As filed with the Securities and Exchange Commission on February 8, 2007

Registration No. 333-          

 


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


Amendment No. 1

to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 


MONOTYPE IMAGING HOLDINGS INC.

(Exact Name of Registrant as Specified in Its Charter)

 


 

Delaware   7371   20-3289482
(State of Incorporation)  

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

500 Unicorn Park Drive

Woburn, Massachusetts 01801

(781) 970-6000

(Address, Including Zip Code, and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

 


Douglas J. Shaw

President and Chief Executive Officer

Monotype Imaging Holdings Inc.

500 Unicorn Park Drive

Woburn, Massachusetts 01801

(781) 970-6000

(Name, Address, Including Zip Code, and Telephone Number,

Including Area Code, of Agent For Service)

 


Copies to:

 

Jocelyn M. Arel

Lizette M. Pérez-Deisboeck

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, Massachusetts 02109

(617) 570-1000

  

Janet M. Dunlap

General Counsel and Secretary

Monotype Imaging Holdings Inc.

500 Unicorn Park Drive

Woburn, Massachusetts 01801

(781) 970-6000

 

Martin A. Wellington

Davis Polk & Wardwell

1600 El Camino Real

Menlo Park, California 94025

(650) 752-2000

 


Approximate date of commencement of proposed sale to the public:    As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.   ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

 


The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), shall determine.

 



EXPLANATORY NOTE

This Amendment No. 1 to the Registration Statement on Form S-1 (the “Form S-1”) of Monotype Imaging Holdings Inc. is being filed solely for the purpose of adding Exhibits to the original filing of the Form S-1, filed on January 26, 2007. Other than the addition of exhibits and corresponding changes to the exhibit index and signature page, the remainder of the Form S-1 is unchanged. Accordingly, the prospectus that forms a part of the Form S-1 is not reproduced in this Amendment No. 1. This Amendment No. 1 speaks as of the original filing date of the Form S-1 and does not reflect events occurring after the filing date of the original Form S-1, or modify or update the disclosures therein in any way other than as required to reflect the amendment set forth below.

 


PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses, other than the underwriting discount, payable by us in connection with the sale of common stock being registered. All amounts are estimated except the SEC registration fee and the NASD filing fee.

 

     Amount to be Paid

SEC registration fee

   $ 14,445

National Association of Securities Dealers Inc. fee

     14,000

Nasdaq Global Market listing fee

  

Printing and mailing

  

Legal fees and expenses

  

Accounting fees and expenses

  

Directors and officers insurance

  

Miscellaneous

  

Total

   $  

Item 14. Indemnification of Directors and Officers.

Section 145(a) of the Delaware General Corporation Law provides, in general, that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), because he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

Section 145(b) of the Delaware General Corporation Law provides, in general, that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor because the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made with respect to any claim, issue or matter as to which he or she shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, he or she is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or other adjudicating court shall deem proper.

Section 145(g) of the Delaware General Corporation Law provides, in general, that a corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any

 

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liability asserted against such person and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify the person against such liability under Section 145 of the Delaware General Corporation Law.

Article VII of our Amended and Restated Certificate of Incorporation, as amended to date (the “Charter”), provides that no director of our company shall be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to us or our stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) in respect of unlawful dividend payments or stock redemptions or repurchases, or (4) for any transaction from which the director derived an improper personal benefit. In addition, our Charter provides that if the Delaware General Corporation Law is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of our company shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.

Article VII of the Charter further provides that any repeal or modification of such article by our stockholders or an amendment to the Delaware General Corporation Law will not adversely affect any right or protection existing at the time of such repeal or modification with respect to any acts or omissions occurring before such repeal or modification of a director serving at the time of such repeal or modification.

Article V of our Amended and Restated By-Laws, as amended to date (the “By-Laws”), provides that we will indemnify each of our directors and officers and, in the discretion of our board of directors, certain employees, to the fullest extent permitted by the Delaware General Corporation Law as the same may be amended (except that in the case of an amendment, only to the extent that the amendment permits us to provide broader indemnification rights than the Delaware General Corporation Law permitted us to provide prior to such the amendment) against any and all expenses, judgments, penalties, fines and amounts reasonably paid in settlement that are incurred by the director, officer or such employee or on the director’s, officer’s or employee’s behalf in connection with any threatened, pending or completed proceeding or any claim, issue or matter therein, to which he or she is or is threatened to be made a party because he or she is or was serving as a director, officer or employee of our company, or at our request as a director, partner, trustee, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, foundation, association, organization or other legal entity, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of our company and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. Article V of the By-Laws further provides for the advancement of expenses to each of our directors and, in the discretion of our board of directors, to certain officers and employees.

In addition, Article V of the By-Laws provides that the right of each of our directors and officers to indemnification and advancement of expenses shall be a contract right and shall not be exclusive of any other right now possessed or hereafter acquired under any statute, provision of the Charter or By-Laws, agreement, vote of stockholders or otherwise. Furthermore, Article V of the By-Laws authorizes us to provide insurance for our directors, officers and employees, against any liability, whether or not we would have the power to indemnify such person against such liability under the Delaware General Corporation Law or the provisions of Article V of the By-Laws.

We have entered into indemnification agreements with each of our directors and certain of our executive officers. These agreements provide that we will indemnify each of our directors and certain of our executive officers to the fullest extent permitted by law. In addition, our stockholders agreement provides indemnification to TA Associates and D.B. Zwirn, and their associated investment funds, for damages, expenses, or losses arising out of, based upon or by reason of any third party or governmental claims relating to their status as a security holder, creditor, director, officer, agent, representative or

 

II-2


controlling person of us, or otherwise relating to their involvement with Monotype. There is also an indemnification provision in the stockholders agreement that survives following its termination for so long as any person nominated by TA Associates is a member of our board of directors.

We also maintain a general liability insurance policy which covers certain liabilities of directors and officers of our company arising out of claims based on acts or omissions in their capacities as directors or officers.

In connection with their investment in us, we entered into a stockholders agreement, dated as of November 5, 2004, with TA Associates and D.B Zwirn. Most provisions of the stockholders agreement terminate upon the closing of this offering. However, surviving provisions include our covenant to indemnify TA Associates and D.B. Zwirn, including their associated investment funds, subject to exceptions, for damages, expenses or losses arising out of, based upon or by reason of any breach of a covenant or agreement made by us in the stockholders agreement, any third party or governmental claims relating to their status as a security holder, creditor, director, agent, representative or controlling person of us, or otherwise relating to their involvement with us. This covenant continues until the expiration of the applicable statute of limitations. We have also covenanted to maintain directors and officers’ liability insurance for so long as any person nominated by TA Associates, as two-thirds holder, is a member of our board of directors.

In any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us within the meaning of the Securities Act, against certain liabilities.

Item 15. Recent Sales of Unregistered Securities.

During the past three years, we have sold and issued the following unregistered securities:

(1) On November 5, 2004, Agfa sold to Imaging Acquisition Corporation, a wholly-owned subsidiary of IHC, all 1,000 shares of common stock of Agfa Monotype for an aggregate purchase price of $194.0 million, consisting of cash plus assumption of obligations.

(2) On November 5, 2004, IHC sold 5,204,040 shares of IHC convertible preferred stock, convertible into 5,204,040 shares of its redeemable preferred stock and 304,752 shares of IHC common stock, to affiliates of TA Associates for an aggregate purchase price of $52,043,448.

(3) On November 5, 2004, IHC sold 250,000 shares of IHC convertible preferred stock, convertible into 250,000 shares of its redeemable preferred stock and 17,075 shares of IHC common stock, to affiliates of D.B. Zwirn for an aggregate purchase price of $2,500,171.

(4) On November 5, 2004, IHC sold 365,210 shares of IHC convertible preferred stock, convertible into 365,210 shares of its redeemable preferred stock (5,801 of which were later repurchased) and 20,638 shares of our common stock (323 of which were later repurchased), to certain former officers and employees of Agfa Monotype for an aggregate purchase price of $3,652,306.

(5) On November 5, 2004, Imaging Acquisition Corporation sold TA Associates, D.B. Zwirn and certain former officers and employees of Agfa Monotype notes in the aggregate original principal amount of $20,062,000.

(6) On November 30, 2004, IHC sold 7,500 shares of IHC convertible preferred stock, convertible into 7,500 shares of its redeemable preferred stock and 425 shares of IHC common stock, to certain former employees of Agfa Monotype for an aggregate purchase price of $75,004.

 

II-3


(7) On November 30, 2004, Imaging Acquisition Corporation sold certain former officers and employees of Agfa Monotype notes in the aggregate original principal amount of $25,000.

(8) On June 15, 2005, IHC sold 19,405 shares of IHC convertible preferred stock, convertible into 19,405 shares of its redeemable preferred stock to Ms. Arthur, for an aggregate purchase price of $300,001.

(9) On August 24, 2005, in connection with a recapitalization transaction and debt refinancing, all of the holders of shares of common stock of IHC exchanged their shares for shares of common stock of the registrant. The registrant did not receive any consideration for this transaction.

(10) On August 24, 2005, in connection with a recapitalization transaction and debt refinancing, all of the holders of shares of preferred stock of IHC exchanged their shares for shares of convertible preferred stock of the registrant. The registrant did not receive any consideration for this transaction.

(11) On August 24, 2005, in connection with a recapitalization transaction and debt refinancing, all of the holders of restricted stock of IHC exchanged their restricted stock for shares restricted stock of the registrant. The registrant did not receive any consideration for this transaction.

(12) On July 28, 2006, we sold promissory notes in connection with our acquisition of China Type Design in the aggregate amount of $600,000, which may convert into 100,000 shares of our common stock upon completion of this offering.

(13) Since November 5, 2004 until September 30, 2006, we granted, under our 2004 Option Plan, an aggregate of 343,962 options to purchase shares of our common stock to certain of our officers and employees at exercise prices ranging from $0.01 to $6.78 per share. Since November 5, 2004 until September 30, 2006, we granted, under our 2004 Option Plan, an aggregate of 581,625 shares of restricted stock to certain of our officers and employees at exercise prices ranging from $0.01 to $6.78 per share. On July 14, 2006, we granted, under our 2004 Option Plan, an aggregate of 16,839 options to purchase shares of our common stock to certain of our officers and employees. On September 30, 2006, we granted, under our 2004 Option Plan, an aggregate of 248,150 options to purchase shares of our common stock to certain of our officers, employees and non-employee directors. On December 31, 2006, we granted, under our 2004 Option Plan, an aggregate of 22,250 options to purchase shares of our common stock to certain of our officers, employees and consultants.

