuing Lender may have.
5. No Subrogation. Notwithstanding any payment or payments
made by any of the Guarantors hereunder or any set-off or application of funds
of any of the Guarantors by any Lender or the Issuing Lender, no Guarantor shall
be entitled to be subrogated to any of the rights of the Administrative Agent,
any Lender or the Issuing Lender against the Borrower or any other Guarantor or
any collateral security or guarantee or right of offset held by any Lender or
the Issuing Lender for the payment of the Obligations, nor shall any Guarantor
seek or be entitled to seek any contribution or reimbursement from the Borrower
or any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Administrative Agent, the Lenders and the Issuing
Lender by the Borrower on account
- 3 -
<PAGE>
of the Obligations are paid in full and the Commitments are terminated. If any
amount shall be paid to any Guarantor on account of such subrogation rights at
any time when all of the Obligations shall not have been paid in full, such
amount shall be held by such Guarantor in trust for the Administrative Agent,
the Lenders and the Issuing Lender, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine.
6. Amendments, etc. with respect to the Obligations; Waiver of
Rights. Each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the
Obligations made by the Administrative Agent, any Lender or the Issuing Lender
may be rescinded by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent, any Lender or the Issuing Lender, and the Credit
Agreement, the Notes and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent (or
the Required Lenders, as the case may be) may deem advisable from time to time,
and any collateral security, guarantee or right of offset at any time held by
the Administrative Agent, any Lender or the Issuing Lender for the payment of
the Obligations may be sold, exchanged, waived, surrendered or released. None of
the Administrative Agent nor any Lender nor the Issuing Lender shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against any of the Guarantors, the
Administrative Agent, any Lender or the Issuing Lender may, but shall be under
no obligation to, make a similar demand on the Borrower or any other Guarantor
or guarantor, and any failure by the Administrative Agent, any Lender or the
Issuing Lender to make any such demand or to collect any payments from the
Borrower or any such other Guarantor or guarantor or any release of the Borrower
or such other Guarantor or guarantor shall not relieve any of the Guarantors in
respect of which a demand or collection is not made or any of the Guarantors not
so released of their several obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of the Administrative Agent, any Lender or the Issuing Lender against any
of the Guarantors. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent, any
Lender or the Issuing Lender upon this Guarantee or acceptance of this
Guarantee, the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Guarantee; and all dealings between the Borrower
- 4 -
<PAGE>
and any of the Guarantors, on the one hand, and the Administrative Agent, the
Lenders and the Issuing Lender, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or any of
the Guarantors with respect to the Obligations. Each Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of the Credit Agreement, any Note or any other Loan
Document, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent, any Lender or the Issuing Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower against the Administrative Agent, any Lender or the Issuing Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of
the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Obligations,
or of such Guarantor under this Guarantee, in bankruptcy or in any other
instance. When pursuing its rights and remedies hereunder against any Guarantor,
the Administrative Agent, any Lender and the Issuing Lender may, but shall be
under no obligation to, pursue such rights and remedies as it may have against
the Borrower or any other Person or against any collateral security or guarantee
for the Obligations or any right of offset with respect thereto, and any failure
by the Administrative Agent, any Lender or the Issuing Lender to pursue such
other rights or remedies or to collect any payments from the Borrower or any
such other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of offset, or any release of the Borrower or any
such other Person or any such collateral security, guarantee or right of offset,
shall not relieve such Guarantor of any liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Administrative Agent, the Lenders and the Issuing
Lender against such Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon
each Guarantor and the successors and assigns thereof, and shall inure to the
benefit of the Administrative Agent, the Lenders and the Issuing Lender, and
their respective successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of each Guarantor under this Guarantee shall
have been satisfied by payment in full and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Obligations.
8. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent, any Lender or the Issuing
Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
- 5 -
<PAGE>
9. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in U.S. Dollars at the office of the Administrative Agent specified
in Section 11.2 of the Credit Agreement.
10. Representations and Warranties. Each Guarantor hereby
represents and warrants that:
(a) it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority and the legal right to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged;
(b) it has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guarantee and the other Loan Documents to which is a party, and has taken all
necessary corporate action to authorize its execution, delivery and performance
of this Guarantee and the other Loan Documents to which is a party;
(c) this Guarantee and each of the other Loan Documents to
which such Guarantor is a party has been duly executed and delivered on behalf
of such Guarantor, and constitutes a legal, valid and binding obligation of such
Guarantor enforceable in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered on a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing;
(d) the execution, delivery and performance of this Guarantee
and the other Loan Documents to which such Guarantor is a party will not violate
any provision of any Requirement of Law or Contractual Obligation of such
Guarantor and will not result in or require the creation or imposition of any
Lien on any of the properties or revenues of such Guarantor pursuant to any
Requirement of Law or Contractual Obligation of the Guarantor (other than Liens
created by the Security Documents in favor of the Administrative Agent);
(e) no consent or authorization of, filing with, notice to, or
other act by or in respect of, any Governmental Authority or any other Person
(including, without limitation, any stockholder or creditor of such Guarantor)
is required in connection with the execution, delivery, performance, validity or
enforceability of this Guarantee or the other Loan Documents to which such
Guarantor is a party;
(f) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of such
Guarantor, threatened by or against such Guarantor or against any of its
properties or revenues (i) with respect to this Guarantee or any other Loan
Document to which such Guarantor is a party or any of the transactions
contemplated hereby or thereby, or (ii) which could have a material adverse
effect on the business, operations, property or financial or other condition of
such Guarantor;
- 6 -
<PAGE>
(g) it has good record and marketable title in fee simple to,
or a valid leasehold interest in, all its real property, and good title to, or a
valid leasehold interest in, all its other property, and none of such property
is subject to any Lien of any nature whatsoever except such as are disclosed in
the balance sheet referred to in Section 10(i) hereof and as are permitted by
Section 10.3 of the Credit Agreement;
(h) it has filed or caused to be filed on its behalf all tax
returns which, to its knowledge, are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of such Guarantor); no tax Lien has been
filed, and, to the knowledge of such Guarantor, no claim is being asserted, with
respect to any such tax, fee or other charge;
(i) The unaudited balance sheet of such Guarantor as at August
31, 1997 and the related unaudited statement of income and of cash flows for the
twelve-month period ended on such date, certified by a Responsible Officer,
copies of which have heretofore been furnished to each Lender and the Issuing
Lender, are complete and correct and present fairly the financial condition of
such Guarantor as at such date, and the results of its operations and its cash
flows for the three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). At the date
of the most recent balance sheet referred to above, such Guarantor had no
material Guarantee Obligation, contingent liability or liability for taxes, or
any long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction or other financial derivative, which is not reflected in the
foregoing statements or in the notes thereto. During the period from August 31,
1997, to and including the date hereof there has been no sale, transfer or other
disposition by such Guarantor of any material part of its business or property
and no purchase or other acquisition of any business or property (including any
Capital Stock of any other Person) material in relation to the financial
condition of such Guarantor at August 31, 1997.
Each Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by such Guarantor on the date of
each borrowing by the Borrower, and the date of each issuance of a Letter of
Credit, under the Credit Agreement on and as of such date of borrowing as though
made hereunder on and as of such date.
11. Limitation of Liability. Notwithstanding the provisions of
Section 2, no Guarantor shall have any personal liability for payment of the
Obligations, and in any action or suit to collect the Obligations the
Administrative Agent, the Lenders and the Issuing Lender shall not seek any in
personam judgment against any Guarantor or any judgment for a deficiency but
shall look solely to the security interests created under and the collateral
- 7 -
<PAGE>
described in the documents set forth in Schedule 1 attached hereto (the
"Guarantor Security Documents") to which such Guarantor is a party for payment
of the Obligations. Nothing contained in this Section shall be construed to
impair the validity of the Obligations or affect or impair in any way the right
of the Administrative Agent, the Lenders and the Issuing Lender to exercise
their rights and remedies under the Credit Agreement, the Notes and any other
Loan Documents in accordance with their respective terms.
12. Authority of Administrative Agent. Each Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Guarantee with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the Administrative
Agent and the Lenders and the Issuing Lender, be governed by the Credit
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Administrative Agent and such
Guarantor, the Administrative Agent shall be conclusively presumed to be acting
as Administrative Agent for the Lenders and the Issuing Lender with full and
valid authority so to act or refrain from acting, and no Guarantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
13. Notices. All notices, requests and demands to or upon the
Administrative Agent, any Lender, the Issuing Lender or any Guarantor to be
effective shall be in writing (or by telex, fax or similar electronic transfer
confirmed in writing) and shall be deemed to have been duly given or made (1)
when delivered by hand or (2) if given by mail, when deposited in the mails by
certified mail, return receipt requested, or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(a) if to the Administrative Agent, any Lender or the Issuing
Lender, at its address or transmission number for notices provided in Section
13.2 of the Credit Agreement; and
(b) if to any Guarantor, at its address or transmission number
for notices set forth under its signature below.
The Administrative Agent, each Lender, the Issuing Lender and
each Guarantor may change its address and transmission numbers for notices by
notice in the manner provided in this Section.
14. Counterparts. This Guarantee may be executed by one or
more of the Guarantors on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Guarantee signed by all the
Guarantors shall be lodged with the Administrative Agent.
15. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and
- 8 -
<PAGE>
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
16. Integration. This Guarantee represents the agreement of
each Guarantor with respect to the subject matter hereof and there are no
promises or representations by the Administrative Agent, any Lender or the
Issuing Lender relative to the subject matter hereof not reflected herein.
17. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
each Guarantor and the Administrative Agent, provided that any provision of this
Guarantee may be waived by the Administrative Agent, the Lenders and the Issuing
Lender in a letter or agreement executed by the Administrative Agent or by telex
or facsimile transmission from the Administrative Agent.
(b) None of the Administrative Agent nor any Lender nor the
Issuing Lender shall by any act (except by a written instrument pursuant to
Section 19(a) hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent, any Lender or the Issuing Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Administrative Agent, any Lender or the Issuing Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Administrative Agent, such Lender or the Issuing
Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
18. Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of each Guarantor and shall inure to the benefit
of the Administrative Agent and the Lenders and their successors and assigns.
20. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
21. Submission To Jurisdiction; Waivers. Each of the
Guarantors hereby irrevocably and unconditionally:
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<PAGE>
(a) submits for itself and its property in any legal action or
proceeding relating to this Guarantee and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such
Guarantor at its address set forth under its signature below or at such other
address of which the Administrative Agent shall have been notified pursuant
hereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
22. Acknowledgments. Each Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Guarantee and the other Loan Documents to which
it is a party;
(b) none of the Administrative Agent nor any Lender nor the
Issuing Lender has any fiduciary relationship with or duty to such Guarantor
arising out of or in connection with this Guarantee or any of the other Loan
Documents to which it is a party, and the relationship between such Guarantor,
the Borrower and the other Loan Parties, on one hand, and Administrative Agent
and Lenders and the Issuing Lender, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders and the Issuing Lender or among such Guarantor, the Borrower,
any of the other Loan Parties and the Lenders and the Issuing Lender.
23. WAIVERS OF JURY TRIAL. EACH GUARANTOR HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
- 10 -
<PAGE>
24. Additional Guarantors. Each Subsidiary of the Borrower is
required pursuant to Section 9.9 of the Credit Agreement to become party to this
Subsidiaries Guarantee and shall become a Guarantor for all purposes of this
Subsidiaries Guarantee upon execution and delivery by such Subsidiary of a
Supplement in the form of Annex A hereto
- 11 -
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
UNIDIGITAL ELEMENTS (NY), INC.
By:/s/ William E. Dye
-------------------------------------
Title: Chief Executive Officer
----------------------------------
Addresss for Notices:
Telex:
----------------------------------
Fax:
------------------------------------
UNIDIGITAL ELEMENTS (SF), INC.
By:/s/ William E. Dye
-------------------------------------
Title: Chief Executive Officer
----------------------------------
Addresss for Notices:
Telex:
----------------------------------
Fax:
------------------------------------
UNISON (NY), INC.
By:/s/ William E. Dye
-------------------------------------
Title: Chief Executive Officer
----------------------------------
Addresss for Notices:
Telex:
----------------------------------
Fax:
------------------------------------
UNISON (MA), INC.
By:/s/ William E. Dye
-------------------------------------
Title: Chief Executive Officer
----------------------------------
Addresss for Notices:
Telex:
----------------------------------
Fax:
------------------------------------
- 12 -
ANNEX A
-------
to Subsidiaries Guaranty
SUPPLEMENT TO SUBSIDIARIES GUARANTEE
SUPPLEMENT, dated as of (this
"Supplement"), made by , a
corporation (the "Additional Guarantor"), in favor of CANADIAN IMPERIAL BANK OF
COMMERCE as administrative agent (in such capacity, the "Administrative Agent")
for the Lenders (the "Lenders") and Canadian Imperial Bank Of Commerce as issuer
of the Letters of Credit (as defined in the Credit Agreement referenced below)
(in such capacity, the "Issuing Lender") parties to the Credit Agreement
referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in the Credit Agreement.
RECITALS
WHEREAS, reference is hereby made to that certain Credit Agreement,
dated as of March , 1998, among Unidigital Inc. (the "Borrower"), the
Administrative Agent, the Lenders and the Issuing Lender (as amended,
supplemented or otherwise modified as of the date hereof, the "Credit
Agreement");
WHEREAS, in connection with the Credit Agreement, the Subsidiaries of
the Borrower (other then the Additional Guarantor) (collectively the
"Guarantors" and each a "Guarantor") have entered into the Subsidiaries
Guarantee, dated as of March , 1998, in favor of the Administrative Agent for
the ratable benefit of Lenders and the Issuing Lender (as amended, supplemented
or otherwise modified as of the date hereof, the "Subsidiaries Guarantee");
WHEREAS, Section 9.9 of the Credit Agreement requires that should the
Borrower at any time acquire or form any Subsidiary, such Subsidiary shall
become party to the Subsidiaries Guarantee and the Subsidiaries Security
Agreement;
WHEREAS, the Additional Guarantor has agreed to execute and deliver
this Supplement in order to become a party to the Subsidiaries Guarantee.
NOW, THEREFORE, IT IS AGREED:
1. Subsidiaries Guarantee. By executing and delivering this Supplement,
the Additional Guarantor, as provided in Section 26 of the Subsidiaries
Guarantee, hereby becomes a party to the Subsidiaries Guarantee as a Guarantor
thereunder with the same force and effect as if originally named therein as a
Guarantor and, without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Guarantor thereunder. The
Additional Guarantor hereby represents and warrants the each of the
representations and warranties contained in Section of the Subsidiaries
Guarantee is true and
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<PAGE>
correct on and as of the date hereof (after giving effect to this Supplement) as
if made on and as of such date.
2. Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Supplement
to be duly executed and delivered as of the date first above written.
[NAME OF ADDITIONAL GUARANTOR],
a corporation
--------------------
By:
-------------------------------------
Name:
Title:
INTERCREDITOR
AND SUBORDINATION AGREEMENT
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of March 25, 1998,
by and among the KWIK INTERNATIONAL COLOR, LTD., a New York corporation
(together with its successors and assigns, the "Subordinated Lender"),
UNIDIGITAL INC., a Delaware corporation (together with its successors and
assigns, the "Borrower"), and CANADIAN IMPERIAL BANK OF COMMERCE, a New York
banking corporation, as Administrative Agent (together with its successors and
assigns in such capacity, the "Administrative Agent") for the Lenders parties to
the Senior Credit Agreement (as hereinafter defined).
The parties hereto hereby agree as follows:
1. Definitions. (a) Unless otherwise defined herein, terms defined
in the Senior Credit Agreement and used herein shall have the meanings given to
them in the Senior Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Intercreditor and Subordination Agreement, as the
same may be amended, modified or otherwise supplemented from time to time.
"Event of Default": as defined in the Senior Credit Agreement.
"Insolvency Event": (1) the Borrower or any of its Subsidiaries
commencing any case, proceeding or other action (i) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (ii) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its Subsidiaries
making a general assignment for the benefit of its creditors; or (2) there being
commenced against the Borrower or any of its Subsidiaries any case, proceeding
or other action of a nature referred to in clause (1) above which (i) results in
the entry of an order for relief or any such adjudication or appointment or (ii)
remains undismissed, undischarged or unbonded for a period of 60 days; or (3)
there being commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (4) the Borrower or any of its
Subsidiaries taking any action in furtherance of, or
<PAGE>
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (1), (2) or (3) above; or (5) the Borrower or any of its
Subsidiaries generally not paying, or being unable to pay, or admitting in
writing its inability to pay, its debts as they become due.
"Senior Credit Agreement": the Credit Agreement dated as of March 24,
1998, among the Borrower, the Administrative Agent and the Lenders parties
thereto from time to time, as such Credit Agreement may be amended, modified or
supplemented from time to time, including, without limitation, amendments,
modifications, supplements and restatements thereof giving effect to increases,
renewals, extensions, refundings, deferrals, restructurings, replacements or
refinancings of, or additions to, the arrangements provided in such Credit
Agreement (whether provided by the original Administrative Agent and Lenders
under such Credit Agreement or a successor Administrative Agent or other
Lenders).
"Senior Lenders": the holders from time to time of Senior Obligations.
"Senior Loan Documents": the collective reference to the Senior Credit
Agreement, the Senior Notes, the Senior Security Documents and all other
documents that from time to time evidence the Senior Obligations or secure or
support payment or performance thereof.
"Senior Loans": the loans made by the Senior Lenders to the Borrower
pursuant to the Senior Credit Agreement.
"Senior Notes": the promissory notes of the Borrower outstanding from
time to time under the Senior Credit Agreement.
"Senior Obligations": the collective reference to the unpaid principal
of and interest on the Senior Notes and all other obligations and liabilities of
the Borrower to the Administrative Agent and the Senior Lenders (including,
without limitation, interest accruing at the then applicable rate provided in
the Senior Credit Agreement after the maturity of the Senior Loans and interest
accruing at the then applicable rate provided in the Senior Credit Agreement
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Senior Credit Agreement, the Senior Notes, this
Agreement, the other Senior Loan Documents or any other document made, delivered
or given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by
the Borrower pursuant to the terms of the Senior Credit Agreement or this
Agreement or any other Senior Loan Document).
"Senior Security Documents": the collective reference to all documents
and instruments, now existing or hereafter arising, which create or purport to
create a security interest in property to secure payment or performance of the
Senior Obligations, including, without limitation, the documents listed on
Schedule 1 attached hereto.
- 2 -
<PAGE>
"Subordinated Lender": as defined in the recitals hereof.
"Subordinated Loan Documents": the collective reference to the
Subordinated Note and any other documents or instruments that from time to time
evidence the Subordinated Obligations or secure or support payment or
performance thereof.
"Subordinated Loan": the loan made by the Subordinated Lender pursuant
to the Subordinated Note.
"Subordinated Note": the promissory note of the Borrower, dated March
24, 1998, in the original principal amount of $750,000 and payable to the order
of the Subordinated Lender.
"Subordinated Obligations": the collective reference to the unpaid
principal of and interest on the Subordinated Note and all other obligations and
liabilities of the Borrower to the Subordinated Lender (including, without
limitation, interest accruing at the then applicable rate provided in the
Subordinated Note after the maturity of the Subordinated Loan and interest
accruing at the then applicable rate provided in the Subordinated Note after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Subordinated Note, this Agreement, or any other Subordinated Loan
Document, in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Subordinated Lender
that are required to be paid by the Borrower pursuant to the terms of the
Subordinated Note or this Agreement or any other Subordinated Loan Document).
"Subordination Event": either of the following events:
(A) occurrence of any Insolvency Event; or
(B) the Senior Obligations becoming due and payable in full,
whether upon maturity, acceleration or otherwise.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Subordination. (a) The Subordinated Lender agrees, for itself and
each future holder of the Subordinated Obligations, that the Subordinated
Obligations are expressly
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<PAGE>
"subordinate and junior in right of payment" (as that phrase is defined in
paragraph 2(b)) to all Senior Obligations.
(b) "Subordinate and junior in right of payment": means that:
(1) no part of the Subordinated Obligations shall have any claim to
the assets of the Borrower on a parity with or prior to the claim of the Senior
Obligations;
(2) unless and until the Senior Notes have been paid in full and the
Commitments have been terminated, without the express prior written consent of
the Administrative Agent,
(A) no Subordinated Lender will take, demand or receive from the
Borrower, and the Borrower will not make, give or permit, directly or
indirectly, by set-off, redemption, purchase or in any other manner, any
payment of or security for the whole or any part of the Subordinated
Obligations, and
(B) no Subordinated Lender will accelerate for any reason the
scheduled maturities of any amount owing under the Subordinated Note;
provided, however, that at any time except when an Event of Default has occurred
and is continuing, the Borrower may make, and the Subordinated Lender may
receive, scheduled payments on account of principal of and interest on the
Subordinated Note in accordance with the terms thereof.
