LOAN AGREEMENT
by and between
QMS, INC.
and
MINOLTA CO., LTD.
Dated as of June 7, 1999
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
LOAN AGREEMENT, dated as of June 7, 1999, by and between QMS, INC., a
Delaware corporation (the "Borrower"), and MINOLTA CO., LTD., a Japanese
corporation (together with its successors and permitted assigns, the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has entered into a Share Purchase Agreement (as
amended from time to time, the "Subsidiaries Stock Purchase Agreement"), dated
as of May 17, 1999, with Alto Imaging Group N.V. and Jalak Investments B.V., for
the purchase of all of the issued and outstanding shares of the capital stock of
QMS Europe B.V., a company organized and existing under the laws of The
Netherlands ("QMS Europe"), and QMS Australia PTY Ltd., a company organized and
existing under the laws of Victoria, Australia ("QMS Australia");
WHEREAS, the Lender and Borrower have entered into a Stock Purchase
Agreement, of even date herewith, for the purchase of two million one hundred
and thirty thousand (2,130,000) shares of common stock, par value $0.01 per
share, of the Borrower, representing approximately nineteen and nine-tenths of a
percent (19.9%) of all issued and outstanding shares of the capital stock of the
Borrower (as amended from time to time, the "Borrower Stock Purchase
Agreement"); and
WHEREAS, to finance a portion of the purchase price of the capital
stock of QMS Europe and QMS Australia, the Borrower has requested that the
Lender make available, and the Lender has agreed to make available, a term loan
facility under which the Lender makes a term loan to the Borrower of up to
twelve million and eight hundred thousand Dollars ($12,800,000) in aggregate
principal amount outstanding upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms have the
following meanings:
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person and includes each officer, director, general partner or joint-venturer of
such Person, and each Person who is the beneficial owner of ten percent (10%) or
more of any class of voting Stock of such Person. For the purposes of this
definition, "control" means the possession of the power to direct or cause the
direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Loan Agreement, together with all Exhibits and
Schedules hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"Applicable Margin" means, as of any date, a rate equal to two and one-half
percent (2.5%) per annum; provided, however, that, in the event pursuant to
Section 2.8 the Loan bear interest by reference to the Base Rate, the
"Applicable Margin" shall be zero.
"Australian Stock Pledge Agreement" means the Share Mortgage, substantially
in the form of Exhibit B-1 hereto, dated as of the date hereof, by and between
the Borrower and the Lender, pursuant to which the Borrower grants to the Lender
a first-priority equitable interest on one hundred percent (100%) of all of the
issued and outstanding share capital of QMS Australia, as such agreement may be
amended, supplemented or modified from time to time.
"Base Rate" means, on any day, a fluctuating interest rate per annum as
shall be in effect from time to time equal to the U.S. "prime rate" as published
in the Wall Street Journal on the most recent Business Day.
"Borrower" has the meaning ascribed to such term in the preamble hereto.
"Borrower Stock Purchase Agreement" has the meaning ascribed to such term
in the recitals hereto.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City or Tokyo and a day on which dealings in
Dollar deposits are also carried on in the London interbank market.
"Change of Control" means any of the following:
(a) The acquisition, other than by the Lender or its Affiliates, by any
Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the U.S.
Securities Exchange Act of 1934 (as amended, the "Exchange Act")) of beneficial
ownership of twenty-five percent (25%) or more of the outstanding voting
securities of the Borrower, but excluding, for this purpose, any such
acquisition if, at the time of such acquisition, the Lender together with its
Affiliates owns at least a majority of the outstanding voting securities of the
Borrower on a fully-diluted basis.
(b) Individuals who, as of the date hereof, constitute the Board of Directors
of the Borrower (the "Incumbent Board") cease for any reason to constitute at
least a majority of such Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination for
election, by the Borrower's stockholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Borrower (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); provided, however,
that any that any individual becoming a director subsequent to the date hereof
who shall have been elected or nominated for election by the Lender (including,
without limitation, pursuant to Section 2.3 of the Borrower Stock Purchase
Agreement) shall be considered as though such individual were a member of the
Incumbent Board.
(c) Approval by the stockholders of the Borrower of a reorganization, merger or
consolidation, in each case with respect to which all or substantially all of
the individuals and entities who were the respective beneficial owners of the
voting securities of the Borrower immediately prior to such reorganization,
merger or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation
resulting from such reorganization, merger or consolidation.
(d) The sale or other disposition of all or substantially all the assets of the
Borrower in one transaction or series of related transactions.
(e) An agreement to the effect of any of the foregoing.
"Closing" means the funding of the Loan pursuant to Section 2.1(b) upon
fulfillment of the applicable conditions set forth in Article 3.
"Closing Date" means the date on which the Closing occurs, which is
anticipated to occur on June 7, 1999, or such later date as the Lender and the
Borrower may mutually agree.
"Collateral" means the shares in which the Lender has a perfected first-
priority security interest (or a first-priority equitable interest, as the case
may be) pursuant to the Stock Pledge Agreements .
"Customary Permitted Liens" means:
(i) Liens with respect to the payment of Taxes, assessments or
governmental charges in all cases which are not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP consistently applied;
(ii) Statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other Liens imposed by
law created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being., maintained in accordance with GAAP consistently applied;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance
or other types of social security benefits or to secure the performance of
bids, tenders, sales, contracts (other than for the repayment of borrowed
money), surety, appeal and performance bonds and contractual landlord
liens; provided, however, that (A) all such Liens do not in the aggregate
materially detract from the value of the Borrower's assets or property or
materially impair the use thereof in the operation of its business, and (B)
all Liens of attachment or judgment and Liens securing bonds to stay
judgments or in connection with appeals do not secure at any time an
aggregate amount exceeding one million Dollars ($1,000,000); and
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of real property which do not materially interfere with the ordinary
conduct of the business of the Borrower.
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be recorded
as capital leases in accordance with GAAP consistently applied, and the present
value of all future rental payments under all synthetic leases and
(v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above.
"Default" means an event which, with the giving of notice or lapse of time,
or both, would constitute an Event of Default.
"Dollars" and "$" mean the lawful money of the United States of America.
"European Stock Pledge Agreement" means the Stock Pledge Agreement,
substantially in the form of Exhibit B-2 hereto, dated as of the date hereof, by
and between the Borrower and the Lender, pursuant to which the Borrower grants
to the Lender a perfected first priority security interest on one hundred
percent (100%) of all of the issued and outstanding share capital of QMS Europe,
as such agreement may be amended, supplemented or modified from time to time.
"Event of Default" means any of the occurrences set forth in Section 6.1
after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 6.1.
"Foothill Credit Facility" means the Loan and Security Agreement, dated as
of November 7, 1995, by and between the Borrower and Foothill Capital
Corporation, as amended.
