WAIVER AND AMENDMENT AGREEMENT (this "Waiver Agreement") dated as of July
1, 1997 by and among Unidigital Elements (NY), Inc., Unidigital/Cardinal
Corporation, Unidigital Elements (SF), Inc. and Unidigital/Xxxxx Corporation
(collectively, the "Borrowers"), Unidigital Inc. (the "Company"), and The Chase
Manhattan Bank (the "Lender"). Terms used herein as defined terms and not
otherwise defined herein shall have the meanings given thereto in that certain
Credit Agreement dated as of April 3, 1997 by and between the Borrowers and the
Lender.
WHEREAS, Unidigital/Xxxxx Corporation ("UBC") heretofore incurred
Indebtedness in the principal amount of $1,725,000 in connection with an
Acquisition Transaction involving Xxxxx Image Group, Inc. ("Xxxxx") and such
Indebtedness (the "Xxxxx Acquisition Indebtedness") is currently outstanding;
WHEREAS, the Company proposes to acquire through a wholly-owned United
Kingdom subsidiary (the "New U.K. Subsidiary"), the assets of Libra City
Corporate Printing LTC, a United Kingdom corporation, for a purchase price of
approximately $2,600,000 (the "1997 U.K. Acquisition Transaction");
WHEREAS, in connection with the 1997 U.K. Acquisition Transaction, the
Company proposes to borrow up to $4,000,000 ("the Bridge Loan") from a group of
investors to be evidenced by its promissory notes in the aggregate principal
amount of the Bridge Loan and to issue to such investors warrants for shares of
the Company;
WHEREAS, the incurrence by the Company of Indebtedness represented by the
Bridge Loan in the form as currently proposed would constitute a violation or
violations of Section 6.01 of the Credit Agreement; and
WHEREAS, the Lender is willing to waive such violation or violations and to
enable the Transactions to be consummated, subject to the terms and conditions
hereof;
NOW, THEREFORE, WITNESSETH, that for good and valuable consideration, the
receipt of which the parties hereby acknowledge, the parties hereto agree as
follows:
1. (a) Solely to the extent necessary to permit the effectuation of the
Transactions and subject to the terms and conditions hereof, the Lender hereby
waives the application of those provisions of Section 6.01 that would otherwise
prohibit the Company from incurring (and the Borrowers from suffering the
Company to incur) Indebtedness in the form of the Bridge Loan.
(b)(l) The Borrowers and the Company agree that $1,400,000 principal amount
of the Bridge Loan shall, by its express terms (as set forth in the form of
promissory note of the Company annexed hereto as Exhibit A), be subordinated to
the claims of the Lender against the Borrowers and the Company. The Lender and
the Borrowers agree that such $1,400,000 of principal amount of the Bridge Loan
shall to the extent so evidenced by notes in the form of Exhibit A hereto be
characterized as Approved Subordinated Debt for purposes of the
Credit Agreement. The Borrowers and the Company covenant and agree that, so long
as any of the Loans are outstanding and the Commitment has not yet terminated,
any replacements or substitution for any of such promissory notes shall be
issued by the Company in the same form as Exhibit A and, failing issuance
(whether in replacement, substitution or otherwise) in such form, the principal
so evidenced by a note not in such form shall thereupon no longer constitute
Approved Subordinated Indebtedness and the existence of the Indebtedness
represented by such principal shall constitute a violation of Section 6.01 of
the Credit Agreement and, accordingly, an Event of Default thereunder.
(2) The Borrowers, the Company and the Lender agree that the portion in the
principal amount $2,600,000 of the Indebtedness represented by the Bridge Loan
which the Company shall not evidence by promissory notes in the form of Exhibit
A hereto shall, accordingly, not be Approved Subordinated Debt, but shall,
however, be treated for purposes of the Credit Agreement as Indebtedness of the
Company which is subject to Section 6.01(c) of the Credit Agreement. With
respect to said Section 6.01(c), the Borrowers, the Company and the Lender agree
that such $2,600,000 of Bridge Loan and the Xxxxx Acquisition Indebtedness shall
be treated as fully exhausting the Indebtedness ceiling of $3,000,000 of the
Borrowers thereunder for the current fiscal year of the Company and no further
Indebtedness may be incurred under Section 6.01(c) during such current fiscal
year.
(c) The Lender waives the requirement that the New U.K. Subsidiary shall on
the date hereof be required to comply with Section 5.09 of the Credit Agreement;
provided, however, that the Borrowers shall cause it to comply with such Section
promptly upon notice from the Lender, which Lender may give in its sole
discretion.