(c) If any Event of Default has been cured or waived or shall have
ceased to exist, the Subordinated Lender' right to receive payments as provided
in clause 2(b)(2)(B)(i) shall be reinstated, and the Borrower may resume making
such payments to the Subordinated Lender, including any missed payments.
(d) The expressions "prior payment in full," "payment in full," "paid
in full" and any other similar terms or phrases when used herein with respect to
the Senior Obligations shall mean the payment in full, in immediately available
funds, of all of the Senior Obligations.
3. Additional Provisions concerning Subordination. (a) The
Subordinated Lender and the Borrower agree that upon the occurrence of any
Subordination Event:
(1) all Senior Obligations shall be paid in full before any payment or
distribution is made with respect to the Subordinated Obligations; and
(2) any payment or distribution of assets of the Borrower, whether in
cash, property or securities, to which the Subordinated Lender would be entitled
except for the provisions hereof, shall be paid or delivered by the Borrower, or
any receiver, trustee in bankruptcy, liquidating trustee, disbursing
Administrative Agent or other Person making such payment or distribution,
directly to the Administrative Agent, for the account of the Senior Lenders, to
the extent necessary to pay in full all Senior Obligations, before any payment
or distribution shall be made to the Subordinated Lender.
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<PAGE>
(b) Upon the occurrence of any Insolvency Event:
(1) the Subordinated Lender irrevocably authorizes and empowers
the Administrative Agent (A) to demand, sue for, collect and receive every
payment or distribution on account of the Subordinated Obligations payable
or deliverable in connection with such event or proceeding and give
acquittance therefor, and (B) to file claims and proofs of claim in any
statutory or non-statutory proceeding and take such other actions, in its
own name as Administrative Agent, or in the name of the Subordinated Lender
or otherwise, as the Administrative Agent may deem necessary or advisable
for the enforcement of the provisions of this Agreement; provided, however,
that the foregoing authorization and empowerment imposes no obligation on
the Administrative Agent to take any such action;
(2) the Subordinated Lender shall take such action, duly and
promptly, as the Administrative Agent may request from time to time (A) to
collect the Subordinated Obligations for the account of the Senior Lenders
and (B) to file appropriate proofs of claim in respect of the Subordinated
Obligations; and
(3) the Subordinated Lender shall execute and deliver such powers
of attorney, assignments or proofs of claim or other instruments as the
Administrative Agent may request to enable the Administrative Agent to
enforce any and all claims in respect of the Subordinated Obligations and
to collect and receive any and all payments and distributions which may be
payable or deliverable at any time upon or in respect of the Subordinated
Obligations.
(c) If any payment or distribution, whether consisting of money,
property or securities, be collected or received by the Subordinated Lender in
respect of the Subordinated Obligations, except payments permitted to be made at
the time of payment as provided in paragraph 2(b), the Subordinated Lender
forthwith shall deliver the same to the Administrative Agent for the account of
the Senior Lenders, in the form received, duly indorsed to the Administrative
Agent, if required, to be applied to the payment or prepayment of the Senior
Obligations until the Senior Obligations are paid in full. Until so delivered,
such payment or distribution shall be held in trust by the Subordinated Lender
as the property of the Senior Lenders, segregated from other funds and property
held by the Subordinated Lender.
4. Subrogation. Subject to the payment in full of the Senior
Obligations, the Subordinated Lender shall be subrogated to the rights of the
Senior Lenders to receive payments or distributions of assets of the Borrower in
respect of the Senior Obligations until the Senior Obligations shall be paid in
full. For the purposes of such subrogation, payments or distributions to the
Administrative Agent, for the account of the Senior Lenders, of any money,
property or securities to which the Subordinated Lender would be entitled except
for the provisions of this Agreement shall be deemed, as between the Borrower
and its creditors other than the Senior Lenders and the Subordinated Lender, to
be a payment by the Borrower to or on account of Subordinated Obligations, it
being understood that the provisions of this Agreement are, and are intended
solely, for the purpose of defining the relative rights of the Subordinated
Lender, on the one hand, and the Senior Lenders, on the other hand.
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<PAGE>
5. Consent of Subordinated Lender. (a) The Subordinated Lender
consents that, without the necessity of any reservation of rights against the
Subordinated Lender, and without notice to or further assent by the Subordinated
Lender:
(1) any demand for payment of any Senior Obligations made by the
Administrative Agent or any Senior Lender may be rescinded in whole or in part
by the Administrative Agent or any such Senior Lender, and any Senior Obligation
may be continued, and the Senior Obligations, or the liability of the Borrower
or any guarantor or any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, or any obligation or liability of the Borrower or any other party under
the Senior Credit Agreement or any other agreement, may, from time to time, in
whole or in part, be renewed, extended, modified, accelerated, compromised,
waived, surrendered, or released by the Administrative Agent or any Senior
Lender; and
(2) the Senior Credit Agreement, the Senior Notes and any other Senior
Loan Document may be amended, modified, supplemented or terminated, in whole or
in part, as the Administrative Agent or any Senior Lender may deem advisable
from time to time, and any collateral security at any time held by the
Administrative Agent or any Senior Lender for the payment of any of the Senior
Obligations may be sold, exchanged, waived, surrendered or released,
in each case all without notice to or further assent by the Subordinated Lender,
which will remain bound under this Agreement, and all without impairing,
abridging, releasing or affecting the subordination provided for herein.
(b) The Subordinated Lender waives any and all notice of the creation,
renewal, extension or accrual of any of the Senior Obligations and notice of or
proof of reliance by the Senior Lenders upon this Agreement. The Senior
Obligations, and any of them, shall be deemed conclusively to have been created,
contracted or incurred in reliance upon this Agreement, and all dealings between
the Borrower and the Senior Lenders shall be deemed to have been consummated in
reliance upon this Agreement. The Subordinated Lender acknowledges and agrees
that the Senior Lenders have relied upon the subordination provided for herein
in entering into the Senior Credit Agreement and in making funds available to
the Borrower thereunder. The Subordinated Lender waives notice of or proof of
reliance on this Agreement and protest, demand for payment and notice of
default.
6. Negative Covenants of the Subordinated Lender. So long as any of
the Senior Obligations shall remain outstanding, no Subordinated Lender shall,
without the prior written consent of the Administrative Agent:
(a) sell, assign, or otherwise transfer, in whole or in part, the
Subordinated Obligations or any interest therein to any other Person (a
"Transferee") or create, incur or suffer to exist any security interest, lien,
charge or other encumbrance whatsoever upon the Subordinated Obligations in
favor of any Transferee unless (1) such action is made expressly subject to this
Agreement and (2) the Transferee expressly acknowledges to the Administrative
Agent, by a
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<PAGE>
writing in form and substance satisfactory to the Administrative Agent, the
subordination provided for herein and agrees to be bound by all of the terms
hereof;
(b) permit any of the Subordinated Loan Documents to be amended,
modified or otherwise supplemented; or
(d) commence, or join with any creditors other than the Senior Lenders
in commencing any proceeding referred to in clause (2) of the definition of
"Insolvency Event".
7. Senior Obligations Unconditional. All rights and interests of the
Senior Lenders hereunder, and all agreements and obligations of the Subordinated
Lender and the Borrower hereunder, shall remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of any Senior Security
Documents or any other Senior Loan Documents;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Obligations, or any amendment or waiver
or other modification, whether by course of conduct or otherwise, of the terms
of the Senior Credit Agreement or any other Senior Security Document;
(c) any exchange, release or nonperfection of any security interest in
any Collateral, or any release, amendment, waiver or other modification, whether
in writing or by course of conduct or otherwise, of all or any of the Senior
Obligations or any guarantee thereof; or
(d) any other circumstances which otherwise might constitute a defense
available to, or a discharge of, the Borrower in respect of the Senior
Obligations, or of either the Subordinated Lender or the Borrower in respect of
this Agreement.
8. Representations and Warranties. The Subordinated Lender represents
and warrants to the Administrative Agent and the Senior Lenders that:
(a) its Subordinated Note (1) has been issued to it for good and
valuable consideration, (2) is owned by the Subordinated Lender free and clear
of any security interests, liens, charges or encumbrances whatsoever arising
from, through or under the Subordinated Lender, other than the interest of the
Senior Lenders under this Agreement, (3) are payable solely and exclusively to
the Subordinated Lender and to no other Person and are payable without deduction
for any defense, offset or counterclaim, and (4) constitute the only evidence of
the obligations evidenced thereby.
(b) The Subordinated Lender has the corporate power and authority and
the legal right to execute and deliver and to perform its obligations under this
Agreement and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Agreement.
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<PAGE>
(c) This Agreement constitutes a legal, valid and binding obligation
of the Subordinated Lender.
(d) The execution, delivery and performance of this Agreement will not
violate any provision of any Requirement of Law or Contractual Obligation of the
Subordinated Lender and will not result in the creation or imposition of any
Lien on any of the properties or revenues of the Subordinated Lender pursuant to
any Requirement of Law affecting or any Contractual Obligation of the
Subordinated Lender, except the interest of the Senior Lenders under this
Agreement.
(e) No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder or creditor of the
Subordinated Lender), is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
9. No Representation by Administrative Agent. Neither the
Administrative Agent nor any Senior Lender has made, and none of them hereby or
otherwise makes to the Subordinated Lender, any representations or warranties,
express, or implied, nor does the Administrative Agent or any Senior Lender
assume any liability to the Subordinated Lender with respect to: (a) the
financial or other condition of obligors under any instruments of guarantee with
respect to the Senior Obligations, (b) the enforceability, validity, value or
collectibility of the Senior Obligations or the Subordinated Obligations, any
collateral therefor, or any guarantee or security which may have been granted in
connection with any of the Senior Obligations or the Subordinated Obligations or
(c) the Borrower's title or right to transfer any collateral or security.
10. Waiver of Claims. To the maximum extent permitted by law, the
Subordinated Lender waives any claim it might have against the Senior Lenders
with respect to, or arising out of, any action or failure to act or any error of
judgment, negligence, or mistake or oversight whatsoever on the part of the
Administrative Agent, the Senior Lenders or their respective directors,
officers, employees or Administrative Agents with respect to any exercise of
rights or remedies under the Senior Loan Documents or any transaction relating
to the Collateral. Neither the Administrative Agent, any Senior Lender nor any
of their respective directors, officers, employees or Administrative Agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or the
Subordinated Lender or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof.