On July 14, 2006 and September 30, 2006, the compensation committee authorized the grant of stock options and the issuance of restricted stock to certain of our officers, employees and non-employee directors at the then current fair market value. The fair market value, based on the valuation performed by a third party, was received after September 30, 2006. For accounting purposes, the service inception date for stock options cannot precede the date of determination of the fair market value. Accordingly, the options granted and restricted stock issued on July 14, 2006 and September 30, 2006 are not recognized for accounting purposes as being issued as of September 30, 2006. Whenever we discuss stock options and restricted stock outstanding as of September 30, 2006, we include the options granted and the restricted stock issued on July 14, 2006 and September 30, 2006.

(14) On March 26, 2006, we issued 15,000 restricted shares of our common stock at a price of $6.78 per share to Mr. Simone, as director compensation.

(15) On September 30, 2006, we granted options to purchase 100,500 shares of our common stock, under our 2004 Option Plan, at an exercise price of $25.72 per share to certain of our officers and directors. Of these options, no options to purchase common stock have been exercised through January 1, 2007.

 

II-4


The sales of securities described in items (1) through (12), (14) and (15) above were deemed to be exempt from registration pursuant to Section 4(2) of the Securities Act and Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The issuances of the securities described in item (13) above were deemed to be exempt from registration pursuant to either Rule 701 promulgated under the Securities Act as transactions pursuant to compensatory benefit plans approved by the registrant’s board of directors or Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering.

The recipients of securities in each of these transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients either received adequate information about us or had adequate access, through their relationship with us, to information about us. There were no underwriters employed in connection with any of the transactions set forth in Item 15.

Item 16. Exhibits.

(a) See the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits filed as part of this registration statement on Form S-1, which Exhibit Index is incorporated herein by reference.

(b) Financial Statement Schedules

All schedules have been omitted because they are not applicable.

Item 17. Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by the controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

II-5


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Woburn, Commonwealth of Massachusetts, on February 8, 2007.

 

MONOTYPE IMAGING HOLDINGS INC.
By:  

/ S /    D OUGLAS J. S HAW

 

Douglas J. Shaw

President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on February 8, 2007:

 

Signature

  

Title

/ S /    D OUGLAS J. S HAW

   President, Chief Executive Officer and Director (Principal Executive Officer)
Douglas J. Shaw   

/ S /    J ACQUELINE D. A RTHUR

Jacqueline D. Arthur

   Senior Vice President, Chief Financial Officer and Assistant Secretary (Principal Financial and Accounting Officer)

*

Robert M. Givens

   Chairman of the Board

*

A. Bruce Johnston

   Director

*

Roger J. Heinen, Jr.

   Director

*

Pamela F. Lenehan

   Director

*

Jonathan W. Meeks

   Director

*

Peter J. Simone

   Director

 

By:  

    / S /    D OUGLAS J. S HAW

 

Douglas J. Shaw

Attorney-in-fact

 

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EXHIBIT INDEX

 

Number   

Description

1.1*    Form of Underwriting Agreement
3.1*    Amended and Restated Certificate of Incorporation of the Registrant
3.2*    Amended and Restated By-laws of the Registrant
4.1*    Specimen Stock Certificate
4.2**    Registration Rights Agreement by and among Monotype Imaging Holdings Corp., the Investors and the Management Stockholders named therein, dated as of November 5, 2004
4.3**    Stockholders Agreement by and among Monotype Imaging Holdings Corp., the Management Stockholders and the Investors named therein, dated as of November 5, 2004
5.1*    Opinion of Goodwin Procter LLP
10.1*    2007 Incentive Compensation Plan
10.2**    2004 Stock Option and Grant Plan
10.3**    Form of Non-Qualified Option Agreement under the 2004 Stock Option and Grant Plan
10.4**    Form of Incentive Stock Option Agreement under the 2004 Stock Option and Grant Plan
10.5**    Form of Restricted Stock Agreement under the 2004 Stock Option and Grant Plan
10.6*    2007 Stock Option and Incentive Plan
10.7*    Form of Non-Qualified Option Agreement under the 2007 Stock Option and Incentive Plan
10.8*    Form of Incentive Stock Option Agreement under the 2007 Stock Option and Incentive Plan
10.9*    Form of Stock Restriction Agreement under the 2007 Stock Option and Incentive Plan
10.10**    Employment Agreement by and between Monotype Imaging Inc. and Jeffrey J. Burk, dated as of November 5, 2004
10.11**    Employment Agreement by and between Monotype Imaging Inc. and Robert M. Givens, dated as of November 5, 2004
10.12**    Employment Agreement by and between Monotype Imaging Inc. and David L. McCarthy, dated as of November 5, 2004
10.13**    Employment Agreement by and between Monotype Imaging Inc. and John L. Seguin, dated as of November 5, 2004
10.14**    Employment Agreement by and between Monotype Imaging Inc. and Douglas J. Shaw, dated as of November 5, 2004
10.15**    Employment Agreement by and between Monotype Imaging Inc. and Jacqueline D. Arthur, dated as of May 16, 2005
10.16**    Employment Agreement by and between Monotype Imaging Inc. and Janet M. Dunlap, dated as of September 25, 2006
10.17*    Service Agreement by and between Monotype Imaging Inc. and Frank Wildenberg, dated as of January 24, 2007
10.18**    Form of Indemnification Agreement between Monotype Imaging Inc. and certain of its Directors and Officers
10.19*    Lease, dated as of February 15, 2005, between Acquiport Unicorn, Inc. and Monotype Imaging, Inc., as amended.
10.20**    Lease, dated as of April 6, 2006, between 6610, LLC and Monotype Imaging Inc.


Number     

Description

10.21 **    Lease, dated as of May 24, 2006, between Lake Center Plaza Partners, LLC and Monotype Imaging Inc.
10.22 *    Lease, dated as of April 7, 2005, between RAFI (GP) Limited and Monotype Imaging Limited
10.23      Lease, dated as of November 29, 2004, between Servcorp Japan K.K. and Monotype Imaging Incorporated
10.24      Lease, dated as of July 10, 2006, between Sun Wah Marine Products (Holdings) Limited and China Type Design Limited
10.25      Lease, dated as of July 1, 2006, between Linotype GmbH and Heidelberger Druckmaschinen AG (English translation)
10.26     

Sublease, dated as of July 1, 2006, between Linotype GmbH and Heidelberger Druckmaschinen AG (English translation)

10.27      Office Lease, dated as of December 17, 2006, by and between Sheila L. Ortloff and Monotype Imaging, Inc.
10.28      Stock Purchase Agreement by and among Agfa Corp, Agfa Monotype Corporation and Imaging Acquisition Corporation, dated as of November 5, 2004
10.29 **    Stock Purchase Agreement by and among Monotype Imaging Holdings Corp., the Investors and the Lenders (each as defined therein), dated as of November 5, 2004
10.30 **    Agreement and Plan of Merger by and among the Registrant, MIHC Merger Sub Inc. and Monotype Imaging Holdings Corp., dated as of August 24, 2005
10.31 *    Purchase Agreement for the Sale of Shares in Linotype GmbH by and among Heidelberger Druckmaschinen Aktiengesellschaft, Blitz 06-683 GmbH and Monotype Imaging Holdings Corp., dated as of August 1, 2006
10.32 **    Stock Purchase Agreement by and among Monotype Imaging Inc. and certain stockholders of China Type Design Limited, dated as of July 28, 2006
10.33 *    Credit Agreement by and among Monotype Imaging Holdings Corp., as Parent, Imaging Acquisition Corporation, Agfa Monotype Corporation and International Typeface Corporation, as Borrowers, the Lenders set forth therein, and D.B Zwirn Special Opportunities Fund, L.P., as the Arranger and Administrative Agent, dated as of November 5, 2004 (“D.B. Zwirn Credit Agreement”)
10.34 *    First Amendment to, and Consent and Waiver under, Credit Agreement and Security Agreement, dated as of August 24, 2005 for the D.B. Zwirn Credit Agreement
10.35 *    Second Amendment to, and Consent and Waiver under, Credit Agreement and Security Agreement, dated as of July 28, 2006 for the D.B. Zwirn Credit Agreement
10.36      Credit Agreement by and among Monotype Imaging Holdings Corp., as Parent, Imaging Acquisition Corporation, Agfa Monotype Corporation and International Typeface Corporation, as Borrowers, the Lenders set forth therein, and Wells Fargo Foothill, Inc., as the Arranger and Administrative Agent, dated as of November 5, 2004 (“Wells Fargo Credit Agreement”)
10.37      First Amendment to, and Waiver and Consent under, Credit Agreement, Investor Intercreditor Agreement and Security Agreement, dated as of August 24, 2005 for the Wells Fargo Credit Agreement
10.38      Second Amendment to, and Consent and Waiver under, Credit Agreement and Security Agreement, dated as of July 28, 2006 for the Wells Fargo Credit Agreement


Number   

Description

10.39*    Intercreditor Agreement by and between Wells Fargo Foothill, Inc. and D.B. Zwirn Special Opportunities Fund, L.P., dated as of November 5, 2004 (“Intercreditor Agreement”)
10.40*    Second Amendment to, and Consent under, Intercreditor Agreement, dated as of August 1, 2006
10.41*    Security Agreement by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of November 5, 2004
10.42*    Supplement No. 1 to the Security Agreement by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of December 28, 2006
10.43*    General Continuing Guaranty by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of November 5, 2004
10.44*    Copyright Security Agreement by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of November 5, 2004
10.45*    Patent Security Agreement by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of November 5, 2004
10.46*    Trademark Security Agreement by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of November 5, 2004
10.47*    Intercompany Subordination Agreement by and among Imaging Acquisition Corporation, Agfa Monotype Corporation, International Typeface Corporation, Monotype Imaging Holdings Corp., and D.B. Zwirn Special Opportunities Fund, L.P., dated as of November 5, 2004
10.48    Security Agreement by and among the Grantors (as defined therein) and Wells Fargo Foothill, Inc., dated as of November 5, 2004
10.49    Supplement No. 1 to the Security Agreement by and among the Grantors (as defined therein) and Wells Fargo Foothill, Inc., dated as of December 28, 2006
10.50    General Continuing Guaranty by and among the Grantors (as defined therein) and Wells Fargo Foothill, Inc., dated as of November 5, 2004
10.51*    Copyright Security Agreement by and among the Grantors (as defined therein) and Wells Fargo Foothill, Inc., dated as of November 5, 2004
10.52*    Patent Security Agreement by and among the Grantors (as defined therein) and Wells Fargo Foothill, Inc., dated as of November 5, 2004
10.53*    Trademark Security Agreement by and among the Grantors (as defined therein) and Wells Fargo Foothill, Inc., dated as of November 5, 2004
10.54    Intercompany Subordination Agreement by and among Imaging Acquisition Corporation, Agfa Monotype Corporation, International Typeface Corporation, Monotype Imaging Holdings Corp., and Wells Fargo Foothill, Inc., dated as of November 5, 2004
10.55    Share Pledge Agreement by and among Monotype Imaging Holdings Corp., Blitz 06-683 GmbH, D.B. Zwirn Special Opportunities Fund, L.P. and the Lenders (as defined therein), dated as of July 31, 2006
10.56    Share Pledge Agreement by and among Monotype Imaging Holdings Corp., Blitz 06-683 GmbH, Wells Fargo Foothill, Inc. and the Lenders (as defined therein), dated as of July 31, 2006
10.57**    Subordinated Convertible Promissory Note of Monotype Holdings Inc. in favor of each of: Tsui Eddy Wing Keung, Chun Tak Chiu Ricky and Hui Tai Pang Robin, dated July 28, 2006


