Exhibit 10.40
EXECUTION COPY
================================================================================
AGREEMENT
among
printCafe, Inc.,
as Borrower,
printCafe Systems, Inc.,
as Merger Subsidiary
and
Xxxxxx X. Xxxxxxxx, Xxxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxx,
as Lenders
Dated as of December 31, 2001
================================================================================
i
SCHEDULES:
---------
1.1 Shareholder Notes
2.2 Notes
3.2 Subsidiaries; Joint Ventures
3.4 Governmental Consents
3.5 Litigation
3.6 Intellectual Property
3.8 Compliance With Other Instruments
3.9 Agreements; Actions
3.10 Conflicts of Interest
3.13 Changes
3.15 Tax Returns and Payments
3.17 Employee Benefit Plans
3.18 Labor Agreements and Actions
3.20 Permits
3.22 Compliance With Other Laws
3.26 Security Agreements
6.2(c) Indebtedness
6.4 Permitted Liens
EXHIBITS:
--------
A Form of Note
B Form of Guarantee and Collateral Agreement
C Form of Compliance Certificate
D Form of Closing Certificate
E Form of Assignment and Acceptance
ii
F Form of Legal Opinion
G Form of First Amendment to Lease Agreement
H Form of Guarantee
iii
AGREEMENT (this "AGREEMENT"), dated as of December 31, 2001, between
printCafe, Inc., a Delaware corporation (the "BORROWER"), printCafe Systems,
Inc., a Delaware corporation (the "MERGER SUBSIDIARY") and Xxxxxx X. Xxxxxxxx,
Xxxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxx (collectively, the "LENDERS").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Merger by and
among the Borrower, the Merger Subsidiary, and each of the Lenders dated
February 22, 2000 (the "Merger Agreement"), the Borrower issued to the Lenders,
as the Notes Consideration (as defined in the Merger Agreement) payable in
connection with the Merger referred to in and contemplated by the Merger
Agreement, the Existing Notes (as hereinafter defined);
WHEREAS, the Borrower has requested that the Lenders (i) consent to a
delay in the payment of a portion of the principal amount of the Indebtedness
(as hereinafter defined) evidenced by the Existing Notes, and (ii) accept, in
consideration for such consent, new promissory notes of the Borrower, evidencing
the Indebtedness evidenced by the Existing Notes but incorporating modified and
additional terms, to be issued in substitution for the Existing Notes; and
WHEREAS, the Borrower and the Lenders desire, by this Agreement, to
further specify the terms of such Indebtedness and set forth other agreements
among them with respect to various other matters;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"AFFILIATE": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"AGREEMENT": as defined in the preamble hereto.
"ASSET SALE": any Disposition of property or series of related
Dispositions of property that yields gross proceeds to any Group Member (valued
at the initial principal amount thereof in the case of non-cash proceeds
consisting of notes or other debt securities and valued at fair market value in
the case of other non-cash proceeds) in excess of $100,000. The gross proceeds
of any such Disposition shall equal at least the fair market value of the
property subject thereto.
"ASSIGNEE": as defined in Section 8.6(b).
"ASSIGNMENT AND ACCEPTANCE": an Assignment and Acceptance, in the form
of EXHIBIT E.
"ASSIGNOR": as defined in Section 8.6(b).
"BOARD": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"BORROWER": as defined in the preamble hereto.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"CAPITAL EXPENDITURES": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any commercial bank organized under the laws of the United
States or any state thereof having combined capital and surplus of not less than
$500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard &
Poor's Ratings Services ("S&P") or P-1 by Xxxxx'x Investors Service, Inc.
("MOODY'S"), or carrying an equivalent rating by a nationally recognized rating
agency, if both of the two named rating agencies cease publishing ratings of
commercial paper issuers generally, and maturing within six months from the date
of acquisition; (d) repurchase obligations of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days, with respect to securities issued or fully guaranteed or insured by the
United States government; (e) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's; (f) securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"CLOSING DATE": the date on which the conditions precedent set forth
in Section 4.1 shall have been satisfied, which date is December 31, 2001.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": as defined in the Guarantee and Collateral Agreement.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a Responsible
Officer substantially in the form of EXHIBIT C.
"CONFIDENTIALITY AND INVENTION ASSIGNMENT AGREEMENT": as defined in
Section 3.7.
"CONTEMPLATED TRANSACTIONS": as defined in Section 4.1(d).
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CREO": Iris Graphics Inc., a Delaware corporation, a wholly owned
subsidiary of Creo Products Inc., a federally incorporated Canadian corporation.
"CREO AGREEMENT": the Credit Agreement, dated on or about the date
hereof, between the Borrower and Creo.
"CREO DEBT": Indebtedness of the Borrower in an original principal
amount not to exceed $23,600,000 incurred pursuant to the Creo Agreement.
"CREO DOCUMENTS": the Creo Agreement and all security or other
agreements, instruments and documents contemplated thereby or otherwise now or
hereafter delivered to Creo with respect to the Creo Debt, as the same may be
amended, supplemented or otherwise modified as permitted hereby.
"CSI DEBT": Indebtedness of the Borrower in an aggregate amount of
$23,604,051.24 under the promissory notes issued to the former shareholders of
Logic Associates, Inc.
"DAMAGES": as defined in the Merger Agreement.
"DEFAULT": any of the events specified in Section 7, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"DISPOSITION": with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof, but
shall not include the licensing of software in the ordinary course of a Group
Member's business. The terms "DISPOSE" and "DISPOSED OF" shall have correlative
meanings.
"DOLLARS" and "$": dollars in lawful currency of the United States.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States.
"ENVIRONMENTAL LAWS": as defined in Section 3.19.
"EQUITY INVESTMENT": as defined in Section 4.1(d)(i).
"ESCROW TERMINATION DATE": as defined in the Merger Agreement.
"EVENT OF DEFAULT": any of the events specified in Section 7, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"EXCLUDED FOREIGN SUBSIDIARY": any Foreign Subsidiary in respect of
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.
"EXISTING NOTES": collectively, the Existing Escrow Notes and the
Existing Non-Escrow Notes.
"EXISTING ESCROW NOTES": collectively, those certain Subordinated
Non-Negotiable Promissory Notes of the Borrower in the aggregate original
principal amount of $4,040,220, payable to Merger Subsidiary, as escrow agent,
and upon the surrender of which in accordance with the terms of the Merger
Agreement following the expiration of the Escrow Termination Date the Lenders
are entitled to receive new promissory notes of the Borrower.
"EXISTING NON-ESCROW NOTES": collectively, those certain Subordinated
Non-Negotiable Promissory Notes of the Borrower in the aggregate original
principal amount of $7,959,780, payable to the Lenders.
"FINANCIAL STATEMENTS": as defined in Section 3.12.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"GAAP": generally accepted accounting principles in the United States
as in effect from time to time, except that for purposes of Section 6.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in Section 3.12. In the event that any
"Accounting Change" (as defined below) shall occur and such change results in a
change in the method of calculation of financial covenants, standards or terms
in this Agreement, then the Borrower and the Lenders agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, to the Lenders, all financial covenants, standards and terms in
this Agreement shall continue to be calculated or construed as if such
Accounting Changes had not occurred. "Accounting Changes" refers to changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if applicable, the SEC.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"GROUP MEMBERS": the collective reference to the Borrower and its
Subsidiaries.
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and Collateral
Agreement to be executed and delivered by the Borrower and each Subsidiary
Guarantor, in the form of EXHIBIT B.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefore, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; PROVIDED, HOWEVER, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"HAZARDOUS SUBSTANCE": as defined in Section 3.19.
"HAZARDOUS WASTE": as defined in Section 3.19.
"HEDGE AGREEMENTS": all interest rate swaps, caps or collar agreements
or similar arrangements dealing with interest rates or currency exchange rates
or the exchange of nominal interest obligations, either generally or under
specific contingencies.
"INDEBTEDNESS": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or Lenders under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) all Guarantee Obligations of
such Person in respect of obligations of the kind referred to in clauses (a)
through (f) above, (h) all obligations of the kind referred to in clauses (a)
through (g) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation, and
(i) for the purposes of Sections 6.2 and 7(e) only, all obligations of such
Person in respect of Hedge Agreements. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person's ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.
"INTELLECTUAL PROPERTY RIGHTS": as defined in Section 3.6.
"INTERCREDITOR AGREEMENT": the intercreditor agreement, dated the date
hereof, between the Lenders and Creo.
"INTEREST PAYMENT DATE": (a) the first day of each month to occur
while the Notes are outstanding, commencing February 1, 2002, (b) the final
maturity date of the Notes and (c) the date of any repayment or prepayment made
in respect thereof.
"INVESTMENTS": as defined in Section 6.9.
"LENDERS": as defined in the preamble hereto.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"LOAN DOCUMENTS": this Agreement, the Security Documents and the
Notes.
"LOAN PARTY": each Group Member that is a party to a Loan Document.
"M DATA DEBT": Indebtedness of the Merger Subsidiary in an aggregate
principal amount of $4,000,000 under the Amended and Restated Subordinated
Non-Negotiable Promissory Note, dated as of December 31, 2001, issued to Xxxxxxx
X. Xxxxxx and Xxxx X. Xxxxxx, as the same may be amended, supplemented or
otherwise modified as permitted hereby.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, property, operations, or financial condition of the Borrower and its
Subsidiaries taken as a whole or (b) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or remedies of the
Lenders hereunder or thereunder.