11. Provisions Applicable After Bankruptcy; No Turnover.
(a) The provisions of this Agreement shall continue in full force and
effect notwithstanding the occurrence of any event contemplated under the
definition of "Insolvency Event."
(b) To the extent that the Subordinated Lender has or acquires any
rights under Section 363 or Section 364 of the Bankruptcy Code with respect to
the Collateral, the Subordinated
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<PAGE>
Lender hereby agrees not to assert such rights without the prior written consent
of the Administrative Agent, on behalf of the Senior Lenders; provided that, if
requested by the Administrative Agent, the Subordinated Lender shall seek to
exercise such rights in the manner requested by the Administrative Agent,
including the rights in payments in respect of such rights.
12. Further Assurances. The Subordinated Lender and the Borrower, at
their own expense and at any time from time to time, upon the written request of
the Administrative Agent will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Administrative
Agent reasonably may request for the purposes of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted.
13. Expenses. (a) The Borrower will pay or reimburse the
Administrative Agent and each Senior Lender, upon demand, for all its costs and
expenses in connection with the enforcement or preservation of any rights under
this Agreement, including, without limitation, fees and disbursements of counsel
to the Administrative Agent and the Senior Lenders.
(b) The Borrower will pay, indemnify, and hold each Senior Lender and
the Administrative Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions (whether sounding
in contract, tort or on any other ground), judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to this Agreement or any action taken or omitted to
be taken by any Senior Lender or the Administrative Agent with respect to any of
the foregoing.
14. Provisions Define Relative Rights. This Agreement is intended
solely for the purpose of defining the relative rights of the Administrative
Agent and the Senior Lenders on the one hand and the Subordinated Lender on the
other, and no other Person shall have any right, benefit or other interest under
this Agreement.
15. Legend. The Subordinated Lender and the Borrower will cause the
Subordinated Note to bear upon its face the following legend:
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO OTHER
INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS
OTHERWISE SUBJECT TO THE TERMS OF, THE INTERCREDITOR AND
SUBORDINATION AGREEMENT, DATED MARCH 25, 1998 (THE "SUBORDINATION
AGREEMENT"), AS THE SAME MAY BE AMENDED, MODIFIED OR OTHERWISE
SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG UNIDIGITAL INC., AS
BORROWER, CANADIAN IMPERIAL BANK OF COMMERCE, AS ADMINISTRATIVE
AGENT FOR THE LENDERS PARTIES TO THE SENIOR CREDIT AGREEMENT
REFERRED TO IN THE SUBORDINATION AGREEMENT, AND THE HOLDERS FROM
TIME TO TIME OF THE OBLIGATIONS ARISING UNDER THE
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<PAGE>
SUBORDINATED NOTE REFERRED TO IN THE SUBORDINATION AGREEMENT,
INCLUDING, WITHOUT LIMITATION, THIS NOTE.
16. Powers Coupled With An Interest. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until the Senior Obligations are paid in full and the Commitments
are terminated.
17. Authority of Administrative Agent. The Borrower and the
Subordinated Lender acknowledge that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any action taken by
the Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Senior Lenders, be governed by the Senior Credit
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Administrative Agent, on the one
hand, and the Borrower and the Subordinated Lender, on the other hand, the
Administrative Agent shall be conclusively presumed to be acting as
Administrative Agent for the Senior Lenders with full and valid authority so to
act or refrain from acting, and neither the Borrower nor the Subordinated Lender
shall be under any obligation, or entitlement, to make any inquiry respecting
such authority.
18. Notices. All notices, requests and demands to or upon the
Administrative Agent or the Borrower or the Subordinated Lender to be effective
shall be in writing (or by telex, fax or similar electronic transfer confirmed
in writing) and shall be deemed to have been duly given or made (1) when
delivered by hand or (2) if given by mail, when deposited in the mails by
certified mail, return receipt requested, or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
If to the Administrative Agent:
Canadian Imperial Bank of Commerce
425 Lexington Avenue, 3rd Floor
New York, New York 10017
Attention: William Koslo
Fax: 212-856-3991
If to the Borrower:
Unidigital Inc.
545 West 45th Street
New York, New York 10036
Attention: William Dye
Fax: 212-212-262-1830
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<PAGE>
If to the Subordinated Lender:
Kwik International Color, Ltd
229 West 28th Street
New York, New York 1001-5996
Attention: Richard J. Sirrota
Fax: 212-643-0201
The Administrative Agent, the Borrower and the Subordinated Lender may change
their addresses and transmission numbers for notices by notice in the manner
provided in this Section.
19. Counterparts. This Agreement may be executed by one or more of the
parties on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the counterparts of this Agreement signed by all the parties shall be lodged
with the Administrative Agent.
20. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
21. Integration. This Agreement represents the agreement of the
Administrative Agent and the Senior Lenders and the Subordinated Lender with
respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Senior Lender or the
Subordinated Lender relative to the subject matter hereof not reflected herein.
22. Amendments in Writing; No Waiver: Cumulative Remedies. (a) None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the
Administrative Agent, the Borrower and the Subordinated Lender; provided that
any provision of this Agreement may be waived by the Administrative Agent and
the Senior Lenders in a letter or agreement executed by the Administrative Agent
or by telex or facsimile transmission from the Administrative Agent.
(b) No failure to exercise, nor any delay in exercising, on the part
of the Administrative Agent or any Senior Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
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<PAGE>
23. Section Headings. The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
24. Successors and Assigns. (a) This Agreement shall be binding upon
the successors and assigns of the Borrower and the Subordinated Lender and shall
inure to the benefit of the Administrative Agent and the Senior Lenders and
their successors and assigns.
(b) Upon a successor Administrative Agent becoming the Administrative
Agent under the Senior Credit Agreement, such successor Administrative Agent
automatically shall become the Administrative Agent hereunder with all the
rights and powers of the Administrative Agent hereunder without the need for any
further action on the part of any party hereto.
25. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York.
[Signature Pages Follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
CANADIAN IMPERIAL BANK UNIDIGITAL INC.
OF COMMERCE as Borrower
as Administrative Agent
By:/s/ William Koslo By:/s/ William E. Dye
-------------------------------- ---------------------------------
Title: Executive Director Title:Chief Executive Officer
------------------------- ---------------------------
KWIK INTERNATIONAL COLOR, LTD
as Subordinated Lender
By:/s/ Richard J. Sirota
--------------------------------
Title: President
--------------------------
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT
between
UNIDIGITAL INC., Borrower
AND
CANADIAN IMPERIAL BANK OF COMMERCE, Lender
Property Address:
Unison (NY), Inc.
545 West 45th Street
New York, New York 10036
THIS DOCUMENT WAS PREPARED BY AND
AFTER RECORDING SHOULD BE MAILED TO:
Steven N. Cohen, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
<PAGE>
Table of Contents
-----------------
PRELIMINARY STATEMENT..........................................................1
1. Payment of Indebtedness; Performance of Obligations........................3
2. Taxes and Other Obligations................................................4
3. Reserves for Taxes.........................................................4
4. Use of Property............................................................4
5. Insurance and Condemnation.................................................4
6. Preservation and Maintenance of Property...................................6
7. Protection of Lender's Security............................................6
8. Inspection.................................................................7
9. Books and Records..........................................................7
10. Financial Statements......................................................7
11. Environmental Matters.....................................................7
12. Covenants.................................................................9
13. Lease....................................................................10
14. Estoppel Certificate.....................................................10
15. Transfers of the Property or Beneficial Interest in Borrower; Assumption.10
16. No Additional Liens, Encumbrances or Indebtedness.......................11
17. Borrower and Lien Not Released...........................................11
18. Uniform Commercial Code Security Agreement...............................11
19. Events of Default; Acceleration of Indebtedness..........................12
20. Entry; Foreclosure.......................................................13
21. Expenditures and Expenses................................................13
22. Application of Proceeds of Foreclosure Sale..............................14
23. Appointment of Receiver or Mortgagee in Possession.......................14
24. After-Acquired Property..................................................14
25. Future Advances..........................................................14
26. Forbearance by Lender Not a Waiver.......................................14
27. Waiver of Statute of Limitations.........................................15
28. Waiver of Homestead, Redemption an Prejudgment Remedy....................15
29. Jury Trial Waiver........................................................15
30. Venue....................................................................15
31. Governing Law; Severability..............................................16
32. Notice...................................................................16
33. Successors and Assigns Bound; Joint and Several Liability; Agents;
Captions.................................................................17
34. Release..................................................................17
35. Terms....................................................................18
36. Exculpation..............................................................18
37. State Specific Provisions................................................18
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THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT
(this "Mortgage") is made as of this 24th day of March, 1998, between UNIDIGITAL
INC., a Delaware corporation ("Borrower"), whose address is 545 West 45th
Street, New York, New York 10036, and CANADIAN IMPERIAL BANK OF COMMERCE
("Lender") whose address is 425 Lexington Avenue, 3rd Floor, New York, New York
10017
PRELIMINARY STATEMENT
WHEREAS, Lender has agreed, subject to the terms and conditions of that
certain Credit Agreement, dated as of the date hereof, executed by and among
Borrower, Lender and various other lenders from time to time (the "Credit
Agreement"), to make loans (the "Loan") to Borrower. The Loan is evidenced by
three notes of even date herewith and the sum of the original principal amounts
of the three notes is Forty Million and no/100 Dollars ($40,000,000.00) (which
notes, together with all notes issued in substitution or exchange therefor and
all amendments thereto, is hereinafter collectively referred to as the "Note"),
providing for monthly payments as set forth in the Note, with the balance
thereof, due and payable as set forth therein or such later date to which
maturity may be extended in accordance with the terms and conditions of the Note
(said date, or any earlier date on which the entire unpaid principal amount
shall be paid or required to be paid in full, whether by prepayment,
acceleration or otherwise, is hereinafter called the "Maturity Date"). The terms
and provisions of the Credit Agreement and Note are hereby incorporated by
reference in this Mortgage. All capitalized terms used but not otherwise defined
herein shall have the respective meanings ascribed thereto in the "Loan
Documents" (as hereinafter defined).
