AMENDMENT NO. 2
TO CREDIT AGREEMENT
AMENDMENT NO. 2 dated as of November 16, 1998 by and among IMAGEMAX,
INC., a Pennsylvania corporation (the "Borrower"), the undersigned subsidiaries
of the Borrower (with the Borrower, the "Company Affiliates"), FIRST UNION
NATIONAL BANK (successor by merger to CORESTATES, BANK, N.A.) a national banking
association, for itself and as agent (the "Agent"), and COMMERCE BANK, N.A., a
national banking association (such banks collectively referred to the "Banks").
WHEREAS, the Borrower, the Company Affiliates, the Agent and the Banks
entered into a certain Credit Agreement dated as of March 30, 1998 (as amended
on the date hereof and hereafter, the "Credit Agreement"); and
WHEREAS, the Borrower has requested the Banks to make certain changes
to the Credit Agreement;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Capitalized Terms. All capitalized terms used in this Amendment,
unless otherwise defined herein, shall have the meanings ascribed thereto in
the Credit Agreement.
2. Definition of Cash Flow. The definition of "Cash Flow" shall be
amended to insert after "net income" the following: "(excluding a pretax
restructuring charge of $925,000 taken by the Borrower in its fiscal quarter
ending September 30, 1998 and a pretax restructuring charge of up to $6,150,000
expected to be taken in Borrower's fiscal quarter ending December 31, 1998 with
respect to the sale of Borrower's Southeast Unit)."
3. Definition of Termination Date. The definition of "Termination Date"
shall be amended to read in full as follows:
"Termination Date" means December 31, 1999.
4. Reduction of Facility. Section 2.01 (a) shall be amended to read in
full as follows, and Schedule 2.01 shall be amended to read in full as attached
hereto.
Section 2.01. Amount and Nature of Revolving Credit Facility.
(a) Subject to the terms and conditions of this Agreement, and in
particular Section 2.04 and 9.10, and to the other Loan Documents, and
in reliance upon the representations, warranties and covenants herein
and therein contained, each Bank severally (but not jointly) agrees to
make a Revolving Credit Facility available to Borrower and through the
Borrower, to each of its operating Subsidiaries, in an aggregate
principal amount not to exceed such Bank's Ratable Share of
$20,100,000, divided into;
(i) an acquisition facility not to exceed $15,390,000 (the
"Acquisition Facility"), and
(ii) a working capital facility not to exceed the lesser of
(A) $4,710,000 or (B) 80% of the amount of the Eligible Accounts
of the Company Affiliates (the "Working Capital Facility");
provided that, either (x) the Acquisition Facility shall be
reduced automatically to $10,390,000 on December 31, 1998, and the
total Revolving Credit Facility shall also be reduced accordingly, and
all Revolving Credit Advances in excess thereof shall be repaid in
full, or (y) on or before December 31, 1998, the Borrower shall repay
Revolving Credit Advances under the Acquisition Facility to the
maximum amount possible up to $5,000,000, and the Borrower shall
deliver to the Banks executed, unconditional agreements from third
parties in form and substance satisfactory to the Banks, providing for
the purchase of equity securities and/or the issuance of subordinated
debt of the Borrower for a total to be paid to the Borrower equal to
or greater than $5,000,000 minus the amount of Revolving Credit
Advances repaid under this subsection (y), and after December 31, 1998
the Acquisition Facility and the total Revolving Credit Facility shall
be reduced and the Revolving Credit Advances paid as set forth in
subsection (x) above on or before the date set forth for the
consummation of such agreements (which date shall be satisfactory to
the Banks in their sole discretion).
(the various limitations required in this subsection (a) being
herein referred to as the "Revolving Credit Limits").
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5. Increase in Base Rate. Section 4.01 (b)(i) shall be amended
effective on October 1, 1998, to provide that interest on Base Rate Loans will
be payable at an annual rate equal to the Base Rate plus .75% and conforming
changes shall be deemed made throughout the Loan Documents.
6. Increase in Applicable Margin. Section 4.01 (a) shall be amended to
read in full as follows, effective on October 1, 1998:
(a) The Applicable Margin for LIBOR Loans shall be equal to three and
one-half percent (3.5%).
7. Minimum Cash Flow. Section 9.01 shall be amended to change the
scheduled ratios as follows:
Fiscal Quarters Ending
in the Following Periods Amount
------------------------ ------
10/1/98 through 12/31/98 $5,700,000
1/l/99 through 6/30/99 5,700,000
7/1/99 through 9/30/99 6,250,000
thereafter 7,500,000
8. Ratio of Funded Debt to Cash Flow. Section 9.02 shall be amended to
change the scheduled ratios to read in full as follows:
Fiscal Quarters Ending
in the Following Periods Ratio
------------------------ -----
7/1/98 through 9/30/99 3.60 to 1.0
10/1/98 through 12/31/98 3.30 to 1.0
1/1/99 through 3/31/99 3.50 to 1.0
4/1/99 through 6/30/99 3.30 to 1.0
thereafter 3.00 to 1.0
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9. Cash Flow Coverage. Section 9.03 shall be amended to read in full as
follows:
Section 9.03. Cash Flow Coverage. The Company Affiliates will not
permit the ratio of Adjusted Cash Flow to Fixed Charges, for any period of
four consecutive fiscal quarters ending as set forth below, to be less than
the following ratios:
Fiscal Quarters Ending
In the Following Periods Ratio
------------------------ -----
10/01/98 through 12/31/98 1.20 to 1.0
01/01/99 through 03/31/99 1.00 to 1.0
04/01/99 through 06/30/99 1.00 to 1.0
thereafter 1.50 to 1.0
10. Minimum Capitalization. Section 9.04 shall be amended to add
thereto the following:
provided that, the dollar amount set forth in subsection (a) above
shall be reduced to $38,000,000 if and only if the entire Southeast Unit of the
Company Affiliates is sold in one transaction on or before December 31, 1998 and
the Borrower incurs restructuring charges with respect to such sale in its
fiscal quarter ended December 31, 1998 not to exceed $6,150,000.