"MERGER AGREEMENT": as defined in the recitals hereto.
"MERGER SUBSIDIARY": as defined in the preamble hereto.
"NATIONAL CITY DEBT": Indebtedness of the Borrower in the original
principal amount of $900,000 under the Commercial Installment Note (with
Financial Covenants), dated as of June 6, 1999, issued to National City Bank of
Pennsylvania ("NCB") and in an aggregate principal amount of $2,000,000 under
the Commercial Note: Demand Line of Credit dated March 25, 2000 issued to NCB,
in each case, as the same may be amended, supplemented or otherwise modified as
permitted hereby.
"NET CASH PROCEEDS": in connection with any Asset Sale, the proceeds
thereof in the form of cash and Cash Equivalents (including any such proceeds
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received) of such Asset Sale, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Asset Sale (other than any Lien pursuant
to a Security Document) and other customary fees and expenses actually incurred
in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements).
"NON-EXCLUDED TAXES": as defined in Section 2.13(a).
"NOTES": as defined in Section 2.2.
"OBLIGATIONS": the unpaid principal of and interest (including,
without limitation, any PIK Interest and interest accruing after the maturity of
the Notes and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) on the Notes and all other
obligations and liabilities of the Borrower to the Lenders, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document or any other document made, delivered or
given in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including all fees, charges and disbursements of counsel to the Lenders that
are required to be paid by the Borrower pursuant hereto) or otherwise.
"OTHER TAXES": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"PERMITTED LIENS": any (a) mechanics', carriers', workers' and other
similar Liens arising in the ordinary course of business which are not
delinquent and which in the aggregate are not material in amount, and do not
interfere with the present use of the assets of the Borrower or any of its
Subsidiaries to which they apply; (b) Liens for current taxes and assessments
not yet due and payable; (c) Liens and encumbrances that have arisen in the
ordinary course of business and that do not (in any case or in the aggregate)
materially detract from the value of the assets subject thereto or materially
impair the operations of the Borrower or any of its Subsidiaries; (d) with
respect to any asset of the Borrower or any of its Subsidiaries which consists
of a leasehold or other possessory interest in real property, all encumbrances,
covenants, imperfections in title, easements, restrictions and other title
matters (whether or not the same are recorded) not known to the Borrower or such
Subsidiary to which the underlying fee estate in such real property is subject
which were not created by or incurred by the Borrower or such Subsidiary; (e)
Liens securing Indebtedness of the Borrower or any other Subsidiary incurred
pursuant to Section 6.2(d) to finance the acquisition of fixed or capital
assets, PROVIDED that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased; (f) Liens created pursuant to the Security Documents; (g) existing
Liens set forth on SCHEDULE 6.4; and (h) Liens not otherwise permitted by this
Agreement so long as neither (i) the aggregate outstanding principal amount of
the obligations secured thereby nor (ii) the aggregate fair market value
(determined as of the date which Lien is incurred) of the assets subject thereto
exceed (as to the Borrower and all Subsidiaries) $250,000 at any one time.
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PIK INTEREST": as defined in Section 2.8(b).
"PIK INTEREST RATE": as defined in Section 2.8(b).
"PRODUCT DEVELOPMENTS COSTS": the dollar amount equal to that recorded
in the line item Product Development in the Financial Statements.
"PROJECTIONS": as defined in Section 5.2(b).
"REGULATION U": Regulation U of the Board as in effect from time to
time.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, president or chief
financial officer of the Borrower, but in any event, with respect to financial
matters, the chief financial officer of the Borrower.
"RESTRICTED PAYMENTS": as defined in Section 6.7.
"SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.
"SECURITY DOCUMENTS": the collective reference to the Guarantee and
Collateral Agreement, any mortgages entered into pursuant to Section 5.9(b) and
all other security documents hereafter delivered to the Lenders granting a Lien
on any property of any Person to secure the obligations and liabilities of any
Loan Party under any Loan Document.
"SERVICE PROVIDERS": as defined in Section 3.7.
"SHAREHOLDER NOTES": those certain promissory notes listed on Schedule
1.1 in favor of the Borrower issued by certain shareholders of the Borrower in
connection with the purchase of Borrower's Capital Stock.
"SOLVENT": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"SUBSIDIARY": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other
than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. With
respect to the Borrower, reference in this Agreement to Subsidiaries is not
intended to waive or modify in any respect the covenant of the Borrower
contained in Section 6.9 regarding the acquisition or creation of Subsidiaries.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Borrower other than any
Excluded Foreign Subsidiary.
"SYNTHETIC PURCHASE AGREEMENT": any agreement pursuant to which any
Group Member is or may become obligated to make (a) any payment in connection
with the purchase by any third party from a Person other than a Group Member of
any Capital Stock of any Group Member or any Indebtedness referred to in Section
6.9 or (b) any payment (except as otherwise expressly permitted by Section 6.6
or 6.9) the amount of which is determined by reference to the price or value at
any time of any such Capital Stock or Indebtedness; PROVIDED, that no phantom
stock or similar plan providing for payments only to current or former
directors, officers or employees of any Group Member (or to their heirs or
estates) shall be deemed to be a Synthetic Purchase Agreement.
"UNITED STATES": the United States of America.
"WASTE": as defined in Section 3.19.
"WHOLLY OWNED SUBSIDIARY": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
"WHOLLY OWNED SUBSIDIARY GUARANTOR": any Subsidiary Guarantor that is
a Wholly Owned Subsidiary of the Borrower.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the other Loan Documents
or any certificate or other document made or delivered pursuant hereto or
thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. THE NOTES
2.1 ACKNOWLEDGEMENT AND WAIVER. The Borrower and the Merger Subsidiary
each hereby acknowledge that the Escrow Termination Date has occurred and,
accordingly, the Escrow Period has expired. The Borrower and the Merger
Subsidiary, each on behalf of itself and its Affiliates, officers, directors,
employees, representatives and agents, hereby waive all claims for Damages
heretofore made under the Merger Agreement, including Section 8 thereof, and all
claims asserted in the escrow claim letter of the Borrower dated on or about
March 8, 2001.
2.2 ISSUANCE OF NOTES. Contemporaneously with the execution of this
Agreement, the Borrower shall issue to each of the Lenders, in substitution and
replacement for the Existing Notes held by the Lenders or by the Merger
Subsidiary for the benefit of the Lenders (which Existing Notes shall be
delivered to the Borrower marked "cancelled"), an amended and restated
promissory note in the form of EXHIBIT A hereto, such promissory note to be in a
principal amount equal to the aggregate principal amount of the Existing Notes
it amends, restates and replaces, as specified in Schedule 2.2 hereto (each such
amended and restated promissory note, as the same may hereafter be modified and
together with any note or notes hereafter issued in substitution thereof, being
herein referred to as a "Note" and all such notes being referred to collectively
as "Notes").
2.3 REPAYMENT OF NOTES. The Notes shall mature (a) in an initial
installment, payable contemporaneously with the execution and delivery of the
Notes as contemplated hereby, in the aggregate amount of $4,000,000 (which
installment shall be paid together with accrued and unpaid interest on the
outstanding principal amount of the Existing Notes to the date of such payment),
and (b) in 36 consecutive equal monthly installments, each in an amount equal to
1/36th of the principal amount of the Notes remaining unpaid following the
payment of the installment contemplated by clause (a) above (with appropriate
adjustment to the final such payment to account for prior payments having been
rounded, if such be the case), such installments due on the first day of each
month, commencing January 1, 2003 and continuing through and including December
1, 2005. All such payments shall be applied pro rata on all Notes.
2.4 [Intentionally Omitted]
2.5 OPTIONAL PREPAYMENTS. The Borrower may at any time prepay the
Notes, in whole or in part and without penalty or premium, upon irrevocable
notice delivered to the Lenders at least 3 Business Days prior thereto, which
notice shall specify the date and amount of prepayment. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to such date on the amount
prepaid. If any such prepayment shall be less than the entire unpaid principal
amount of the Notes, the amount of such prepayment shall be applied pro rata on
all Notes on the last maturing required installment or installments of principal
in inverse order of their maturity.
2.6 MANDATORY PREPAYMENTS.
(a) Simultaneously with the consummation by the Borrower of an initial
public offering of its Capital Stock, the Borrower shall prepay the Notes in
whole from the Net Cash Proceeds thereof or otherwise.
(b) If on any date any Group Member shall receive Net Cash Proceeds
from any Asset Sale (other than a Disposition of the Capital Stock of the
Borrower) then such Net Cash Proceeds shall, subject to the prior payment in
full of the Creo Debt, be applied on such date toward the prepayment of the
Notes.
(c) Each prepayment of the Notes under this Section 2.6 shall be
accompanied by accrued interest to the date of such prepayment on the amount
prepaid, and, with respect to a prepayment pursuant to paragraph (b) of less
than the entire unpaid principal amount of the Notes, applied pro rata on all
Notes on the last maturing required installment or installments of principal in
inverse order of their maturity.