WHEREAS, Lender wishes to secure (i) the prompt payment of the Note,
together with all interest, premiums and other amounts, if any, due in
accordance with the terms of the Note, as well as the prompt payment of any
additional indebtedness accruing to Lender on account of any future payments,
advances or expenditures made by Lender pursuant to the Note, the Credit
Agreement, this Mortgage, any of the other Mortgages, Assignments of Leases and
Rents and Security Agreements now or hereafter made by Borrower or any affiliate
of Borrower in favor of Lender and encumbering the Property (hereinafter
defined) and other properties similar to the Property owned by Borrower or any
affiliate of Borrower (collectively, the "Other Mortgages") or any other
agreement, document, or instrument securing the payment of the indebtedness
evidenced by the Note (such documents together with any modifications, renewals,
extensions or replacements thereof are hereinafter collectively referred to as
the "Loan Documents") and (ii) the prompt performance of each and every
covenant, condition, and agreement contained in the Loan Documents of Lender and
Borrower. All payment obligations of Lender and Borrower to Lender are
hereinafter sometimes collectively referred to as the "Indebtedness," and all
other obligations of Lender and Borrower to Lender are hereinafter sometimes
collectively referred to as the "Obligations".
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to secure so much of the Indebtedness as may be outstanding at any
time (subject to the limitations set forth
<PAGE>
in Section 37(f) hereof) and the performance of the Obligations, Borrower has
executed this Mortgage and does hereby mortgage, convey, assign, warrant,
transfer, pledge and grant to Lender a security interest in the following
described property and all proceeds thereof (which property is hereinafter
sometimes collectively referred to as the "Property"):
A. The real estate described on Exhibit A hereto (the "Land") ;
B. All of the following (collectively, the "Improvements"): all
buildings, improvements and fixtures of every kind or nature situated on the
Land; to the extent not owned by tenants of the Property, all machinery,
appliances, equipment, furniture and all other personal property of every kind
or nature located in or on, or attached to, or used or to be used in connection
with the Land, buildings, structures, improvements or fixtures; all building
materials and goods procured for use or in connection with the foregoing; and
all additions, substitutions and replacements to any of the foregoing;
C. To the extent assignable, all plans, specifications, architectural
renderings, drawings, soil test reports, other reports of examination or
analysis of the Land or the Improvements;
D. All easements, rights-of-way, water courses, water rights and
appurtenances in any way belonging, relating or appertaining to any of the Land
or Improvements, or which hereafter shall in any way belong, relate or be
appurtenant thereto ("Appurtenances");
E. All agreements affecting the use, enjoyment or occupancy of the Land
and/or Improvements now or hereafter entered into (the "Leases") and all rents,
royalties, profits, issues and revenues from the Land and/or Improvements from
time to time accruing under the Leases (the "Rents"), reserving to Borrower,
however, so long as no "Event of Default" (hereinafter defined) has occurred
hereunder and is continuing, a revocable license to receive and apply the Rents
in accordance with the terms and conditions of Section 13 of this Mortgage;
F. All claims, demands, judgments, insurance proceeds, rights of
action, awards of damages, compensation, and settlements hereafter made
resulting from the taking of the Land and/or the Improvements or any part
thereof under the power of eminent domain, or for any damage (whether caused by
such taking, by casualty or otherwise) to the Land, Improvements or
Appurtenances or any part thereof;
G. To the extent assignable, all management contracts, permits,
certificates, licenses, approvals, contracts, entitlements and authorizations,
however characterized, issued or in any way furnished for the acquisition,
construction, development, operation and use of the Land, Improvements and/or
Leases, including building permits, environmental certificates, licenses,
certificates of operation, warranties and guaranties;
H. All accounts, contract rights, general intangibles, chattel paper,
documents, instruments, inventory, equipment and all books and records relating
to the foregoing;
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<PAGE>
I. Any monies on deposit with or for the benefit of Lender, including
deposits for the payment of real estate taxes;
J. All proceeds, products, replacements, additions, substitutions,
renewals and accessions of and to the Land, Improvements or Appurtenances; and
K. Any and all after-acquired right, title or interest of Borrower in
and to any property of the types described in the preceding granting clauses.
TO HAVE AND TO HOLD the Property and all parts thereof unto Lender to
its own proper use, benefit, and advantage forever, subject, however, to the
terms, covenants, and conditions herein.
The Note is secured by, inter alia, this Mortgage and the Other
Mortgages. It is understood and agreed that all of the properties of all kinds
conveyed by this Mortgage and the Other Mortgages are security for the
Indebtedness without allocation of any one or more of the parcels or portions
thereof to any portion of the Indebtedness. It is specifically covenanted and
agreed that Lender may proceed, at the same or different times, to foreclose
this Mortgage and the Other Mortgages or any of them, in accordance with the
provisions hereof and thereof by any proceedings appropriate in the State of New
York or elsewhere, and that no event of enforcement taking place in any state,
including, without limiting the generality of the foregoing, any pending
foreclosure, judgment or decree of foreclosure, foreclosure sale, rents
received, possession taken, deficiency judgment or decrees, or judgment taken on
the Note, shall in any way stay, preclude or bar enforcement of this Mortgage
and the Other Mortgages or any of them (whether in the State of New York or
elsewhere), and that Lender may pursue any or all of its remedies to the maximum
extent permitted by law and as provided hereunder and thereunder until all of
the Indebtedness now or hereafter secured by any or all of this Mortgage and the
Other Mortgages has been paid or discharged in full. No release of any portion
of the property now or hereafter subject to the lien of any of this Mortgage and
the Other Mortgages shall have any effect whatsoever by way of impairment or
disturbance of the lien or priority of this Mortgage and the Other Mortgages on
the unreleased property encumbered thereby. Any foreclosure or other appropriate
remedy brought in any state may be brought and prosecuted as to any part of the
mortgaged security, wherever located, without regard to the fact that
foreclosure proceedings or other appropriate remedies have or have not been
instituted elsewhere on any other land subject to the lien of this Mortgage and
the Other Mortgages or any of them.
Borrower covenants and agrees with Lender as follows:
1. Payment of Indebtedness; Performance of Obligations.
Borrower shall promptly pay when due the Indebtedness and shall
promptly perform all Obligations.
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<PAGE>
2. Taxes and Other Obligations.
Borrower will pay, or cause to be paid, all taxes, assessments, and
other similar charges which are assessed, levied, confirmed, imposed, or which
become a lien upon or against the Property or any portion thereof or which
become payable with respect thereto or with respect to the occupancy, use or
possession of the Property before the same become delinquent, and, if requested
by Lender, will promptly deliver to Lender receipts therefor.
Should Borrower fail to make any of such payments, Lender may, at its
option and at the expense of Borrower, pay the amounts due for the account of
Borrower. Upon the request of Lender, Borrower shall immediately furnish to
Lender all notices of amounts due and receipts evidencing payment. Borrower
shall promptly notify Lender of any lien on all or any part of the Property and
shall promptly discharge any unpermitted lien or encumbrance.
3. Reserves for Taxes.
Upon demand by Lender following the occurrence of an Event of Default
that has not been cured within any applicable cure period therefor and
thereafter, at the time of and in addition to the monthly installments of
principal and interest due under the Note, Borrower shall pay to Lender a sum
equal to one-twelfth (1/12) of the amount estimated by Lender to be sufficient
to pay at least thirty (30) days before they become due and payable, all taxes,
assessments and other similar charges levied against the Property (collectively,
the "Taxes"). So long as no Event of Default exists hereunder, Lender shall
apply the sums to pay the Taxes. These sums may be commingled with the general
funds of Lender, and no interest shall be payable thereon nor shall these sums
be deemed to be held in trust for the benefit of Borrower. If Lender at any time
determines that such amount on deposit is insufficient to fully pay such taxes,
Borrower shall, within ten (10) days following notice from Lender, deposit such
additional sum as may be required by Lender. On the Maturity Date, the moneys
then remaining on deposit with Lender or its agent shall, at Lender's option, be
applied against the Indebtedness. The obligation of Borrower to pay the Taxes is
not affected or modified by the provisions of this paragraph.
4. Use of Property.
Unless required by applicable law, Borrower shall not permit changes in
the use of any part of the Property from the use existing at the time this
Mortgage was executed. Borrower shall not initiate or acquiesce in a change in
the zoning classification of the Property without Lender's prior written
consent.
5. Insurance and Condemnation.
(a) Insurance.
---------
Borrower shall keep the Property insured with such coverage as Lender
shall now and hereafter require, including, without limitation, policies (i)
insuring the Improvements against
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<PAGE>
fire, lightning, windstorm, civil commotion, vandalism, malicious mischief and
other risks insured against by so-called "all causes of loss" forms of policy in
amounts equal to one hundred percent (100%) of the replacement costs of the
Improvements (without deduction for depreciation) containing satisfactory
replacement costs and mortgagee interest endorsements with co-insurance
penalties waived, and Lender shall have the right, but not the duty, to
determine from time to time the replacement costs of the Improvements, (ii)
covering public liability, (iii) affording such other or additional coverage as
from time to time may be requested by Lender. Borrower shall pay, or cause to be
paid, all premiums on such policies. The companies issuing such policies, and
the amounts, forms, expiration dates and substance of such policy shall be
acceptable to Lender and shall contain, in favor of Lender, a standard
non-contributory mortgagee clause, or its equivalent, and a mortgagee loss
payable endorsement, in form satisfactory to Lender. Borrower will assign and
deliver to Lender the original or a certificate satisfactory to Lender together
with a photocopy of each policy of insurance required to be maintained pursuant
to this section, and all renewals and replacements thereof. Each such policy
shall provide that all proceeds shall be payable to Lender, that the same may
not be canceled or materially modified except upon thirty (30) days prior
written notice to Lender and that no act or thing done by Borrower shall
invalidate the policy as against Lender. At all times until the payment in full
of the Loan, Lender shall have and hold said policies as further collateral for
the payment in full of the Loan and interest thereon and all other amounts
evidenced by the Note and performance of the other Obligations.
Subject to the terms and provisions of any lease of the Property or
portion thereof (which lease was in existence on the date hereof), which
provisions shall govern, Lender is authorized and empowered: (a) to make or file
proofs of loss or damage and to settle and adjust any claim under insurance
policies which insure against such risks; or (b) to direct Borrower, in writing,
to agree with the insurance company or companies on the amount to be paid in
regard to such loss. In either case, Lender is authorized to collect any such
insurance proceeds. Subject to the leases of the Property or portion thereof
(which lease was in existence on the date hereof), such insurance proceeds
(after deduction of Lender's reasonable costs and expenses, if any, in
collecting the same) shall be disbursed and applied in accordance with the terms
and provisions of the Credit Agreement.
(b) Condemnation.