"GAAP" means generally accepted accounting principles utilized in the
United States, as set forth in the Statement on Auditing Standards No. 69
entitled "The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles in the Independent Auditors Report" promulgated by the
American Institute of Certified Public Accountants (or any successor statement
or amendment thereto) in effect on the date hereof unless otherwise specified
herein as in effect on another date or dates.
"Indemnitees" has the meaning ascribed to such term in Section 7.8.
"Interest Payment Date" means the last day of each Interest Period.
"Interest Period" means the time period from the eleventh (11th) day of
each calendar month through the tenth (10th) day of the next succeeding calendar
month; provided, however, that (a) if any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day or, if such Business Day falls in the next calendar
month, on the next preceding Business Day, (b) each successive Interest Period
shall commence on the day on which the next preceding Interest Period expires
and (c) when interest first accrues to any Obligation, the first "Interest
Period" in respect of such Obligation shall be the time period from the time
such interest first accrues until the tenth (10th) day of the next succeeding
calendar month.
"Interest Rate Determination Date" has the meaning ascribed to such term in
Section 2.8(a).
"Lender" has the meaning ascribed to such term in the preamble hereto.
"Lending Office" means the office or offices of the Lender set forth
opposite such Lender's name under the heading "Lending Office" on the signature
pages hereof or such other office or offices of such Lender as it may from time
to time specify by written notice to the Borrower.
"LIBO Rate" means, with respect to any applicable Interest Period , an
interest rate per annum determined by the Lender to be the British Banker's
Association's London interbank offered rate (rounded upward to the nearest whole
multiple of one sixteenth (1/16) of one percent (1%) per annum) for deposits in
Dollars for the applicable Interest Period which appears on Dow Xxxxx Markets
Telerate Page 3750 (or any successor page) at approximately 11:00 A.M. (London
time) on the second full Business Day next preceding the first day of such
Interest Period (unless such date is not a Business Day, in which event the next
succeeding Business Day will be used) as the London interbank offered rate for
deposits in Dollars for a term comparable to such Interest Period. In the event
that such rate does not appear on Dow Xxxxx Markets Telerate Page 3750 (or on
any successor page or otherwise on the Dow Xxxxx Markets screen), the LIBO Rate
for the purposes of this definition shall be determined by reference to such
other comparable publicly available service for displaying LIBO rates as may be
selected by the Lender.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Debt or other obligation, including, without limitation, any
conditional sale or other title retention agreement, the interest of a lessor
under leases which shall have been or should be, in accordance with GAAP
consistently applied, recorded as capital leases, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the UCC or comparable law of any jurisdiction, of any financing statement
naming the owner of the asset to which such Lien relates as debtor.
"Loan" has the meaning ascribed to such term in Section 2.1(a).
"Loan Documents" means this Agreement, the Note, the Stock Pledge
Agreements and any other document or instrument executed and delivered by the
Borrower or the Lender in connection with this Agreement.
"Note" has the meaning ascribed to such term in Section 2.1(a).
"Obligations" means all loans, advances, debts, liabilities, obligations,
covenants and duties of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, due to the Lender from
Borrower, arising under this Agreement, the Note, the other Loan Documents,
whether or not for the payment of money, whether arising by reason of an
extension of credit, opening of a letter of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
or hereafter arising and however acquired, together with all interest, charges,
expenses, attorneys' fees and other sums chargeable to the Borrower under this
Agreement (it being understood and agreed that "Obligations" shall not include
obligations of the Borrower to the Lender in respect of trade payables that do
not arise out of or in connection with this Agreement or the other Loan
Documents).
"Person" means 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.
"Permitted Credit Facilities" means either (i) a revolving credit facility
to be made available to the Borrower after the Closing Date, which facility (A)
shall have a termination date at least three (3) years after the Closing Date,
(B) shall provide for loans and other financial accommodations for the Borrower
for an aggregate principal amount not in excess of thirty million Dollars
($30,000,000), (C) may be secured by a first-priority security interest or
first-priority equitable interest in the assets of the Borrower other than the
Collateral and (D) is on terms and conditions reasonably satisfactory to the
Lender or (ii) the Foothill Credit Facility; provided, however, that (A) such
facility is amended to authorize the transactions contemplated in the Borrower
Stock Purchase Agreement, this Loan Agreement and the other Loan Documents and
(B) such facility is otherwise amended to meet the requirements of clause (i) of
this definition.
"QMS Australia" has the meaning ascribed to such term in the recitals
hereto.
"QMS Europe" has the meaning ascribed to such term in the recitals hereto.
"Stock Pledge Agreements" means the European Stock Pledge Agreement and the
Australian Stock Pledge Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other business entity of which an
aggregate of more than fifty percent (50%) of the issued and outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors, managers, trustees or other controlling persons, is, at the time,
directly or indirectly, owned or controlled by such Person and/or one or more
Subsidiaries of such Person (irrespective of whether, at the time, Stock of any
other class or classes of such entity shall have or might have voting power by
reason of the happening of any contingency).
"Subsidiaries Stock Purchase Agreement" has the meaning ascribed to such
term in the recitals hereto.
"Taxes" has the meaning ascribed to such term in Section 2.9(a).
"Termination Date" means the day which is the earlier of (A) June 10, 2003
or (B) the payment in full of the Obligations.
"UCC" means the Uniform Commercial Code as enacted in the State of New
York, as it may be amended from time to time.
1.2 Computation of Time Periods. In this Agreement, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including", the words "to" and "until" each mean "to but
excluding" and the word "through" means "to and including".
1.3 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in conformity with GAAP consistently applied and all
accounting determinations required to be made pursuant hereto shall, unless
expressly otherwise provided herein, be made in conformity with GAAP
consistently applied.
1.4 Certain Terms. The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole, and not to any
particular Article, Section, subsection or clause in this Agreement. References
herein to an Exhibit, Schedule, Article, Section, subsection or clause refer to
the appropriate Exhibit or Schedule to, or Article, Section, subsection or
clause in this Agreement.
ARTICLE 2
AMOUNT AND TERM OF THE LOAN
2.1 The Loan: the Note. (a) The Lender agrees, on the terms and subject
to the conditions hereinafter set forth, to make a term loan to the Borrower in
the aggregate principal amount of up to twelve million eight hundred thousand
Dollars ($12,800,000) (the "Loan"). The Loan shall be evidenced by a promissory
note of the Borrower to the Lender substantially in the form of Exhibit A hereto
delivered to the Lender pursuant to Article 3 (Conditions of Lending) (the
"Note"), which Note shall evidence the Borrower's promise to repay principal and
interest on the Loan.
(b) Upon fulfillment of the applicable conditions set forth in Article 3
(Conditions of Lending), the Lender shall make the Loan available to the
Borrower in immediately available funds.