2.7 [Intentionally Omitted]
2.8 INTEREST RATES AND PAYMENT DATES.
(a) The Notes shall bear interest at the same fluctuating rate as the
Term Loan (as defined in the Creo Agreement), which interest rate shall be
determined in the manner contemplated by and in accordance with the rates
specified in the Creo Agreement with respect to the Term Loan and change when
and as the interest rate on the Term Loan changes (excluding changes occurring
as a result of an Event of Default under the Creo Agreement) in accordance with
the provisions of the Creo Agreement, as such provisions are originally stated
and without giving effect to any subsequent amendments, waivers or other
modifications (except that any such modification to increase such interest rate
shall be given effect). Accrued interest on the Notes shall be payable on each
Interest Payment Date (notwithstanding the timing of interest payments under the
Creo Agreement). The Company shall provide the Lenders with copies of all
notices the Company shall give to Creo regarding interest rate elections under
the Creo Agreement.
(b) Without limiting the generality of the foregoing clause (a), the
Notes shall also bear PIK Interest (as defined in the Creo Agreement) determined
in the manner contemplated by and in accordance with the rates specified in the
Creo Agreement with respect to the Term Loan and change when and as the PIK
Interest Rate (as defined in the Creo Agreement) changes (excluding changes in
the determination thereof occurring as a result of an Event of Default under the
Creo Agreement) in accordance with the provisions of the Creo Agreement, as such
provisions are originally stated and without giving effect to any subsequent
amendments, waivers or other modifications (except that any such modification to
increase such interest rate shall be given effect). Any PIK Interest so accrued
shall be compounded monthly and shall be payable (a) on the earliest to occur
of: (i) an Event of Default; (ii) December 1, 2005; or (iii) repayment in full
of the Notes; and (b) on any date the Notes shall be prepaid pursuant to Section
2.5 with respect to the portion of any principal amount so prepaid.
(c) (i) If all or a portion of the principal amount of the Notes shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section plus 5%, and (ii) if all or a portion of any interest
payable on the Notes or any fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to a Base Rate Loan (as determined in the Creo Agreement
pursuant to the foregoing
provisions) plus 5%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
(d) Except as otherwise set forth in Section 2.8(b) with respect to
PIK Interest, interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
2.9 COMPUTATION OF INTEREST AND FEES. The Borrower shall request from
Creo, at the request of the Lenders, and shall deliver to the Lenders, upon
receipt of the same from Creo, a statement showing the quotations used by Creo
in determining any interest rate pursuant to Section 2.8.
2.10 [Intentionally Omitted]
2.11 PRO RATA TREATMENT AND PAYMENTS.
(a) The amount of each principal prepayment of the Notes shall be
applied PRO RATA to reduce the then remaining installments of the Notes in
inverse order of maturity. Amounts prepaid on account of the Notes may not be
reborrowed.
(b) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Lenders by wire transfer to
an account or accounts specified by the Lenders, in Dollars and in immediately
available funds. If any payment hereunder becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day.
2.12 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by the Lenders with any
request or directive (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lenders to any tax of any kind whatsoever
with respect to this Agreement or change the basis of taxation of
payments to the Lenders in respect thereof (except for Non-Excluded
Taxes covered by Section 2.13 and changes in the rate of tax on the
overall net income of the Lenders);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of the Lenders that is not otherwise included in
the determination of the Eurodollar Rate (as defined in the Creo
Agreement); or
(iii) shall impose on the Lenders any other condition;
and the result of any of the foregoing is to increase the cost to the Lenders,
by an amount that the Lenders deems to be material, of making, converting into,
continuing or maintaining a Eurodollar Loan (as defined in the Creo Agreement)
or to reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay the Lenders, upon its demand, any
additional amounts necessary to compensate the Lenders for such increased cost
or reduced amount receivable. If the Lenders becomes
entitled to claim any additional amounts pursuant to this paragraph, it shall
promptly notify the Borrower of the event by reason of which it has become so
entitled.
(b) A certificate as to any additional amounts payable pursuant to
this Section submitted by the Lenders to the Borrower shall be conclusive in the
absence of manifest error. The obligations of the Borrower pursuant to this
Section shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.
2.13 TAXES.
(a) All payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Lenders as a result of a present or former connection between the Lenders
and the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Lenders having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("NON-EXCLUDED
TAXES") or Other Taxes are required to be withheld from any amounts payable to
the Lenders hereunder, the amounts so payable to the Lenders shall be increased
to the extent necessary to yield to the Lenders (after payment of all
Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, PROVIDED,
however, that the Borrower shall not be required to increase any such amounts
payable to the Lenders with respect to any Non-Excluded Taxes imposed on amounts
payable to the Lenders at the time the Lenders becomes a party to this Agreement
or thereafter, except to the extent that the Lenders's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Lenders a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Lenders the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental taxes,
interest or penalties that may become payable by the Lenders as a result of any
such failure.
(d) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Notes and all other amounts payable
hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Notes, the Borrower represents and warrants to the Lenders that:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each Group Member
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and
has all requisite corporate power and authority to carry on its business. Each
Group Member is duly qualified as a foreign corporation or is otherwise duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure so to qualify would, either individually or in the aggregate,
have a Material Adverse Effect.
3.2 SUBSIDIARIES; JOINT VENTURES. The Borrower does not currently own
or control, directly or indirectly, any interest in any other corporation,
association, or other business entity other than the Subsidiaries set forth on
SCHEDULE 3.2. The Borrower, either directly or through one of its Subsidiaries,
holds all of the issued and outstanding capital stock of each of the
Subsidiaries. The Borrower is not a participant in any joint venture,
partnership or similar arrangement.
3.3 AUTHORIZATION. All corporate action on the part of each Loan
Party, its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the other Loan Documents, the
performance of all obligations of the Borrower hereunder and thereunder and, in
the case of the Borrower, the authorization of the issuance of the Notes on the
terms and conditions of this Agreement has been taken or will be taken prior to
the Closing Date, and the Loan Documents, when executed and delivered by each
Loan Party party thereto, shall constitute valid and legally binding obligations
of such Loan Party, enforceable against such Loan Party in accordance with their
respective terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors' rights generally, as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies. All corporate action on the part of each Loan Party
and its predecessors, officers, directors, stockholders and subsidiaries
necessary for the authorization, execution and/or delivery, as applicable, for
all past corporate actions was obtained.
3.4 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority of the United
States is required in connection with the consummation of the transactions
contemplated by this Agreement, except for (i) consents, authorizations, filings
and notices described in SCHEDULE 3.4, which consents, authorizations, filings
and notices have been obtained or made and are in full force and effect and (ii)
the filings referred to in Section 3.26.
3.5 LITIGATION. Except as set forth on SCHEDULE 3.5, there is no
action, suit, proceeding or investigation pending or, to the Borrower's
knowledge, currently threatened against the Borrower or any of its Subsidiaries,
or any basis therefor known to the Borrower, that questions the validity of the
Loan Documents or the right of the Loan Parties to enter into them, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any Material Adverse Effect.
Except as set forth on SCHEDULE 3.5, neither the Borrower nor any of its
Subsidiaries is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. Except as set forth on SCHEDULE 3.5, there is no action, suit,
proceeding or investigation by the Borrower or any of its Subsidiaries currently
pending or which the Borrower or any of its Subsidiaries intends to initiate.
The foregoing includes, without limitation, actions pending or threatened (or
any basis therefor known to the Borrower) involving the prior employment of any
of the Borrower's or its Subsidiaries' employees, their use in connection with
the Borrower's or its Subsidiaries' business of any information or technologies
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers.
3.6 INTELLECTUAL PROPERTY. Each Group Member owns or possesses
sufficient legal rights to all patents, trademarks, service marks, tradenames,
copyrights, trade secrets, licenses, information and proprietary rights and
processes (collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary for its
business without any conflict with, or infringement of, the rights of others. To
the Borrower's
knowledge, no third party is infringing or violating any Group Member's
Intellectual Property Rights. The Borrower has not received any written
communications alleging that any Group Member has violated or, by conducting its
business, would violate any of the Intellectual Property Rights of any other
person or entity. Except with respect to license agreements entered into in the
ordinary course of a Group Member's business, or as disclosed in Schedule 3.6,
there are no outstanding options, licenses or agreements of any kind related to
the foregoing, nor is any Group Member bound by, or a party to, any options,
licenses or agreements of any kind with respect to Intellectual Property Rights
of any other forms.
3.7 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS. Each
officer, independent contractor, consultant and employee of the Borrower
(collectively, "SERVICE PROVIDERS") has entered into an agreement with the
Borrower regarding confidentiality, non-solicitation of employees and customers
and assignment of all Intellectual Property Rights, technical information and
other information developed and/or worked on by such Service Provider while
employed or engaged with the Borrower (each, a "CONFIDENTIALITY AND INVENTION
ASSIGNMENT AGREEMENT"). To the Borrower's knowledge, (i) no past or present
Service Provider is in violation of any term of any Confidentiality and
Invention Assignment Agreement between the Borrower and such Service Provider;
and (ii) it is not nor will it be necessary to use any inventions of any of its
Service Providers (or persons it currently intends to hire) made prior to their
employment or engagement by the Borrower. Each Service Provider hired or engaged
by the Borrower after the date hereof shall, prior to their employment or
engagement with the Borrower, enter into a Confidentiality and Invention
Assignment Agreement with the Borrower.