------------
Borrower hereby assigns, transfers and sets over unto Lender the entire
interest of Borrower in the proceeds of any award and any claim for damages for
any of the Property (including the Improvements) taken or damaged under the
power of eminent domain or by condemnation. Subject to any leases of the
Property or portion thereof (which lease was in existence on the date hereof),
Lender is authorized to collect any such proceeds, and may, in its sole
discretion, elect: (a) to apply the proceeds or the award or claims upon or in
reduction of the Loan, whether due or not; or (b) to make those proceeds
available to Borrower for repair, restoration, or rebuilding of the
Improvements, in the manner and under the conditions that the Lender may
require. Lender shall not be held responsible for any failure to collect any
condemnation proceeds regardless of the cause of such failure or for any use by
Borrower of such proceeds as Lender may pay over to Borrower.
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<PAGE>
6. Preservation and Maintenance of Property.
Borrower shall keep and maintain the Property, including the
Improvements, to be kept and maintained, in good order, condition, and repair.
Borrower will not intentionally or materially waste the Property, including the
Improvements. Borrower will not cause or permit any excavation, construction,
earth work, site work or any other mechanic's lienable work to or for the
benefit of any of the Property or the construction of any buildings, structures,
or improvements on the Property without the prior written consent of Lender to
the proposed construction as well as to the plans and specifications relating
thereto, except for tenant improvements and normal repair and maintenance in the
ordinary course of business. Without limitation of the foregoing, Borrower will
not cause or consent to any instrument or document affecting the Property of
which Borrower has knowledge to be recorded without Lender's prior written
consent thereto.
Borrower shall: (a) duly and punctually perform, observe and comply
with, or cause the punctual performance, observance and compliance of, all (i)
building, zoning, fire, health, disabled persons, environmental, and use laws,
codes, ordinances, rules, and regulations, (ii) covenants and restrictions of
record, and (iii) easements, which are in any way applicable to the Property or
any part thereof or to the construction of any Improvements thereon and the use
or enjoyment thereof; (b) not abandon the Property; (c) provide for management
of the Property by a property manager reasonably satisfactory to Lender pursuant
to a contract in form and substance reasonably satisfactory to Lender; and (d)
give notice in writing to Lender of and, unless otherwise directed in writing by
Lender, appear in and defend any action or proceeding purporting to affect the
Property, the security granted by the Loan Documents or the rights or powers of
Lender. Neither Borrower nor any tenant or other person shall remove, demolish
or alter any Improvement on the Land except when incident to the replacement of
fixtures, equipment, machinery and appliances with items of like kind.
7. Protection of Lender's Security.
If (a) Borrower fails to pay the Indebtedness or to perform the
Obligations, (b) any action or proceeding is commenced which affects or could
affect the Property or Lender's interest therein, including any loss, damage,
cost, expense or liability incurred by Lender with respect to (i) any
environmental matters relating to the Property or (ii) the preparation of the
commencement or defense of any action or proceeding or any threatened action or
proceeding affecting the Loan Documents or the Property, then Lender, at
Lender's option, may make such appearances, disburse such sums and take such
action as Lender deems necessary, in its sole discretion, to protect the
Property or Lender's interest therein, including entry upon the Property to take
such actions Lender determines appropriate to preserve, protect or restore the
Property. Any amounts disbursed by Lender pursuant to this Section 7 (including
attorneys' fees, costs and expenses), together with interest thereon at the
Default Rate from the date of disbursement, shall become additional Indebtedness
of Borrower secured by the lien of this Mortgage and the other Loan Documents
and shall be due and payable on demand. Nothing contained in this Section 7
shall require Lender to incur any expense or take any action hereunder.
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<PAGE>
8. Inspection.
Lender shall have the continuous right to conduct on-site inspections
of the Property. Lender shall not, during Lender's inspections, unreasonably
interfere with any of the tenants and/or the Property. Borrower shall reimburse
Lender for all costs and expenses incurred by Lender in connection with such
inspections. However, so long as no Event of Default has occurred, Lender shall
not conduct any such inspections more than one time per year and Borrower will
not be required to reimburse Lender for costs and expenses incurred in
connection with more than one annual inspection.
9. Books and Records.
Borrower shall keep and maintain (or cause to be kept and maintained)
books and records of account in which full, true and correct entries shall be
made of all dealings and transactions relative to the Property, including,
without limitation, profit and loss statements and rent rolls. Such books and
records of account shall be kept and maintained in accordance with generally
accepted accounting principles consistently applied except as otherwise
disclosed to Lender. Borrower shall maintain correspondence files as part of
said books and records and shall deliver to Lender copies of all such
correspondence to Lender upon request. Lender, its accountants, and other duly
authorized representatives shall have the continuous right, during normal
business hours and upon reasonable notice to Borrower, at Borrower's sole cost
and expense, to audit, inspect and copy the books and records of Borrower
pertaining to the Property and such books and records shall be maintained at a
central location. However, so long as no Event of Default has occurred, Lender
shall not conduct any such audits more than one time per year, and Borrower will
not be required to reimburse Lender for costs and expenses incurred in
connection with more than one annual audit of the books and records for the
Property. In the event of a foreclosure of this Mortgage, all of Borrower's
books, records, contracts, correspondence, Leases and other documents maintained
in connection with the Property shall be made available to the successful bidder
at the foreclosure sale for inspection and copying for a period of not less than
three (3) years following said sale.
10. Financial Statements.
Borrower shall furnish to Lender financial statements and other
certificates in accordance with and in the time periods set forth in Section 9
of the Credit Agreement.
11. Environmental Matters.
(a) Borrower represents and warrants that, to the best of its
knowledge, except as previously disclosed to Lender in writing or as contained
in the written due diligence reports delivered to Lender by Borrower, there are
no, and covenants that there will not be, for so long as any of Borrower's
Indebtedness remains outstanding, any "Hazardous Materials" (as hereinafter
defined) generated, released, stored, buried or deposited over, beneath, in or
upon the Property or on or beneath the surface of adjacent property, except as
such Hazardous Materials may be used, stored or transported in connection with
the permitted uses of the
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<PAGE>
Property and then only to the extent permitted by law after obtaining all
necessary permits and licenses therefor. For purposes of this Mortgage,
"Hazardous Materials" means and includes, without limitation: (i) "hazardous
substances," or "toxic substances" as those terms are defined by the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss.9601 et seq.; or the Hazardous Materials Transportation Act, 49 U.S.C.
ss.1802, all as amended and hereafter amended; (ii) "hazardous wastes," as that
term is defined by the Resource Conservation and Recovery Act, 42 U.S.C. ss.6902
et seq., as amended and hereafter amended; (iii) any pollutant or contaminant or
hazardous, dangerous or toxic chemicals, materials, or substances within the
meaning of any other applicable federal, state, or local law, regulation,
ordinance, or requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste substance or material, all as amended or
hereafter amended; (iv) petroleum products, including, but not limited to, crude
oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch
absolute) and substances containing hydrocarbons (other than petroleum products
which are normally contained in motor vehicles, to the extent that said
petroleum products are not released from said motor vehicles) (v) any
radioactive material, including any source, special nuclear or by-product
material as defined at 42 U.S.C. ss.2011 et seq., as amended or hereafter
amended; (vi) asbestos in any form or condition; and (vii) polychlorinated
biphenyls or substances or compounds containing PCBs. Such laws, ordinances and
regulations are hereinafter collectively referred to as the "Hazardous Materials
Laws".
(b) Borrower shall, and Borrower shall cause all employees, agents,
tenants, contractors and subcontractors of Borrower and any other persons from
time to time present on or occupying the Property to, keep and maintain the
Property in compliance with, and not cause or knowingly permit the Property to
be in violation of, any applicable Hazardous Materials Laws. Neither Borrower
nor any employees, agents, tenants, contractors or subcontractors of Borrower or
any other persons occupying or present on the Property shall use, generate,
manufacture, store or dispose of on, under or about the Property or transport to
or from the Property any Hazardous Materials, except as such Hazardous Materials
may be used, stored or transported in connection with the permitted uses of the
Property and then only to the extent permitted by law after obtaining all
necessary permits and licenses therefor.
(c) Borrower shall immediately advise Lender in writing of: (i) any
notices received by Borrower (whether such notices are from the Environmental
Protection Agency, or any other federal, state or local governmental agency or
regional office thereof) of the violation or potential violation of any
applicable Hazardous Materials Laws occurring on or about the Property; (ii) any
and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened pursuant to any Hazardous Materials
Laws; (iii) all claims made or threatened by any third party against Borrower or
the Property relating to damage, contribution, cost recovery compensation, loss
or injury resulting from any Hazardous Materials (the matters set forth in
clauses (i), (ii) and (iii) above are hereinafter referred to as "Hazardous
Materials Claims"); and (iv) Borrower's discovery of any occurrence or condition
on any real property adjoining or in the vicinity of the Property that could
cause the Property or any part thereof to be subject to any Hazardous Materials
Claims.
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<PAGE>
Lender shall have the right but not the obligation to join and participate in,
as a party if it so elects, any legal proceedings or actions initiated in
connection with any Hazardous Materials Claims and Borrower shall pay to Lender,
upon demand, all attorneys' and consultants' fees incurred by Lender in
connection therewith.
(d) Borrower shall be solely responsible for, and shall indemnify and
hold harmless Lender, its directors, officers, employees, agents, successors and
assigns from and against, any loss, damage, cost, expense or liability directly
or indirectly arising out of or attributable to the use, generation, storage,
release, threatened release, discharge, disposal or presence (whether prior to
or during the term of the Loan or otherwise and, subject to the terms of this
Section 11, regardless of by whom caused, whether by Borrower or any predecessor
in title or any owner of land adjacent to the Property or any other third party,
or any employee, agent, tenant, contractor or subcontractor of Borrower or any
predecessor in title or any such adjacent land owner or any third person) of
Hazardous Materials on, under or about the Property, which use, generation,
storage, release, threatened release, discharge, disposal or presence results
from the acts or omissions of Borrower, without limitation: (i) claims of third
parties (including governmental agencies) for damages, penalties, losses, costs,
fees, expenses, injunctive or other relief; (ii) response costs, clean-up costs,
costs and expenses of removal and restoration, including fees of attorneys and
experts, and costs of determining the existence of Hazardous Materials and
reporting same to any governmental agency; and (iii) any and all expenses or
obligations, including attorneys' fees, costs, and other expenses.
(e) Borrower hereby represents, warrants and certifies that to the best
of its knowledge, except as previously disclosed to Lender in writing or as
contained in the written due diligence reports delivered to Lender by Borrower,
there are no underground storage tanks located on, under or about the Property
that are subject to the notification requirements under Section 9002 of the
Solid Waste Disposal Act, as now or hereafter amended (42 U.S.C. ss.6991).