Number   

Description

10.58*    Joinder and Consent Agreement to and Consent and Waiver Under, Credit Agreement, by and among Linotype Corp., Monotype Imaging Holdings Corp., Monotype Imaging, Inc., International Typeface Corporation, the Required Lenders (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of December 28, 2006
10.59    Joinder and Consent Agreement to and Consent and Waiver Under Credit Agreement, by and among Linotype Corp., Monotype Imaging Holdings Corp., Monotype Imaging, Inc., International Typeface Corporation, the Required Lenders (as defined therein) and Wells Fargo Foothill, Inc., dated as of December 13, 2006
10.60*    Copyright Security Agreement by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of December 28, 2006
10.61*    Patent Security Agreement by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of December 28, 2006
10.62*    Trademark Security Agreement by and among the Grantors (as defined therein) and D.B. Zwirn Special Opportunities Fund, L.P., dated as of December 28, 2006
10.63    Trademark Security Agreement by and among the Grantors (as defined therein) and Wells Fargo Foothill, Inc., dated as of December 28, 2006
10.64†    Intellifont Software and Type Software Agreement dated August 15, 1991 by and between Monotype Imaging Inc. and Lexmark International, Inc., as amended by Addendums No. 1 through 17 and the Letter Addendum dated September 19, 1995 and the Notification of Assignment of Agreement
14.1**    Code of Business Conduct and Ethics
21.1**    List of Subsidiaries
23.1**    Consent of Ernst & Young LLP
23.2**    Consent of Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft
23.3**    Consent of KPMG LLP
23.4*    Consent of Goodwin Procter LLP (included in Exhibit 5.1)
24.1**    Power of Attorney (included in page II-6)

 


 

* To be filed by amendment
** Previously filed
Confidential treatment has been requested for certain provisions of this Exhibit pursuant to Rule 406 promulgated under the Securities Act.

Exhibit 10.23

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Financial Benefits Page-Shinjuku Nomura Building, Tokyo

LOGO

FOR THE ONE TO TEN MAN BUSINESS THERE IS NO COMPARISON

 

Per Month Costs

   Servcorp   Traditional
Office Space
 

Comments*

Security Deposit#    ¥380,000*~   ¥9,000,000*   *1 months rent versus 10 months rent.
Lease Risk    1 month   2-3 years*   *Minimum lease term available in prime building in Shinjuku.

Rental Scale (Average ¥380,000/mth)

Including outgoings

   ¥380,000~   ¥900,000*   *Minimum size traditional space 30 tsubo at ¥30,000 per tsubo plus personal guarantees.

Partitioning, Furniture and access to all Servcorp resources including: Tea, coffee, spring water,

Electricity and cleaning

   INCLUDED   ¥45,000*
¥50,000*
  *Value in excess of ¥2,200,000 written off over a period of approximately four (4) years. Includes leased items such as furniture, computers, meeting room, photocopier, fax, printer, reception furniture & fit-out. Plus ongoing incidental monthly costs.
Allocated Personal Secretary    YOU*
DECIDE!
  ¥300,000   *Only pay for what you use! Average per client only 25,000 per month. Includes all on-costs: insurance, holidays and sick pay.
Receptionist    INCLUDED*   ¥200,000   *Fully trained multi lingual professional.
Telephone Connection    ¥25,000*   ¥16,500

 

(Two ISDN,
installation,
small PABX
& handset)

  *You only need one telephone number and your calls can be transferred to your office, mobile or anywhere in the world. No set up fees.
Servcorp Smart Office™ Connection    ¥21,000   ¥200,000*   *A T1 line starts from ¥200,000 per month plus equipment & installation.

TOTAL PER

MONTH

   “ILLEGIBLE
COPY”
  “ILLEGIBLE
COPY”
 

*Security Deposit and local taxes not included in monthly total.


LOGO

 

SERVCORP

   THE COMPETITION

DETAILED ACCOUNTS:

 

Detailed monthly or weekly breakdowns of your invoice. The Servcorp Hottdesk will soon enable you, or your Head Office, to view your invoice online on a monthly or weekly basis. We can bill in the currency of your choice.

  

NO DETAILED ACCOUNTS:

 

Some operators have over 30 different invoicing systems, therefore making it impossible to deliver detailed or consolidated accounts.

HELP DESK:

 

40 full time IT professionals, who helped design the

in-house system. Dial *1 for HELP and receive IT

support with a 1 hour response time during business

hours. IT administrators on every floor.

Y1,000 flag fall plus Y100 per minute.

  

NO HELP DESK:

 

Outsourced. At 50% higher per hour than Servcorp with * 1.

UNIFIED MESSAGING:

 

1. Can extend calls 24 hours a day to your mobile, home or anywhere in the world. Receive your messages via e mail or dial in. You’ll never miss a call.

2. Your phone number can be yours forever.

  

VOICEMAIL ONLY

 

1. No automatic extension to your number of choice

 

2.When you leave you lose your phone number.

INSTANT CONNECTIVITY:

 

Sit down and plug into broadband lightning speed for every client. INSTANT broadband and no set up fees.

FIRST MONTH FREE.

  

NO INSTANT CONNECTIVITY:

 

Normally three days setup time required. 64k, 512k

or shared 2Mb.

Ask about the hidden set up fees.

PRICE, SPEED & CONTRACT PERIOD:

 

1 st 2 connections Y21,000mth, thereafter Y11,000mth, 5OOMBs Complimentary Usage - Y15/meg thereafter

for Smart Office broadband internet. Servcorp’s Smart Office is four times the speed, 40% less costs with 99% up time.

  

CONTRACT PERIOD:

 

6 months as IT services are outsourced. No matter what your lease term.

With Servcorp you can cancel at any time on 1 month’s notice.

SERVCORP HOTTDESK:

 

Log into your office & access Microsoft Office XP and many more exciting packages, software, files, email, storage, Servcorp International printers & resources. Y5,000mth/subscription.

  

HAS NO ANSWER:

 

There is no other product that will give you the power or flexibility.

PRINT:

 

Print directly from your desktop to in-house color printers and photocopiers to any Servcorp city in the world, 24 hours a day, 7 days a week.

   UNABLE TO PROVIDE PRINT SERVICE DIRECTLY FROM YOUR DESKTOP.

CABLING:

 

CAT 6 or CAT 7

  

CABLING:

 

CAT 5 if you are lucky

“Servcorp makes its profit on rented floor space. We make a loss on providing our services. Our average client spend on services is only 12% of their rent spend”


LOGO


Servcorp Services Directory

Tokyo

… only pay for what you use

 

The Servcorp Options Menu offers an extensive range of business support services to make your work life easier and more efficient. For these services you only need to pay for what you use, which means you can avoid any extra investment in people or equipment and gain cost-efficiency.

 

Parking

  

Price on request

  

Per month (subject to availability)

Secretarial Services   

Per 10 mins:

 

Secretarial               ¥620

 

Office Assistant     ¥520

  

You only need to pay for the time that you use. No need to be restricted to payment by the hour or during work breaks, keeping your costs to a minimum.

 

Highly qualified bi-lingual Servcorp team members handle all of your word processing and

desk top publishing needs with today’s most advanced and sophisticated library of Microsoft software.

 

Personal administration and photocopying services

Translation Service    Price on request    Documents translated into all major business languages
Courier Service – National & International    Servcorp preferred courier    Daily service with in-house pick-up and delivery
Facsimile Transmission   

Call charges at NTT

business standard rates

from your office fax machine

   Incoming faxes ¥38 per page. On request we will also provide a fax forwarding service to another number whilst you are travelling. Alternatively, connect your own fax machine in your office.
Photocopying Service   

¥40

 

¥20

  

Print directly from your desk, via Smart Office or self service, black and white A4 high specification copier

 

For the first 100 pages

 

Bulk discount in excess of 100 copies

Franking service    Postage    We can track your mail to provide a professional presentation and bundle bulk mailings. Daily delivery to the post office is complimentary.
Colour printing    ¥200 per page    High specification colour printer A4. Print directly from your desk via smart office.
Additional services    Price on request    Binding, laminating, scanning etc
Refreshments    ¥255 per drink    A wide range of soft drinks, self service, Complimentary tea, coffee and spring water
Boardrooms and Private Offices   

Hour               Day

¥9,000         ¥36,000

   Complimentary multi system video, television, videoconferencing equipment and whiteboards in board rooms
Conference Centre – Sydney & Paris       50% corporate discount to Servcorp clients. Smart Conference Centre is great for corporate events and lunches. 130 seat auditorium with 3D visualiser, electronic whiteboard, etc.
Business Catering    Price on request    We can arrange hot & cold beverages, lunches, or light snacks

….as well as dry cleaning, flower deliveries etc.

 

In addition to the above, Servcorp offers an extensive range of business support services that are included in the price of a Servcorp Office. We also offer a range of voice and data technology already installed for you. The advantages of our international Network mean that you can benefit from our multi-national purchasing power, ensuring economies of scale and cost efficiency on business products and services. You have access to our team to support your business and our single monthly invoice keeps your accounting processes simple.

* Prices will very depending on you requirements and are available on request

   Prices are exclusive of local taxes, subject to change and effective from 1st January 2001.

* Smart Office is VPN enabled and quotes for VPN setup can be provided on request


Servcorp Services Directory

Tokyo

…only pay for what you use

The advantages of the Servcorp International Network are clear. You can benefit from our multi-national purchasing power, ensuring economies of scale and cost efficiency on business products and services. Our transparent pricing prevents surprises and our detailed monthly invoice keeps your accounting process simple.