3.8 COMPLIANCE WITH OTHER INSTRUMENTS. No Group Member is in violation
in any respect or default of any Requirements of Law, which violation or default
is reasonably likely to result in a Material Adverse Effect. No event has
occurred which with the passage of time or the giving of notice, or both, would
constitute a material breach of or default under any of the foregoing, which
material violation or breach or default is reasonably likely to result in a
Material Adverse Effect. Except as set forth on Schedule 3.8, the execution,
delivery and performance of the Loan Documents and the consummation of the
transactions contemplated thereby will not result in any such violation or
breach or be in conflict with or constitute, with or without the passage of time
and giving of notice, either a default under any such provision, agreement,
commitment, arrangement, license, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of any Loan Party (other than the Liens created by
the Security Documents.) Neither the execution or delivery of this Agreement,
nor the carrying on of any Group Member's business by the employees of such
Group Member, nor the conduct of such Group Member's business as proposed, will
conflict in any material respect with or result in a material breach of the
terms, conditions, or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such Group Member's
employees is now obligated.
3.9 AGREEMENTS; ACTION.
(a) There are no agreements, understandings or proposed transactions
between the Borrower and any of its officers, directors, Affiliates or any
Affiliate thereof, including without limitation Creo and any of its Affiliates
(other than the Creo Documents and the Strategic Alliance Agreement, Sales
Channel Agreement and software license and escrow agreement referred to in
Section 4.1(q)).
(b) Except as explicitly contemplated by the Loan Documents, and
agreements entered into in the ordinary course of business or set forth in
Schedule 3.9, there are no agreements, understandings, instruments, contracts or
proposed transactions to which any Group Member is a party or by which it is
bound that involve (i) obligations (contingent or otherwise) of, or payments to,
any Group Member in excess of $50,000, (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from any Group Member,
or (iii) the grant of rights to manufacture, produce, assemble, license,
market, or sell its products to any other person or affect the Borrower's
exclusive right to develop, manufacture, assemble, distribute, market or sell
its products.
(c) No Group Member has (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any Indebtedness in excess of $50,000 or in
excess of $100,000 in the aggregate (other than under this Agreement and as set
forth on SCHEDULE 6.2(C)), (iii) made any loans or advances to any person, other
than ordinary advances to such Group Member's employees for business expenses,
or (iv) sold, exchanged or otherwise disposed of any of its assets or rights,
other than the sale of its inventory and licensing of products and services in
the ordinary course of business.
(d) Except as disclosed in Schedule 3.9 or as set out in the Loan
Documents, the Borrower has not entered into any binding letters of intent with
any corporation, partnership, association, other business entity or any
individual regarding (i) the consolidation or merger of the Borrower with or
into any such corporation or other business entity, (ii) the sale, conveyance or
disposition of all or substantially all of the assets of the Borrower or a
transaction or series of transactions in which more than 50% of the voting power
of the Borrower is disposed of, or (iii) any other form of acquisition,
liquidation, dissolution or winding-up of the Borrower.
3.10 NO CONFLICT OF INTEREST. No Group Member is indebted, directly or
indirectly, to any of its officers or directors, in any amount whatsoever, other
than in connection with expenses or advances of expenses incurred in the
ordinary course of business or relocation expenses of employees. Except as set
forth on SCHEDULE 3.10, none of any Group Member's officers or directors are,
directly or indirectly, indebted to such Group Member (other than in connection
with purchases of such Group Member's stock) or, to the Borrower's knowledge,
have any direct or indirect ownership interest in any firm or corporation with
which any Group Member is affiliated or with which any Group Member has a
business relationship, or any firm or corporation which competes with any Group
Member (other than ownership of stock in, but not exceeding two percent (2%) of
the outstanding capital stock of, any publicly traded company that competes with
such Group Member). To the Borrower's knowledge, except as set forth on SCHEDULE
3.10, none of any Group Member's officers or directors is, directly or
indirectly, interested in any material contract with any Group Member. Except as
set forth on Schedule 3.10, no Group Member is a guarantor of any Indebtedness
of any other person, firm or corporation.
3.11 TITLE TO PROPERTY AND ASSETS. Each Group Member has good and
valid title to all of its properties and assets, both real and personal, and has
good title to all its leasehold interests, in each case free and clear of all
Liens, except for Permitted Liens. Each Group Member owns or leases all
properties and assets reasonably necessary to the operation of its business as
now conducted. With respect to the property and assets it leases, each Group
Member is in compliance with such leases and, to such Group Member's knowledge,
holds a valid leasehold interest free of any Liens, except for Permitted Liens.
3.12 FINANCIAL STATEMENTS. The Borrower has furnished to the Lenders
the consolidated balance sheet, statement of operations and statement of cash
flows of the Borrower for the fiscal year ended December 31, 2000 and the
unaudited consolidated balance sheet, statement of operations and statement of
cash flows of the Borrower for the nine months ended September 30, 2001
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with GAAP consistently applied (except that the unaudited
financial statements do no contain footnotes and are subject to normal year-end
audit adjustments). The Financial Statements are complete in all material
respects and in accordance with the books and records of the Group Members and
fairly present the financial condition and operating results of the Group
Members as of the dates, and for the periods, indicated therein (except that the
unaudited financial statements do no contain footnotes and are subject to
normal year-end audit adjustments). Except as set forth in the Financial
Statements, no Group Member has any material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to September 30, 2001, (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, and (iii) performance obligations of the Borrower under the Equity
Investment documents.
3.13 CHANGES. Except as set forth on Schedule 3.13, since September
30, 2001 there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Borrower from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not had,
in the aggregate, a Material Adverse Effect;
(b) any damage, destruction, loss or other occurrence or development
that has had a Material Adverse Effect;
(c) any waiver or compromise by the Borrower of a valuable right or
any material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance
or payment of any obligation by the Borrower, except in the ordinary course of
business and that is not material to the assets, business, properties or
financial condition or operating results of the Borrower;
(e) any material change or amendment to a material contract or
agreement by which the Borrower or any of its assets or properties is bound or
subject;
(f) any material change or amendment in any compensation arrangement
or agreement with any employee, officer, director or stockholder;
(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any officer or key
employee of the Borrower; and the Borrower, is not aware of any impending
resignation or termination of employment of any such officer or key employee;
(i) any transfer of a security interest in, or Lien, created by any
Group Member, with respect to any of its material properties or assets, except
for Permitted Liens;
(j) any loans or guarantees made by any Group Member to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(k) any declaration, setting aside or payment or other distribution in
respect to any of the Borrower's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Borrower;
(l) to the Borrower's knowledge, any other event or condition of any
character that might have a Material Adverse Effect; or
(m) any arrangement or commitment by the Borrower to do any of the
things described in this Section 3.13.
3.14 DISTRIBUTIONS. There has been no declaration or payment by the
Borrower of any dividend, nor any distribution by the Borrower of any assets of
any kind, to any of its stockholders.
3.15 TAX RETURNS AND PAYMENTS. Except as set forth on Schedule 3.15,
each Group Member has filed all tax returns and reports as required by
applicable law and such tax returns and reports are true and correct in all
material respects. Except as set forth on Schedule 3.15, each Group Member has
paid all taxes, fees, assessments and other governmental charges upon such Group
Member, or upon any of its properties, income, or franchises, shown in such
returns and on assessments received by such Group Member to be due as of the
date hereof and no such taxes or assessments are being contested.
3.16 INSURANCE. The Borrower has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed, and the Borrower has such other insurance
policies and coverages as are customary in the Borrower's industry.
3.17 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.17 sets forth all currently
effective employment contracts, deferred compensation arrangements, bonus plans,
incentive plans, profit sharing plans, retirement agreements or other employee
compensation agreements. No Group Member has any Employee Benefit Plan as
defined in the Employee Retirement Income Security Act of 1974, as amended.
3.18 LABOR AGREEMENTS AND ACTIONS. No Group Member is bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of such
Group Member, has sought to represent any of the employees, representatives or
agents of such Group Member. There is no strike or other labor dispute involving
any Group Member pending, or to the knowledge of such Group Member threatened,
which could have a Material Adverse Effect, nor is any Group Member aware of any
labor organization activity involving its employees. Except as set forth on
SCHEDULE 3.18, the employment of each officer and employee of each Group Member
is terminable at the will of such Group Member. The service of each consultant
and independent contractor is terminable by such Group Member upon not more than
thirty (30) days prior written notice. To its knowledge, each Group Member has
complied in all material respects with all applicable state and federal equal
employment opportunity laws and with other laws related to employment.