(f) Lender may, in its sole discretion, require Borrower, at its sole
cost and expense, from time to time to perform or cause to be performed, such
studies or assessments of the Property, as Lender may deem necessary or
appropriate or desirable, to determine the status of environmental conditions on
and about the Property, which such studies and assessments shall be for the
benefit of Lender and be prepared in accordance with the specifications
established by Lender.
12. Covenants.
Borrower covenants with Lender:
(a) to warrant and defend title to the Property against all claims and
demands, subject to easements and restrictions set forth in the pro-forma title
commitment issued in connection with the Loan and this Mortgage;
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<PAGE>
(b) to provide Lender with notice of any litigation, arbitration, or
other proceeding or governmental investigation pending or, to Borrower's
knowledge, threatened against or relating to Borrower or the Property; and
(c) to use the proceeds evidenced by the Note solely and exclusively
for proper business purposes and not for the purchase or carrying of registered
equity securities within the purview and operation of any regulation issued by
the Board of Governors of the Federal Reserve System or for the purpose of
releasing or retiring any indebtedness which was originally incurred for any
such purpose.
13. Lease.
Borrower shall not, without Lender's prior written consent, execute,
modify, amend, surrender or terminate any Lease other than in the ordinary
course of business. Such Leases shall be on the form of lease previously
approved by Lender with tenants and for a use acceptable to Lender. All Leases
executed or renewed after the date hereof must be approved by Lender prior to
the execution thereof by Borrower. Borrower shall not be authorized to enter
into any ground lease of the Property without Lender's prior written approval.
If Lender consents to any new lease or the renewal of any existing lease, at
Lender's request, Borrower shall cause the tenant thereunder to execute a
subordination and attornment agreement in form and substance satisfactory to
Lender. Borrower shall comply with and observe Borrower's obligations as
landlord under all Leases. Borrower shall furnish Lender with executed copies of
all Leases.
So long as there shall not have occurred an Event of Default, Borrower
shall have the right to collect all Rents, and shall hold the same, in trust, to
be applied, in accordance with the terms and provisions of the Note.
14. Estoppel Certificate.
Borrower shall within ten (10) days after Lender's request, furnish
Lender with a written statement, duly acknowledged, setting forth the sums,
according to Borrower's books and records, secured by the Loan Documents and any
right of set-off, counterclaim or other defense which exists against such sums
and the Obligations.
15. Transfers of the Property or Beneficial Interest in Borrower; Assumption.
Borrower agrees that Borrower may not, sell, lease (except leases
executed in the ordinary course of business and pursuant to the requirements
contained herein and in the other Loan Documents), transfer, or in any other way
encumber or dispose of all or any of the Property (or any portion thereof or any
legal, equitable or other interest therein, including interests pursuant to an
installment contract) except as otherwise set forth in the Credit Agreement or
otherwise approved by Lender in writing. Except for the interest of Borrower and
encumbrances permitted by Lender, there shall be no interests, claims or liens
with respect to the Property whether subordinate or superior to the lien of this
Mortgage and the other Loan
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<PAGE>
Documents, except as otherwise approved in the Credit Agreement or by Lender.
Ownership interests in Borrower (such as stock, shares and general and limited
partnership interests), shall not be permitted to be transferred, sold, assigned
or in any other way encumbered or disposed of, and no new ownership interests in
Borrower shall be created.
16. No Additional Liens, Encumbrances or Indebtedness.
Borrower covenants not to execute any mortgage, security agreement,
assignment of leases and rents or other agreement granting a lien against or
encumbrance on the Property or take or fail to take any other action which would
result in a lien against the Property (except the liens granted to Lender by the
Loan Documents) or the interest of Borrower in the Property without the prior
written consent of Lender and Borrower further covenants to keep the Property,
free and clear of all liens and encumbrances (except the liens granted to Lender
by the Loan Documents or unless the same are bonded or insured over in a manner
satisfactory to Lender within thirty (30) days of such filing) of every nature
or description (whether for taxes or assessments, or charges for labor,
materials, supplies or services or any other thing).
Except as otherwise permitted in the Credit Agreement, Borrower shall
not, without Lender's prior written consent, incur additional indebtedness,
except that Borrower may incur unsecured trade payables outstanding at any one
time in the ordinary course of business.
17. Borrower and Lien Not Released.
From time to time, Lender may, at Lender's option, without giving
notice to or obtaining the consent of Borrower, its successors or assigns or of
any junior lienholder or guarantors, without liability on Lender's part and
without regard to Borrower's breach of any covenant or agreement in any Loan
Document: (i) extend or otherwise modify the terms or the time for payment of
the Indebtedness or any part thereof, including the interest rate, amortization
period, or payment amount; (ii) release anyone liable on any of said
Indebtedness; (iii) accept replacement note or notes therefor; (iv) release from
the lien of any Loan Document any part of the Property or take or release other
security; (v) consent to any map or plan of the Property; (vi) consent to the
granting of any easement; (vii) join in any extension or subordination
agreement; and/or (viii) waive or modify any of the Obligations. Any actions
taken by Lender pursuant to the terms of this Section 17 shall not affect the
obligation of Borrower or Borrower's successors or assigns to pay the
Indebtedness and to perform the Obligations, shall not affect the guaranty of
any person, corporation, partnership or other entity for payment of the
Indebtedness and shall not affect the lien or priority of this Mortgage.
18. Uniform Commercial Code Security Agreement.
(a) This Mortgage shall constitute a security agreement pursuant to the
Uniform Commercial Code for any portion of the Property which, under applicable
law, may be subject to a security interest pursuant to the Uniform Commercial
Code, and Borrower hereby grants Lender a security interest in said Property.
Any reproduction of this Mortgage or of any other security agreement or
financing statement shall be sufficient as a financing statement. In
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<PAGE>
addition, Borrower agrees to execute and deliver to Lender any financing
statements, as well as extensions, renewals and amendments thereof, and
reproductions of this Mortgage in such form as Lender may require to perfect a
security interest with respect to said items. Borrower hereby authorizes and
empowers Lender and irrevocably appoints Lender its agent and attorney-in-fact
to execute and file, on Borrower's behalf, all financing statements and
refilings and continuations thereof as Lender deems necessary or advisable to
create, preserve and protect such lien. Borrower shall pay all costs of filing
such financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all reasonable costs and expenses of any record searches
for financing statements Lender may reasonably require. Without limitation of
the foregoing, if an Event of Default occurs, Lender shall be entitled
immediately to exercise all remedies available to it under the Uniform
Commercial Code.
(b) Any party to any contract subject to the security interest granted
herein shall be entitled to rely on the rights of Lender without the necessity
of any further notice or action by Borrower. Lender shall not by reason of this
Mortgage or the exercise of any right granted hereby be obligated to perform any
obligation of Borrower with respect to any portion of the personal property nor
shall Lender be responsible for any act committed by Borrower, or any breach or
failure to perform by Borrower with respect to any portion of the personal
property.
19. Events of Default; Acceleration of Indebtedness.
The occurrence of any one or more of the following events shall
constitute an "Event of Default" under this Mortgage:
(a) failure of Borrower to pay any of the Indebtedness in accordance
with the terms and provisions of the Note or the Credit Agreement; or
(b) failure of Borrower to strictly comply with Sections 5(a), 11, 15
and 16 of this Mortgage; or
(c) the occurrence of an "Event of Default" under and as defined in any
other Loan Document; or
(d) any statement, report or certificate made or delivered to Lender by
Borrower is not materially true and complete at any time; or
(e) failure of Borrower, within thirty (30) days after notice and
demand, to satisfy each and every Obligation not set forth in the subsections
above.
Upon the occurrence of an Event of Default at the option of Lender, the
Indebtedness shall become immediately due and payable without notice to Borrower
and Lender shall be entitled to all of the rights and remedies provided in the
Loan Documents or at law or in equity. Each remedy provided in the Loan
Documents is distinct and cumulative to all other rights or remedies under the
Loan Documents or afforded by law or equity, and may be exercised concurrently,
independently, or successively, in any order whatsoever.
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20. Entry; Foreclosure.
Upon the occurrence of an Event of Default, Borrower, upon demand of
Lender, shall forthwith surrender to Lender the actual possession of the
Property, or to the extent permitted by law, Lender itself, or by such officers
or agents as it may appoint, may enter and take possession of all or any part of
the Property, and may exclude Borrower and its agents and employees wholly
therefrom, and may have joint access with Borrower to the books, papers and
accounts of Borrower. If Borrower shall for any reason fail to surrender or
deliver the Property or any part thereof after such demand by Lender, Lender may
obtain a judgment or decree conferring on Lender the right to immediate
possession or requiring the delivery to Lender of the Property, and Borrower
specifically consents to the entry of such judgment or decree. Upon every such
entering upon or taking of possession, Lender may hold, store, use, operate,
manage and control the Property and conduct the business thereof. Lender shall
have no liability for any loss, damage, injury, cost or expense resulting from
any action or omission by it or its representatives which was taken or omitted
in good faith.
When the Indebtedness or any part thereof shall become due, whether by
acceleration or otherwise, Lender may, either with or without entry or taking
possession as herein provided or otherwise, proceed by suit or suits at law or
in equity or by any other appropriate proceeding or remedy to: (a) enforce
payment of the Note or the performance of any term, covenant, condition or
agreement of Borrower under any of the Loan Documents; (b) foreclose the lien
hereof for the Indebtedness or part thereof and sell the Property as an entirety
or otherwise, as Lender may determine; and/or (c) pursue any other right or
remedy available to it under or by the law and decisions of the State in which
the Land is located. Notwithstanding any statute or rule of law to the contrary,
the failure to join any tenant or tenants of the Property as party defendant or
defendants in any foreclosure action or the failure of any such order or
judgment to foreclose their rights shall not be asserted by Borrower as a
defense in any civil action instituted to collect (a) the Indebtedness, or any
part thereof or (b) any deficiency remaining unpaid after foreclosure and sale
of the Property.
Upon any foreclosure sale, Lender may bid for and purchase the Property
and shall be entitled to apply all or any part of the Indebtedness as a credit
to the purchase price.
21. Expenditures and Expenses.
In any action to foreclose the lien hereof or otherwise enforce
Lender's rights and remedies hereunder, there shall be allowed and included as
additional Indebtedness all expenditures and expenses which may be paid or
incurred by or on behalf of Lender including repair costs, payments to remove or
protect against liens, attorneys' fees, costs and expenses, receivers' fees,
costs and expenses, appraisers' fees, engineers' fees, accountants' fees,
outlays for documentary and expert evidence, stenographers' charges, stamp
taxes, publication costs, and costs (which may be estimates as to items to be
expended after entry of an order or judgment) for procuring all such abstracts
of title, title searches and examination, title insurance policies and similar
data and assurances with respect to title as Lender may deem reasonably
necessary either to prosecute any action or to evidence to bidders at any sale
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which may be had pursuant to an order or judgment the true condition of the
title to, or the value of, the Property.