2.2 Use of Proceeds. The Borrower shall apply proceeds of the Loan
solely to pay in full all obligations outstanding under the Foothill Credit
Facility, to fund a portion of the Cash Balance under the Subsidiaries Share
Purchase Agreement (and as defined therein) and to pay in full expenses
incurred in connection therewith and with this Agreement; provided, however,
that the Borrower shall not be required to pay in full all obligations
outstanding under the Foothill Credit Facility in the event the Foothill Credit
Facility has become a Permitted Credit Facilities within sixty (60) days after
the Closing Date.
2.3 Repayment of Loan; Evidence of Debt. (a) The Borrower shall repay
the Loan in thirty-five (35) equal installments of three hundred fifty five
thousand five hundred Dollars ($355,500) due on the tenth (10th) day of each
calendar month starting on the full calendar month next succeeding the first
anniversary of the Closing Date until May 10, 2003 and the Borrower shall repay
the entire unpaid principal amount of the Loan on the Termination Date, and
agrees to pay in cash all unpaid interest accrued thereon, in accordance with
the terms of this Agreement and the Note, and further agrees that all
outstanding Obligations shall be paid in full on or before the Termination Date.
(b) The Lender shall maintain an account evidencing any Debt of the
Borrower to the Lender resulting from the Loan, including, without limitation,
the amounts of principal and interest payable and paid to the Lender from time
to time under this Agreement. The entries made in such account shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided, however, that the failure
of the Lender to maintain such an account or any error therein shall not in any
manner affect the obligation of the Borrower to repay the Loan in accordance
with its terms.
2.4 Optional Prepayments. The Borrower shall have no right to prepay the
principal amount of the Loan other than as provided in this Section 2.4. The
Borrower may, upon at least two (2) Business Days' prior written notice (seven
(7) Business Day's prior written notice in the case of a payment in full of the
Loan) to the Lender stating the proposed date and principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amount of the Loan in whole or in part, together with
accrued interest to the date of such prepayment on the principal amount prepaid;
provided, however, that (x) each partial prepayment shall be in an aggregate
principal amount not less than one hundred thousand Dollars ($100,000), (y) any
Loan may only be prepaid in whole or in part (i) on the expiration date of the
then applicable Interest Period or (ii) upon payment of the amounts described in
Section 2.8(d) (Compensation) and (z) any optional prepayment made under this
Section 2.4 will be applied, first, to any unpaid accrued interest to the date
of such prepayment on the principal amount prepaid and, second, to installments
due hereunder in the inverse order of their maturity.
2.5 Mandatory Prepayments. Immediately upon the occurrence of any Change
of Control, the outstanding principal of the Loan and all interest thereon and
all other amounts payable under this Agreement and the Note shall become and be
forthwith due and payable, including, without limitation, any amounts payable
pursuant to Section 2.8 (Special Interest Rate Provisions), without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower.
2.6 Interest on the Loan and other Obligations.
(a) Rate of Interest. The Loan and the outstanding principal balance
of all other Obligations shall bear interest on the unpaid principal amount
thereof from the date such Loan was made and such other Obligations are due and
payable until paid in full, except as otherwise provided in Section 2.6(c)
(Default Interest) and except that such interest rate shall not exceed the
maximum rate permitted by applicable law, at a rate per annum equal to the sum
of (A) the LIBO Rate determined for the applicable Interest Period plus (B) the
Applicable Margin.
(b) Interest Payments. Interest accrued on the Loan or all other Obligations
shall be payable in arrears (i) on each applicable Interest Payment Date, (ii)
upon the payment or prepayment thereof in full or in part and (iii) if not
theretofore paid in full, at maturity (whether by acceleration or otherwise) of
such Loan or when such other Obligation otherwise becomes due and payable
(whether by acceleration or otherwise).
(c) Default Interest. Notwithstanding the rates of interest specified in
Section 2.6(a) or elsewhere in this Agreement, effective immediately upon (i)
the occurrence of an Event of Default described in Section 6.1(a) or (b) or (ii)
the occurrence of any other Event of Default and notice from the Lender of the
effectiveness of this Section 2.6(c), and for as long thereafter as such Event
of Default shall be continuing, the principal balance of the Loan and all other
Obligations shall bear interest at a rate equal to two percent (2%) per annum in
excess of the LIBO Rate plus the Applicable Margin.
2.7 Payments and Computations. (a) The Borrower shall make each payment,
hereunder and under the Note, of principal and interest on the Loan and other
Obligations without condition or reservation of right, in immediately available
funds, not later than 11:00 A.M. (New York City time) on the day when due in
Dollars to the Lender at its address referred to in Section 7.1 (Notices, Etc.).
(b) All computations of interest shall be made by the Lender on the
basis of a three hundred and sixty (360)-day year and the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable. Each determination by the Lender of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(c) Whenever any payment hereunder or under the Note shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of payment of interest; provided, however, that if such extension
would cause payment of interest on or principal of the Loan to be made in the
next following calendar month, such payment shall be made on the next preceding
Business Day.
2.8 Special Interest Rate Provisions.
(a) Determination of Interest Rate. As soon as practicable on the second
Business Day prior to the first day of each Interest Period (the "Interest Rate
Determination Date"), the Lender shall determine (pursuant to the procedures set
forth in the definition of "LIBO Rate") the interest rate which shall apply to
the principal amount of the Loan for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to the Borrower. The
Lender's determination shall be presumed to be correct, absent manifest error,
and shall be binding upon the Borrower.
(b) Interest Rate Unascertainable, Inadequate or Unfair. In the event that at
least one (1) Business Day before the Interest Rate Determination Date:
(i) The Lender determines that adequate and fair means do not exist for
ascertaining the applicable interest rates by reference to which the LIBO Rate
then being determined is to be fixed; or
(ii) The LIBO Rate for the Loan will not adequately reflect the cost to the
Lender of obtaining funds in Dollars in the London interbank market in the
amount substantially equal to such Loan in Dollars and for a period equal to
such Interest Period; then the Lender shall forthwith give notice thereof to the
Borrower, whereupon (until the Lender notifies the Borrower that the
circumstances giving rise to such conversion no longer exist) the Loan shall
bear interest at the Base Rate plus the Applicable Margin.
(c) Illegality. If at any time the Lender determines (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties) that the making or continuation of the Loan at the LIBO Rate has become
unlawful or impermissible by compliance by the Lender with any law, governmental
rule, regulation or order of any governmental authority (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful or would result in costs or penalties), then, and in any such event,
the Lender may give notice of that determination, in writing, to the Borrower,
whereupon (until the Lender notifies the Borrower that the circumstances giving
rise to such conversion no longer exist) the Loan shall bear interest at the
Base Rate plus the Applicable Margin. If at any time after the Lender gives
notice under this Section 2.8(c) the Lender determines that the Loan may
lawfully bear interest at the LIBO Rate, the Lender shall promptly give notice
of that determination, in writing, to the Borrower. The Loan shall, upon
receipt of such notice pursuant to Section 7.1 (Notices, Etc.), bear interest at
the LIBO Rate.