3.19 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS. To the Borrower's
knowledge, it has obtained all material permits, licenses and other
authorizations required under federal, state and local laws relating to
pollution or protection of the environment. The Borrower has not violated any
applicable Environmental Law, the violation of which is reasonably likely to
result in a material adverse change in the financial condition, assets,
liabilities, operations or financial performance of the Borrower. To the
knowledge of the Borrower, there are no present requirements of any applicable
Environmental Law which are due to be imposed upon it which will materially
increase its cost of complying with the Environmental Laws. All past on-site
generation, treatment, storage and disposal of Waste, including Hazardous Waste,
by the Borrower and, to its knowledge, by its predecessors have been done in
compliance with the currently applicable Environmental Laws, and all past
off-site treatment, storage and disposal of Waste, including Hazardous Waste,
generated by the Borrower and, to its knowledge, by its predecessors have been
done in compliance with the currently applicable Environmental Laws. As used in
this Agreement, the terms (i) "ENVIRONMENTAL LAWS" include, but are not limited
to, any federal, state, local or foreign law, statute, charter or ordinance, and
any rule, regulation, binding interpretation, binding policy, permit, order,
court order or consent decree issued pursuant to any of the foregoing, which
pertains to, governs or otherwise regulates any of the following activities,
including, without limitation, (a) the emission, discharge, release or spilling
of any substance into the air, surface water, groundwater, soil or substrata;
(b) the manufacturing, processing, sale, generation, treatment, storage,
disposal labeling or other management of any Waste, Hazardous Substance or
Hazardous Waste, and (ii) "WASTE," "HAZARDOUS SUBSTANCE," and "HAZARDOUS WASTE"
include any substance defined as such by any applicable Environmental Law.
3.20 PERMITS. Each Group Member has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business, the lack of
which could result in a Material Adverse Effect and, to its knowledge, it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. Except as set forth on Schedule
3.20, no Group Member is in default in any material respect under any of such
franchises, permits, licenses or other similar authority.
3.21 DISCLOSURE. The Borrower has made available to the Lenders all
material information relating to the Group Members. This Agreement, including
all representations herein by the Borrower, each Loan Document and any exhibits
hereto or any certificate furnished or to be furnished to the Lenders, taken
together, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made.
3.22 COMPLIANCE WITH OTHER LAWS. Except as set forth on Schedule 3.22,
the Borrower has complied in all material respects with all laws, statutes,
rules, regulations and orders of federal, state, local and foreign agencies and
authorities, applicable to its business, properties and operations.
3.23 FEDERAL REGULATIONS. No part of the proceeds of the Notes, and no
other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by the Lenders, the Borrower will furnish to the Lenders a statement
to the foregoing effect in conformity with the requirements of FR Form G-3 or FR
Form U-1, as applicable, referred to in Regulation U.
3.24 INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
3.25 ACKNOWLEDGMENT. The Borrower acknowledges that it is indebted to
the Lenders pursuant to the Existing Notes without defense, offset or
counterclaim.
3.26 SECURITY DOCUMENTS. The Guarantee and Collateral Agreement is
effective to create for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof. In the case of the Pledged Stock described in the Guarantee and
Collateral Agreement, when stock certificates representing such Pledged Stock
are delivered to Creo (and giving effect to the provisions of the Intercreditor
Agreement), and in the case of the other Collateral described in the Guarantee
and Collateral Agreement, when financing statements and other filings specified
on SCHEDULE 3.26 in appropriate form are filed in the offices specified on
SCHEDULE 3.26, the Guarantee and Collateral Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the
Obligations (as defined in the Guarantee and Collateral Agreement), in each case
prior and superior in right to any other Person (except Liens securing the Creo
Debt and other Liens permitted by Section 6.4).
3.27 SOLVENCY. Each Loan Party is, and after giving effect to the
Contemplated Transactions will be and will continue to be, Solvent.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO ACCEPTANCE OF NOTES. The agreement of the Lenders to
accept the Notes is subject to the satisfaction, prior to or concurrently with
the issuance of such Notes on the Closing Date, of the following conditions
precedent:
(a) AGREEMENT; GUARANTEE AND COLLATERAL AGREEMENT. The Lenders shall
have received (i) this Agreement, executed and delivered by the Borrower and the
Lenders, (ii) the Guarantee and Collateral Agreement, executed and delivered by
the Borrower and each Subsidiary Guarantor, (iii) the Notes, and (iv) an
Acknowledgement and Consent in the form attached to the Guarantee and Collateral
Agreement, executed and delivered by each Issuer (as defined therein), if any,
that is not a Loan Party, and any indemnification, subordination and/or other
document that the Lenders shall determine to be necessary or desirable.
(b) LEASE EXTENSION AND GUARANTEE. The execution and delivery by the
Merger Subsidiary of a First Amendment Lease Agreement with Rialto Investments,
LLP in the form of EXHIBIT G hereto and by the Borrower of a Guarantee in the
form of EXHIBIT H hereto.
(c) INTERCREDITOR AGREEMENT. The Intercreditor Agreement shall have
been duly executed and delivered by all parties thereto.
(d) CONTEMPLATED TRANSACTIONS. The following transactions
(collectively, the "Contemplated Transactions") shall have been consummated, in
each case on terms and conditions reasonably satisfactory to the Lenders:
(i) The Borrower shall have received at least $14,800,000 in
gross proceeds (including up to $2,250,000 in proceeds from the
cancellation of indebtedness) from the issuance of, and at least
$900,000 in commitments to purchase the Series F Preferred Stock of
the Borrower with rights and restrictions similar to the existing
Series E Preferred Stock and on such terms as may be acceptable to the
Lenders to existing shareholders of the Borrower (such transaction,
the "EQUITY INVESTMENT");
(ii) The Borrower shall have received at least $1,000,000 in
gross proceeds from repayment of debt owing to it, and $23,600,000 in
gross proceeds (including up to $2,250,000 in proceeds from the
cancellation of indebtedness) in connection with the consummation of
the transactions contemplated by the Creo Documents, all on such terms
as may be acceptable to the Lenders;
(iii) (A) The Lenders shall have received satisfactory evidence
that the CSI Debt shall have been terminated and all amounts
thereunder shall have been paid in full, (B) satisfactory arrangements
shall have been made for the termination of all Liens granted in
connection therewith, (C) the M Data Debt shall have been restructured
on such terms as may be acceptable to the Lenders, and (D) the
Borrower shall have made the payment contemplated by Section 2.3(a);
and
(iv) The Lenders shall have received a complete and correct copy
of the source and use of funds schedule reflecting the application of
the proceeds of the Contemplated Transactions and certifying that the
Contemplated Transactions have been consummated.
In addition, the Borrower shall have delivered to the Lenders complete and
correct as-executed copies of the documentation executed in connection with the
Equity Investment and the other Contemplated Transactions (including in each
case any amendments, supplements or modifications with respect thereto), as well
as complete and correct copies of the documentation relating to the CSI Debt,
the National City Debt and the M Data Debt as originally executed and as
heretofore modified.
(e) FINANCIAL STATEMENTS. The Lenders shall have received unaudited
interim consolidated financial statements of the Borrower for each fiscal month
and quarterly period ended subsequent to the date of the latest audited
financial statements received by the Lenders as to which such financial
statements are available, and such financial statements shall not, in the
reasonable judgment of the Lenders, reflect any material adverse change in the
business prospects or consolidated financial condition of the Borrower.
(f) APPROVALS. All governmental and third party approvals necessary in
connection with the Equity Investment and the other Contemplated Transactions,
the continuing operations of the Group Members, and the transactions
contemplated hereby shall have been obtained and be in full force and effect.
(g) LIEN SEARCHES. The Lenders shall have received the results of a
recent lien search in each of the jurisdictions where assets of the Borrower are
located, and such search shall reveal no liens on any of the assets of the Loan
Parties except for Liens permitted by Section 6.4 or discharged on or prior to
the Closing Date pursuant to documentation satisfactory to the Lenders.
(h) FEES. The Lenders or their counsel, Xxxx, Plant, Xxxxx, Xxxxx &
Xxxxxxx, P.A. ("Xxxx Plant"), shall have received (i) payment of Xxxx Plant's
invoice #273828 dated December 17, 2001 in the amount of $16,078.28, and (ii)
all other fees required to be paid, and all reasonable expenses incurred by the
Lenders for which invoices have been presented (including the reasonable fees
and expenses of legal counsel), in connection with due diligence, preparation,
execution, filing and recording of this facility and any documents executed and
delivered in connection herewith, whether or not the transaction closes, on or
before the Closing Date. All such amounts not theretofore paid will be paid on
the Closing Date with proceeds of the Equity Investment and will be reflected in
the funding instructions given by the Borrower on or before the Closing Date.
(i) CLOSING CERTIFICATE; CERTIFIED CERTIFICATE OF INCORPORATION; GOOD
STANDING CERTIFICATES. The Lenders shall have received (i) a certificate of each
Loan Party, dated the date hereof, substantially in the form of EXHIBIT D, with
appropriate insertions and attachments, including the certificate of
incorporation of each Loan Party that is a corporation certified by the relevant
authority of the jurisdiction of organization of such Loan Party, and (ii) a
long form good standing certificate for each Loan Party from its jurisdiction of
organization.
(j) LEGAL OPINIONS. The Lenders shall have received the legal opinion
of (i) Xxxxxx, Xxxxx & Bockius LLP, counsel to the Borrower and its
Subsidiaries, substantially in the form of EXHIBIT F, and (ii) local Delaware
counsel with respect to matters of perfection, in form and substance
satisfactory to the Lenders.
(k) PLEDGED STOCK; STOCK POWERS; PLEDGED NOTES. (i) Creo shall have
received (A) the certificates representing the shares of Capital Stock pledged
pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof and (B)
each promissory note (if any) pledged to the Lenders pursuant to the Guarantee
and Collateral Agreement endorsed (without recourse) in blank (or accompanied by
an executed transfer form in blank) by the pledgor thereof, and (ii) the Lenders
shall have received satisfactory evidence thereof.
