Exhibit 10.1
THIRD AMENDMENT TO
AMENDED AND RESTATED
SUBORDINATION AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED SUBORDINATION AGREEMENT
(this "Third Amendment") is made as of December 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, N.A. ("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 , and successor-in-interest to, 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 and the Second Amendment
to Amended and Restated Subordination Agreement dated as of April 11, 2003, in
connection with the subordination of certain indebtedness of Borrowers to the
Creditors in favor of Lenders, all as more particularly set forth therein
(collectively, 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, as further amended by the Second Amendment to Amended and
Restated Credit Agreement dated as of April 11, 2003 (collectively, the "Credit
Agreement"), and the Forbearance Agreement, dated as of August 18, 2003, by and
among Borrowers, Lenders and Agent, as further amended by the First Amendment to
Forbearance Agreement dated as of September 30, 2003, and as further amended by
the Second Amendment to Forbearance Agreement of even date herewith
(collectively, the "Credit Agreement"), Lenders established, modified and
administered, 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 (as
defined therein), and the Forbearance Agreement and the other Forbearance
Documents (as defined 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 dated April 11, 2003; and (ii) a Term
Loan Facility in the amount of Two Million Two Hundred Thirty Thousand
($2,230,000) Dollars, the indebtedness under which Term Loan Facility has been
paid in full.
C. Creditors have requested that Lenders, and Lenders have agreed to,
permit Creditors to declare an Event of Default under, and as defined in, the
Creditor Loan Documents solely to accelerate and demand payment of the
Obligations, as defined in the Creditor Loan Documents, (but otherwise not in
any manner, whether under the Creditor Loan Documents, or otherwise at law or in
equity, seek to collect the Obligations) by reason of those Events of Default
under the Creditor Loan Documents. 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. Amendment of Restated Subordination Agreement. Section 5(a) of the
Restated Subordination Agreement is hereby amended and restated in its
entirety, as follows:
(a) Creditors unconditionally agree not to accept or demand any payment
or reduction of Obligations of Borrowers to Creditors and that no
direct or indirect payment may be made by or on behalf of any of the
Borrowers upon or in respect of Obligations of Borrowers to Creditors
(including, but not limited to, all interest payments from Borrowers to
Creditors) until the repayment of the Senior Obligations in full and
the termination of the requirement that Lenders make Advances to the
Borrowers under the Credit Agreement. In the event that,
notwithstanding the foregoing, any payment shall be received by any
Creditor when such payment is prohibited by this Agreement, such
Creditor shall promptly notify Agent of such prohibited payment and
such payment shall be held in express trust for the benefit of, and
shall, promptly after such Creditor's receipt thereof, be paid over or
delivered to Agent, ratably for the benefit of the Lenders; provided,
however, that Creditors may declare an Event of Default under the
Creditor Loan Documents and accelerate and demand payment of the
Obligations solely and exclusively for the purpose of exercising the
Warrants (as defined in the Creditor Loan Documents) held by the
Creditors by reason of those Events of Default under the Creditor Loan
Documents; provided, further, however, that no Borrower may make, and
no Creditor may accept, any payment requested by such demand of
Creditors. The parties hereto agree that the default rate of interest
provided for in the second paragraph of the Convertible Subordinated
Promissory Notes shall not be applicable solely by reason of the
Company's failure to make payment of the Obligations following the
acceleration and demand for payment permitted by the previous sentence;
however, such waiver of the default rate of interest shall not apply to
any subsequent acceleration or demand by the Creditors in which
principal or interest is overdue. Notwithstanding the rights of the
Creditors under the forgoing proviso, and except as otherwise permitted
in the Subordination Agreement, each of the Creditors acknowledges and
agrees that so long as any portion of the Senior Obligations remain
unpaid or unperformed, none of the Creditors may exercise any other
right under the Creditor Loan Documents or otherwise at law or in
equity to collect or otherwise enforce the payment of the indebtedness
or the performance of the obligations of the Borrowers arising under,
or in connection with, the Creditor Loan Documents.
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 December 3, 2003, 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 is, as of December 3, 2003, One
Million One Hundred Fifty-Eight Thousand Ninety-Four ($1,158,094) Dollars.
(b) Lenders acknowledge and agree that as December 3, 2003
hereof: (i) the principal outstanding Indebtedness due under the Revolving
Credit Facility is Five Million Four Hundred Thirty-Eight Thousand Eight Hundred
Eight Dollars and Sixty Cents ($5,438,808.60); and (ii) accrued and unpaid
interest on the Indebtedness is One Thousand Nine Hundred Sixty-Four Dollars and
One Cent ($1,964.01), all of which is in addition to accrued and unpaid Lenders'
Costs and Fees as provided in the Loan Documents and the Forbearance Documents.
There is no Indebtedness outstanding under the Term Loan Facility.
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 herby 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 Credit Agreement and the
other Loan Documents (as defined their) and in the Forbearance Agreement and the
other Forbearance Documents (as defined therein).
5. Additional Subordinated Debt. As a condition to the effectiveness of
this Third Amendment, Borrowers shall have received from Creditors cash proceeds
in the amount of Five Hundred Thousand ($500,000) Dollars (the "Additional
Creditor Subordinated Debt") from additional subordinated debt, all of which
shall constitute Obligations of Borrowers to Creditors and shall be fully
subordinated to the Senior Obligations as provided in the Subordination
Agreement. Creditors, Borrowers, Agent and Lenders acknowledge and agree that
the Additional Creditor Subordinated Debt, and only the Additional Creditor
Subordinated Debt, may be secured by the Collateral (as defined in the Second
Amendment to Forbearance Agreement) held by the Lenders, provided, that (i) such
liens securing the Additional Creditor Subordinated Debt shall be and hereby are
fully subordinated for all purposes and in all respects to the liens and
security interests of Agent and Lenders in the Collateral, regardless of the
time, manner or order of perfection of any such liens and security interests and
(ii) Borrowers shall not grant to Creditors a lien on, or security interest, any
other property of Borrowers unless Agent and Lenders have a priority lien on,
and security interest, any such property. Creditors and Borrowers further agree
that they will not amend the Subordinated Loan and Amendment Agreement of even
date herewith among Creditors and ImageMax, Inc. or the Notes, Mortgage or
Security Agreement (each as defined in the Subordinated Loan and Amendment
Agreement) without the prior written consent of Agent and Lenders.
6. Borrowers' Acknowledgments, Representations and Warranties.
(a) Each of the Borrowers acknowledges receipt of this Third
Amendment, consents to its terms and conditions, and agrees, except as permitted
under the Restated Subordination Agreement, as amended by this Third 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 Obligations of Borrowers to
Creditors.
7. Entire Agreement. The "Background" Section above is incorporated
herein by reference and is hereby made a part of this Second Amendment. This
Third 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 Third Amendment except in writing
executed with the same formalities as this Third 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.
8. Successors and Assigns. This Third Amendment shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
9. Counterparts. This Third 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 Third Amendment.
Signature by facsimile shall bind the parties thereto.
10. Governing Law. This Third 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: TDH III, L.P., its general partner
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇▇
Title: General Partner
LVIR INVESTOR GROUP, LP, (the assignee of,
and successor-in-interest to, Dime Capital Partners,
Inc.), Creditor,
By its General Partner,
PROMETHEUS MANAGEMENT GROUP, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Creditor