(d) Compensation. In addition to all amounts required to be paid by the
Borrower pursuant to Section 2.6 (Interest on the Loan and Other Obligations),
the Borrower shall compensate the Lender, upon demand, for all losses, expenses
and liabilities (including, without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of funds acquired by the Lender to
fund or maintain the Loan to the Borrower but excluding any loss of Applicable
Margin thereon) which the Lender may sustain (i) if for any reason the Loan is
prepaid (including, without limitation, pursuant to Section 2.5 (Mandatory
Prepayments)) on a date which is not the last day of the applicable Interest
Period or (ii) as a consequence of any failure by the Borrower to repay the Loan
when required by the terms of this Agreement. The Lender shall deliver to the
Borrower concurrently with such demand a written statement in reasonable detail
as to such losses, expenses and liabilities, and this statement shall become
conclusive within thirty (30) days as to the amount of compensation due to the
Lender, absent manifest error. During such thirty (30)-day period, the Borrower
shall have the opportunity to request more detailed information if it reasonably
feels such information is necessary, and the Borrower shall be afforded a
reasonable opportunity to review and comment on the calculation (such review in
any case not to exceed thirty (30) days).
(e) Affiliates Not Obligated. No Affiliate of the Lender shall be deemed a
party to this Agreement or shall have any liability or obligation under this
Agreement.
2.9 Taxes.
(a) Payment of Taxes. Any and all payments by the Borrower hereunder or under
the Note or other document evidencing any Obligations shall be made free and
clear of and without reduction for any and all present or future taxes, levies,
imposts, deductions, charges, and all stamp or documentary taxes, excise taxes,
ad valorem taxes and other taxes imposed on the value of the property, charges
or levies which arise from the execution, delivery or registration, or from
payment or performance under, any of the Loan Documents and all other
liabilities with respect thereto excluding, any withholding taxes and taxes
imposed on or measured by net income or overall gross receipts and capital and
franchise taxes now or hereafter imposed on the Lender by (i) the United States
or any political subdivision thereof, (ii) the governmental authority of the
jurisdiction (or any political subdivision thereof) in which the Lender's
Lending Office is located or (iii) any governmental authority in the
jurisdiction in which the Lender is organized, managed and controlled or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges and withholdings being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to withhold or deduct any Taxes from or
in respect of any sum payable hereunder or under the Note or such document to
the Lender, (x) the Borrower shall make such withholding or deductions and (y)
the Borrower shall pay the full amount withheld or deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) Indemnification. The Borrower will indemnify the Lender against, and
reimburse the Lender on demand for, the full amount of all Taxes (including,
without limitation, any Taxes imposed by any governmental authority on amounts
payable under this Section 2.9 and any additional income or franchise taxes
resulting therefrom) incurred or paid by the Lender and any liability (including
penalties, interest, and out-of-pocket expenses paid to third parties) arising
therefrom or with respect thereto, whether or not such Taxes were lawfully
payable. A certificate as to any additional amount payable to any Person under
this Section 2.9 submitted by it to the Borrower shall, absent manifest error,
be final, conclusive and binding upon all parties hereto. The Lender agrees,
within a reasonable time after receiving a written request from the Borrower, to
provide the Borrower with such certificates as are reasonably required, and take
such other action as are reasonably necessary to claim such exemptions as the
Lender may be entitled to claim in respect of all or a portion of any Taxes
which are otherwise required to be paid or deducted or withheld pursuant to this
Section 2.9 in respect of any payments under this Agreement or under the Note.
(c) Receipts. Within thirty (30) days after the date of any payment of Taxes
by the Borrower, it will furnish to the Lender, at its address referred to in
Section 7.1 (Notices, Etc.), the original or a certified copy of a receipt or
other documentation reasonably satisfactory to the Lender, evidencing payment
thereof.
ARTICLE 3
CONDITIONS OF LENDING
3.1 Condition Precedent to the Loan. The obligation of the Lender to
make the Loan hereunder is subject to fulfillment (or waiver in writing by the
Lender) of the following conditions precedent (it being understood and agreed
that the delivery of the stock certificates in Section 3.1(f)(ii) shall be
deemed to have occurred simultaneously with the Closing):
(a) The Closing (as defined under the Borrower Stock Purchase Agreement) shall
have occurred and the Borrower shall have acquired all of the capital stock of
QMS Europe and QMS Australia.
(b) The representations and warranties made by the Borrower in the Borrower
Stock Purchase Agreement and in Article 4 (Representations and Warranties) shall
be true and correct on and as of the date of the Loan, before and after giving
effect to the Loan and to the application of the proceeds therefrom, as though
made on and as of such date.
(c) No event shall have occurred and be continuing, or would result from the
Loan, or from the application of the proceeds therefrom, which would constitute
a Default or an Event of Default in effect on, and as of the date of, the Loan.
(d) There shall not have occurred any material adverse change in the
consolidated assets, liabilities, operations, business, customer base, condition
(financial or otherwise) or prospects of the Borrower since April 30, 1999.
(e) The Foothill Credit Facility shall have been amended to authorize (or
Foothill Capital Corporation shall otherwise have consented in writing to) the
transactions contemplated in the Borrower Stock Purchase Agreement, this Loan
Agreement and the other Loan Documents.
(f) There shall have been delivered to the Lender on or before the Closing Date
the following, each in form and substance satisfactory to the Lender:
(i) The Note duly executed by the Borrower;
(ii) The Stock Pledge Agreements duly executed by the Borrower (together with
stock certificates and stock powers, as appropriate, and, in the case of the
Australian Stock Pledge Agreement, transfers of shares in QMS Australia duly
executed in blank by the Borrower);
(iii) A true and complete copy of the Certificate of Incorporation and By-
laws of the Borrower, and certified copies of the resolutions of the Board of
Directors of the Borrower approving this Agreement, the Stock Pledge Agreements,
the Note and all other Loan Documents delivered on the Closing Date, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement, the Stock Pledge Agreements,
the Note and such other Loan Documents;
(iv) A certificate of the Secretary or an Assistant Secretary of the Borrower
certifying the names and true signatures of the officers of the Borrower
authorized to sign this Agreement, the Stock Pledge Agreements and the Note and
other documents to be delivered hereunder to which it is a party;
(v) Favorable opinions of Hand Xxxxxxxx, LLC, as counsel for the Borrower, De
Brauw Blackstone Westbroek, as Dutch local counsel for the Borrower, and
Mallesons Xxxxxxx Xxxxxx, as Australian local counsel for the Borrower, all in
form and substance satisfactory to the Lender and its counsel;
(vi) Any document in the applicable jurisdiction necessary or appropriate for
the Lender to obtain or evidence the perfection and priority of the Lender's
first-priority security interest (or equitable interest, as the case may be) in
the Collateral; and
(vii) Such other documents and instruments (including, without limitation,
financial and other information) as the Lender shall reasonably request.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Borrower. The Borrower
represents and warrants on and as of the date hereof and on the Closing Date as
follows:
(a) The Borrower is duly incorporated, validly existing and in good standing
under the laws of Delaware, has the corporate power and authority to own its
assets and to transact the business in which it is now engaged or proposed to be
engaged.
