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): September 30, 1999
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IMAGEMAX, INC.
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(Exact name of issuer as specified in charter)
Pennsylvania 000-23077 23-2865585
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
100 E. Hector Street
Suite 396
Conshohocken, Pennsylvania 19428
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(Address of principal executive offices) (Zip Code)
(610) 832-2111
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On September 30, 1999, the Company entered into an interim agreement (the
"Interim Agreement") with First Union National Bank (successor by merger to
CoreStates Bank, N.A.) and Commerce Bank, N.A. (together, the "Banks"), who are
the parties to its Credit Facility dated March 30, 1998, as amended pursuant to
Amendment No. 1 dated June 9, 1998 and Amendment No. 2 dated November 16, 1998
(as amended, the "Credit Facility"). Pursuant to the Interim Agreement, the
Banks have agreed to forbear from exercising their rights and remedies with
respect to all existing defaults under the Credit Facility until the earlier of
April 1, 2000 or the occurrence of a default under the Interim Agreement or any
additional default under the Credit Facility.
Under the terms of the Interim Agreement, the amount available under the
Credit Facility is reduced to $18.5 million, the amount outstanding on September
30, 1999. The outstanding amount under the Credit Facility will now bear
interest at the prime rate plus two percent (2%) per annum (effective rate of
10.25% as of September 30, 1999). Principal repayments of $50,000, $75,000, and
$100,000 are due January 1, February 1, and March 1, 2000, respectively, with
all remaining sums payable on April 1, 2000.
In addition, pursuant to the Interim Agreement, the Company: (i) shall not
make capital expenditures in excess of $250,000 per quarter on a non-cumulative
basis; (ii) shall maintain a minimum stockholders' equity of at least $35
million; (iii) shall not declare or pay any dividends; and (iv) shall not incur
any additional indebtedness in excess of $10,000 without the permission of the
Banks.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
10.37 Forbearance Agreement dated September 30, 1999 by and
among the Company, First Union National Bank
(successor by merger to CoreStates Bank, N.A.) and
Commerce Bank, N.A.
99 Press Release dated October 6, 1999.
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SIGNATURE
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.
IMAGEMAX, INC.
By: /s/ Andrew R. Bacas
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Name: Andrew R. Bacas
Title: Acting Chief Executive Officer
Date: October 7, 1999.
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EXHIBIT INDEX
Exhibit
No. Description
10.37 Forbearance Agreement dated September 30, 1999 by and among the Company,
First Union National Bank (successor by merger to CoreStates Bank, N.A.)
and Commerce Bank, N.A.
99 Press Release dated October 6, 1999.
EXHIBIT 10.37
FORBEARANCE AGREEMENT
This Forbearance Agreement (this "Agreement"), dated this 30th day of
September, 1999, is by and among ImageMax, Inc. ("Borrower"), a Pennsylvania
corporation, the undersigned subsidiaries of Borrower (collectively, along with
Borrower, the "Company Affiliates"), First Union National Bank ("First Union"),
successor by merger to CoreStates Bank, N.A., a national bank, for itself and as
agent pursuant to the Credit Agreement described below (in such capacity, the
"Agent"), and Commerce Bank, N.A. ("Commerce"), a national bank and one of the
"Banks" under the Credit Agreement described below.