11. Restriction on Acquisitions. Section 9.10 is hereby amended to read
in full as follows:
Section 9-10. Restriction on Acquisitions. No Company Affiliate shall
create or acquire any new Company Affiliate, acquire all or a substantial
portion of the assets or securities of any other Person, or assume or agree
to discharge the liabilities or obligations of any other Person, or agree
to do any of the foregoing (by merger, consolidation or otherwise).
12. Default. Section 10.01 (i) is hereby amended to read in full as
follows:
(i) The dissolution, merger, consolidation, or the sale or change in
control (as "control" is defined in Rule l2b-2 under the Securities
Exchange Act of 1934 as amended) of Borrower, or transfer of any
substantial portion of Borrower's assets, or if any agreement for such
dissolution, merger, consolidation, change in control, sale or transfer is
entered into by Borrower. There shall be conclusively presumed to have been
a change in control if any one of the Chief Executive Officer, Chief
Financial Officer or Chief Operating Officer of Borrower ceases to serve in
such capacity for whatever reason
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and is not replaced within sixty (60) days with a person reasonably
satisfactory to the Required Banks;
13. Fees. The Company Affiliates hereby confirm that (a) they will pay
to the Banks a restructuring fee of $150,000, payable $50,000 on the date
hereof, and $100,000 on January 2, 1999, provided that the latter payment shall
be waived if (i) the Acquisition Facility is reduced to $10,390,000 on December
31, 1998 and outstanding Revolving Credit Advances are equal to or less than the
Revolving Credit Limits, or (ii) the Banks receive the agreements described in
the proviso to Section 2.01 (a), (b) they will pay to the Agent collateral audit
fees promptly when billed. and (c) they will pay the legal fees of the Agent and
the Banks on the date hereof and thereafter as billed.
14. Representations and Covenants. The Company Affiliates certify that
all representations and warranties contained in the Credit Agreement including
without limitation the schedules thereto, are true, correct and complete on and
as of the date hereof, that there has been no material adverse change in the
Company Affiliates' consolidated operations, properties, or condition, financial
or otherwise, and that no Default or Event of Default is in existence on the
date hereof or will be in existence after giving effect hereto.
15. Ratification. Other than as specifically set forth herein, the
Company Affiliates hereby ratify and confirm the Credit Agreement and all other
Loan Documents, and confirms that (a) all of the foregoing remain in full force
and effect, (b) each of the foregoing is enforceable against each Company
Affiliate in accordance with its terms, and (c) no Company Affiliate has any
defense to its obligations, and no claims, relative to the Credit Agreement.
16. Miscellaneous. Article XII of the Credit Agreement is incorporated
herein by this reference and shall apply to this Amendment. Execution of this
Amendment shall not constitute an agreement by the Agent or any Bank to execute
any other amendment or
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modification of or waiver with respect to the Credit Agreement or any other Loan
Document. References to the Credit Agreement in any document relating thereto
shall be deemed to include this Amendment. This Amendment may be executed in
counterparts.
IN WITNESS WHEREOF, the Company Affiliates, the Agent and the Banks
have caused this Amendment to be duly executed and delivered as of the date and
year first above written.
FIRST UNION NATIONAL BANK, for itself and
as Agent
By: /s/ Xxxxxxx X. XxXxx
---------------------------------
Name: Xxxxxxx X. XxXxx
Title: Vice President
Address: Broad & Xxxxxxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000
With a copy to:
First Union National Bank
Meetinghouse Business Center
0000 Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
COMMERCE BANK, N.A.
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
Address:
0000 Xxxxx 00 Xxxx
Xxxxxx Xxxx, XX 00000
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IMAGEMAX, INC.
IMAGEMAX OF INDIANA, INC.
IMAGEMAX OF SOUTH CAROLINA, INC.
IMAGEMAX OF TENNESSEE, INC.
IMAGEMAX OF ARIZONA, INC.
IMAGEMAX OF NEBRASKA, INC.
IMAGEMAX OF OHIO, INC.
IMAGEMAX OF NEW YORK, INC.
IMAGEMAX OF OREGON, INC.
IMAGEMAX OF CALIFORNIA, INC.
IMAGEMAX OF VIRGINIA, INC.
AMMCORP ACQUISITION CORP.
IMAGEMAX OF DELAWARE, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx
Treasurer
Address: 0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: President
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Exhibit 2.01
Banks and Ratable Shares
Revolving Credit
Facility
----------------
First Union National Bank, 13,400,000
Successor by merger to
CoreStates Bank, N.A.
Xxxxx & Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Commerce Bank, N.A. 6,700,000
0000 Xxxxx 00 Xxxx
Xxxxxx Xxxx, XX 00000
----------
20,100,000
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