Exhibit 10.56
SECOND AMENDMENT TO
AMENDED AND RESTATED
SUBORDINATION AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED SUBORDINATION AGREEMENT
(this "Second Amendment") is made as of April 11,2003, by and among IMAGEMAX,
INC., a Pennsylvania corporation, together with its wholly owned subsidiary
IMAGEMAX OF DELAWARE, INC., a Delaware corporation (collectively, the
"Borrowers"); COMMERCE BANK, NA ("Commerce") for itself and as agent pursuant to
the Credit Agreement described below (in such capacity, the "Agent"), and the
Lenders, who are or who may become Lenders, under the Credit Agreement described
below (collectively, the "Lenders"), and TDH III, L.P. ("TDH"), LVIR INVESTOR
GROUP, LP ("LVIR", the assignee of Dime Capital Partners, Inc.) and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ ("▇▇▇▇▇"; TDH, LVIR and ▇▇▇▇▇ sometimes individually a "Creditor" and
collectively the "Creditors").
Background
A. Borrowers, Commerce (as Agent), the Lenders, and the Creditors are
parties to that certain Amended and Restated Subordination Agreement dated as of
June 13, 2002, as amended by the First Amendment to Amended and Restated
Subordination Agreement dated as of December 23, 2002, in connection with the
subordination of certain indebtedness of Borrowers to the Creditors in favor of
Lenders, all as more particularly set forth therein (the "Restated Subordination
Agreement"). All initially capitalized terms used herein and not otherwise
defined herein shall have the same meaning as ascribed to such terms in the
Restated Subordination Agreement.
B. Pursuant to the terms, and subject to the conditions set forth in,
the Amended and Restated Credit Agreement dated as of June 13, 2002, as amended
by the First Amendment to Amended and Restated Credit Agreement dated as of
December 23, 2002 (the "First Amendment to Credit Agreement"), Lenders
established a Revolving Credit Facility for Borrowers pursuant to which Lenders
severally, and not jointly, agreed, subject to and in reliance on, all of the
provisions of the Credit Agreement and the other Loan Documents referred to
therein, to provide: (i) a Revolving Credit Facility in an amount not to exceed
at any time the Maximum Available Revolving Credit, which Revolving Credit
Facility is additionally evidenced by those certain Second Amended and Restated
Credit Notes of even date therewith; and (ii) a Term Loan Facility in the amount
of Two Million Two Hundred Thirty Thousand ($2,230,000) Dollars, which Term Loan
Facility is additionally evidenced by those certain Second Amended and Restated
Term Loan Notes issued by the Borrowers on June 13, 2002 in favor of the
Lenders.
C. Borrowers have requested, and Lenders have agreed, to increase the
amount of the Maximum Available Revolving Credit under the Revolving Credit
Facility subject to the terms, conditions and provisions set forth in that
certain Second Amendment to Amended and Restated Credit Agreement of even date
herewith (the "Second Amendment to Credit Agreement", and together with the
Amended and Restated Credit Agreement and the First Amendment to Credit
Agreement, collectively the "Revised Credit Agreement"), all as more
particularly set forth therein. Pursuant to the terms of the Restated
Subordination Agreement, the maximum principal amount of indebtedness arising
under the Senior Loan Documents which shall constitute "Senior Obligations"
under the Restated Subordination Agreement as amended by the First Amendment to
Amended and Restated Subordination Agreement was not to exceed Seven Million Two
Hundred Thirty Thousand ($7,230,000) Dollars, plus all costs of collection and
any expenses incurred to (i) protect or defend the Collateral or (ii) with
respect to the exercise of any remedies to enforce or collect the Senior
Obligations.