BACKGROUND
A. Pursuant to the terms and subject to the conditions set forth in that
certain Credit Agreement, dated as of March 30, 1998, among Borrower, the
undersigned subsidiaries of Borrower, Agent, for itself and in such capacity,
Commerce Bank, N.A. and any other banks becoming a party thereto, as amended
pursuant to that certain Amendment No. 1 to Credit Agreement dated as of June 9,
1998 among Company Affiliates, First Union and Agent, and that certain Amendment
No. 2 to Credit Agreement dated as of November 16, 1998 among Company
Affiliates, First Union, Agent and Commerce (as amended, the "Credit
Agreement"), Banks established a revolving credit facility for Company
Affiliates pursuant to which Banks severally agreed, subject to and in reliance
on all of the provisions of the Credit Agreement and the other Loan Documents
referred to therein, to provide a revolving credit facility up to Thirty Million
($30,000,000.00) Dollars (which revolving credit facility has been decreased
pursuant to, inter alia, the Second Amendment (as decreased and amended, the
"Revolving Credit"), pursuant to which Banks made various loans, advances and
extensions of credit (including extensions of credit in the form of the issuance
for the account of Borrower and/or other Company Affiliates of various letters
of credit), which indebtedness is further evidenced by (i) a certain Revolving
Credit Note dated as of March 30, 1998 in the principal sum of Twenty-Five
Million ($25,000,000.00) Dollars (in respect of the Acquisition Facility)
executed and delivered by Borrower to Agent for the rateable benefit of each of
the Banks and (ii) a certain Revolving Credit Note dated as of March 30, 1998 in
the principal sum of Five Million ($5,000,000.00) Dollars (in respect of the
Working Capital Facility) executed and delivered by Borrower to Agent for the
rateable benefit of each of the Banks (collectively, the "Revolving Credit
Note").
B. As collateral security for the Obligations (as defined in the Credit
Agreement), pursuant to the terms and subject to the conditions set forth in (i)
that certain Security and Pledge Agreement, dated as of March 30, 1998, executed
and delivered by Company Affiliates to Agent, (ii) that certain Trademark
Collateral Agreement, dated as of March 30, 1998, executed and delivered by
Borrower to Agent and (iii) that certain Copyright Collateral Agreement, dated
as of March 30, 1998, executed and delivered by Borrower to Agent (collectively,
along with each of the instruments, agreements and documents referred to in such
documents and the Chesterton Mortgage described below, the "Loan Documents"),
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Company Affiliates granted to Agent for the rateable benefit of Banks, and Agent
holds liens on and security interests in, to and under all of Company
Affiliates' respective existing and future goods, equipment, furniture,
inventory, machinery, money, accounts, contracts, contract rights, general
intangibles, fixtures, instruments, documents and chattel paper, whether now
owned or hereafter acquired or arising, together with all replacements and
substitutions therefor and additions thereto and cash and noncash proceeds
thereof (the "Collateral").
C. To induce Banks to enter into the Credit Agreement, establish the
Revolving Credit and make various loans, advances and extensions of credit to or
for the benefit of Company Affiliates, pursuant to the terms and subject to the
conditions of that certain Surety Agreement dated as of March 30, 1998, by each
Company Affiliate (other than Borrower) to Agent (the "Surety Agreement"), each
such Company Affiliate guaranteed, as a surety, the Obligations.
D. Prior to March 29, 1999, Borrower and the other Company Affiliates
defaulted in their financing arrangements with Agent and Banks. A list of the
defaults under the Credit Agreement and the other Loan Documents (collectively,
the "Existing Defaults") is attached to this Agreement as Exhibit "A" and hereby
made a part hereof. At the request of Company Affiliates, Agent and Banks
executed and exchanged with Company Affiliates that certain Forbearance
Agreement dated March 29, 1999 (the "First Forbearance Agreement"), pursuant to
which Agent and Banks agreed to forbear from exercising their rights and
remedies under the Loan Documents and applicable law.
E. The First Forbearance Agreement has terminated and the Obligations
remain outstanding. Company Affiliates have again requested that Agent and Banks
forbear from exercising their rights and remedies under the Loan Documents and
applicable law, pending the refinancing by Company Affiliates of the
Obligations, and Agent and Banks agree to so forbear under the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, with the foregoing Background deemed incorporated
hereinafter by this reference and hereby made a part hereof, the parties hereto,
intending to be legally bound, hereby further covenant and agree as follows:
SECTION 1. DEFINITIONS.
1.1 Accounting Terms. All accounting terms not otherwise defined in this
Agreement shall have the meanings ascribed to such terms in accordance with
GAAP.
1.2 Capitalized Terms. All capitalized terms not otherwise defined in this
Agreement shall have the meanings ascribed to such terms in the Credit
Agreement.
1.3 "Potential Default" means the occurrence of any event which, with the
passage of time or the giving of notice, or both, could constitute a Default.