(l) FILINGS, REGISTRATIONS AND RECORDINGS. Each document (including
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Lenders to be filed,
registered or recorded in order to create in favor of the Lenders, for the
benefit of the Lenders, a perfected Lien on the Collateral described therein,
prior and superior in right to any other Person (other than with respect to
Liens expressly permitted by Section 6.4), shall be in proper form for filing,
registration or recordation.
(m) SOLVENCY CERTIFICATE. The Lenders shall have received a
certificate of solvency from the chief financial officer of the Borrower.
(n) INSURANCE. Not later than January 15, 2002, the Borrower shall
deliver to the Lenders insurance certificates satisfying the requirements of
Section 5.2(b) of the Guarantee and Collateral Agreement.
(o) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents shall be
true and correct on and as of such date as if made on and as of such date.
(p) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Notes.
(q) STRATEGIC ALLIANCE AGREEMENT AND SALES CHANNEL AGREEMENT. The
Borrower shall have provided the Lenders with correct and complete copies of the
amended and restated Strategic Alliance Agreement with Creo and Sales Channel
Agreement with Creo, together with a software license and escrow agreement, and
the terms of the same shall be acceptable to the Lenders.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower agrees that, so long as the Notes or other amount is
owing to the Lenders hereunder, the Borrower shall and shall cause each of its
Subsidiaries to:
5.1 FINANCIAL STATEMENTS. Furnish to the Lenders:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related audited consolidated statements of income and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, reported on without a "going concern" or like
qualification or exception (other than with respect to fiscal year 2001), or
qualification arising out of the scope of the audit, by Ernst & Young LLP or
other independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of the Borrower, the unaudited consolidated balance sheet of the Borrower as of
the end of such quarter and the related unaudited consolidated financial
statements of income and of cash flows for such quarter and the portion of the
fiscal year through the end of such quarter (including schedules, to the extent
applicable), setting forth in each case beginning with the quarter ended June
30, 2002 and for each quarterly period thereafter, in comparative form the
figures for the previous year, certified by a Responsible Officer of the
Borrower as being fairly stated in all material respects (subject to normal
year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45 days
after the end of each month occurring during each fiscal year of the Borrower
(other than the third, sixth, ninth and twelfth such month), the unaudited
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of such month and the related unaudited consolidated statements of income and of
cash flows for such month and the portion of the fiscal year through the end of
such month, setting forth in each case (beginning with the month ended April 30,
2002 and for each month thereafter) in comparative form the figures for the
previous year, certified by a Responsible Officer of the Borrower as being
fairly stated in all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared and certified in reasonable detail and in
accordance with GAAP, subject to year-end audit adjustments, applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein).
5.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Lenders:
(a) concurrently with the delivery of any financial statements
pursuant to Section 5.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, the Borrower
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition contained in this Agreement and the
other Loan Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate and (ii)
in the case of quarterly or annual financial statements, (x) a Compliance
Certificate containing all information and calculations necessary for
determining compliance by each Group Member with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or fiscal
year of the Borrower, as the case may be (it being understood that failure to
demonstrate such compliance shall not in and of itself be deemed a breach of
this Section 5.2(a)), and (y) to the extent not previously disclosed to the
Lenders, a listing of any county or state within the United States where the
Borrower keeps inventory or equipment and of any Intellectual Property Rights
acquired by the Borrower since the date of the most recent list delivered
pursuant to this clause (y) (or, in the case of the first such list so
delivered, since the Closing Date);
(b) as soon as available, and in any event no later than 30 days prior
to the end of each fiscal year of the Borrower, a detailed consolidated budget
for the following fiscal year (including a projected consolidated balance sheet
of the Borrower and its Subsidiaries as of the end of the following fiscal year,
the related consolidated statements of projected cash flow and projected income
and a description of the underlying assumptions applicable thereto), and, as
soon as available, significant revisions, if any, of such budget and projections
with respect to such fiscal year (collectively, the "PROJECTIONS"), which
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no reason to
believe that such Projections are incorrect or misleading in any material
respect;
(c) within five days after the same are sent and to the extent not
otherwise delivered hereunder, copies of all financial statements and reports
that the Borrower sends to the holders of any
class of its debt securities or public equity securities and, within five days
after the same are filed, to the extent not publicly available, copies of all
financial statements and reports that the Borrower may make to, or file with,
the SEC; and
(d) such additional financial and other information as the Lenders may
from time to time reasonably request.
5.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with, and to the extent required by, GAAP with
respect thereto have been provided on the books of the relevant Group Member.
5.4 MAINTENANCE OF EXISTENCE; COMPLIANCE. (a)(i) Preserve, renew and
keep in full force and effect its organizational existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 6.5 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business.
5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and (b) permit
representatives of the Lenders to visit and inspect any of its properties and
examine and make abstracts from any of its books and records upon reasonable
prior notice at any reasonable time and not more than twice during any fiscal
quarter (so long as an Event of Default has not occurred or, if such has
occurred, is not continuing) and to discuss the business, operations, properties
and financial and other condition of the Group Members with officers and
employees of the Group Members and with their independent certified public
accountants; and (c) in the event that the Lenders do not have a representative
who is a member of the Borrower's Board of Directors, grant the Lenders the
right to have a representative, who shall be one of the Lenders, attend all
meetings of the Board of Directors of the Borrower as an observer, and provide
the observer (i) prompt notice of such meeting and copies of any agenda or other
documentation accompanying such notice, and (ii) access to all other written
communications, minutes and materials.
5.7 NOTICES. Promptly upon obtaining knowledge thereof give notice to
the Lenders of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or proceeding
that may exist at any time between any Group
Member and any Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting any Group Member (i) in
which the amount involved is $500,000 or more and not covered by insurance, (ii)
in which injunctive or similar relief is sought or (iii) which relates to any
Loan Document;
(d) any bona fide interest from a third party to acquire all of the
assets or shares of the Borrower or any Subsidiary, details of any such
proposal; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 5.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the relevant Group Member proposes to take with
respect thereto.
5.8 ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and ensure compliance in all
material respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws, and obtain and comply in all material respects with and
maintain, and ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.
(b) In the event that a Group Member acquires real property, conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws.
5.9 ADDITIONAL COLLATERAL, ETC.
(a) With respect to any property acquired after the Closing Date by
any Group Member (other than (x) any property described in paragraph (b), (c) or
(d) below and (y) property acquired by any Excluded Foreign Subsidiary) as to
which the Lenders does not have a perfected Lien, promptly (i) execute and
deliver to the Lenders such amendments to the Guarantee and Collateral Agreement
or such other documents as the Lenders deems necessary or advisable to grant to
the Lenders a security interest in such property to the extent set forth in the
Guarantee and Collateral Agreement and (ii) take all actions necessary or
advisable to grant to the Lenders a perfected security interest in such
property, subject only to any Permitted Liens securing the Creo Debt, the M Data
Debt or the National City Debt, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be requested by the Lenders.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $500,000 acquired after
the Closing Date by any Group Member (other than real property acquired by any
Excluded Foreign Subsidiary), promptly (i) execute and deliver a first priority
mortgage, for the benefit of the Lenders, covering such real property, subject
only to any Permitted Lien securing the Creo Debt, (ii) if requested by the
Lenders, provide the Lenders with (A) title and extended coverage insurance
covering such real property in an amount at least equal to the purchase price of
such real property (or such other amount as shall be reasonably specified by the
Lenders) as well
as a current ALTA survey thereof, together with a surveyor's certificate and (B)
any consents or estoppels reasonably deemed necessary or advisable by the
Lenders in connection with such mortgage, each of the foregoing in form and
substance reasonably satisfactory to the Lenders and (iii) if requested by the
Lenders, deliver to the Lenders legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Lenders.
(c) With respect to any new Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date by any Group Member
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly (i)
execute and deliver to the Lenders such amendments to the Guarantee and
Collateral Agreement as the Lenders deems necessary or advisable to grant to the
Lenders, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new Subsidiary that is owned by any Group
Member, subject only to any Permitted Liens securing the Creo Debt, the M Data
Debt or the National City Debt, (ii) deliver to the Lenders (or, so long as the
Intercreditor Agreement remains in effect, to Creo) the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the relevant Group
Member, (iii) cause such new Subsidiary (A) to become a party to the Guarantee
and Collateral Agreement, (B) to take such actions necessary or advisable to
grant to the Lenders a perfected security interest in the Collateral described
in the Guarantee and Collateral Agreement with respect to such new Subsidiary,
subject only to any Permitted Liens securing the Creo Debt, the M Data Debt or
the National City Debt, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be requested by the Lenders and (C)
to deliver to the Lenders a certificate of such Subsidiary, substantially in the
form of EXHIBIT C, with appropriate insertions and attachments, and (iv) if
requested by the Lenders, deliver to the Lenders legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Lenders.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by any Group Member (other than by any Group
Member that is an Excluded Foreign Subsidiary), promptly (i) execute and deliver
to the Lenders such amendments to the Guarantee and Collateral Agreement as the
Lenders deems necessary or advisable to grant to the Lenders, a perfected first
priority security interest, subject only to any Permitted Liens securing the
Creo Debt, the M Data Debt or the National City Debt, in the Capital Stock of
such new Subsidiary that is owned by any such Group Member (provided that in no
event shall more than 66% of the total outstanding voting Capital Stock of any
such new Subsidiary be required to be so pledged), (ii) deliver to the Lenders
(or, so long as the Intercreditor Agreement remains in effect, to Creo) the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
relevant Group Member, and take such other action as may be necessary or, in the
opinion of the Lenders, desirable to perfect the Lenders' security interest
therein, and (iii) if requested by the Lenders, deliver to the Lenders legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Lenders.