(b) The execution, delivery and performance by the Borrower of the Loan
Documents to which it is a party have been duly authorized by all necessary
corporate actions and do not and will not (i) contravene its charter or by-laws;
(ii) violate any provision of, or require any filing, registration, consent or
approval under, any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award having applicability to the Borrower; (iii)
result in a breach of or constitute a default or require any consent under any
material indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower or its Subsidiaries are a party or by which
they or their properties may be bound or affected (including, without
limitation, the existing facilities listed on Schedule 4.1(f) and, if not repaid
in full and terminated at the Closing Date, the Foothill Credit Facility); or
(iv) cause the Borrower to be in default (with or without notice or lapse of
time or both) under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument.
(c) Each of the Loan Documents to which the Borrower is a party has been duly
executed and delivered and constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(d) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for the due
execution, delivery and performance by the Borrower of this Agreement, the Stock
Pledge Agreements, the Note or the other Loan Documents to which it is a party.
(e) Set forth on Schedule 4.1(e) is a complete and accurate list showing, as of
the date hereof, after giving effect to the share purchase contemplated in the
Subsidiaries Stock Purchase Agreement, all Subsidiaries of the Borrower and, as
to each such Subsidiary, the jurisdiction of its incorporation, the number of
shares of each class of capital stock authorized, the number outstanding on the
date hereof and the percentage of the outstanding shares of each such class
owned, directly or indirectly, by the Borrower. None of the capital stock of
any such Subsidiary is subject to any outstanding option, warrant, right of
conversion or purchase or any similar right other than those of the Borrower and
its Affiliates. All of the issued and outstanding capital stock of each such
Subsidiary has been validly issued, fully paid and non-assessable and is owned
by the Borrower (after giving effect to the share purchase contemplated in the
Subsidiaries Stock Purchase Agreement) free and clear of all Liens other than
Liens in favor of the Lender and its Affiliates. Neither the Borrower nor any
such Subsidiary is a party to, or has knowledge of, any agreement restricting
the transfer or hypothecation of any shares of capital stock of any such
Subsidiary, other than the Loan Documents. The Borrower does not own or hold
directly or indirectly, any capital stock or equity security of, or any equity
interest in, any Person other than such Subsidiaries.
(f) There are no Liens of any nature whatsoever on the Collateral or any
properties of the Borrower, any of its Subsidiaries, QMS Australia or QMS Europe
other than those permitted by Section 5.2(a) (Negative Covenants) and, in
respect of QMS Australia and QMS Europe, those listed on Schedule 4.1(f). The
Liens granted to the Lender pursuant to the Stock Pledge Agreements are fully
perfected first priority Liens in and to the Collateral.
(g) Both before and after giving effect to the Loan, the application of the
proceeds thereof in connection with Section 2.2 (Use of Proceeds) and the
payment of all estimated legal, accounting and other fees relating hereto and
thereto, (A) the value of the assets of the Borrower (both at fair value and at
present fair saleable value) will be greater than the total amount of its
liabilities (including, without limitation, contingent and unliquidated
liabilities), (B) the Borrower will be able to pay all of its liabilities as
they mature, (C) the Borrower's stockholders' equity shall be above twelve
million and eight hundred thousand Dollars ($12,800,000) and (D) the Borrower
will not have unreasonably small capital.
(h) All representations and warranties of the Borrower contained in the
Borrower Stock Purchase Agreement are true and correct.
(i) All representations and warranties of the Borrower contained in this
Agreement, the other Loan Documents, the Borrower Stock Purchase Agreement and
all certificates, documents and other information, including, without
limitation, financial information delivered by the Borrower to the Lender in
connection therewith, do not contain any untrue statement of material fact or
omit to state a material fact necessary in order to make the statements
contained therein not misleading.
ARTICLE 5
COVENANTS OF THE BORROWER
5.1 Affirmative Covenants. So long as the Note shall remain unpaid
hereunder and until all the Obligations are paid in full, the Borrower shall,
unless the Lender shall otherwise consent in writing:
(a) Corporate Maintenance. At all times maintain its corporate existence and
preserve and keep in full force and effect its rights, privileges and franchises
necessary or desirable to its business.
(b) Compliance with Laws, Etc. Comply in all material respects with (i) all
applicable laws, rules, regulations and orders and (ii) all indentures, or loan
or credit agreements or any other agreement, lease or instrument to which it is
a party or by which it or its properties may be bound or affected.
(c) Taxes. Duly file all tax returns with respect to the Borrower and its
property which are required to be filed, duly pay all taxes shown thereon to be
due and payable by the Borrower, including all quarterly tax assessments.
(d) Books and Records. Keep proper books of record and account in which
entries in conformity with GAAP consistently applied shall be made of all
dealings and transactions in relation to their businesses and activities.
(e) Inspection. Permit the Lender and its representatives at any time to
inspect the facilities, the location and condition of the Collateral and other
assets of the Borrower and the books and records thereof, to make copies and
extracts therefrom and to discuss its affairs, finances and accounts with its
officers, employees and independent auditors (and by this provision the Borrower
authorizes such independent auditors to discuss with the Lender and its
representatives such affairs, finances and accounts and to obtain all
information concerning the Borrower's business, and all financial and any other
information the Lender may require).
(f) Reporting Requirements. Furnish to the Lender:
(i) As soon as available, and in any event within ninety (90) days after the
Closing Date, an audited, pro forma consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries as of the Closing Date prepared in
accordance with GAAP consistently applied, which balance sheet gives effect to
the transactions contemplated in the Subsidiaries Stock Purchase Agreement, the
transactions contemplated hereby, and the payment or accrual of all fees and
expenses related to the foregoing;
(ii) As soon as available, and in any event within thirty (30) days after the
end of each fiscal month, consolidated and consolidating unaudited balance
sheets of the Borrower and its subsidiaries as of the end of such month and the
related statements of income, stockholders' equity and cash flow of the Borrower
and its subsidiaries for the period commencing at the beginning of the fiscal
year and ending at the close of such fiscal month, including comparative
statements which reflect the same period(s) of the previous fiscal year,
certified by the chief financial officer of the Borrower;
(iii) As soon as available, and in any event within forty-five (45) days
after the end of each fiscal quarter, consolidated and consolidating unaudited
balance sheets of the Borrower and its subsidiaries as of the end of such
quarter and the related statements of income, stockholders' equity and cash flow
of the Borrower and its subsidiaries for the period commencing at the beginning
of the then current fiscal year and ending at the close of such quarter,
including comparative statements which reflect the same period(s) of the
previous fiscal year, certified by the chief financial officer of the Borrower;
(iv) As soon as available and in any event within ninety (90) days after the end
of each fiscal year of the Borrower, a copy of the annual report for such year
for the Borrower containing financial statements for such year and consolidated
and consolidating balance sheets for the twelve month period then ended,
statements of income, stockholders' equity, cash flow and changes in
stockholders' equity of the Borrower for such fiscal year, together with
comparative information for the previous fiscal year, and copies of all reports
and management letters from independent certified public accountants to the
Borrower reasonably acceptable to the Lender, all certified by the chief
financial officer of the Borrower;
(v) As soon as possible and in any event within five (5) days after the
occurrence of each Default and Event of Default, continuing on the date of such
statement, a statement of the chief financial officer of the Borrower setting
forth details of such Default or Event of Default and the action which the
Borrower has taken and proposes to take with respect thereto;
(vi) Promptly upon the filing thereof or the mailing thereof to the public
shareholders or debt-holders of the Borrower generally, the Borrower shall
deliver to the Lender copies of all filings or reports made with the U.S.