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SECTION 2. FORBEARANCE.
2.1 Forbearance Period; Terminating Events. Agent and Banks agree to
forbear from exercising their rights and remedies under the Loan Documents and
applicable law which Agent and Banks are entitled to exercise as a result of the
occurrence of the Existing Defaults during the period (the "Forbearance Period")
commencing on the Effective Date of this Agreement and ending on the earlier of
(i) April 1, 2000 or (ii) the date on which any Terminating Event (as
hereinafter defined) occurs (the "Forbearance Termination Date"). For the
purposes of this Agreement, the term "Terminating Event" shall mean the
occurrence of any Default or Potential Default under any of the Loan Documents,
other than one of the Existing Defaults, or the occurrence of any breach of
warranty or representation or covenant set forth in this Agreement or the
occurrence of any default, violation or event of default (howsoever defined)
under any of the instruments, agreements or documents executed and/or delivered
pursuant to this Agreement.
2.2 Suspension of Revolving Credit; and Interest Rates.
(A) No further loans, advances or extensions of credit (including,
without limitation, the issuance of any Letters of Credit and the honoring of
checks for which there are insufficient and/or uncollected funds) shall be
considered or made. Notwithstanding the foregoing and anything else to the
contrary set forth in the Loan Documents, to the extent Agent makes further
loans, advances or extensions of credit to or for the benefit of Company
Affiliates, including the honoring of overdrafts drawn on accounts of any
Company Affiliate, any such extensions of credit shall be deemed to be Revolving
Credit Advances for all purposes under the Credit Agreement and as having been
made by Agent for the purposes of preserving and protecting the Collateral and
collecting and enforcing the Obligations pursuant to Section 11 of the Credit
Agreement.
(B) During the Forbearance Period, interest shall accrue on the
outstanding principal balance of the Obligations at the Base Rate plus two (2%)
percent per annum, with changes in the Base Rate to be effective immediately,
and no further LIBOR Loans shall be available to Company Affiliates. If any
payment of principal, interest or other sum on account of the Obligations is not
received in full by Agent within ten (10) days after the due date thereof, there
shall be added to the Obligations a late charge equal to five (5%) percent of
the amount past due, and such late charge shall be immediately due and payable.
Payments are deemed made the banking day on which they are received by Agent,
but any payments received after 3:00 p.m. will be deemed made the next banking
day. Upon the occurrence of any Terminating Event, notwithstanding the
foregoing, interest on the outstanding principal balance of the Obligations
shall accrue and be payable, on demand, at the Base Rate plus five (5%) percent
per annum, with changes in such Base Rate to be effective immediately.
2.3 Amortization of Obligations. Interest on the outstanding principal
balance of the Obligations shall be payable monthly, in arrears, commencing
October 1, 1999 and continuing
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on the first day of each month thereafter. The principal of the Obligations
shall be payable in consecutive monthly installments as follows:
Payment Date Amount of Payment
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January 1, 2000 $50,000
February 1, 2000 $75,000
March 1, 2000 $100,000
April 1, 2000 All principal, interest, fees and
reimbursable expenses in connection
with the Obligations shall be paid and
satisfied in full
SECTION 3. WARRANTIES AND REPRESENTATIONS.
3.1 Reaffirmation of Warranties and Representations. Except as qualified in
Schedule 3.1 attached hereto and hereby made a part hereof, Company Affiliates
hereby severally and collectively reaffirm and restate each of the warranties
and representations set forth in the Credit Agreement and the other Loan
Documents as if each such warranty and representation were set forth at length
herein.
3.2 Additional Warranties and Representations. To induce Agent and Banks to
enter into this Agreement, in addition to the representations and warranties set
forth in the Loan Documents and the other instruments, agreements and documents
otherwise referred to herein, Company Affiliates severally and collectively
represent and warrant to Agent and Banks that:
(A) Each Company Affiliate has the corporate power, authority and
capacity to enter into and perform its liabilities and obligations under this
Agreement and all related instruments, agreements and documents, and to incur
the indebtedness herein and therein provided for, and has taken all proper and
necessary corporate action to authorize the execution, delivery and performance
of this Agreement and related instruments, agreements and documents;
(B) This Agreement is valid, binding and enforceable against Company
Affiliates in accordance with its terms; and
(C) No consent, approval or authorization of, or filing, registration
or qualification with, any person or entity (including, without limitation, any
shareholder or creditor of any Company Affiliates) is required to be obtained by
any Company Affiliate in connection with the execution and delivery of this
Agreement or any related instrument, agreement or document, or undertaking or
performance of any obligation hereunder or thereunder.
