THIS NOTE HAS BEEN ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH SUCH REQUIREMENTS OR A WRITTEN OPINION OF
COUNSEL ACCEPTABLE TO THE OBLIGOR THAT SUCH TRANSFER WILL NOT RESULT IN ANY
VIOLATION OF SUCH LAWS OR AFFECT THE LEGALITY OF ITS ISSUANCE.
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO OTHER INDEBTEDNESS
PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE SUBJECT TO THE
TERMS OF, THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED MARCH 25, 1998
(THE "SUBORDINATION AGREEMENT"), AS THE SAME MAY BE AMENDED, MODIFIED OR
OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG UNIDIGITAL INC., AS
BORROWER, CANADIAN IMPERIAL BANK OF COMMERCE, AS ADMINISTRATIVE AGENT FOR THE
LENDERS PARTIES TO THE SENIOR CREDIT AGREEMENT REFERRED TO IN THE SUBORDINATION
AGREEMENT, AND THE HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER
THE SUBORDINATED NOTE REFERRED TO IN THE SUBORDINATION AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THIS NOTE.
SUBORDINATED PROMISSORY NOTE
$750,000 March 25, 1998
FOR VALUE RECEIVED, the undersigned, Unidigital Inc., a Delaware
corporation (the "Obligor"), hereby promises to pay to the order of Kwik
International Color, Ltd., a New York corporation (the "Holder"), the principal
sum of Seven Hundred Fifty Thousand Dollars ($750,000) payable as set forth
below. The Obligor also promises to pay to the order of the Holder interest on
the principal amount hereof at a rate per annum equal to five and seven-tenths
percent (5.7%) compounded annually, which interest shall be payable at such time
as the principal is due hereunder. Interest shall be calculated on the basis of
a year of 365 days and for the number of days actually elapsed. Any amounts of
interest and principal not paid when due shall bear interest at the maximum rate
of interest allowed by applicable law. The payments of principal and interest
hereunder shall be made in coin or currency of the United States of America
which at the time of payment shall be legal tender therein for the payment of
public and private debts.
This Note shall be subject to the following additional terms and
conditions:
1. Payments. Principal shall be payable in thirty-five (35) equal
installments of $20,833.33 and one (1) installment of $20,833.45.
Each such payment shall be made by the Obligor to the Holder on
the fifteenth (15th) day of each month, commencing on April 15,
1998. In the event that any payment to be made hereunder shall be
or become due on a Saturday, Sunday or any other day which
is a legal bank holiday under the laws of the State of New York,
such payment shall be or become due on the immediately preceding
business day.
2. Restrictions on Transferability. This Note may not be transferred
in any manner other than by will or by the laws of descent or
distribution; provided, however, that the Holder shall be
permitted to transfer this Note, in whole or in part, to Richard
J. Sirota, the sole shareholder of the Holder, Mr. Sirota's wife,
Mr. Sirota's daughter or Walter Berkower (each, a "Permitted
Transferee"). Prior to transferring this Note pursuant to this
Section 2, the Holder shall cause the Permitted Transferee to
agree to be bound by the terms and provisions of this Note.
3. No Waiver. No failure or delay by the Holder in exercising any
right, power or privilege under this Note shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law. No course of dealing between
the Obligor and the Holder shall operate as a waiver of any
rights by the Holder.
4. Waiver of Presentment and Notice of Dishonor. The Obligor and all
endorsers, guarantors and other parties that may be liable under
this Note hereby waive presentment, notice of dishonor, protest
and all other demands and notices in connection with the
delivery, acceptance, performance or enforcement of this Note.
5. Place of Payment. All payments of principal of this Note and the
interest due thereon shall be made at the office of the Holder,
229 West 28th Street, New York, New York 10001-5996 or at such
other place as the Holder may from time to time designate in
writing.
6. Events of Default. The entire unpaid principal amount of this
Note and the interest due thereon shall, at the option of the
Holder exercised by written notice to the Obligor, forthwith
become and be due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived, if any one or more of the following events
(herein called "Events of Default") shall have occurred (for any
reason whatsoever and whether such happening shall be voluntary
or involuntary or come about or be effected by operation of law
or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any
administrative or governmental body) and be continuing at the
time of such notice, that is to say:
a) if default shall be made in the due and punctual payment of
the principal of this Note and the interest due thereon when
and as the same shall become due and payable, whether at
maturity, or by acceleration or otherwise, and such default
shall have continued for a period of five days;
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b) if the Obligor shall:
(i) admit in writing its inability to pay its debts
generally as they become due;
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act;
(iii)make an assignment for the benefit of creditors;
(iv) consent to the appointment of a receiver of the whole
or any substantial part of his property;
(v) on a petition in bankruptcy filed against him, be
adjudicated a bankrupt; or
(vi) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any
other applicable law or statute of the United States of
America or any State, district or territory thereof;
c) if a court of competent jurisdiction shall enter an order,
judgment, or decree appointing, without the consent of the
Obligor, a receiver of the whole or any substantial part of
Obligor's property, and such order, judgment or decree shall
not be vacated or set aside or stayed within 90 days from
the date of entry thereof; and
d) if, under the provisions of any other law for the relief or
aid of debtors, any court of competent jurisdiction shall
assume custody or control of the whole or any substantial
part of Obligor's property and such custody or control shall
not be terminated or stayed within 90 days from the date of
assumption of such custody or control.
7. Remedies. In case any one or more of the Events of Default
specified in Section 6 hereof shall have occurred and be
continuing, the Holder may proceed to protect and enforce his
rights either by suit in equity and/or by action at law, whether
for the specific performance of any covenant or agreement
contained in this Note or in aid of the exercise of any power
granted in this Note, or the Holder may proceed to enforce the
payment of all sums due upon this Note or to enforce any other
legal or equitable right of the Holder.
8. Severability. In the event that one or more of the provisions of
this Note shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Note, but this Note shall be construed as if such invalid,
illegal or unenforceable provision had never been contained
herein.
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9. Governing Law. This Note and the rights and obligations of the
Obligor and the Holder shall be governed by and construed in
accordance with the laws of the State of New York.
10. Unsecured Obligations. The Holder hereby acknowledges that the
obligations of the Obligor hereunder are unsecured.
* * * * * * *
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
and delivered on the date first written above.
UNIDIGITAL INC.
By:/s/ William E. Dye
---------------------------
William E. Dye, President