Securities and Exchange Commission (or the governmental or quasi-governmental
entity or entities receiving substantially equivalent filings in any relevant
jurisdiction) by the Borrower or any of its subsidiaries and all communications
made by the Borrower to its shareholders generally; and
(vii) Such other information respecting the condition or operations,
financial or otherwise, of the Borrower as the Lender may from time to time
reasonably request.
(g) Further Assurances. Execute and deliver from time to time to the Lender
all such further documents and instruments and do all such other acts and things
as may be reasonably required by the Lender to enable the Lender to exercise and
enforce its rights hereunder and under the other documents referred to herein
and to perfect, continue the perfection of, preserve and protect its lien on the
Collateral.
(h) Foothill Credit Facility. On or before the sixtieth (60th) day following
the Closing Date, the Foothill Credit Facility and all Liens granted thereunder
shall have been terminated in form and substance satisfactory to the Lender or
the Foothill Credit Facility shall have become a Permitted Credit Facility and
shall remain a Permitted Credit Facility.
5.2 Negative Covenants. So long as the Note shall remain unpaid hereunder
and until all the Obligations are paid in full, the Borrower will not without
the written consent of the Lender:
(a) Create or suffer to exist, any Lien upon or with respect to any of its
properties, whether now owned or hereafter acquired, or assign any right to
receive income, in each case to secure or provide for the payment of any Debt of
any person or entity, other than (i) purchase money liens or purchase money
security interests upon or in any personal property acquired or held by the
Borrower in the ordinary course of business to secure the purchase price of such
personal property or to secure Debt incurred solely for the purpose of financing
the acquisition of such personal property, (ii) Liens existing on such
properties at the time of its acquisition (other than any such Lien created in
contemplation of such acquisition), (iii) Customary Permitted Liens and (iv)
Liens in favor of the Lender or created to secure the obligations under the
Permitted Credit Facilities; provided, however, that the aggregate principal
amount at any time outstanding of the Debt secured by the Liens referred to in
clauses (i) and (ii) above shall not exceed one million Dollars ($1,000,000);
provided, further, that the aggregate principal amount of all obligations owing
to ING Bank Corporate Investments B.V. (or its affiliates) under the ING credit
facilities listed in clause (i) of Schedule 4.1(f) shall not exceed four million
Dollars ($4,000,000).
(b) Merge or consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to,
acquire all or substantially all of the assets of, any Person or division of any
Person or materially change the nature or conduct of its business as conducted
on the date hereof.
(c) Sell, assign, pledge, grant any Lien on, transfer, dispose or otherwise
encumber the Collateral or any part thereof.
(d) Directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Debt, except for such debts,
obligations and liabilities outstanding as of the date hereof and identified as
such on Schedule 4.1(f) (other than any such liabilities under the Foothill
Credit Facility) and liabilities in respect of the Permitted Credit Facilities.
(e) Declare, pay or make any dividend or distribution on any shares of capital
stock of the Borrower or purchase, repurchase, redeem or otherwise acquire for
value any shares of any capital stock of the Borrower.
(f) Issue any new shares of capital stock or any other voting securities.
(g) Default in the repayment of any material debt or performance of any
material obligation of the Borrower or any of its Subsidiaries.
(h) Except as expressly contemplated hereby, engage in any transaction with an
Affiliate (other than transactions involving only the Borrower, the Lender
and/or wholly owned subsidiaries thereof) on terms more favorable to such
Affiliate than would have been obtainable in an arm's-length dealing.
(i) Amend, modify or otherwise change any of the terms or provisions in its
articles/certificate of incorporation, its by-laws, any document setting forth
the designation, amount, relative rights, limitations and preferences of any
class or series of capital stock of the Borrower, and in each case, any
equivalent documents as in effect on the Closing Date.
(j) Change its accounting treatment and reporting practices or tax reporting
treatment, except as required by GAAP consistently applied or law and disclosed
to the Lender; provided, however, that the Borrower may from time to time, with
the prior written consent of the Lender , change its accounting treatment and
reporting practices if it reasonably believes such change would be appropriate
to implement proposed changes in GAAP.
(k) Become an Affiliate of any Person other than the Lender.
(l) Enter into any agreement that would not permit the Borrower to (i) comply
fully with all of the provisions of this Article 5 or (ii) grant to the Lender a
perfected first-priority exclusive Lien on the Collateral.