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SECTION 4. BORROWER'S ADDITIONAL COVENANTS.
4.1 Additional Affirmative Covenants. In addition to the affirmative
covenants set forth in the Loan Documents and the agreements and documents
executed and/or delivered to Agent and Banks concurrently herewith, Company
Affiliates covenant and agree with Agent and Banks that, so long as any of the
Obligations remain unsatisfied and outstanding, they will comply with the
following covenants:
(A) Company Affiliates will furnish to Banks (or cause to be furnished
to Banks) such data and information (financial or otherwise) as Banks may
reasonably request to be informed of each Company Affiliate's respective status
and affairs including, without limitation:
(1) The statements, reports, certificates and notices to be
furnished to Agent pursuant to the Credit Agreement and the other Loan Documents
including, without limitation, Section 8 of the Credit Agreement;
(2) By 5:00 p.m. on each Monday during the Forbearance Period (a) a
certification by Borrower of weekly collections of Company Affiliates for the
calendar week ending the Friday prior to such Monday, (b) a certification as to
the amount of cash held by Company Affiliates (and where held, including account
numbers) for each day during such prior week, and (c) a four (4) week rolling
cash flow forecast report for Company Affiliates, together with a reconciliation
of actual results for the prior week to what had been forecast for such week in
the four (4) week cash flow forecast;
(B) On the first Business Day of each month, a written status report of
activities undertaken by William Blair & Co. ("Blair") in connection with the
sale of stock and/or assets of Company Affiliates and a status report of
activities undertaken by Blair and Company Affiliates to refinance the
Obligations. These reports shall include, without limitation, information as to
the existence and status of letters of intent, offers, term sheets, financing
proposals, commitments and the like, together with copies of all such things;
(C) Company Affiliates will, when requested to do so, make available
for inspection by duly authorized representatives of Agent and Banks any of its
books and records (wherever located), and will furnish to Agent (or cause to be
furnished to Agent and Banks) any information regarding its business affairs and
condition (financial and otherwise) within a reasonable time after request
therefor. Agent may at any time and from time to time without notice to any
Company Affiliate have complete access to all of Company Affiliates' premises
for the purposes of inspecting, examining, verifying and auditing the Collateral
and Company Affiliates' books and records and otherwise conducting field
examinations with respect to the Collateral and Company Affiliates' books and
records. The out-of-pocket cost and expense associated with such field and other
examinations shall be borne by Company Affiliates;
(D) During the Forbearance Period, Company Affiliates shall comply with
the following additional covenants:
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(1) Company Affiliates will not acquire any stock in, or all or
substantially all of the assets of, any person, firm or entity without the
prior, written consent of Banks, which consent may be withheld by Banks in their
sole and absolute discretion;
(2) Company Affiliates minimum stockholders equity shall at all
times be not less than Thirty-Five Million ($35,000,000.00) Dollars, and shall
increase by the amount of net income of Company Affiliates and investments in
Company Affiliates, but shall not be reduced by losses incurred by Company
Affiliates.