 

Facilities
Your Furnished Office/s and Team Work Areas    Included    Fully furnished and equipped offices and team areas providing a professional and functional working environment. Additional furniture - price upon request.
Your Reception    Included    No Servcorp signage in reception. Spacious, professional & welcoming reception area providing a quality corporate image. Daily Newspapers and fresh flowers.
Utilities and Maintenance    Included    All heating, lighting, electricity, insurance of common areas, maintenance of building and security systems. Airconditioning during business hours.
Your Kitchen    Included    Complimentary coffee, tea and spring water.
Your Daily Office Cleaning    Included    Daily cleaning of offices and common areas provided Monday to Friday.
Your International Offices    5 days per month    Complimentary use of a 1-2 person office business lounge in any Servcorp office worldwide (subject to availability).
Your Lobby Directory Signage    ¥30,000 initial setup cost + ¥10,000 p/mth    Place your company name in the directory board located in the main lobby of our building.
Team
Your PA and her Assistants    Included    A fully trained team instantly at your service. We eliminate fees for recruitment and advertising as well as the time and cost of managing interview and selection processes, induction programmes and training courses. Nor need you deal with ongoing costly issues such as holidays and illness.
Your Servcorp Manager    Included    The Servcorp Manager maintains the facilities the technology and leads the Servcorp team members leaving you to run your business efficiently in a professional environment.
Your Receptionist    Included    We can answer your calls in your company name, greet your guests and provide front line support to ensure the smooth running of your business.
Your Office Assistant    Included    Incoming mail sorted, date and time stamped and placed on your desk complimentary daily. Outgoing mail is delivered complimentary to the post office daily.
Your Office Kitchen    Included    Help yourself to unlimited fresh coffee, tea and spring water.
Efficiency
We run all over town arranging your business life…
Your Office Supplies    Servcorp preferred supplier    A wide range of stationery accessories and more. Take advantage of the Servcorp International discounts.
Your Hotel and Travel Arrangements    Preferential rates    The Servcorp team will assist you in handling all your hotel and travel arrangements.

 

     Prices will vary depending on your requirements and are available on request
     Prices are exclusive of local taxes, subject to change and effective from 1st January 2001.
     Smart Office is VPN enabled and quotes for VPN setup can be provided on request.


Sevcorp Services Directory

Tokyo

…only pay for what you use

 

Technology      
Communication System    ¥25,000 per month    Digital PABX system featuring: the ability to transfer incoming calls to your office, mobile, home, office or overseas office, conference calling, direct dial personal telephone number and more.
Telephone Installation & Programming    Included    Initial set up of up to four (4) telephone handsets at time of move-in.
CAT 6 cabling    Included    Use of highest quality voice cabling from PABX to office.
Maintenance    Included    On-site support and instant replacement service for telephone handset.
Technology upgrades    Included    Regular upgrades of hardware and software to ensure up to date technology is available.
Telephone Handset    Included    High specification phone featuring conference call, speed dial and capacity for more than one line.
4 business lines    Included    4 pre-installed incoming business lines per handset saving local provider charge. Your telephone will never ring engaged.
Voicemail    Included    24-hour, 7 days a week, message storage with remote retrieval via voice or data. This gives you flexibility so that you will always be accessible but not always disturbed. Voicemail also can be programmed to give the caller the option to dial 1 for your mobile phone. If you require written message taking a small service charge will apply

Call Charges

All local and long distance calls

   NTT standard business rate    Volume discounts apply for usage of over ¥100,000 per month.
Smart Office*    1st & 2nd connection 21,000 yen per month. 3rd connection and thereafter 11,000 yen per month. Complimentary usage up to 500MBs (¥15 per MB thereafter).    Plug into 100% secure transport via a port in your office and print to our magazine quality colour printers and high speed volume black and white copiers. Broadband Internet without the necessity to dial up or speak to an ISP. All the infrastructure is in place to build a 100% secure and isolated LAN without further cabling
Dial *1111 for H.E.L.P.   

¥1000 Flag tali plus

¥100 per minute

(minimum 10 minutes)

   You will receive IT support Monday to Friday with a 1 hour response time during business hours, and a 6 hour response time after hours.
Fax/Modem Line    ¥15,000 per line per month    Dial up line in your office.
LAN Access via CAT 6 cabling    Complimentary with Smart Office Connection    Smart Office enables quick and easy set up of your Local Area Network.
Client communication centre    Price on request    Rack space for hubs and routers. Professional rack storage space in custom designed environment.
Videoconferencing Equipment    Call price on request    With our Polycom equipment we offer you the latest VC technology providing excellent sound and picture quality. This user friendly system is compliant with international standards. Call charges and boardroom rental apply. Videoconferencing equipment is complimentary. We will also provide you with an out of hours service by prior arrangement to accommodate international time differences.

In addition, Servcorp offers an extensive range of other business support services to make your work life easier and more efficient. For these services you only need to pay for what you use, which means you can avoid any extra investment in people or equipment and gain cost-efficiency. Details are available on request.

 

* Prices will vary depending on your requirements and are available on request
   Prices are exclusive of local taxes, subject to change and effective 1st January 2001.
* Smart Office is VPN enabled and quotes for VPN setup can be provided on request.


LOGO

LOGO

ADDENDUM TO RENTAL AGREEMENT

Addendum to the Rental Agreement made on this day, November 29, 2004, between

Servcorp Japan K.K. (called “the Landlord”) Level 32 Shinjuku Nomura Building, 1-26-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0532 Japan

and

Monotype Imaging Incorporated (called “the Tenant”) Level 32 Shinjuku Nomura Building, 1-26-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0532 Japan

on the premises known as Suite 39, Level 32 Shinjuku Nomura Building, 1-26-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0532 Japan

Extension of Lease Term

The Tenant has agreed to extend their rental period for 12 months commencing from December 1, 2005 to November 30, 2006 whereupon rental shall be at 480,000 yen per month excluding local taxes.

The rental shall return to the list price of 640,000 yen per month excluding local taxes or as negotiated from December 1, 2006 if the Rental Agreement has become a periodic Rental Agreement from month to month.

Termination Notice Period of 2 months must be given to the Landlord IN WRITING as stated in original Rental Agreement 5 Renewal of Contract.

We hereby agree to all the above conditions:

The COMMON SEAL of Monotype Imaging Incorporated

was hereunto affixed by the authority of

the Board of Directors and in the presence of: /s/ Douglas J. Shaw

The COMMON SEAL of Servcorp Japan K.K.

was hereunto affixed by the authority of

the Board of Directors and the presence of:

LOGO

Exhibit 10.24

AN AGREEMENT is made the 10 th day of July, Two Thousand and Six.

 

Parties    BETWEEN the Landlord and the Tenant more particularly described and set out in the First Schedule hereto.
   WHEREAS:
Premises   

1.       The Landlord shall let and the Tenant shall take ALL THAT the premises more particularly described and set out in the Second Schedule hereto (hereinafter referred to as “the said premises”) (TOGETHER with the furniture fixtures fittings equipment (hereinafter called “the said furniture”) now thereat details whereof are contained in the Fourth Schedule hereto) (if any) AND together with the use in common with the Landlord and all others having the like right of the entrances, staircases, landings, passages and lavatories (if any) in the building of which the said premises form part (hereinafter called “the said building”) in so far as the same are necessary for the proper use and enjoyment of the said premises And Together Also with the use in common as aforesaid of the lift escalators and other facilities (if any) whenever the same shall be operating for the term and at the rent more particularly described and set out in the Third Schedule hereto.

Agreement by Tenant   

2.       The Tenant to the intent that the obligations hereunder shall continue throughout the said term of tenancy hereby covenants with the Landlord as follows:

To pay rent   

(a)     To pay the said rent in advance without any deduction and on the days and in manner hereinbefore provided for payment thereof.

To pay rates,

Government Rent

  

(b)     To pay and discharge all rates, taxes, government rents (if any) assessments, duties, charges, impositions and outgoings of an annual or recurring nature now or hereafter to be assessed, imposed or charged by the Government of Hong Kong Special Administrative Region or other lawful authority upon the said premises or upon the owner or occupiers thereof (Property Tax (if any) only excepted).


To pay other outgoing   

(c)     To pay and discharge all charges for gas, water, electricity, telephone rental and other outgoings now or at any time hereafter consumed by the Tenant and chargeable in respect of the said premises and to make all necessary deposits therefor.

To pay management and

other charges

  

(d)     To duly pay or discharge the management fee as set out in the Third Schedule hereto or otherwise all periodical maintenance management or service charges in respect of the said premises payable by the owner or occupier of the said premises in accordance with the provisions of the Deed of Mutual Covenant and Management Agreement of the said building.

To keep interior in repair   

(e)     To keep all the interior of the said premises including the flooring and interior plaster or other finishes or rendering to walls, floors, windows and ceilings and the said furniture (if any) and the Landlord’s fixtures therein including all doors, windows, drains, pipes, electrical installations and wirings in good, clean tenantable repair and condition and properly preserved and painted and so to maintain the same at the expense of the Tenant and shall take all precautions to prevent the said premises, the furniture and fixtures (if any) from being damaged by fire, water, storm, typhoon and to deliver up the same to the Landlord at the expiration or sooner determination of the term in like condition aforesaid. The Tenant shall also repair and replace any window broken or damaged whether or not the damage is caused by the Tenant’s default.

To be responsible for loss or

damage caused by Interior

Defects

  

(f)      To be wholly responsible for any loss, damage or injury caused to any person whomsoever directly or indirectly through the defective or damaged condition of any part of the interior of the said premises and to make good the same by payment or otherwise and to indemnify the Landlord against all actions, proceedings, claims and demands made upon the Landlord in respect of any such loss, damage or injury and all costs and expenses incidental thereto.

 

2


To permit Landlord to enter

and view

  

(g)     To permit the Landlord and all persons authorized by it at all reasonable times to enter and view the state of the said premises, to take inventories of the fixtures and fittings therein, to carry out any necessary works or repairs which are required to be done and, during the last three months of the said term, to show the said premises to prospective tenants or purchasers without interruption to the operation of the Tenant’s business.

To permit Landlord to repair

other premises

  

(h)     To permit the Landlord and all persons authorized by him at all reasonable times to enter and carry out any works or repairs in respect of other premises in or any part of the external walls of the said building PROVIDED that in this connection the Landlord shall be responsible to make good all damage done to the said premises.

To execute repairs on

receipt of notice

  

(i)      On receipt of any notices from the Landlord or its authorized representatives specifying any works or repairs which are required to be done and which are the responsibility of the Tenant hereunder forthwith to put in hand and execute the same with all possible dispatch and without any delay. If the Tenant shall not within 14 days after service of such notices proceed with the execution of such repairs the Landlord may enter upon the premises and execute such repairs and the cost thereof shall be a debt due from the Tenant to the Landlord and be forthwith recoverable by legal action or to be deducted from the deposit.