22. Application of Proceeds of Foreclosure Sale.
The proceeds of any foreclosure sale of the Property shall be
distributed and applied in the order of priority set forth in the Note with the
excess, if any, being applied, to any party entitled thereto as their rights may
appear.
23. Appointment of Receiver or Mortgagee in Possession.
If an Event of Default is continuing or if Lender shall have
accelerated the Indebtedness, Lender, upon application to a court of competent
jurisdiction, shall be entitled as a matter of strict right, without notice, and
without regard to the occupancy or value of any security for the Indebtedness or
the insolvency of any party bound for its payment, to the appointment, at its
option, of itself as mortgagee in possession, or of a receiver to take
possession of and to operate the Property, and to collect and apply the Rents.
24. After-Acquired Property.
To the extent permitted by, and subject to, applicable law, the lien of
this Mortgage, including without limitation the security interest created under
the granting clauses of this Mortgage and Section 18, shall automatically
attach, without further act, to all property hereafter acquired by Borrower
located in or on, or attached to, or used or intended to be used in connection
with, or with the operation of, the Property or any part thereof.
25. Future Advances.
This Mortgage is given to secure not only the existing Indebtedness,
but also future advances (whether such advances are obligatory or are made at
the option of Lender, or otherwise) made by Lender under the Note or this
Mortgage, to the same extent as if such future advances were made on the date of
the execution of this Mortgage. The total amount of indebtedness that may be so
secured may decrease or increase from time to time, but all Indebtedness secured
hereby shall in no event exceed five (5) times the aggregate face amount of the
Note. Such future advances shall be evidenced by the Note, may be made pursuant
to the terms and conditions hereof or of any of the other Loan Documents. The
extension of such future advances by Lender to or for the benefit of Borrower
shall not extend the Maturity Date and shall be due and payable on demand
therefor by Lender or, if no demand is sooner made therefor, on the Maturity
Date.
26. Forbearance by Lender Not a Waiver.
Any forbearance by Lender in exercising any right or remedy under any
of the Loan Documents, or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of any right or remedy. Lender's acceptance
of payment of any sum secured by any
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of the Loan Documents after the due date of such payment shall not be a waiver
of Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Indebtedness, nor shall Lender's receipt of any awards, proceeds or damages
under Section 5 hereof operate to cure or waive Borrower's default in payment or
sums secured by any of the Loan Documents. With respect to all Loan Documents,
only waivers made in writing by Lender shall be effective against Lender.
27. Waiver of Statute of Limitations.
Borrower hereby waives the right to assert any statute of limitations
as a bar to the enforcement of the lien created by any of the Loan Documents or
to any action brought to enforce the Note or any other obligation secured by any
of the Loan Documents.
28. Waiver of Homestead, Redemption an Prejudgment Remedy.
Borrower hereby waives all right of homestead exemption in the
Property. Borrower hereby waives all right of redemption on behalf of Borrower
and on behalf of all other persons acquiring any interest or title in the
Property subsequent to the date of this Mortgage, except decree or judgment
creditors of Borrower.
29. Jury Trial Waiver.
BORROWER AND LENDER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THE LOAN
DOCUMENTS. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY
BORROWER, AND BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON
BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO THE OTHER TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTION THAT MAY IN ANY WAY MODIFY
OR NULLIFY ITS EFFECT. BORROWER FURTHER ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THE
LOAN DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
BORROWER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND
RAMIFICATIONS OF THIS WAIVER PROVISION.
30. Venue.
BORROWER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY,
INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS
AGREEMENT SHALL BE LITIGATED, AT LENDER'S SOLE DISCRETION AND ELECTION, ONLY IN
COURTS HAVING A SITUS WITHIN
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THE COUNTY OF NEW YORK, STATE OF NEW YORK. BORROWER HEREBY CONSENTS AND SUBMITS
TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID
COUNTY AND STATE. BORROWER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES
CORPORATION SERVICE COMPANY, WHOSE ADDRESS IS UNIDIGITAL INC., C/O CORPORATION
SERVICE COMPANY, 1013 CENTER ROAD, NEW CASTLE, DELAWARE 19805, AS ITS DULY
AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH
PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON
BORROWER. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR
CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, BORROWER SHALL, WITHIN TEN (10) DAYS
AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT ON ITS BEHALF AND WITHIN SUCH
PERIOD NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY
APPOINTED, LENDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A
SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO BORROWER. BORROWER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST IT BY LENDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH THIS PARAGRAPH.
31. Governing Law; Severability.
This Mortgage shall be governed by and construed in accordance with the
laws of the State of New York. The invalidity, illegality or unenforceability of
any provision of this Mortgage shall not affect or impair the validity, legality
or enforceability of the remainder of this Mortgage, and to this end, the
provisions of this Mortgage are declared to be severable.
32. Notice.
Any notice or other communication required or permitted to be given
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier or U.S. Mail and
shall be deemed given: (a) if served in person, when served; (b) if telecopied,
on the date of transmission if before 4:00 p.m. (New York time); provided that a
hard copy of such notice is also sent pursuant to clause (c) or (d) below; (c)
if by overnight courier, on the first "business day" (as hereinafter defined)
after delivery to the courier; or (d) if by U.S. Mail, on the fourth (4th) day
after deposit in the mail, postage prepaid, if addressed to the party to whom
such notice is intended as set forth below:
Notices to Borrower: Unidigital, Inc.
545 West 45th Street
New York, New York 10036
Attention: William E. Dye
Telecopy: (212) 262-1830
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with a copy to: Buchanan Ingersoll
500 College Road East
Princeton, New Jersey 08540
Attention: David J. Sorin, Esq.
Telecopy: (609) 520-0360
Notices to Lender: Canadian Imperial Bank of Commerce
425 Lexington Avenue, 3rd Floor
New York, New York 10017
Attention: William Koslo, Jr.
Telecopy: (212) 856-3991
with a copy to: Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Steven N. Cohen, Esq.
Telecopy: (212) 504-6666
or to either party at such other addresses as such party may designate in a
written notice to the other party given in the manner specified herein.
33. Successors and Assigns Bound; Joint and Several Liability; Agents; Captions.
The covenants and agreements contained in the Loan Documents shall
bind, and the rights thereunder shall inure to, the respective successors and
assigns of Lender and Borrower, subject to the provisions of Section 15 hereof.
All covenants and agreements of Borrower shall be joint and several. In
exercising any rights under the Loan Documents or taking any actions provided
for therein, Lender may act through its employees, agents or independent
contractors as authorized by Lender. The captions and headings of the paragraphs
of this Mortgage are for convenience only and are not to be used to interpret or
define the provisions hereof.
34. Release.
Upon payment of all amounts due and payable under the Note, this
Mortgage, the Credit Agreement and the other Loan Documents or upon the sale or
transfer of the Property in accordance with the terms of the Credit Agreement,
Lender shall release this Mortgage. Borrower shall pay Lender's reasonable costs
incurred in releasing this Mortgage and any financing statements related
thereto.
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35. Terms.
As used in the Loan Documents, (i) "business day" means a day when
banks are not required to be open or are authorized to be closed in New York,
New York; and (ii) the phrase "including" shall mean "including but not limited
to" unless specifically set forth to the contrary.
36. Exculpation.
This Mortgage and all of Borrower's obligations hereunder are subject
to the provisions of the Note entitled Exculpation, which are incorporated
herein by this reference.
37. State Specific Provisions.
(a) Conflicts. In the event of any inconsistencies between the terms
and conditions of Section 37 of this Mortgage and the terms and provisions of
the rest of this Mortgage, the terms and provisions of Section 37 of this
Mortgage shall control and be binding.
(b) Commercial Property. Mortgagor represents that this Mortgage does
not encumber real property principally improved or to be improved by one or more
structures containing in the aggregate not more than six residential dwelling
units, each having its own separate cooking facilities.
(c) Insurance Proceeds. In the event of any conflict, inconsistency or
ambiguity between the provisions of Section 5(a) of this Mortgage and the
provisions of subsection 4 of Section 254 of the Real Property Law of New York
covering the insurance of buildings against loss by fire, the provisions of
Section 5(a) hereof shall govern and control.
(d) Trust Fund. Pursuant to Section 13 of the lien law of New York,
Borrower shall receive the advances secured hereby and shall hold the right to
receive such advances as a trust fund to be applied first for the purpose of
paying the cost of any improvement and shall apply such advances first to the
payment of the cost of any such improvement of the Property before using any
part of the total of the same for any other purpose.
(e) Section 291-f Agreement. This Mortgage is intended to be, and shall
operate as, the agreement described Section 291-f of the Real Property Law of
the State of New York and shall be entitled to the benefits afforded thereby.
Mortgagor shall (unless such notice is contained in such tenant's Lease) deliver
notice of this Mortgage in form and substance acceptable to Lender, to all
present and future holders of any interest in any Lease, by assignment or
otherwise, and shall take such other action as may now or hereafter be
reasonably required to afford Lender the full protections and benefits of
Section 291-f. Borrower shall request the recipient of any such notice to
acknowledge the receipt thereof.
(f) Maximum Principal Indebtedness. The maximum amount of principal
indebtedness secured by this Mortgage at execution or which under any
contingency may be secured hereby at any time hereafter is $3,000,000.00 plus
all amounts expended by
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Mortgagee following a default hereunder in respect of insurance premiums and
real estate taxes, and all legal costs or expenses required to protect and
preserve the lien of this Mortgage.
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IN WITNESS WHEREOF, Borrower has executed this Mortgage or has caused
the same to be executed by its representatives thereunto duly authorized.
BORROWER:
UNIDIGITAL INC., a Delaware corporation
By:/s/ William E. Dye
-------------------------------------
Name: William E. Dye
Title: Chief Executive Officer
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of March, 1998, before me personally came
William E. Dye, to me known, who, being by me duly sworn, did depose and say
that he has an address at c/o Unidigital Inc., 545 West 45th Street, New York,
New York 10036; that he is the Chief Executive Officer of Unidigital Inc., which
corporation executed the foregoing instrument; and that he signed his name
thereto by authority of the board of directors of said corporation on behalf of
said corporation.
/s/ Man Wai Lau
----------------------------------------
Notary Public, State of New York