(3) Capital Expenditures of Company Affiliates shall not exceed in
the aggregate the sum of Two Hundred Fifty Thousand ($250,000.00) Dollars per
calendar quarter on a non-cumulative basis;
(4) Company Affiliates shall not declare or pay any dividends or
make any other payments or distributions on account of their capital stock;
(5) Without the prior written consent of Banks, which consent may
be withheld by Banks in their sole and absolute discretion, Company Affiliates
shall not permit or suffer to exist any further liens, claims or encumbrances
against their assets for any debts, liabilities or obligations in excess of the
aggregate sum of Ten Thousand ($10,000.00) Dollars;
(6) Without the prior written consent of Banks, which consent may
be withheld by Banks in their sole and absolute discretion, Company Affiliates
shall not incur any additional indebtedness including, without limitation,
"off-balance sheet" indebtedness in excess of the aggregate sum of Ten Thousand
($10,000.00) Dollars;
(7) Without the prior written consent of Banks, which consent may
be withheld by Banks in their sole and absolute discretion, Company Affiliates
shall not enter into or modify any existing employment agreements for executive
officers of Company Affiliates;
(8) Without the prior, written consent of Banks, which consent may
be withheld by Banks in their sole and absolute discretion, Company Affiliates
shall not adopt any shareholders' right's plans or other "poison pill;" and
(9) Borrower and the Company Affiliates shall remit to Agent for
the ratable benefit of Banks all proceeds of the sale or disposition of
Collateral (except proceeds arising in the ordinary course of Company
Affiliates' business, which proceeds shall be used for working capital purposes
in the ordinary course of such business). The sale or disposition of Collateral,
except in the ordinary course of Company Affiliates' business, shall be subject
to the prior, written consent of Banks, which consent may be withheld by Banks
in their sole and absolute discretion. Proceeds of sales or other dispositions
of Collateral outside the ordinary course of Company Affiliates' business shall
be applied by Agent and Banks in reduction of the Obligations in such order and
manner as Agent and Banks may determine in their sole and absolute discretion.
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(E) If no agreement for the sale or refinancing of the Obligations is
furnished to and deemed acceptable to Agent and Banks in their sole and absolute
discretion on or before December 31, 1999, Company Affiliates shall establish
lockbox facilities or restricted cash concentration accounts with Agent for the
concentration of remittances on account of accounts receivable and for other
proceeds from the sale or other disposition of Collateral, and all of Company
Affiliates' local bank depositories shall enter into blocked account agreements
with Agent in form and substance satisfactory to Banks and their counsel.
Proceeds of Collateral remitted through lockbox facilities shall be transferred
to a cash collateral account and, as funds clear, applied on account of the
Obligations then due and owing. Absent the existence of any Terminating Event,
sums in excess of Obligations then due and owing shall be released to the use of
Company Affiliates for working capital purposes in the ordinary course of their
business. Company Affiliates shall have no right of access to or withdrawal from
lockbox facilities or cash collateral accounts, and no interest shall accrue on
sums in such facilities or accounts.
SECTION 5. CONDITIONS PRECEDENT.
This Agreement is subject to the following conditions precedent (all
instruments, agreements and documents to be in form and substance satisfactory
to Banks and their counsel):
5.1 Documents Required for Closing. Borrower shall have duly executed
and/or delivered (or caused to be duly executed and/or delivered) to Banks the
following:
(A) A secretary's certificate (as of the date of this Agreement)
attaching a copy of resolutions of each Company Affiliate's Board of Directors
authorizing the execution, delivery and performance of this Agreement and each
other document to be executed and/or delivered pursuant hereto and any other
instrument, agreement or document referred to herein and confirming that the
articles or certificate of incorporation and by-laws of each Company Affiliate
have not changed since last delivered to Agent;
(B) A certificate (dated the date of this Agreement) of each Company
Affiliate's corporate secretary as to the incumbency and specimen signatures of
the officers of Borrower executing this Agreement and each other document to be
executed and/or delivered pursuant hereto or thereto;
(C) Payment of Banks' reasonable expenses (including legal fees and
disbursements of counsel) in connection with the preparation and negotiation of
this Agreement and a closing hereunder;
(D) In consideration of the agreement of Banks to forbear pursuant to
this Agreement, Company Affiliates acknowledge that Banks, upon execution and
exchange of this Agreement, have earned a forbearance fee in the amount of One
Hundred Thousand ($100,000.00) Dollars (which fee shall be deemed part of the
Obligations secured by the Collateral) payable to Agent for ratable benefit of
Banks as follows: Fifty Thousand ($50,000.00) Dollars upon execution and
exchange of this Agreement; and Fifty Thousand ($50,000.00) Dollars on the
earlier of December 15, 1999 or the Forbearance Termination Date;
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(E) Evidence that the computer hardware and software used in the
business operations of Company Affiliates are Y2K compliant;
(F) Bank shall be satisfied in all respects with Company Affiliates'
management of cash and accounts receivable and, to evaluate such management,
Company Affiliates agree to reimburse Banks, on demand, for a third party's
review of such cash management systems and accounts receivable, as well as
participation in initial and subsequent audits of Company Affiliates; and
(G) Such other instruments, agreements and documents as may be required
by Banks and/or their counsel.