Not to erect install or alter

partitioning fixtures, etc.

  

(j)      Not without the previous written consent of the Landlord, which consent shall not be unreasonably withheld and relevant government authorities to erect, install or alter any fixtures, partitioning or other erection or installation outside or within the said premises or any part thereof except for dismantling and removing the partition wall between Units 03 and 04 as shown on the plan annexed hereto.

 

3


Not to cut injure maim walls

etcs.

  

(k)     Not to cut maim or injure or permit or suffer to be cut maimed or injured any doors, windows, walls, beams structural members or any part of the fabric of the said premises nor any of the plumbing or sanitary apparatus or installations included therein.

User of premises   

(l)      Not to use the said premises for any purpose other than for the purpose and under the name as described and set out in the Third Schedule hereto and not to prepare or permit to be prepared any food in the said premises.

Not to produce music or

noise

  

(m)    Not to produce or permit or suffer to be produced any music noise (including sound produced by broadcasting audible outside or any apparatus or equipment capable of producing reproducing receiving or recording sound) so as to be a nuisance or annoyance to occupiers of other premises in the said building or in the neighbourhood.

Not to permit any nuisance

or annoyance

  

(n)     Not to do or permit or suffer to be done any act or thing which may be or become a nuisance or annoyance to the Landlord or to the tenants or occupiers of other premises in the said building or in any adjoining or neighbouring building.

Not to breach Government

Lease terms or cause

Insurance to be avoided or

premium increased

  

(o)     Not to do or permit or suffer to be done any act, deed, matter or thing whatsoever which amounts to a breach of any of the terms and conditions under which the said building is held from the Government or whereby any insurance of the said building against loss or damage by fire and/or claims by third parties for the time being in force may be rendered void or voidable or whereby the premium thereon may be increased Provided That if as the result of any act, deed, matter or thing done permitted or suffered by the Tenant, the premium on any such insurance shall be increased, the Landlord shall entitled at his option either to terminate this Agreement or to continue the same upon payment by the Tenant of the increased premium and upon such other terms and conditions as the Landlord may, at his discretion think fit to impose.

 

4


Not to keep arms or

combustible or hazardous

goods on premises

  

(p)     Not to keep or store or permit or suffer to be kept or stored on or in the said premises any arms ammunition gunpowder saltpetre kerosene or other explosive or combustible or hazardous goods.

Not to permit illegal or

immoral use

  

(q)     Not to use or permit or suffer the said premises to be used for any illegal or immoral purpose.

Not to display signs   

(r)      Not to affix or display or permit or suffer to be affixed or displayed within or outside the said premises any signboard, sign decoration or other device whether illuminated or not which may be visible from outside the said premises without the written consent of the Landlord first had and obtained which consent shall not be unreasonably withheld and such signboard shall not exceed 16 inches x 10 inches.

Not to encumber or obstruct

passages and common areas

  

(s)     Not to encumber or obstruct or permit to be encumbered or obstructed with any boxes, packaging or obstruction of any kind or nature any of the entrances, staircases, landings, passages, lifts (if any) lobbies or other parts of the said building in common use and not to leave rubbish or any article or thing in any part of the said building not in the exclusive occupation of the Tenant.

To observe Deed of Mutual

Covenant

  

(t)      Not to do or cause to be done or suffer or permit any act deed matter or thing whatsoever which shall amount to a breach or non-observance of the covenants terms and provisions in the Deed of Mutual Covenant Sub-Deed of Mutual Covenant and Management Agreement or any house rules (if any) relating to the said building so far as they relate to the occupation of the said premises and to indemnify the Landlord against the breach non-observance or non-performance thereof.

Not to assign underlet   

(u)     Not to assign, underlet, part with or share the possession o f or transfer the said premises or any part thereof or any interest therein to and with other persons, nor permit or suffer any arrangement or transaction whereby any person who is not a party to this Agreement shares or obtains the use, possession, occupation or enjoyment of the said premises or any part thereof

 

5


  

         irrespective of whether any rental or other consideration is given therefor. This Tenancy shall be personal to the Tenant named in this Agreement and without in any way limiting the generality of the foregoing, the following acts and events shall, unless previously approved in writing by the Landlord be deemed to be breaches of this Clause:

  

(i)      In the case of tenant which is a partnership, the taking in of one of more new partners whether on the death or retirement of an existing partner or otherwise.

  

(ii)     In the case of a tenant who is an individual (including a sole surviving partner of a partnership tenant) the death, insanity or other disability of that individual to the intent that no right to use, possess, occupy or enjoy the said premises or any part thereof shall vest in the executors, administrators, personal representatives, next of kin, trustee or committee of any such individual.

  

(iii)   In the case of a Tenant which is a corporation, any take-over, reconstruction, amalgamation, merger or voluntary liquidation, or any change in shareholding or in the person who owns a majority of its voting shares or who otherwise has effective control of ultimate beneficial ownership.

  

(iv)    The giving by the Tenant of a Power of Attorney or similar authority whereby the donee of the Power obtains the right to use, possess, occupy or enjoy the said premises or any part thereof or does in fact use, possess, occupy or enjoy the same.

  

(v)     The change of the Tenant’s business name without the previous written consent of the Landlord.

To comply with Ordinances

etc.

  

(v)     To obey and comply with and to indemnify the Ordinances etc. Landlord against the breach of all ordinances, regulations, bye-laws, rules and

 

6


  

          requirements of any Governmental or other competent authority relating to the use, occupation and enjoyment of the said premises by the Tenant or to any other act, deed, matter or thing done, permitted, suffered or omitted therein or thereon by the Tenant or any employee, agent or licensee of the Tenant and to notify the Landlord forthwith in writing of any notice received from any statutory or public authority concerning or in respect of the said premises or any services supplied thereto.

To pay cost of cleaning

drains etc.

  

(w)    To pay to the Landlord on demand all costs incurred by the Landlord in cleansing or clearing any of the drains, pipes or sanitary or plumbing apparatus choked or stopped up.

To protect interior from

approaching typhoon

  

(x)     To take all reasonable precautions to protect the interior of the said premises against damage by storms or typhoons or the like.

Re-instate premises   

(y)     Unless the Landlord otherwise agrees in writing, to re-instate and restore the said premises to their original condition as at the commencement of the Tenancy Agreement dated 6 th August 1998 when the Tenant was first given possession of the Premises and to make good all damage caused or occasioned by the erection and removal of alterations partitions or other erections at the expiration or sooner determination of this tenancy, unless otherwise agreed between the Landlord and the Tenant.

To yield up premises   

(z)     Quietly to yield up vacant possession of the premises together with all fixtures, fittings and additions therein and thereto and the said furniture (if any) at the expiration or sooner determination of this tenancy in good clean tenantable repair and condition (fair wear and tear excepted) in accordance with the stipulations hereinbefore contained Provided That where the Tenant has made any alteration or installed any fixtures or additions to the said premises (whether of a non-structural or structural nature) with or without the Landlord’s written consent the Landlord may at its discretion require the Tenant to remove or do away with such alterations fixtures or additions or

 

7


  

          any part or portion thereof, to make good any damage caused by such alternation or installation (including but not limited to holes on the ceiling walls or floors of the said premises caused by insertion of nails), and to reinstate the said premises to its original state and condition as at the commencement of the Tenancy Agreement dated 6 th  August 1998 (fair wear and tear and removal or installation of electrical or telephone plugs and installation of blinds excepted).

Pests and infestation   

(aa)   To take all reasonable steps and precautions to the satisfaction of the Landlord to prevent the said premises or any part thereof from becoming infested by termites rats mice cockroaches or any other pests or vermin.

Sleeping or Domestic Use   

(bb)   If the user of the said premises is for the Tenant’s business only, not to use the said premises or any part thereof as sleeping quarter or as domestic premises within the meaning of any ordinance for the time being in force or to allow any person to remain in the said premises overnight unless with the Landlord’s prior permission in writing. Such permission shall only be given to enable the Tenant to post watchmen to look after the contents of the said premises and the names of the watchmen shall first be notified to and registered with the Landlord.

To be responsible for

contractors, servants, agents

and licensees

  

(cc)   To be responsible to the Landlord for the acts, neglects, defaults and omission of all contractors, servants, agents, licensees, guests, visitors or customers of the Tenant as if they were the acts, neglects, defaults and omission of the Tenant himself and for the purpose of this Agreement, “Licensee” shall include any person present in, using or visiting the said premises with the consent of the Tenant express or implied.

 

8


  

(dd)   Before or upon expiry or sooner determination of the tenancy hereby created, to surrender to the Landlord possession of the said premises and all keys giving access to all parts of the said premises held by the Tenant and to remove at the Tenant’s expense all lettings and characters from all the doors, walls or windows of the said premises and to repair in a proper and workmanlike manner any damage caused by such removal.

Landlord’s Agreement   

3.      The Landlord hereby agrees with the Tenant as follows:

Property Tax   

(a)    To pay the Property Tax attributable to or payable in respect of the said premises.

Quiet Enjoyment   

(b)     That the Tenant paying the rent and the management fee hereby agreed to be paid on the days and in manner herein provided for payment of the same and observing and performing the covenants agreements stipulations terms and conditions herein contained and on the Tenant’s part to be observed and performed shall peacefully hold and enjoy the said premises during the said term without any interruption by the Landlord or any person lawfully claiming under or in trust for the Landlord.

Capital expenses   

(c)     To be responsible for payments under the Deed of Mutual Covenant and Management Agreement which are of a capital and/or non-recurring nature.

  

4.      IT IS HEREBY FURTHER EXPRESSLY AGREED AND DECLARED as follows:

Re-entry on default   

(a)     If the rent and/or management and maintenance charges hereby agreed to be paid or any part thereof shall be unpaid for fifteen (15) days after the same shall become payable (whether legally or formally demanded or not) or if the Tenant shall fail or neglect to observe or perform any of the covenants, agreements, stipulations terms and conditions herein contained and on the Tenant’s part to be observed and performed or if the Tenant shall become bankrupt or being a corporation shall go into liquidation (save the voluntary liquidation of a solvent company for the purposes of amalgamation or reconstruction) or if the Tenant

 

9


  

          shall otherwise become insolvent or make any composition or arrangement with creditors or shall suffer any execution to be levied on’ the said premises or otherwise on the Tenant’s goods, or the Tenant continues to cause unnecessary annoyance, inconvenience or disturbance to the Landlord after warning in writing has been served by the Landlord on the Tenant and for the purpose of this Clause, persistent failure to pay rent as and when it falls due shall be regarded as causing unnecessary inconvenience to the Landlord, then and in any such case subject to the provision of Section 58 of the Conveyancing and Property Ordinance (Cap.219) it shall be lawful for the Landlord at any time thereafter to re-enter the said premises or any part thereof in the name of the whole hereupon this Agreement shall absolutely cease and determine and the deposit so paid hereunder and as more particularly described and set out in the Third Schedule shall be forfeited to the Landlord to such extent as to compensate any loss in rental and other charges suffered by the Landlord resulted from such re-entry but without prejudice to any right of action by the Landlord in respect of any outstanding breach or non-observance or non-performance of any of the said covenants, agreements, stipulations, terms and conditions herein contained and on the Tenant’s part to be observed and performed.