D. In consideration of the economic benefits to be derived by the
Borrowers and the Creditors by the increase in the Maximum Available Revolving
Credit to be made available to Borrowers by the Lenders under the Second
Amendment to Credit Agreement, the creditors have agreed to: (i) consent to the
execution and delivery by Borrowers and the Lenders of the Second Amendment to
Credit Agreement; and (ii) amend the defined terms of "Maximum Available
Revolving Credit", "Senior Credit Facilities", "Senior Obligations", "Senior
Notes", and "Senior Loan Documents" as set forth in the Restated Subordination
Agreement to contemplate such amendments as set forth herein. Other than as set
forth herein, each and every other term and condition set forth in the Restated
Subordination Agreement, is intended by the parties hereto be to ratified and
confirmed in full.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, covenant and agree as follows:
1. Amended and Restated Defined Terms. The following terms defined in
the Restated Subordination Agreement are each hereby amended and restated in
their respective entirety:
(a) "Maximum Available Revolving Credit" shall mean the lesser
of (i) Seven Million ($7,000,000) Dollars, less the aggregate face amount of
Letters of Credit issued by the Agent for the benefit of the Borrowers pro rata
on account of the Lenders; or (ii) the sum of (a) Eighty (80%) Percent of
Borrowers' Eligible Accounts Receivable (or such lesser percentage as the Agent
in its sole and absolute discretion (exercised in good faith in its reasonable
judgment), may determine) less an amount equal to the aggregate amount of trade
payables of any of the Borrowers due to Minolta Corporation and Canon USA, Inc.,
and any of their respective Affiliates, and (b)(1) from the date of the Second
Amendment through September 30, 2003, Fifty (50%) Percent of Borrowers' accounts
receivable, which are in excess of ninety (90) days from the date of the billing
thereof, but in all other respects comport to the definition of Eligible
Accounts Receivables of the Borrower (the "Over 90-Day Receivables"); or (2)
from October 1, 2003 through December 31, 2003, Thirty-Five (35%) Percent of
Borrowers' Over 90-Day Receivables, provided, however, that any Advance against
such Over 90-Day Receivables shall not exceed Five Hundred Thousand ($500,000)
Dollars, all of the foregoing determined in accordance with the last prevailing
Borrowing Base Certificate delivered to Agent in the form of Schedule 2.1.4 of
the Revised Credit Agreement.
(b) "Senior Credit Facilities" shall mean the credit
facilities extended by the Lenders to the Borrowers under the Senior Loan
Documents.
(c) "Senior Obligations" shall mean the following obligations
of the Borrowers to the Lenders and/or Agent, whether outstanding on the date
hereof or hereafter incurred, including any indebtedness of Borrowers to others
which Lenders or Agent may acquire by assignment or otherwise, and any other
existing or future indebtedness in favor of Lenders or Agent, whether matured or
unmatured, direct or contingent, joint or several, including, without
limitation, any extensions, modifications, renewals thereof and substitutions
therefor and any refinancing of or increases to, any such indebtedness: (a) all
existing and future debts, liabilities and obligations of the Borrowers in favor
of Lenders and/or Agent including, without limitation, those incurred pursuant
to the Original Senior Loan Documents and the Senior Loan Documents, including
the principal amount of, and accrued interest (including, without limitation,
any interest which accrues after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization of any of
the Borrowers, whether or not allowed as an enforceable claim against any of the
Borrowers pursuant to applicable bankruptcy, insolvency or reorganization laws)
on the Senior Notes and all indebtedness, liabilities and obligations of the
Borrowers in respect thereof; and (b) all other indebtedness, obligations and
liabilities (including fees and expenses) of Borrowers to Lenders and/or Agent
now existing or hereinafter incurred, whether created under or with respect to
the Original Senior Loan Documents, the Senior Loan Documents or otherwise
including as to both (a) and (b), without limitation, (i) any interest thereon
which accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of any of the
Borrowers, whether or not allowed as an enforceable claim against such Borrower
pursuant to applicable bankruptcy, insolvency or reorganization laws, or (ii)
any advances by the Lenders which exceed the aggregate face amount of the Senior
Notes or any other instruments evidencing any of the Senior Obligations, or
which are made after the occurrence of a default, violation or event of default
under the Revised Credit Agreement or any other agreement among Borrowers, Agent
and/or Lenders, and any refinancing of, or increases to, any of the indebtedness
described as Senior Obligations. Notwithstanding the foregoing, the maximum
principal amount of indebtedness arising under the Senior Loan Documents which
shall constitute "Senior Obligations" under this Agreement shall not exceed
Seven Million Three Hundred Sixty-Five Thousand ($7,365,000) Dollars (the
"Maximum Principal Amount"), plus all costs of collection and any expenses
incurred to (i) protect or defend the Collateral or (ii) with respect to the
exercise of any remedies to enforce or collect the Senior Obligations; provided,
however, that, as of July 1, 2003, the Maximum Principal Amount shall be reduced
to Seven Million ($7,000,000) Dollars if Borrowers have made the Term Loan
payment required by, and pursuant to the terms of, Clause 2.2.3(v) of the
Revised Credit Agreement.
(d) "Senior Loan Documents" shall mean, the Revised Credit
Agreement and the Senior Notes, together with all agreements, documents and
instruments executed and delivered in connection therewith.