SECTION 6. CONFIRMATION OF EXISTING INDEBTEDNESS AND RATIFICATION OF LOAN
DOCUMENTS.
6.1 Confirmation of Obligations. Company Affiliates hereby unconditionally
acknowledge and confirm that: the unpaid principal indebtedness of Company
Affiliates to Banks evidenced by the Loan Documents is as set forth on Exhibit
"B;" interest on such principal obligations has been paid through the date(s)
set forth on Exhibit B; and the foregoing indebtedness, together with
continually accruing interest and related costs, fees and expenses is, as of the
date hereof, owing without claim, counterclaim, right of recoupment, defense or
set-off of any kind or of any nature whatsoever.
6.2 Ratification of Financing Agreements. Company Affiliates hereby
unconditionally ratify and confirm and reaffirm in all respect and without
condition, all of the terms, covenants and conditions set forth in the Loan
Documents and agree that they remain unconditionally liable to Banks in
accordance with the respective terms, covenants and conditions of such
instruments, agreements and documents, and that all liens and security interests
and pledges encumbering the Collateral created pursuant to and/or referred to in
the Loan Documents continue unimpaired and in full force and effect, and secure
and shall continue to secure all of the Obligations, as the same may be modified
by the terms of this Agreement. As part of the Collateral, each Obligor hereby
reaffirms its prior grant and grants to Agent a lien on and a security interest
in and to all of such Obligor's existing and future investment property.
SECTION 7. MISCELLANEOUS.
7.1 Integrated Agreement. This Agreement and all of the instruments,
agreements and documents executed and/or delivered in conjunction with this
Agreement shall be effective upon the date of execution hereof and thereof by
all parties hereto and thereto, and shall be deemed incorporated into and made a
part of the Loan Documents. All such instruments, agreements and documents, and
this Agreement, shall be construed as integrated and complementary of each
other, and as augmenting and not restricting Agent's and Banks' rights,
remedies, benefits and security. If, after applying the foregoing, an
inconsistency still exists, the provisions of this Agreement shall constitute an
amendment thereto and shall govern and control.
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7.2 Disgorgement. If any Bank is, for any reason, compelled to surrender or
disgorge any payment, interest or other consideration described hereunder to any
person or entity because the same is determined to be void or voidable as a
preference, fraudulent conveyance, impermissible set-off or for any other
reason, such Obligation or part thereof intended to be satisfied by virtue of
such payment, interest or other consideration shall be revived and continue as
if such payment, interest or other consideration had not been received by such
Bank, and Company Affiliates shall be liable to, and shall indemnify, defend
(engaging counsel acceptable to such Bank) and hold such Bank harmless for, the
amount of such payment or interest surrendered or disgorged. The provisions of
this Paragraph shall survive execution of this Agreement.
7.3 No Defenses; Reliance. Company Affiliates hereby confirm and reconfirm
that there are no existing defenses, claims, counterclaims or rights of
recoupment or set-off against Agent and/or Banks in connection with the
negotiation, preparation, execution, performance or any other matters relating
to the Loan Documents or this Agreement. It is hereby and thereby further
acknowledged and agreed that notwithstanding anything to the contrary set forth
in this Agreement, Banks have and shall have no obligation to further amend the
Loan Documents, or otherwise further restructure the Obligations, and that
neither Banks nor their representatives have made any agreements with, or
commitments or representations or warranties to, Company Affiliates (either in
writing or orally) other than as expressly stated in this Agreement. Nothing
contained in this Agreement, or any compliance with the terms of this Agreement
or any of the instruments, agreements or documents referred to in this
Agreement, shall impose any obligation on the part of Agent or Banks to
consummate a further restructure of the Obligations.