ARTICLE 6
EVENTS OF DEFAULT
6.1 Events of Default. If any of the following Events of Default shall
occur and be continuing:
(a) The Borrower shall fail to pay any principal of the Note when the same
becomes due and payable and such non-payment continues for a period of more than
five (5) days; or
(b) The Borrower shall fail to pay any interest on the Note or any other amount
payable hereunder or under any of the other Loan Documents to which it is a
party when the same becomes due and payable and such non-payment continues for a
period of more than five (5) days; or
(c) Any representation or warranty made by the Borrower herein or in the other
Loan Documents to which it is a party or in any certificate agreement or
statement contemplated by or made and delivered to the Lender in connection with
this Agreement shall prove to have been incorrect in any material respect when
made; or
(d) The Borrower shall (i) fail to perform or observe any term, covenant or
agreement binding on such Person under Section 5.1(a) (Corporate Maintenance) or
Section 5.1(e) (Inspection), or Section 5.2 (Negative Covenants) or (ii) default
in the performance or compliance with any term contained in this Agreement
(other than as covered by paragraphs (a), (b) or (c) or clause (i) of this
paragraph (d) of this Section 6.1) or any default or event of default shall
occur under any of the other Loan Documents and such default or event of default
continues for a period of more than thirty (30) days after the occurrence
thereof; or
(e) The Borrower shall fail to pay any principal of or premium or interest on
any Debt (but excluding Debt evidenced by the Note) of the Borrower that has an
aggregate principal amount in excess of one million Dollar ($1,000,000), when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or
(f) The Borrower shall generally not pay its debts as such debts become due, or
shall admit in writing their inability to pay its debts generally, or shall make
a general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower seeking to adjudicate it bankrupt or
insolvent, or seeking the liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of the Borrower or of its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for either of them or for
any substantial part of their property and, in the case of any such proceeding
instituted against either of them (but not instituted by either of them), either
such proceeding shall remain undismissed or unstayed for a period of 45 days, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, either of them or for any substantial
part of their property) shall occur; or the Borrower shall take any corporate
action to authorize any of the actions set forth above in this subsection (f);
or
(g) Any judgment or order for the payment of money in excess of five hundred
thousand Dollars ($500,000) shall be rendered against the Borrower and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of ten consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(h) Any default under, or Event of Default as defined in, any of the Permitted
Credit Facilities) shall have occurred and be continuing which has not been
waived in accordance with the terms of the Permitted Credit Facilities; or
(i) This Agreement, the Note or the Stock Pledge Agreements shall, at any time
after their respective execution and delivery and for any reason, cease to be in
full force and effect or shall be declared null and void and not replaced by
substantially similar instruments in form and substance reasonably satisfactory
to the Lender, or the validity or enforceability thereof or the security
interests (or equitable interests, as the case may be) granted thereunder shall
be contested by the Borrower, or the Borrower shall deny that such person has
any further liability or obligation under this Agreement, the Note or the Stock
Pledge Agreements, as the case may be; then, and in any such event, the Lender
may, by notice to the Borrower, declare the Note, all interest thereon and all
of the Obligations to be forthwith due and payable, whereupon the Note, all
such interest and all of the Obligations shall become and be forthwith due
and payable, without presentment, demand, protest, or further notice of any
kind, all of which are hereby expressly waived by the Borrower; provided,
however, that in the event of an actual or deemed entry of an order for
relief with respect to the Borrower under the Federal Bankruptcy Code, the
Loan, the Note, all such interest and all the Obligations shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower.
Notwithstanding any other rights the Lender may have under applicable law and
hereunder, the Borrower agrees that upon the occurrence and during the
continuance of an Event of Default, the Lender shall have the right
to apply (including by way of set-off) any of the property of the Borrower held
by the Lender or thereafter coming into the Lender's possession (including
account balances of the Borrower) to a reduction of the Obligations of the
Borrower.
ARTICLE 7
MISCELLANEOUS Amendments, Etc. No amendment or waiver of any provision of this
Agreement or the Note, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
7.1 Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at its address at Xxx Xxxxxx Xxxx, Xxxxxx, XX
00000, Attention: Chief Executive Officer, Fax: (000) 000-0000, with a copy to
Hand Xxxxxxxx, LLC, First Xxxxxxxx Xxxx Xxxxxxxx, Xxxxx 0000, Xxxxxx, XX 00000,
Attention: Xxxxxxx X. Xxxxx, Esq., Fax: (000) 000-0000; and if to the Lender,
at its address at 3-13, 2-Chome, Xxxxxx-Xxxxx, Xxxx-Xx, Xxxxx 000-0000, Xxxxx,
Attention: General Manager of Finance Division, Fax: 000-00-0-0000-0000, with a
copy to Weil, Gotshal & Xxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Fax:
(000) 000-0000, Attention: Xxxxxxx X. Xxxxx, Esq.; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other party. All such notices and communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, be effective when deposited in the
mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or redelivered to the cable company, respectively, except that
notices to the Lender pursuant to the provisions of Article 2 (Amount and Term
of the Loan) shall not be effective until received by the Lender.
7.2 No Waiver; Remedies. No failure on the part of the Lender to exercise, and
no delay in exercising, any right hereunder or under the Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
7.3 Costs, Expenses and Taxes. The Borrower agrees to pay on demand all
reasonable costs and expenses in connection with the preparation, execution,
delivery, administration, modification and amendment of this Agreement, the
Note, the Stock Pledge Agreements and the other Loan Documents, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Lender with respect thereto and with respect to advising the Lender as
to its rights and responsibilities under this Agreement. The Borrower further
agrees to pay after an Event of Default on demand all costs and expenses, if any
(including reasonable counsel fees and expenses), (i) in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Note, the Stock Pledge Agreements and the other Loan
Documents, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 7.3; (ii) in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work out" or in any insolvency
or bankruptcy proceeding; and (iii) in commencing, defending or intervening in
any litigation or in filing a petition, complaint, motion or other pleadings in
any legal proceeding relating to the Obligations, the Collateral, the Borrower
and related to or arising out of the transactions contemplated hereby or by any
of the other Loan Documents. In addition, the Borrower shall pay any and all
stamp and other taxes (other than those taxes excluded pursuant to Section 2.9
(Taxes)) payable or determined to be payable in connection with the execution
and delivery of this Agreement, the Note, the Stock Pledge Agreements and the
other Loan Documents to be delivered hereunder, and agrees to save the Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes.
7.4 Right of Set-off. Upon the occurrence and during the continuance of an
Event of Default, the Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any Debt at
any time owing by the Lender to or for the credit or the account of the Borrower
against any and all of the Obligations of the Borrower now or hereafter
existing, whether or not the Lender shall have made any demand under this
Agreement, the Note or any other Loan Document and although such Obligations may
be unmatured. The Lender agrees promptly to notify the Borrower after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Lender
under this Section 7.4 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Lender may have.
7.5 Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Lender and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lender. The Lender may assign all or a portion of its rights and obligations
under this Agreement upon notice to the Borrower.
7.6 Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. One or more counterparts
of this Agreement (or portions hereof) may be delivered via telecopier, with the
intention that they shall have the same effect as an original counterpart hereof
(or such portions hereof). All signature pages need not be on the same
counterpart.
7.7 Entire Agreement; Severability of Provisions. The Loan Documents contain
the entire agreement of the parties hereto and supersede all prior agreements
and understandings, oral and otherwise, among the parties hereto with respect to
the matters contained in the Loan Documents. If any provision of this Agreement
or the application thereof to any Person or circumstance is invalid or
unenforceable, or contravenes any law, regulation or document applicable to such
Person, such provision or application shall be deemed ineffective ab initio, but
the remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected thereby, and the provisions of
this Agreement shall be severable in any such instances.
7.8 Indemnification. The Borrower agrees to indemnify the Lender and its
Affiliates and each of their respective stockholders, directors, officers,
agents, attorneys and employees, and the successors and assigns of the foregoing
(collectively, "Indemnitees"), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against any Indemnitee in any way relating to or
arising out of the Loan Documents or any related transactions (whether actual or
proposed), or any action taken or omitted by the Lender under the Loan
Documents; provided, however, that the Borrower shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of such Indemnitee as determined in a final,
non-appealable judgment by a court of competent jurisdiction. The foregoing
agreements shall survive the making and repayment of the Loan.
