Exhibit 10.4
This Note is subject to the terms and conditions of a
Subordinated Loan and Amendment Agreement, dated December 11, 2003 among
ImageMax, Inc. (the "Company") and holders of certain shares or holders having
rights to acquire shares of the outstanding capital stock of the Company. Copies
of such agreement may be obtained at no cost by written request made by the
holder of record of this Note to the Company.
This instrument and the rights and obligations evidenced
hereby are subordinate in the manner and to the extent set forth in that certain
Amended and Restated Subordination Agreement (the "Subordination Agreement")
dated as of June 13, 2002, as amended, among ImageMax, Inc., ImageMax of
Delaware, Inc., TDH III, L.P., LVIR Investor Group, LP, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
Commerce Bank, NA, Individually and as Agent.
This Note has not been registered under the Securities Act of
1933, as amended (the "Act"), and may not be offered, sold or otherwise
transferred, pledged or hypothecated unless and until registered under the Act
or unless the Company has received an opinion of counsel or other evidence
satisfactory to the Company and its counsel that such registration is not
required.
SECURED SUBORDINATED PROMISSORY NOTE
Due April 30, 2004
$133,333.00 December 11, 2003
FOR VALUE RECEIVED, IMAGEMAX, INC., a Pennsylvania corporation
having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company") and IMAGEMAX OF DELAWARE, INC., a
Delaware corporation having its principal place of business at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Subsidiary") hereby jointly
and severally promise to pay to the order of TDH III, L.P. (the "Holder"), at
the place designated by the Holder, the principal amount of ONE HUNDRED THIRTY
THREE THOUSAND THREE HUNDRED THIRTY THREE DOLLARS ($133,333) in lawful money of
the United States of America, and to pay interest in like money on the terms set
forth below. This Subordinated Promissory Note (as the same may hereafter be
amended and/or restated and any notes issued in substitution or exchange for any
of the foregoing, the "Note") is being delivered pursuant to the terms and
conditions of that certain Subordinated Loan and Amendment Agreement dated
December 11, 2003 among the Company and several investors one of which is the
Holder (the "Investors"), (as the same may hereafter be amended and/or restated,
the "Loan Agreement") pursuant to which the Investors loaned the Company and the
Subsidiary an aggregate of Five Hundred Thousand Dollars ($500,000), and the
Holder's rights under this Note are subject to the terms and conditions of the
Loan Agreement. This Note is one of several Notes issued under and as defined in
the Loan Agreement. All capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed to them in the Loan Agreement. In the
event the Holder makes any payments on behalf of the Company on account of the
Senior Obligations, as defined in the Subordination Agreement, (it being
understood that the Holder has no obligation to the Company to do so) the amount
of such payment shall be added to the principal balance hereof and shall accrue
interest from the date paid until repaid in full.
1. Payments of Interest and Principal. Payments of all amounts
outstanding hereunder including principal and accrued interest shall be payable
in a single payment on the earlier of (a) April 30, 2004 or (b) the same date
upon which the obligations of the Company under the Convertible Note become due
and payable, whether by acceleration or otherwise (the "Termination Date").
Interest shall accrue from the date hereof on the unpaid principal balance
hereof at a rate equal to nine percent (9%) per annum, compounded semi-annually
on June 30 and December 31. Such interest shall be calculated on the basis of
actual days elapsed over a 365-day year and shall be payable on the Termination
Date or on such earlier date as this Note is prepaid in full pursuant to the
terms set forth below. All payments of principal, interest, fees and other
amounts due hereunder shall be made by the Company in lawful money of the United
States of America, by wire transfer or by any other method approved in advance
by the Holder at the office of the Holder set forth in Section 10 hereof or at
such other place designated by the Holder in writing to the Company in
immediately available and freely transferable funds at such place of payment.
Upon the occurrence and during the continuance of an Event of
Default, the Company and the Subsidiary jointly and severally agree to pay
interest (computed on the same basis as set forth above) on the entire unpaid
principal balance hereof at the stated rate plus four and one-half percent
(4.5%) per annum, compounded semi-annually on June 30 and December 31 (or, in
each case, at the highest rate permitted by applicable law, whichever is less)
(such rate the "Default Rate"). In addition, to the extent permitted by
applicable law, the Company and the Subsidiary jointly and severally agree to
pay interest at the Default Rate on any overdue installment of interest not paid
within ten (10) days of the date when due, such Default Rate to be computed from
the date the installment of interest was due until the date such installment of
interest, including the interest accrued with respect thereto, is paid in full.