7.4 No Contest. In consideration of this Agreement, Company Affiliates
hereby agree that they will not contest the exercise of Agent's or Banks' rights
to foreclose or otherwise take action with respect to the liens on and security
interests of Agent in and to the Collateral, the Loan Documents and collateral
security described in this Agreement, or contest the appointment of any receiver
in connection of the operation of any of such property and assets.
7.5 Release. In consideration of the accommodations being made available by
Banks to or for the benefit of Company Affiliates under this Agreement,
including, without limitation, the forbearance on the part of Banks, Company
Affiliates, for themselves and their respective heirs, personal representatives,
agents, employees, successors and assigns, do hereby remise, release and forever
discharge Agent, Banks and their respective agents, employees, representatives,
officers, successors and assigns of and from any and all claims, counterclaims,
demands, actions and causes of action of any nature whatsoever, whether at law
or in equity, including, without limitation, any of the foregoing arising out of
or relating to the transactions described in this Agreement, which against
Agent, Banks or their respective agents, employees, representatives, officers,
successors or assigns, or any of them, any Obligor has or hereafter can or may
have for or by reason of any cause, matter or thing whatsoever, from the
beginning of the world to the date of this Agreement; provided, however, that
this provision shall not release claims resulting from acts of gross negligence
or wilful misconduct of Banks.
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7.6 No Coercion. Company Affiliates hereby represent and warrant that they
are fully aware of the terms set forth in this Agreement and have voluntarily,
and without coercion or duress of any kind, entered into this Agreement
intending to be legally bound by its terms.
7.7 Banks Reliance. Company Affiliates expressly understand and further
agree that Agent and Banks are relying on all terms, covenants, conditions,
warranties and representations set forth in this Agreement including, without
limitation, Agent's and Banks' right to terminate the Forbearance Period at any
time upon the occurrence of a Terminating Event, as a material inducement to
Agent and Banks to enter into this Agreement.
7.8 Debit Authorization. Each Company Affiliate hereby irrevocably
authorizes Agent and Banks to charge any deposit account of any Company
Affiliate maintained at any Bank for all or any part of any amount due under the
Loan Documents and this Agreement including, without limitation, principal,
interest, late charges, fees and expenses reimbursable to Agent and Banks
(including reasonable legal fees).
7.9 Expenses of Agent and Banks. Company Affiliates will pay all expenses,
including the reasonable fees and expenses of legal counsel for Agent and Banks,
incurred in connection with the preparation, negotiation, administration,
amendment, modification or enforcement of this Agreement, the Credit Agreement,
the other Loan Documents, the collection or attempted collection of the
Obligations and Agent's and Banks' rights hereunder and under the instruments,
agreements and documents referred to herein, and in any proceedings (including,
without limitation, bankruptcy or other insolvency proceedings) brought or
threatened to enforce payment of any of the Obligations.
7.10 Applicable Law. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania, without giving effect to principles of conflicts
of laws.
7.11 Jury Trial Waiver. COMPANY AFFILIATES HEREBY IRREVOCABLY WAIVE TRIAL
BY JURY AND ANY RIGHT THERETO, AND CONSENT TO THE JURISDICTION OF THE COURTS OF
PHILADELPHIA COUNTY, PENNSYLVANIA, AND AGREE NOT TO RAISE ANY OBJECTION TO SUCH
JURISDICTION, OR TO THE LAYING OF THE VENUE IN SUCH COMMONWEALTH, AND FURTHER
AGREE THAT SERVICE OF PROCESS MAY BE DULY EFFECTED UPON THEM BY SERVICE IN
ACCORDANCE WITH THE PROVISIONS OF THE UNIFORM INTERSTATE AND INTERNATIONAL
PROCEDURE ACT.
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IN WITNESS WHEREOF, the parties hereto have caused this Forbearance
Agreement to be duly executed and exchanged as of the day and year first above
written.