5.10 PAY-OFF LETTERS; PROOF OF PAYMENT. (a) Use commercially best
efforts to obtain executed pay-off letters from the holders of the CSI Debt to
the extent not previously provided to the Lenders.
(b) Within 10 days of the Closing Date, provide satisfactory evidence
to the Lender with respect to the repayment in full of the CSI Debt.
5.11 HEALTH INSURANCE COVERAGE. Either (i) provide, at no cost to the
Lenders, continued family medical and dental care insurance for each of the
Lenders at the highest level of
coverage offered to senior executives of the Borrower, or (ii) at the election
of any Lender, such election to be exercised by such Lender by written notice to
the Borrower prior to the beginning of any fiscal year of the Borrower in which
such election is to take effect, pay such Lender, for such fiscal year and each
fiscal year thereafter, amounts equal to the premium paid for the insurance
provided to such Lender during the fiscal year in which such election is made,
such amounts to be paid to such Lender when and as the premium would otherwise
have been payable (it being understood and agreed, however, that coverage under
the foregoing clause (i) shall no longer be available following the exercise of
such election). The Lenders hereby agree to cooperate in good faith with the
Borrower in connection with the Borrower's efforts to include the Lenders under
Borrower's group health insurance plan.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Notes or any other
amount is owing to the Lenders hereunder, the Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly:
6.1 [Intentionally Omitted]
6.2 INDEBTEDNESS. Create, issue, incur, assume, become liable in
respect of or suffer to exist any additional funded Indebtedness, including any
obligation under a Hedge Agreement, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(c) the Creo Debt, the M Data Debt, the National City Debt and the
other Indebtedness outstanding on the date hereof and listed on SCHEDULE
6.2(C) and any refinancings, refundings, renewals or extensions thereof
(without (i) increasing, or shortening the maturity of, the principal
amount thereof or increasing the rate of interest thereon, or, with respect
to any refinancing, refunding, renewal or extension of the National City
Debt, increasing the rate of interest to a rate above the then prevailing
market rate, but in any event not including any additional draws on any
outstanding commitments under the National City Debt or the conversion of
any Indebtedness from term debt to revolving credit, or (ii) providing
additional collateral with respect thereto, except, with respect to any
refinancing, refunding, renewal or extension of the Creo Debt, collateral
that also becomes subject to a Lien pursuant to the Security Documents), it
being understood that the Lenders agree to enter into an intercreditor
agreement or similar arrangement reasonably necessary to effectuate any
refinancing, refunding, renewal or extension of the Creo Debt, the M Data
Debt or the National City Debt in a manner consistent with the terms
thereof (including with respect to priority), but only so long as the
rights and obligations of the Lenders as they exist prior to the
consummation of the transaction in connection with which any such
arrangement is proposed will not be adversely affected by such arrangement.
(d) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 6.4 in an aggregate
principal amount not to exceed $1,000,000 at any one time outstanding.
6.3 PRODUCT DEVELOPMENT COSTS. Permit the amount of Product
Development Costs to exceed $3,750,000 for each fiscal quarter, except as
permitted under the Creo Agreement.
6.4 LIENS. Create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except for Permitted
Liens.
6.5 FUNDAMENTAL CHANGES. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
property or business, or purchase any business or otherwise acquire equity of or
assets from any Person, except as expressly permitted by Section 6.9 and except
that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor (PROVIDED that the Wholly Owned Subsidiary Guarantor shall be the
continuing or surviving corporation);
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (i) to the Borrower or any Wholly Owned Subsidiary Guarantor (upon
voluntary liquidation or otherwise)(it being understood that after giving
effect to any such Disposition of all of its assets, such Subsidiary may be
dissolved) or (ii) pursuant to a Disposition permitted by Section 6.6; and
(c) any Investment expressly permitted by Section 6.9 may be
structured as a merger, consolidation or amalgamation.
6.6 DISPOSITION OF PROPERTY. Dispose of any of its property, whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person (it being
understood that this Section 6.6 shall not prohibit the issuance or sale of
shares of the Capital Stock of the Borrower), except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 6.5(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor; and
(e) the Disposition of other property or assets having a fair market
value not to exceed $2,000,000 in the aggregate during the term of this
Agreement.
6.7 RESTRICTED PAYMENTS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of any Group Member
(collectively, "RESTRICTED PAYMENTS"), except that so long as no Default or
Event of Default shall have occurred and be continuing, the Borrower may
purchase its common stock or options to purchase its common stock, or Capital
Stock or options to purchase its Capital Stock from present or former officers
or employees of any Group Member upon the death, disability or termination of
employment of such officer or employee (i) to the extent effected through the
discharge of the Shareholder Notes or (ii) so long as the aggregate amount of
such payments after the date hereof (net of any proceeds received by the
Borrower after the date hereof in connection with resales of any common stock or
common stock options so purchased) shall not exceed $50,000.
6.8 CAPITAL EXPENDITURES. Make or commit to make any Capital
Expenditure, except Capital Expenditures of the Borrower and its Subsidiaries in
the ordinary course of business not exceeding $750,000 in the aggregate for each
fiscal quarter.
6.9 INVESTMENTS. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person,
including investments in or loans or advances to any corporation or other Person
proposed to be acquired or created as a Subsidiary (all of the foregoing,
"Investments"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of any Group Member in the
ordinary course of business (excluding loans and advances (i) for travel,
entertainment and relocation expenses and (ii) evidenced by the Shareholder
Notes) in an aggregate amount for all Group Members not to exceed $100,000
at any one time outstanding;
(d) intercompany Investments by any Group Member in the Borrower or
any Person that, prior to such investment, is a Wholly Owned Subsidiary
Guarantor; and
(e) in addition to Investments otherwise expressly permitted by this
Section, Investments by the Borrower or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed $2,000,000 during the term
of this Agreement.
6.10 OPTIONAL PAYMENTS AND MODIFICATIONS OF CERTAIN DEBT INSTRUMENTS;
SYNTHETIC PURCHASE AGREEMENTS. (a) Amend, modify, waive or otherwise change, or
consent or agree to any amendment, modification, waiver or other change to, any
of the terms of the Borrower's Certificate of Incorporation or its By-Laws in
any manner materially adverse to the Lender; (b) make or offer to make any
optional or voluntary payment, prepayment, repurchase or redemption of or
otherwise optionally or voluntarily defease or segregate funds with respect to
any Indebtedness (including the M Data Debt and the National City Debt, but
excluding the Creo Debt); (c) make or offer to make any optional or voluntary
payment, prepayment, repurchase or redemption of or otherwise defease or
segregate funds with respect to any preferred Capital Stock; (d) amend, modify,
waive or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of any preferred Capital Stock that
(i) would shorten the scheduled redemption date or increase the amount of any
scheduled redemption payment or increase the rate or shorten the date for
payment of dividends thereon, (ii) is materially adverse to the Lenders, or
(iii) involves the payment of a consent fee); or (e) enter into or be party to,
or make any payment under, any Synthetic Purchase Agreement.
6.11 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Borrower, any Wholly Owned Subsidiary Guarantor, Creo,
or any affiliate of Creo) other than transactions (i) otherwise permitted under
this Agreement, (ii) in the ordinary course of business of the relevant Group
Member, and (iii) upon fair and reasonable terms no less favorable to the
relevant Group Member than it would obtain in a comparable arm's length
transaction with a Person that is not an Affiliate.
6.12 SALES AND LEASEBACKS. Enter into any arrangement with any Person
providing for the leasing by any Group Member of real or personal property that
has been or is to be sold or transferred
by such Group Member to such Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such property or
rental obligations of such Group Member.
6.13 CHANGES IN FISCAL PERIODS. Permit the fiscal year of the Borrower
to end on a day other than December 31 or change the Borrower's method of
determining fiscal quarters.
6.14 NEGATIVE PLEDGE CLAUSES. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any Group Member
to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, to secure its obligations
under the Loan Documents to which it is a party other than: (a) this Agreement;
(b) any agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby); and (c)
any agreement governing the Creo Debt, the M Data Debt and the National City
Debt.
6.15 CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary, and
(iii) any restrictions existing under the Creo Documents or agreements relating
to the M Data Debt or the National City Debt.
6.16 LINES OF BUSINESS. Enter into any business, either directly or
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement or that are
reasonably related thereto (including, without limitation, technical businesses
within the graphic arts industry and e-commerce services).