Finally, if the Holder makes any payments on behalf of the Company on account of
the Senior Obligations, the Default Rate of Interest shall apply to the unpaid
principal balance hereof until such principal balance and all accrued interest
have been repaid in full.
It is the intention of the Company and all individuals and
entities to whom Notes are being issued under the Loan Agreement, that all
payments on account of the Notes be made on a pro rata basis to all Holders of
Notes in proportion to the outstanding principal balance of such Notes. Should
any holder of this Note receive a payment in excess of the amount to which such
holder is entitled based on the foregoing understanding, such holder shall hold
such excess payment in trust for the benefit of the holders of other Notes who
received less than the amount they were entitled to receive and shall pay the
amount of such excess to such other holders. The Company acknowledges that the
principal balance of this Note shall not be reduced by such excess payments that
are paid out by the holder of this Note to the holders of other Notes as
provided herein.
2. Default and Remedies. (a) The occurrence of any one of the
following shall constitute an "Event of Default" under this Note:
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(i) Default shall occur in the payment of interest on
this Note or any of the other Notes or any of the Convertible Notes when the
same shall have become due; or
(ii) Default shall occur in the making of any payment
of the principal of this Note or any of the other Notes or any of the
Convertible Notes at the expressed or any accelerated maturity date; or
(iii) Default shall be made in the payment of the
principal of or interest on any Indebtedness (other than this Note or any of the
other Notes) of the Company or its Subsidiary in excess of $2,000,000 and such
default shall continue beyond the period of grace, if any, allowed with respect
thereto; or
(iv) Default or the happening of any event shall
occur under any contract, agreement, lease, indenture or other instrument under
which any Indebtedness (other than this Note) of Company or its Subsidiary may
be issued and such default or event shall not have been waived and shall (i)
result in liability of more than $2,000,000 and (ii) continue for a period of
time sufficient to permit the acceleration of the maturity of any such
Indebtedness of the Company or its Subsidiary outstanding thereunder; or
(v) Default shall occur in the observance or
performance of any covenant or agreement contained in the Loan Agreement or any
Warrant and such default is not remedied within twenty (20) business days after
the earlier of (i) the date on which the Company first obtains knowledge of such
Default and (ii) the date on which written notice thereof is given to the
Company by any Holder; an Event of Default shall occur under the Security
Agreement or the Mortgage; or any Event of Default shall occur under the Loan
and Warrant Purchase Agreement; or
(vi) Any representation or warranty made by the
Company in the Loan Agreement, or made by the Company in any agreement,
statement or certificate furnished by the Company in connection with the
consummation of the issuance and delivery of this Note and the Warrants or
furnished by the Company pursuant hereto or pursuant to the Loan Agreement, is
untrue in any material respect as of the date of the issuance or making thereof;
or
(vii) Final judgment or judgments for the payment of
money aggregating in excess of $2,000,000 or providing non-monetary relief
resulting in a Material Adverse Effect, is or are outstanding against the
Company and/or its Subsidiary and/or against any property or assets of any of
the foregoing and any one of such judgments has remained unpaid, unvacated,
unbonded or unstayed by appeal or otherwise for a period of ninety (90) days
from the date of its entry; or
(viii) The Company or its Subsidiary becomes
insolvent or bankrupt, is generally not paying its debts as they become due or
makes an assignment for the benefit of creditors, or the Company or its
Subsidiary applies for or consents to the appointment of a custodian, trustee,
liquidator, or receiver for the Company or for the major part of its property;
or
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(ix) A custodian, trustee, liquidator, or receiver is
appointed for the Company or its Subsidiary or for the major part of the
property of the Company or any of its Subsidiaries and is not discharged within
ninety (90) days after such appointment; or
(x) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or against the
Company or its Subsidiary and, if instituted against the Company or its
Subsidiary, are consented to or are not dismissed within ninety (90) days after
such institution.