IMAGEMAX, INC.
IMAGEMAX OF INDIANA, INC.
IMAGEMAX OF SOUTH CAROLINA, INC.
IMAGEMAX OF TENNESSEE, INC.
IMAGEMAX OF ARIZONA, INC.
IMAGEMAX OF OHIO, INC.
IMAGEMAX OF VIRGINIA, INC.
AMMCORP ACQUISITION CORP.
Attest: IMAGEMAX OF DELAWARE, INC.
By:/s/Jennifer J. Buckingham By: /s/ Mark P. Glassman
_______________________________ _______________________________
Name: Jennifer J. Buckingham Name: Mark P. Glassman
Title: Office Manager Title: Chief Financial Officer
(Corporate Seal) Address: 1100 Hector Street
Suite 396
Conshohocken, PA 19428
Attn: President
FIRST UNION NATIONAL BANK, successor
by merger to CORESTATES BANK, N.A. for
itself and as Agent
By: /s/ Elizabeth B. Styer
__________________________________
Name: Elizabeth B. Styer
Title: Senior Vice-President
Address: 123 S. Broad Street
Philadelphia, PA 19109
With a copy to: Klehr, Harrison, Harvey,
Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
Attn: Donald M. Harrison
Richard S. Roisman
[Signature Lines Continued]
11
<PAGE>
COMMERCE BANK, N.A.
By: /s/ Roger L. Bomgardner
__________________________________
Name: Roger L. Bomgardner
Title: Regional Vice-President
Address: 1701 Route 70 East
Cherry Hill, NJ 08034
12
<PAGE>
EXHIBIT B
Acquisition loan outstanding as of 09/28/99:
Bank Amount
---- -------
First Union National Bank $ 9,780,000.00
Commerce Bank, NA $ 4,890,000.00
--------------
Total Outstanding: $14,670,000.00
Working Capital loan outstanding as of 09/28/99:
Bank Amount
---- ------
First Union National Bank $ 2,560,666.67
Commerce Bank, NA $ 1,280,333.33
--------------
Total Outstanding: $ 3,841,000.00
13
EXHIBIT 99
For Immediate Release PR-99011
Contact: Andrew R. Bacas, Acting Chief Executive Officer 610-832-2111, x101
Mark P. Glassman, Chief Financial Officer 610-832-2111, x104
ImageMax Announces Signing of Interim Bank Agreement
- --------------------------------------------------------------------------------
Conshohocken, PA, October 6, 1999--ImageMax, Inc. (OTCBB: IMAG) announced
today that the Company has entered into an Interim Agreement with the banks that
are the parties to the Company's credit facility entered into on March 30, 1998
(as amended, the "Credit Facility"). Pursuant to the Interim Agreement, the
banks have agreed to forbear from exercising their rights and remedies with
respect to all existing defaults under the Credit Facility until the earlier of
April 1, 2000 or the occurrence of a default under the Interim Agreement or any
additional default under the Credit Facility.
"This agreement should allow management to focus more on internal
operations as we continue to explore and develop our strategic alternatives,"
said Acting CEO Andy Bacas.
Under the terms of the Interim Agreement, the amount available under the
Credit Facility is reduced to $18.5 million, which was the amount outstanding on
September 30, 1999, and the applicable interest rate is reduced to prime rate
plus two percent (2%) per annum (effective rate of 10.25% as of September 30,
1999). Principal repayments of $50,000, $75,000, and $100,000 are due January 1,
February 1, and March 1, 2000, respectively, with all remaining sums payable on
April 1, 2000. The Company is subject to certain restrictive covenants
pertaining to levels of capital expenditures, additional indebtedness,
stockholders' equity, and the declaration or payment of dividends.
Statements in this press release which are not historical fact are
forward-looking statements that involve risk and uncertainty, including those
set forth in "Business-Risk Factors" in ImageMax' 1998 Annual Report on Form
10-K and other ImageMax filings with the Securities and Exchange Commission, and
risks associated with the results of the continuing operations of ImageMax.
Accordingly, there is no assurance that the results in the forward-looking
statements will be achieved.