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of the Notes when due
in accordance with the terms hereof; or the Borrower shall fail to pay or
any interest on the Notes, or any other amount payable hereunder or under
any other Loan Document, within three days after any such interest or other
amount becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) any Loan Party shall default in the observance or performance of
any agreement contained in Section 6 of this Agreement or Sections 5.5 and
5.7(b) of the Guarantee and Collateral Agreement; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 15 days after notice
to the Borrower from the Lenders; or
(e) any Group Member shall (i) default in making any payment of any
principal of any Indebtedness (including any Guarantee Obligation, but
excluding the Loan) on the scheduled or original due date with respect
thereto; or (ii) default in making any payment of any interest on any such
Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; or (iv) default in the observance
or performance of any material agreement or condition or obligation owing
to the Lenders under any agreement or instrument; provided, that a default,
event or condition described in clause (i), (ii) or (iii) above shall not
at any time constitute an Event of Default unless, at such time, one or
more defaults, events or conditions of the type described in clauses (i),
(ii) and (iii) of this paragraph (e) shall have occurred and be continuing
with respect to Indebtedness the outstanding principal amount of which
exceeds in the aggregate $500,000; or
(f) (i) any Group Member shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or any Group Member shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against any Group Member
any case, proceeding or other action of a nature referred to in clause (i)
above that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
any Group Member any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets that results in the entry of an order
for any such relief that shall not have been vacated, discharged, or stayed
or bonded pending appeal within 60 days from the entry thereof; or (iv) any
Group Member shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) any Group Member shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay
its debts as they become due; or
(g) one or more judgments or decrees shall be entered against any
Group Member involving in the aggregate a liability (not paid or fully
covered by insurance as to which the relevant insurance company has not
denied coverage) of $500,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal
within 30 days from the entry thereof;
(h) any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported
to be created thereby; or
(i) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect (other than as expressly permitted by this Agreement) or any Loan
Party or any Affiliate of any Loan Party shall so assert; or
(j) a Change of Control (as defined in the Borrower's Sixth Amended
and Restated Certificate of Incorporation) shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Notes (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents shall immediately become
due and payable, and (B) if such event is any other Event of Default the Lenders
may declare the Notes (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 8.1. The
Lenders and each Loan Party party to the relevant Loan Document may, from time
to time, (a) enter into written amendments, supplements or modifications hereto
and to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Lenders may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences. Any such waiver and any such amendment,
supplement or modification shall be binding upon the Lenders and the Borrower
and all future holders of the Notes. In the case of any waiver, the Loan Parties
and the Lenders shall be restored to their former positions and rights hereunder
and under the other Loan Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
8.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case the Borrower and the Lenders, or to
such other address as may be hereafter notified by the respective parties
hereto:
Borrower: printCafe, Inc.
Forty 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: President
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Lenders: Xxxxxx X. Xxxxxxxx, Xxxxxxxx X. Xxxxxxxx, and Xxxxxxx
X. Xxxxx
c/o Gray, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A.
3400 City Center
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
PROVIDED that any notice, request or demand to or upon the Lenders shall not be
effective until received.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Lenders, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Notes.
8.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or
reimburse the Lenders for all reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including the reasonable legal fees and costs to the Lenders'
counsel, and filing and recording fees and expenses, with statements with
respect to the foregoing to be submitted to the Borrower prior to the Closing
Date (in the case of amounts to be paid on the Closing Date) and from time to
time thereafter on a quarterly basis or such other periodic basis as the Lenders
shall deem appropriate, (b) to pay or reimburse the Lenders for all its costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including the fees and disbursements of counsel to the Lenders, (c)
to pay, indemnify, and hold the Lenders harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, that may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold the Lenders and their respective
affiliates, agents, heirs and representatives (each, an "INDEMNITEE") harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of any Group Member or any of the Properties and
the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any
Indemnitee against any Loan Party under any Loan Document (all the foregoing in
this clause (d), collectively, the "INDEMNIFIED LIABILITIES"), PROVIDED, that
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities to the extent such Indemnified Liabilities are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such
Indemnitee. Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and agrees to cause its Subsidiaries to waive,
all rights for contribution or any other rights of recovery with respect to all
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, under or related to Environmental Laws,
that any of them might have by statute or otherwise against any Indemnitee. All
amounts due under this Section 8.5 shall be payable not later than 10 days after
written demand therefore. Statements payable by the Borrower pursuant to this
Section 8.5 shall be submitted to the President of the Borrower (Telephone No.
000-000-0000) (Telecopy No. 412-456-1151), at the address of the Borrower set
forth in Section 8.2, or to such other Person or address as may be hereafter
designated by the Borrower in a written notice to the Lenders. The agreements in
this Section 8.5 shall survive repayment of the Loan and all other amounts
payable hereunder.
8.6 SUCCESSORS AND ASSIGNS; ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit the
Borrower and the Lenders, all future holders of the Notes and their respective
successors, heirs, representatives and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement or the
other Loan Documents without the prior written consent of the Lenders and the
Lenders may not assign or transfer any of their rights or obligations under this
Agreement or the other Loan Documents without the prior written consent of the
Borrower (except for testamentary or inter vivos estate planning transfers,
which may be effected without such consent of Borrower).
(b) Solely to the extent an assignment is permitted pursuant to
Section 8.6(a), any of the Lenders (an "ASSIGNOR") may, in accordance with
applicable law, at any time and from time to time assign to any Person (an
"ASSIGNEE") all or any part of their rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance, executed
by such Assignee and such Assignor. Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of the Lenders hereunder as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto). Except in the case of the assignment of all of the Lenders' interest in
this Agreement, the Lenders shall retain all rights and obligations with respect
to the administration, waiver, amendment, collection and enforcement of,
compliance with and consent to the terms and provisions of this Agreement, the
Notes and any Security Documents.
8.7 ADJUSTMENTS; SET-OFF. In addition to any rights and remedies of
the Lenders provided by law, the Lenders shall have the right, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, upon any amount becoming due and
payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lenders or any branch or
agency thereof to or for the credit
or the account of the Borrower, as the case may be. The Lenders agrees promptly
to notify the Borrower after any such setoff and application made by the
Lenders, provided that the failure to give such notice shall not affect the
validity of such setoff and application.
8.8 COUNTERPARTS. This Agreement and each of the other Loan Documents
may be executed by one or more of the parties hereto or thereto on any number of
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Delivery of an executed
signature page of this Agreement or of any other Loan Document by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof or thereof. A set of the copies of this Agreement and the other Loan
Documents signed by all the parties shall be lodged with the Borrower and the
Lenders.
8.9 SEVERABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.10 INTEGRATION. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower and the Lenders with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Lenders relative to the subject matter
hereof not expressly set forth or referred to herein or in the other Loan
Documents.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) agrees that service of process in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a
party may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid to the
Borrower at its address set forth in Section 8.2 or at such other address
of which the Lenders shall have been notified pursuant thereto;
(b) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(c) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) the Lenders has no fiduciary relationship with or duty to the
Borrower arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship
between the Lenders and the Borrower in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby
between the Lenders and the Borrower.
8.14 RELEASES OF GUARANTEES AND LIENS. At such time as the Notes and
the other obligations under the Loan Documents shall have been paid in full, the
Collateral shall be released from the Liens created by the Security Documents,
and the Security Documents and all obligations (other than those expressly
stated to survive such termination) of each Loan Party under the Security
Documents shall terminate, all without delivery of any instrument or performance
of any act by any Person.
8.15 CONFIDENTIALITY. The Lenders agrees to keep confidential all
non-public information provided to it by any Loan Party pursuant to this
Agreement that is designated by such Loan Party as confidential; provided that
nothing herein shall prevent the Lenders from disclosing any such information
(a) subject to an agreement to comply with the provisions of this Section, to
any actual or prospective Assignee (or any professional advisor to such
counterparty), (b) to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates, (c) upon the
request or demand of any Governmental Authority, (d) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (e) if requested or required to do so in
connection with any litigation or similar proceeding, (f) that has been publicly
disclosed, (g) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires
access to information about the Lenders's investment portfolio in connection
with ratings issued with respect to the Lenders, or (h) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
8.16 MERGER AGREEMENT. Except as modified hereby, the Merger Agreement
and the covenants, representations and warranties therein shall remain in full
force and effect. Notwithstanding anything to the contrary herein, the terms of
this Agreement are not intended to and do not serve to effect a novation as to
the Merger Agreement or indebtedness currently evidenced by the Existing Notes.
The parties hereto expressly do not intend to extinguish the Merger Agreement or
the indebtedness currently evidenced by the Existing Notes. Instead, it is the
express intention of the parties hereto to reaffirm, subject to the provisions
of this Agreement, the Merger Agreement and the indebtedness currently evidenced
by the Existing Notes.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
PRINTCAFE, INC., as Borrower
By: /s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
Title: President and Chief Executive
Officer
PRINTCAFE SYSTEMS, INC., as Merger
Subsidiary
By: /s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
Title: President and Chief Executive
Officer
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxx, as Lender
/s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxxx, as Lender
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx, as Lender
SCHEDULE 2.2
NOTES TO BE ISSUED
Lender Original Principal Amount
-----------------------------------------------------------------------
Xxxxxx X. Xxxxxxxx $3,000,000
Xxxxxxxx X. Xxxxxxxx $3,000,000
Xxxxxxx X. Xxxxx $6,000,000