(b) When any Event of Default described in paragraph (i) through
(vii), inclusive, of Section 2(a) above has happened and is continuing, any
holder of this Note may, by notice to the Company, declare the entire principal
and all interest accrued on this Note to be, and this Note shall thereupon
become, forthwith due and payable, without any presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived; provided,
however, that so long as the Institutional Investors both hold Notes, no Holder
of this Note may exercise the foregoing remedy without the prior written consent
of a Required Interest of Institutional Investors as defined in Section 1.31 of
the Loan Agreement. When any Event of Default described in paragraph (viii),
(ix) or (x) of Section 2(a) has occurred, then this Note shall immediately
become due and payable without presentment, demand or notice of any kind, all of
which are hereby expressly waived. Upon this Note becoming due and payable as a
result of any Event of Default as aforesaid, the Company and the Subsidiaries
will forthwith pay to the Holder of this Note the entire principal and interest
accrued on this Note. No course of dealing on the part of any Note holder nor
any delay or failure on the part of any Note holder to exercise any right shall
operate as a waiver of such right or otherwise prejudice such Holder's rights,
powers and remedies. The Company and the Subsidiary further agree, to the extent
permitted by law, to pay to the Holder or Holders of the Note all costs and
expenses, including reasonable attorneys' fees, incurred by them in the
collection of any Note upon any default hereunder or thereon.
3. [Reserved]
4. Restriction on Transfer.
(a) Subject to the provisions of Section 14, this Note and
the rights granted to the Holder are transferable, in whole or in part, upon
surrender of this Note, together with a properly executed assignment in the form
attached hereto as Exhibit A, at the office or agency of the Company referred to
in Section 10 hereof, provided, however, that any transfer or assignment shall
be subject to the conditions set forth in Section 4(b) hereof and Section __ of
the Loan Agreement. Until due presentment for registration of transfer on the
books of the Company, the Company and the Subsidiary may treat the registered
holder hereof as the owner and holder hereof for all purposes, and the Company
and the Subsidiary shall not be affected by any notice to the contrary.
(b) Exercise or Transfer Without Registration. If, at the
time of the surrender of this Note in connection with any transfer or exchange
of this Note, this Note shall not be registered under the Act and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer, or exchange, that the holder or transferee
of this Note, as the case may be, furnish to the Company a written opinion of
counsel, in form, substance and scope customary to opinions typically delivered
in transactions of this nature, to the effect that such transfer, or exchange
may be made without registration under the Act and under applicable state
securities or blue sky laws.
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5. Prepayment. This Note may be prepaid by the Company at any
time, in whole or in part, without penalty or premium.
6. [Reserved]
7. [Reserved]
8. Subordination. This Note is and shall be subordinated to
certain bank and other commercial lending obligations of the Company and its
Subsidiary as provided in the Loan Agreement and the Subordination Agreement,
but shall be senior to all other debt of the Company and its Subsidiary to
Persons other than the Investors except debt secured by a purchase money
security interest arising in connection with the purchase of equipment in the
ordinary course of business.
9. [Reserved]
10. Communications. All notices or requests provided for or
permitted to be given pursuant to this Agreement must be in writing and may be
given or served by (i) depositing the same in the United States mail, addressed
to the party to be notified, postage paid, and registered or certified with
return receipt requested, or (ii) by delivering such notice in person to such
party. Notices so deposited in the mail shall be deemed to have been given or
served on the date on which the party actually received or refused such written
notice, as shown by the date or postmark of any return receipt indicating the
date of delivery or attempted delivery to such receiving party. The addresses of
the parties hereto for all purposes of this Note are:
The Company:
ImageMax, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Holder:
TDH III, L.P.
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇, Keen & ▇▇▇▇▇▇▇
Radnor Court
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
11. Company's Waivers. The Company, to the extent permitted by
law, waives and agrees not to assert or take advantage of any of the following:
(a) acceptance or notice of acceptance of this Note by the Company; (b)
presentment and/or demand for payment of this Note or any indebtedness or
obligations hereby promised; and (c) protest and notice of dishonor with respect
to this Note or any indebtedness or performance of obligations arising
hereunder.
12. Governing Law. This Note shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to conflicts of laws principles.
13. Headings. The headings of the sections of this Note are
inserted for convenience only and do not constitute a part of this Note.
14. Assignments. This Note may not be assigned in whole or in
part without the consent of the Company; provided, however, that no such consent
shall be required (i) in connection with an assignment of this Note to one or
more partners of the Holder or to a trust established for the benefit of one or
more of such partners or (ii) to an assignment occurring after April 30, 2004.
15. Waiver of Trial by Jury. THE COMPANY, THE SUBSIDIARIES AND
HOLDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDINGS, CLAIMS OR
COUNTERCLAIMS, WHETHER IN CONTRACT OR TORT, AT LAW OR IN ANY WAY RELATING TO
THIS NOTE.
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IN WITNESS WHEREOF, IMAGEMAX, INC. has caused this Note to be
signed and to be dated the day and year first above written.
IMAGEMAX, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
IMAGEMAX OF DELAWARE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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