Notice of re-entry   

(b)     A written notice served by the Landlord on the Tenant in manner hereinafter mentioned to the effect that the Landlord thereby exercises the power of re-entry herein contained shall be a full and sufficient exercise of such power without actual physical entry on the part of the Landlord.

Landlord not liable for

overflow of water etc.

  

(c)     The Landlord shall not be under any liability to the Tenant or to pay any other person whomsoever in respect of any loss or damage to person or property sustained by the Tenant or any such other person caused by or through or in any way owing to the overflow of water or the escape of fumes smoke fire or any other calamity or any substance or thing from anywhere within the said building and the Tenant shall fully and effectually indemnify the Landlord from and against all actions, claims and/or

 

10


Tenant to indemnify

Landlord against certain

claims

  

         demands made against the Landlord by any person for nuisance, occupiers liability or any other liabilities arising in the Premises and in respect of any loss, damage or injury caused by or through or in any way owing to the overflow of water or the escape of fumes smoke fire or any calamity or any other substance or thing from the said premises owing to the neglect or default of the Tenant his servants, agents, licensees or to the defective or damaged condition of the interior of the said premises for which the Tenant is responsible hereunder and against all costs and expenses incurred by the Landlord in respect of any such claim or demand.

For purposes of Distraint

Rent in arrear not paid in

advance on due date

  

(d)     For the purposes of Part III of the Landlord and Tenant (Consolidation) Ordinance, (Chapter 7) and of these presents, the rent payable in respect of the said premises shall be and be deemed to be in arrear if not paid in advance at the times and in manner herein provided for payment thereof.

Condoning by Landlord not

operate as waiver

  

(e)     No condoning, excusing or waiving by the Landlord of any default, breach or non-observance or non-performance by the Tenant at any time or times of any of the Tenant’s obligations herein contained shall operate as a waiver of the Landlord’s right hereunder in respect of any continuing or subsequent default, breach or non-observance or non-performance or so as to defeat or affect in any way the rights and remedies of the Landlord hereunder in respect of any such continuing or subsequent default or breach and no waiver by the Landlord shall be inferred from or implied by anything done or omitted by the Landlord unless expressed in writing and signed by the Landlord. Any consent given by the Landlord shall operate as a consent only for the particular matter to which it relates and in no way shall be considered as a waiver or release of any of the provisions hereof nor shall it be construed as dispensing with the necessity of obtaining the specific written consent of the Landlord in the future, unless expressly so provided.

 

11


Landlord can exhibit Letting

Notice during last 3 months

of term

  

(f)      During the last three (3) months of the term hereby created, the Landlord shall be at liberty to affix exhibit and maintain without interference upon any external part of the’ said premises a notice stating that the said premises are to be let and such other information in connection therewith where the Landlord shall think fit and the Tenant shall with reasonable prior notice and during normal hours allow the Landlord’s prospective tenant(s) accompanied by the Landlord or his agent to inspect the said premises without interruption to the operation of the Tenant’s business.

Service of Notice   

(g)     Any notice to be served hereunder shall, if to be served on the Tenant, be sufficiently served if addressed to the Tenant and sent by prepaid post to or delivered at the said premises or the Tenant’s last known place of business or residence in Hong Kong and, if to be served on the Landlord shall be sufficiently served if addressed to the Landlord and sent by prepaid post to or delivered at the Landlord’s last known place of business or residence in Hong Kong or other address which the Landlord may notify to the Tenant from time to time.

Service of Legal

proceedings

  

(h)     Any original process including writ or originating summons or otherwise and any other summons or notices in connection with this Agreement to be served on the Tenant by the Landlord in any legal proceedings or action commenced in any court or tribunal shall be deemed to have been duly and sufficiently served on the Tenant forty-eight (48) hours after having been sent by ordinary prepaid post to the Tenant at his registered office or usual place of business or abode or at the address of the said premises.

Tenant agrees to take out

proper insurance

  

(i)      The Tenant shall take out and maintain a policy or policies of insurance against the risks of fire and water with an insurance company.

 

12


Events deemed to be breach

of condition

  

(j)      Without prejudice to the generality and effect of Clause 4(a) of this Agreement, if any of the following events or state of affairs should happen or occur, the Tenant is deemed to have committed a breach of condition of this Agreement:

  

(i)      The Tenant becoming bankrupt;

  

(ii)     The Tenant being a corporation, going into liquidation;

  

(iii)   The Tenant making any composition or arrangement with creditors;

  

(iv)    The Tenant suffering any execution to be levied on the said premises or otherwise on his goods; and

  

(v)     The Tenant being otherwise insolvent.

Stamp Duty & Costs   

(k)     Stamp duty and registration fees payable at the Land Registry on this Agreement and its counterpart shall be borne by the parties hereto in equal shares and each party shall bear its own costs.

Legal Costs for enforcement   

(l)      The Tenant shall reimburse or pay to the Landlord all reasonable expenses and charges (including legal costs on a solicitors and client basis) incurred by the Landlord in connection with the demand for payment of any rent in arrear or any outstanding sum to be payable by the Tenant hereunder and enforcement of any other provisions and terms herein.

Surcharge   

(m)    If the Tenant fails to pay any rent or any other sum payable hereunder within 7 days as and when they fall due, then, without prejudice to any other right or remedy available to the Landlord for such default, the Tenant shall pay to the Landlord interest on the defaulted sum at, whichever is highest, 2% per month or 2% above the prime rate quoted by The Hongkong and Shanghai Banking Corporation Limited or 2% above one month HIBOR RATE from time to time calculated on a daily basis from the date when such sum falls due to the date of actual payment.

 

13


Definitions   

(n)     Unless the context otherwise requires, words herein importing the masculine feminine or neuter gender shall include the others of them and words herein in the singular shall include the plural and vice versa and the terms “Landlord” and “Tenant” shall include their successors in title (if applicable).

Marginal Notes   

(o)     The marginal notes are intended for guidance only and do not form part of this Agreement nor shall any of the provisions in this Agreement be construed or interpreted by reference thereto or be in any way affected or limited thereby.

Key Money   

5.      The Tenant hereby expressly declares that for the grant of the said term no key money or premium or other consideration other than considerations herein expressly provided has been paid or will be payable to the Landlord or to any person.

Suspension of rent in case of

fire etc.

  

6.      In the event that the said premises or the said building or a substantial part thereof shall at any time during the tenancy be inaccessible or so destroyed or damaged owing to fire water storm wind typhoon defective construction white ants earthquake subsidence of the ground or any calamity beyond the control of the Landlord and not attributable to the act or default of the Tenant so as to be rendered unfit for use and- occupation or being declared unfit for use and occupation or is inaccessible and the policy or policies of insurance effected by the Landlord shall not have been vitiated or payment of the policy moneys refused in whole or in part in consequence of any act or default of the Tenant or if at any time during the continuance of this tenancy the said premises or said building shall be condemned as a dangerous structure or a demolition order or closure order shall become operative in respect of the said premises or the said building then the rent hereby stipulated or a fair proportion thereof according to the nature and extent of the damage sustained or order made shall after the expiration of the then current month be suspended until the said premises or said building shall again be rendered accessible or fit for occupation and use as the case may be And the Landlord shall pay to the Tenant the amount of any such abatement insofar as the rent shall have been paid in advance provided the amount of such abatement shall be such sum as shall either be agreed between the parties in writing or

 

14


  

         in the event of failure of the parties to reach agreement by a single arbitrator in accordance with the provisions of the Arbitration Ordinance (Cap.341) or any statutory modification or re-enactment thereof for the time being in force AND provided always that the Landlord shall be under no obligation to reinstate the said premises whatsoever and provided that if for any of the above causes the said premises are declared unfit for use and occupation or shall remain subject to the said closure order or otherwise remain uninhabitable and not reinstated for a period of three months, either party may forthwith or within a reasonable time from the occurrence of such damage or destruction or order give to the other of them notice in writing to terminate this present Agreement and the tenancy and everything herein contained shall determine as from the date of occurrence of such destruction or damage or order or of the premises becoming inaccessible but without prejudice to either party’s rights and remedies against the other in respect of any antecedent claim or breach of the agreements stipulations terms and conditions herein contained or of the Landlord in respect of the rent payable hereunder prior to the coming into effect of the suspension.

Tenant’s Deposit   

7.      

  

(a)     The Tenant shall on the signing hereof deposit and maintain with the Landlord a rental deposit in the sum as set out in the Third Schedule hereto to secure the due observance and performance by the Tenant of agreements stipulations terms and conditions herein contained and on the Tenant’s part to be observed and performed. The said deposit shall be retained by the Landlord throughout the said term free of any interest to the Tenant with power for the Landlord, without prejudice to any other right or remedy hereunder to have the deposit forfeited as provided in Clause 4(a) hereof and to deduct from the deposit the amount of any costs expenses loss or damage sustained by the Landlord as the result of any non-observance or non-performance by the Tenant of any such agreements stipulations terms or conditions to remedy such non-observance or non-performance and in which event, the Tenant shall, as a condition precedent to the continuation of this tenancy deposit with the Landlord the amount so deducted failing which the Landlord shall forthwith be entitled to re-enter the said premises as provided in Clause 4(a).

 

15


Repayment of deposit   

         Subject to as aforesaid, the said deposit shall be refunded to the Tenant by the Landlord within fourteen (14) days after the expiration or sooner determination of this Agreement and the delivery of vacant possession to the Landlord or within fourteen (14) days of the settlement of the last outstanding claim by the Landlord against the Tenant in respect of any breach, non-observance or non-performance of any of the said agreements, stipulations terms or conditions and on the part of the Tenant to be observed and performed whichever is the later.

  

(b)     During the said term the Tenant shall maintain the said deposit at a sum equal to three months’ rent and three months’ management fee and three months’ rates and if the management fee and rates shall be increased, the Tenant shall forthwith pay to the Landlord the additional amount to make up such deposit.

Transfer of Deposit to

Assignee

  

8.      