2. The waivers herein granted by the Lender shall be conditioned upon and
shall not become effective unless and until:
(i) The Company shall have delivered to the Lender a certificate of
the Chief Financial Officer of the Company certifying that the form of
promissory note annexed hereto as Exhibit A is the form of note issued by
the Company to purchasers of promissory notes representing $1,400,000
principal amount of the Bridge Loan;
(ii) The Company shall have executed and delivered to the Lender: (x)
a Pledge Security Agreement in the form of Exhibit B-1 hereto, (y)
financing statements on Form UCC-1 in the form of Exhibit B-2 hereto, and
(z) shall have pledged, hypothecated and delivered to the Lender (under the
Pledge Security Agreement), free and clear of any Liens (other than any
Permitted Encumbrances), investment grade commercial paper owned by the
Company (with any required endorsements) having a fair market value on the
date hereof not less than $350,000; and
(iii) The Borrowers shall have delivered a certificate of the Chief
Financial Officer of the Company required by Section 6.04(c) of the Credit
Agreement with respect to the 1997 U.K. Acquisition Transaction.
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3. Section 1.01 of the Credit Agreement is hereby amended as follows:
(i) A definition of "Pledge Security Agreement" is added to such
Section 1.01, which shall read as follows:
"Pledge Security Agreement" means that certain Pledge
Security Agreement dated as of July 1, 1997 made by the Company
to the Lender, as it may be supplemented, amended or modified
from time to time."
(ii) The definition of "Security Documents" as set forth in such
Section 1.01 is amended so that it shall read as follows:
"'Security Documents' means (x) each of the agreements,
instruments, and documents referred to in clauses (i) through
(iii) of Section 4.01(a) (including, without limitation, any
guarantee or security agreement hereafter made and given to the
Lender as provided in Section 5.09), and (y) the Pledge Security
Agreement."
4. This Waiver Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and shall be governed by the
laws of the State of New York applicable to contracts made and to be performed
entirely within such State, without reference to conflict of laws principles.
5. This Waiver Agreement may be executed in counterparts, each of which
when so executed and delivered (including by facsimile transmission of a signed
counterpart) shall be deemed to be an original and all of which taken together
shall constitute but one and the same instrument.
6. Except as expressly set forth herein, the Credit Agreement as heretofore
amended shall remain in full force and effect, and the Credit Agreement is
hereby ratified and confirmed by the Borrowers.
7. This Waiver Agreement shall constitute an additional Loan Document.
8. Each Borrower hereby represents and warrants to the Lender that, after
giving effect to this Waiver, no Default or Event of Default has occurred and is
continuing as of the date hereof under the Credit Agreement or will result by
reason of the consummation of any of the Transactions.
9. Each of the Borrowers and the Company hereby warrants and represents to
the Lender that this Waiver Agreement and the other documents contemplated
hereby and all of the actions to be taken in connection herewith or therewith
have been authorized by all necessary corporate and shareholder action and will
not conflict with, violate or constitute a default under their charters, by-laws
or any agreements, instruments or other documents to which they or any
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one of them is a party or by which any of their assets are bound (including,
without limitation, any agreements, instruments or other documents executed or
to be executed in connection with the Transactions) and that the same do not and
will not violate any applicable laws or regulations.
10. Without limiting or being limited by Section 8.03(b) of the Credit
Agreement, the Borrowers, jointly and severally, indemnify the Lender and each
Related Party of the Lender (each such person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of counsel for any Indemnitee, arising out of, in connection with,
or as a result of (i) the execution or delivery of this Waiver Agreement or any
other Loan Document or any agreement or instrument contemplated hereby or
thereby, or the performance by the parties hereto or thereto of their respective
obligations hereunder or thereunder, or the consummation of the transactions
contemplated hereby or thereby, or (ii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided, that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by any final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee.
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver
Agreement to be executed and delivered in the City of New York as of the date
first hereinabove written.
THE CHASE MANHATTAN BANK
By:/s/ Xxxxxx Xxxxxx
--------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
UNIDIGITAL ELEMENTS (NY), INC.
By:/s/ Xxxxxxx X. Xxx
--------------------------
Name: Xxxxxxx X. Xxx
Title: Chairman
UNIDIGITAL/CARDINAL CORPORATION
By:/s/ Xxxxxxx X. Xxx
--------------------------
Name: Xxxxxxx X. Xxx
Title: Chairman
UNIDIGITAL ELEMENTS (SF), INC.
By:/s/ Xxxxxxx X. Xxx
--------------------------
Name: Xxxxxxx X. Xxx
Title: Chairman
UNIDIGITAL/XXXXX CORPORATION
By:/s/ Xxxxxxx X. Xxx
--------------------------
Name: Xxxxxxx X. Xxx
Title: Chairman
UNIDIGITAL INC.
By:/s/ Xxxxxxx X. Xxx
--------------------------
Name: Xxxxxxx X. Xxx
Title: President & CEO
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