7.9 Governing Law. This Agreement and the Note shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
agreements entered into and to be executed entirely within the State of New
York.
7.10 Consent to Jurisdiction. The Borrower represents that it has no immunity
with respect to any action or proceeding brought in connection with this
Agreement or the other Loan Documents, and agrees that any legal or equitable
action or proceeding with respect to this Agreement, the Note or the other Loan
Documents to which it is a party or the enforcement thereof may be brought in
any Federal or State court of competent jurisdiction located in the City of New
York and, by execution and delivery of this Agreement, it accepts for itself and
its property, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts and any related appellate court, irrevocably agrees to be bound
by any judgment rendered thereby in connection with this Agreement or the other
Loan Documents, and irrevocably waives any objection it may now or hereafter
have as to the venue of any such action or proceeding brought in such a court or
that such court is an inconvenient forum. The Borrower consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by mailing of copies thereof by registered mail, postage prepaid,
such service to become effective seven (7) Business Days after such mailing.
Nothing herein shall affect the Lender's right to serve process in any other
manner prescribed by law or the right to bring legal or equitable actions or
proceedings in other competent jurisdictions. Any judicial proceeding by the
Borrower against the Lender involving, directly or indirectly, any matter in any
way arising out of, related to or connected with this Agreement, the Note or the
other Loan Documents shall be brought only in a court located in the City of New
York. EACH OF BORROWER AND THE LENDER HEREBY WAIVES TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING BROUGHT BY THE BORROWER OR THE LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
QMS, INC.
By:/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman/President
MINOLTA CO., LTD.
By:/s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Director
Exhibit A to Loan Agreement
PROMISSORY NOTE
QMS, INC.
U.S. $12,800,000 June 7, 1999
Lender: Minolta Co., Ltd. New York, New York
For value received, the undersigned, QMS, INC., a Delaware corporation (the
"Borrower"), promises to pay to the order of the Lender set forth above
(the "Lender"), the principal sum of twelve million and eight hundred thousand
United States dollars ($12,800,000), or, if less, the unpaid principal amount of
the Loan (as defined in the Loan Agreement referred to below) of the Lender to
the Borrower, payable at such times, and in such amounts, as are specified in
the Loan Agreement.
The Borrower also promises to pay interest on the unpaid principal amount
of the Loan from the date hereof until paid at the rates (which shall not exceed
the maximum rate permitted by applicable law) and at the times determined in
accordance with the provisions of that certain Loan Agreement, dated as of June
7, 1999, by and between the Lender and the Borrower (including all annexes,
exhibits and schedules thereto and as the same may be amended, restated,
modified or supplemented from time to time, the "Loan Agreement").
This Promissory Note is issued pursuant to, and is entitled to the benefits
of, the Loan Agreement and the other Loan Documents, to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Loan evidenced hereby are made and are to be repaid. Capitalized
terms defined in the Loan Agreement and not otherwise defined herein are used
herein with the meanings so defined.
All payments of principal and interest in respect of this Promissory Note
shall be made to the Lender not later than 11:00 A.M. (New York City time) on
the date and at the place due, to the Lender's account in lawful money of the
United States of America in same day funds.
This Promissory Note may be prepaid at the option of the Borrower as
provided in Section 2.4 (Optional Prepayments) of the Loan Agreement and must be
prepaid in accordance with such section.
The Loan Agreement and this Promissory Note shall be governed by, and shall
be construed and enforced in accordance with, the laws of the State of New York.
Upon the occurrence of any one or more of certain Events of Default, the
unpaid balance of the principal amount of this Promissory Note may become, and
upon the occurrence and continuation of any one or more of certain other Events
of Default, such unpaid balance may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provisions of this
Promissory Note, the Loan Agreement or the other Loan Documents shall alter or
impair the obligation of the Borrower, which is absolute and unconditional, to
pay the principal of and interest on this Promissory Note at the place, at the
respective times, and in the currency herein prescribed.
The Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees and disbursements incurred in the collection and enforcement of
this Promissory Note or any appeal of a judgment rendered thereon all in
accordance with the provisions of the Loan Agreement. Time is of the essence in
respect of this Promissory Note. The Borrower hereby waives diligence,
presentment, protest, demand and notice of every kind except as required
pursuant to the Loan Agreement and to the full extent permitted by law the right
to plead any statute of limitations as a defense to any demands hereunder.
This Promissory Note is secured by certain of the Loan Documents, and
reference is made to such Loan Documents for the terms and conditions governing
the collateral security for the Obligations of the Borrower hereunder.
* * *
IN WITNESS WHEREOF, the Borrower has caused this Promissory Note to be
executed and delivered by its duly authorized officer, as of the day and year
and at the place first above written.
QMS, INC.
By:/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman/President
SCHEDULE 4.1 (E)
TO LOAN AGREEMENT
Subsidiaries of QMS, Inc.
1. QMS CIRCUITS, INC.
(100% Owned by QMS, Inc.)
State of Domicile: Florida
2. QMS CANADA, INC.
(100% Owned by QMS, Inc.)
State of Domicile: Ontario, Canada
3. QMS KABUSHIKI KAISHA
(100% Owned by QMS, Inc.)
State of Domicile: Tokyo, Japan
4. QMS EUROPE B.V.
(100% Owned by QMS, Inc.)
State of Domicile: The Netherlands
5. QMS AUSTRALIA PTY LTD.
(100% Owned by QMS, Inc.)
State of Domicile: Australia
Subsidiaries of QMS Europe B. V.
1. QMS GmbH
(100% Owned by QMS Europe B.V.)
State of Domicile: Munich, Germany
2. QMS SARL
(100% Owned by QMS Europe B.V.)
State of Domicile: Paris, France
3. QMS (UK) Ltd.
(100% Owned by QMS Europe B.V.)
State of Domicile: Egham, United Kingdom
4. QMS Nordic AB
(100% Owned by QMS Europe B.V.)
State of Domicile: Stockholm, Sweden
SCHEDULE 4.1 (F)
TO LOAN AGREEMENT
Liens on Assets of QMS Europe B.V. and QMS Australia Pty, Ltd.
Liens upon accounts, receivables and other personal property of QMS Europe
B.V. arising in connection with (i) three (3) Loan Agreements, dated as January
22, 1999, and January 25, 1999, by and among ING Bank Corporate Investments B.V.
and NMB-Xxxxxx N.V., QMS Europe B.V., Alto Imaging Group N.V. and Jalak
Investments B.V., with each Agreement providing a loan in the amount of NLG
2,650,000.00, and (ii) the Agreement on Advances and the Provision of Services,
Also Being a General Deed of Pledge, dated as of February 8, 1999, by and
between NMB-Xxxxxx N.V. and QMS Europe B.V., and related agreements, providing
for an inventory and accounts receivable based revolving credit facility, and
all amendments, supplements and modifications to any such agreements.