  

(a)     If at any time during the said term the Landlord shall assign the said premises subject to and with the benefit of this Agreement and transfer to the assignee thereof the deposit mentioned in Clause (7) hereof then upon the assignee agreeing to refund the said deposit to the Tenant in accordance with the terms hereof, the Landlord shall be absolutely discharged and released from its obligation to refund the said deposit to the Tenant and the Tenant shall have no claim against the Landlord in respect thereof.

  

(b)     The Tenant hereby irrevocably consents to such transfer of deposit aforesaid and undertakes and agrees to enter into an agreement in such form, with such party or parties and at such time as the Landlord may think fit to give better effect to the provisions of this Clause 8.

 

16


Special Conditions   

9.      The parties agree that they shall be bound by the terms and conditions (if any) as set out in the Fifth Schedule hereto. In case of conflict between the Fifth Schedule and the terms herein, the Fifth Schedule shall prevail.

 

17


THE FIRST SCHEDULE ABOVE REFERRED TO

(NAMES ADDRESSES AND DESCRIPTION OF PARTIES HERETO)

 

LANDLORD:    SUN WAH MARINE PRODUCTS (HOLDINGS) LIMITED whose registered office is situate at 215-239 Wu Shan Road, Sun Wah Centre, Tuen Mun, New Territories, Hong Kong
TENANT:    CHINA TYPE DESIGN LIMITED and ABACUS SYSTEMS COMPANY LIMITED whose registered address is situate at Rooms 2403-04, 24/F, Yardley Commercial Building, 3 Connaught Road West, Sheung Wan, Hong Kong.

THE SECOND SCHEDULE ABOVE REFERRED TO

(DESCRIPTION OF THE SAID PREMISES)

ALL THOSE COMMERCIAL/OFFICE UNITS in ROOM 2403 and 2404 on the 24 TH FLOOR (excluding the external walls thereof) of the Building now known as YARDLEY COMMERCIAL BUILDING (            ) NO.3 CONNAUGHT ROAD WEST, HONG KONG situated and standing on ALL THOSE piece or parcel of ground registered in, the Land Registry as THE REMAINING PORTION OF MARINE LOT NO.426, THE REMAINING PORTION OF SECTION B OF MARINE LOT NO.425, THE REMAINING PORTION OF MARINE LOT NO.425, THE REMAINING PORTION OF SECTION A OF MARINE LOT NO.425, THE REMAINING PORTION OF SECTION A OF MARINE LOT NO.424 and THE REMAINING PORTION OF MARINE LOT NO.424 which office units are coloured yellow on the plans hereto for identification purpose.

 

18


THE THIRD SCHEDULE ABOVE REFERRED TO

(TERM OF LETTING, RENT, ETC.)

 

Term:    ONE YEAR from the 30 th day of June 2006 to the 29 th day of June 2007 (both days inclusive).
Rent:    HONG KONG DOLLARS EIGHTEEN THOUSAND THREE HUNDRED NINETY TWO ONLY (HK$18,3 92.00) per month exclusive of management fees, government rates, water charges, electricity charges and all other outgoings payable monthly in advance clear of all deductions on the 1st day of each and every calendar month.
Management fee:    HK$4,326.00 per month in advance subject to revision as determined by the property manager of the Building from time to time during the Term.
Rates :    HK$2,115.00 per quarter subject to revision as determined by the Government from time to time during the term.
Security Deposit:    an amount equivalent to 3 months’ rent, 3 months’ management fee and 3 months’ rates or HK$70,269.00, whichever is higher.
User:    For lawful office use under the trade or business name “China Type Design Limited” and “Abacus Systems Company Limited” only, as is permitted by the Government Lease or conditions, the Deed of Mutual Covenant or Management Agreement or any House Rules, and the Occupation Permit.

THE FOURTH SCHEDULE ABOVE REFERRED TO

(INVENTORY OF FURNITURE)

As per photographs attached to the Tenancy Agreement dated 6 th  August 1998 and the exception attached to the Tenancy Agreement dated 7 th  June 2000 between the parties hereto.

 

19


THE FIFTH SCHEDULE ABOVE REFERRED TO

 

1. The Tenant is deemed to be satisfied with the current state and conditions of the said premises and fixtures and finishes (if any) therein and shall take the same on “as-is” basis.

 

2. Notwithstanding anything hereinbefore provided all sums payable by the Tenant under this Agreement shall be paid to such person(s) or corporation(s) and in such manner as the Landlord may from time to time designate or prescribe in writing.

 

20


IN WITNESS WHEREOF this Agreement has been duly executed by the parties hereto on the day and year first above written.

 

SIGNED BY Tsoi Sin Lan Mazie   )    For and on behalf of
for and on behalf of the Landlord   )    SUN WAH MARINE PRODUCTS (HOLDINGS) LIMITED
in the presence:   )    /s/ Tsoi Sin Lan Mazie                    
     Authorized Signatory
SIGNED BY Chin Tak Chiu   )    For and on behalf of
for and on behalf of the Landlord   )    CHINA TYPE DESIGN LIMITED
in the presence:   )    /s/ Chin Tak Chiu                        

 

RECEIVED the day and year first above written from the   )   For and on behalf of
tenant the sum of DOLLARS ONE THOUSAND SIX   )   SUN WAH MARINE PRODUCTS (HOLDINGS)
LIMITED
HUNDRED FOURTEEN ONLY being the additional   )   /s/ Tsoi Sin Lan Mazie                    
deposit money for the difference between the security   )   Authorized Signatory
deposit in the previously signed the Tenancy Agreement   )     
dated 9 th  July 2001 and the new deposit in this Tenancy   )     
Agreement above expressed to be paid by the Tenant to the Landlord   )   HK$1,614.00   
        

 

21


Dated the 10 th day of July, 2006

SUN WAH MARINE PRODUCTS (HOLDINGS) LIMITED

and

CHINA TYPE DESIGN LIMITED and

ABACUS SYSTEMS COMPANY LIMITED

 


TENANCY AGREEMENT

 

Commercial / Office unit on portion of
Rooms 2403-04 on the 24 TH FLOOR
Yardley Commercial Building
No.3 Connaught Road West
Hong Kong
Term:   One (1) year expiring on 29 th  June 2007

Rent:

 

HK$18,392.00 exclusive of

Rates and Management Fees

 


 

22

Exhibit 10.25

(English translation from the German original)

LEASE AGREEMENT FOR COMMERCIAL SPACE

Ø Steinert [illegible]

between

DU PONT DE NEMOURS (Deutschland) [Germany] GMBH

Bad Homburg v.d.H. [Bad Homburg von der Höhe]

-hereinafter referred to as the “Lessor”-

and

LINOTYPE-HELL AG

Eschborn

-hereinafter referred to as the “Lessor”-

 

1. OBJECT OF THE LEASE

 

1.1 The Lessor leases in its administrative building on Du Pont-Str. 1 in 61352 Bad Homburg v.d.H. the office spaces identified in Attachment 1 on the first floor for the operation of a sales, administration, training and service location and the cellar spaces and storage spaces identified in Attachment 1 . The space being leased out as office spaces amounts to a total of 1,750 m² (238 axles). This includes all ancillary spaces inside and outside the leased space. The space leased out as cellar space amounts to a total of 100 m², and the space leased out as storage space also amounts to a total of 100 m².

The Lessee is entitled to use the pantries and restroom facilities identified in Attachment 1 , as well as 80 (in words: eighty) employee parking spaces in the parking lot behind the administrative building.

 

1.2 Upon transfer of the lease object to the Lessee the contract parties shall draw up a written protocol of transfer, which is to be signed by both parties.

 

1.3 Building access cards will be given to the Lessee by the Lessor for each of the Lessee’s employees working in the leased spaces. They will be billed to the Lessee at the Lessor’s cost price per card of DM 12.50 incl. VAT. The building access cards shall remain the property of the Lessor. The Lessor’s rules concerning handling the cards and their replacement in the event of loss, damage etc. ( Attachment 2 ) apply analogously.

 

[initials]    [initials]


The Lessee shall indemnify the Lessor from any damages caused to him or a third-party on account of damage, loss or unauthorized use of the card. The Lessee shall bear the burden of proof to demonstrate it is not the fault of the Lessee.

 

1.4 Use of, e.g., the conference center, company restaurant, travel agency, including cashier, medical clinic and other office services (services offered can be found in Attachment 4 ) is exclusively subject to an additional agreement to be concluded separately. In emergencies the Lessee shall have access to the Lessor’s medical clinic even if there is no special agreement concerning its use.

 

2. LEASE TERM, CANCELLATION

 

2.1 The lease shall begin on 08/01/1997 and shall automatically end on 07/31/2002. The Lessee has the right to renew the lease by five (5) years by unilateral declaration (“Option right”). The option right must be exercised by 10/31/2001 by means of written notification to the Lessor.

If the option right is exercised by the Lessee and the lease agreement is not cancelled in writing by one of the parties within nine (9) months to 07/31/2007, the lease shall convert into an unlimited lease on 08/01/2007 which may be cancelled at any time by either party within nine (9) months to the end of the calendar month.

 

2.2 Notification of cancellation must be received in writing by the third business day of the first month of the cancellation period. In the event of cancellation due to arrears of rent, the rent shall also include ancillary costs.

 

2.3 The Lessor shall offer in writing the Lessee any office space that becomes available to rent in the administrative building during the lease term. The Lessee shall notify the Lessor within two months after receipt of the offer as to whether it accepts the offer.

 

3. RENT

 

3.1

For the lease term of 08/01/1997 through 07/31/2002 the rent for office space shall be DM 22.00 per m 2 a month (in words: twenty-two), i.e., a total of DM 38.500.00 (in words: thirty-eight thousand, five hundred), DM 10.00 per m 2 for cellar space (in words: ten), i.e., DM 1,000.00 in total (in words: one thousand) as well as DM 13.00 per m² for storage space (in words: thirteen), i.e., DM 1,300.00 in total (in words: one thousand three hundred).

 

[initials]    [initials]

 

-2-


In addition to paying rent for office and cellar/storage space under this clause, there shall be an additional fee for the use of forty (40) employee parking spaces. The rent for one parking space is DM 70.00 a month (in words: seventy).

 

3.2 Should the Lessee exercise its option right, the rent for the period from 08/01/2002 through 07/31/2007 may be reset if one of the parties desires this to occur and such desire has been communicated to the other contract party in writing by 12/31/2001 at the latest.