(e) "Senior Notes" shall mean those Second Amended and
Restated Revolving Credit Notes in the form attached as Exhibit A to the Second
Amendment to Credit Agreement, together with the Second Amended and Restated
Term Loan Notes issued in connection with the Amended and Restated Credit
Agreement.
2. Confirmation of Obligations of Borrowers to Creditors and Lenders.
(a) Borrower and Creditors hereby acknowledge and confirm that
the outstanding principal balance of Obligations of Borrowers to Creditors is,
as of the date hereof, Six Million Two Hundred Seventy Thousand ($6,270,000)
Dollars, and that the accrued interest on the principal balance of Obligations
of Borrowers to Creditors has been accruing at the rate of Nine (9.00%) Percent
since December 31, 2001, and has been, and will be, compounded semi-annually on
June 30 and December 31 and that such interest, together with costs, is, as of
the date hereof $595,942.21.
(b) Lenders hereby acknowledge and confirm that the
outstanding principal balance of Borrowers' obligations to the Lenders, as of
March 31, 2003 was $6,355,260.33 and that the aggregate amount of interest and
other charges owed by Borrowers to Lenders, as of March 31, 2003 was Zero ($0)
Dollars.
3. Ratification of Section 4 hereof. Each of the representations,
warranties, covenants and acknowledgments set forth in Section 4 of the Restated
Subordination Agreement are each hereby ratified and confirmed in full as if
republished herein in full.
4. Consent to Senior Loan Documents. Creditors hereby consent to all of
the terms, covenants and conditions set forth in the Restated Credit Agreement,
as amended by the First Amendment to Credit Agreement, the Second Amendment to
Credit Agreement, the issuance of the First Amended and Restated Revolving
Credit Notes, the issuance of the Second Amended and Restated Revolving Credit
Notes in the form attached as Exhibit A to the Second Amendment to Credit
Agreement, the increase in the Maximum Available Revolving Credit and the Senior
Obligations together with each and every other term, condition and provision as
contemplated by the Second Amendment to Credit Agreement.
5. Borrowers Acknowledgments, Representations and Warranties.
(a) Each of the Borrowers acknowledges receipt of this Second
Amendment, consents to its terms and conditions, and agrees, except as permitted
under the Restated Subordination Agreement, as amended by this Second Amendment,
not to pay any of Obligations of Borrowers to Creditors while any of the Senior
Obligations remain outstanding. Each of the Borrowers further agrees to notify
Agent of any legal proceedings against Borrowers by Creditors and, at Agent's
request, to defend such proceedings to the best of Borrowers' ability.
(b) Each of the Borrowers agrees that, solely in order to
prevent the barring of claims, or any of them, by imposition of any applicable
statute of limitations, Borrowers shall, from time to time and at such times as
Agent and/or Creditors deem necessary, acknowledge in writing Obligations of
Borrowers to Creditors.
(c) Each of the Borrowers warrants and represents that each
Borrower has disclosed to Agent and Lenders all of Obligations of Borrowers to
Creditors.
6. Entire Agreement. The "Background" Section above is incorporated
herein by reference and is hereby made a part of this Second Amendment. This
Second Amendment embodies the entire agreement of the parties hereto, and it is
acknowledged that there are no customs, representations, promises, terms,
conditions, or obligations referring to the subject matter, and no inducements
or representations leading to the execution hereof, other than mentioned herein;
and there may be no modification of this Second Amendment except in writing
executed with the same formalities as this Second Amendment. No failure by Agent
or Lenders to exercise any right hereunder shall be construed as a waiver of the
right to exercise the same or any other right at any other time and from time to
time thereafter.
7. Successors and Assigns. This Second Amendment shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
8. Counterparts. This Second Amendment may be executed in any number of
counterparts, each of which so executed shall be deemed an original; and such
counterparts shall together constitute but one and the same Second Amendment.
Signature by facsimile shall bind the parties thereto.
9. Governing Law. This Second Amendment and all other instruments or
documents issued hereunder or pursuant hereto shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Amended and Restated Subordination Agreement to be executed the day
and year above written.
IMAGEMAX, INC.
IMAGEMAX OF DELAWARE, INC.,
Borrowers
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇,
Chief Financial Officer of each Borrower
COMMERCE BANK, N.A.,
Agent and Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President
FIRSTRUST BANK, Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
TDH III, L.P., Creditor
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇▇
Title: Partner
LVIR INVESTOR GROUP, LP, Creditor,
by its General Partner,
PROMETHEUS MANAGEMENT GROUP, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Creditor