If the contract parties do not agree to a new rent by 03/31/2002, at the request of one or both parties an expert appointed as arbitrator by the Chamber of Commerce and Industry in pursuance of §317 BGB [Civil Code] shall decide at his or her own discretion if and to what amount a change in rent should take effect. At that point the new rent shall be binding for both parties from the first of the next month after requesting the contract partner to comply with a change. The costs of this process shall be borne by the parties in proportion to their success and failure as compared to the state of negotiations before referring the case to the Chamber of Commerce and Industry.

 

3.3 The following ancillary costs are not included in the above rent and are therefore payable separately as lump sums and/or as installment payments:

 

•       Heat/water/sewage/ insurance/property tax

   1.00 DM per m2

•       Security/reception

   1.50 DM per m2

•       Facility services of Attachment 3

   2.50 DM per m2

The lump sums for the ancillary costs “heat/water/sewage/insurance/property tax” and the installment payment for “electricity” may be reset by the Lessor in writing with three months prior notice at the beginning of a calendar month. The Lessor shall provide reasons for the requested change.

The lump sums for the ancillary costs “security/reception” and “facility services” are fixed until 07/31/2002. After that point new contract terms for these lump sums can be stipulated. Clause 3.2 applies analogously to the change in the lump sums for these ancillary costs. All other ancillary costs (with the exception of electricity - see below) are included. Those ancillary costs will not be billed.

 

•       Electricity

   TBD DM per m 2

The costs for electricity shall be billed annually based on the area of the lease object based on consumption according to an installed meter.

[Handwritten:] The Lessee shall make monthly installment payments on this of DM 4300.00.

 

[initials]    [initials]

 

-3-


3.4 Rent is due by the third business day of each month at the latest and payable at no cost to the bank account disclosed to the Lessee by the Lessor. Unless stipulated otherwise the ancillary costs shall be payable along with the rent. Prompt payment is not defined by when the money was sent, but by when the money was received.

 

3.5 If the Lessee is in arrears in the payment of the rent, then payments shall be applied first to claims that are in danger of becoming time-barred, then to costs, interests and other debts, unless the Lessee arranges different terms.

 

3.6 The Lessee may only exercise a claim for a reduction in the rent if it has notified the Lessor hereof in writing at least one month before the rent due date.

 

3.7 Retaining rent payment and using rent payment for the purpose of offsetting due to claims from another debt is precluded unless it concerns undisputed claims or claims which have been determined to be legally valid.

 

4. ANCILLARY RIGHTS AND OBLIGATIONS OF THE LESSEE

 

4.1 The Lessor or/and its authorized representative may enter the leased spaces during business hours, after giving prior timely notification, in order to inspect the condition of the leased spaces or for other important reasons. The Lessor shall be authorized to access the leased spaces at any time of the day or night in the event of danger.

 

4.2 The Lessee will ensure that its confidential documents are sealed by its employees after leaving the offices and kept inaccessible to third parties.

 

4.3 The Lessee shall comply with the facility rules and regulations ( Attachment 2 ) at all times and properly instruct its employees on those rules.

 

4.4 The Lessee is entitled to install exterior advertising at its own cost on the freestanding advertising equipment located on the property as well as on the billboard located immediately next to the main entrance (a maximum of 2 company names each). The appearance of the exterior advertising must be approved in advance by DuPont.

 

5. HEATING

The office space will be heated daily from 7 a.m. to 7 p.m. to an extent that is customary for the Lessor itself (approx. 20°C room temperature).

 

[initials]    [initials]

 

-4-


Heat and/or backup heat cannot be demanded in the event of disruptions, force majeure, orders from public officials or in the event of some other service incapacity (e.g., fuel shortage), unless such incapacity is due to malice or gross negligence on the part of the Lessor. The rights of the Lessee from §537 BGB shall remain in full force. The Lessee shall not be entitled to compensation for damages unless the Lessor acted maliciously or out of gross negligence. The Lessor must remedy any disruptions immediately.

 

6. UTILIZATION OF THE LEASE OBJECT/SURRENDER OF USE

 

6.1 The Lessee may only use the lease object for purposes and lines of business different than those set forth in Clause 1 with the written permission of the Lessor; it is not allowed to entirely or partially cease business operations.

 

6.2 Without the written permission of the Lessor the Lessee has neither the right to sublease the lease object nor surrender use of the lease object to third parties. The permission of the Lessor shall only be valid for the specific case and that permission may be withdrawn for important reasons.

 

6.3 The Lessee herewith transfers, in anticipation of any surrender of use of the lease object to a third party, the receivables it has on the sublessee including any right of pledge to the amount of the rent demanded by the Lessor as surety.

 

6.4 The Lessor is not required to provide access to and/or keep building equipment for community use in operation beyond regular operating and business times.

 

6.5 The Lessor shall provide any licenses relevant to the building for the operations of the Lessee and keep them up to date.

 

7. OFFICIAL LICENSES, DANGER FROM EQUIPMENT AND INSTALLATIONS OPERATED BY THE LESSEE

 

7.1 The Lessor assumes no liability for the issuing of commercial licenses for the intended business and/or for the continuity of licenses issued. This applies especially to concessions; [sic] requirements imposed by commercial authorities or other agencies are to be fulfilled by the Lessee at the its own expense.

 

7.2 Clause 7.1 shall not apply, however, if the quality and location of the lease object is not appropriate for the contracted purpose.

 

[initials]    [initials]

 

-5-


7.3

The permissible load limit on the storey floors for installing machines, heavy objects, other equipment and installations is 250 kg/m 2 . The Lessee shall be liable for damages caused by noncompliance with the permissible load limit. The Lessee shall be liable for all equipment and installations operated or brought onto the premises by the Lessee. Should unacceptable detriment or incompatibilities result from the installation or operation of equipment and installations of the Lessee, the Lessee shall be required, to the extent it is unable to find a remedy, to remove them and/or discontinue their operation.

 

8. MAINTENANCE AND REPAIR OF THE LEASE OBJECT

 

8.1 The Lessee is to provide for sufficient cleaning, ventilation and heating of the lease object and to care for the spaces and installations and keep them free of pests.

 

8.2 The Lessee is liable to pay compensation for any damage to the object of the lease and the building as well as any equipment that belongs to the leased spaces or the building if they were caused by the Lessee or people who are involved in its business as well as sublessees. This also applies to damage caused by visitors, vendors and workmen, to the extent they are auxiliary personnel of the Lessee.

 

8.3 The Lessee must immediately notify the Lessor of any damage that occurs in or to the object of the lease. The Lessee shall be liable to pay compensation for any subsequent damage caused by untimely notification.

 

8.4 The Lessor shall not be liable for damages suffered by the Lessee to objects and furnishings which belong to it, no matter what the type, cause, duration and scope the consequences, unless the Lessor caused the damages deliberately or through gross negligence.

 

9. CHANGES TO AND IN THE OBJECT OF THE LEASE BY THE LESSOR

 

9.1 Changes to and in the object of the lease, in particular fittings and conversions, installation and the like, can only be made with the written permission of the Lessor (condition of the object of the lease: Attachment 1 and Protocol of Transfer of Clause (1.2)). At the request of the Lessor, the Lessee shall be required to remove the fittings or conversions entirely or partially in the event it vacates the object of the lease, and to return the object of the lease to its previous condition, without any requirement for a precondition of approval from the Lessor.

 

[initials]    [initials]

 

-6-


9.2 If at the end of the lease the Lessee wishes to remove furnishings with which it has furnished the object of the lease, it must first offer them to the Lessor. When doing so the Lessee must communicate its asking price and verify the reinstatement costs and time that would be spent for such reinstatement. If the Lessor desires to take over the furnishings, it must pay the Lessor a reasonable compensation.

 

9.3 Gas and electrical devices may only be connected to the existing network after a safety test has been performed by the Lessor’s department of building services. The Lessee shall not incur any additional costs for the safety test. This does not include standard devices from the product program of the Lessee that are brought into the object of the lease only briefly for test runs.

 

10. COMPETITION CLAUSE

During the term of the lease agreement the Lessor shall not lease any space at the administrative building Du Pont Str. 1 in 61352 Bad Homburg v.d.H. to third parties whose products stand in direct competition with the products of the Lessee.

 

11. TERMINATION OF THE LEASE

 

11.1  The Lessee must return the object of the lease in a clean condition. If the Lessee fails to meet this requirement or fails to meet it in a timely fashion, the Lessor may have the object of the lease cleaned at the Lessee’s expense.

The move-out obligation of the Lessee extends to all objects in the leased area, to the extent they do not belong to the Lessor. If the Lessee does not meet this requirement, the Lessor shall have the right to have such objects removed at the expense of the Lessee. There is no compulsory safekeeping requirement for the Lessor.

 

11.2  If the lease ends due to termination without notice by the Lessor, then the Lessee shall be liable for the loss in rent resulting from the object of the lease standing empty until expiry of the agreed lease term or if the previous rent cannot be achieved for the new rental.

 

11.3  The Lessee must return all access cards to the Lessor at the end of the lease term.

 

[initials]    [initials]

 

-7-


12. ADDITIONAL AGREEMENT

It is understood that Linotype-Hell AG does not require the lease spaces for its own offices, but for its subsidiaries

Linotype Library GmbH

Linotype-Hell Color Publishing Solutions GmbH

or others and that it shall sublease the leased spaces to them. The Lessor agrees to this sublease. Clause 6 does not apply.

The Lessor is also aware that the plan is soon to merge Linotype-Hell AG into its majority shareholder, Heidelberg Druckmaschinen AG, which will then enter within the scope of universal succession into all rights and obligations of Linotype-Hell AG and thus into this lease agreement as well in place of Linotype-Hell AG.

 

13. CONTRACT AMENDMENTS

Secondary agreements, amendments, additions and cancellation of the contract including this clause are required in writing in order to be valid.

Bad Homburg v.d.H., [handwritten:] 06/12/97

DU PONT DE NEMOURS (Deutschland) GMBH

                            ppa.

[signature]       [signature]
Dr. M.H. Bobzien     M. Gant

Eschborn, [handwritten:] 06/13/1997

LINOTYPE-HELL AG

[signature]       [signature]

 

Attachments:    Attachment 1:    Plan
   Attachment 2:    Facility rules and regulations
   Attachment 3:    Facility Services
   Attachment 4:    Special Clauses

 

-8-


[letterhead]

Du Pont de Nemours

(Deutschland) GmbH

Du Pont-Str. 1

61352 Bad Homburg

06/13/97

Lease contract for commercial space

Dear Sirs:

Attached please find both original copies of the contract, which we—as discussed on the phone—have amended on page 3 with respect to the billing for energy consumption. Please also initial this change for your part and return one of the original copies to us for our files.

As a matter of proper form we would also like to confirm the result of the meeting with Mr. M. Gant of your offices on June 12 th , according to which your company is granting us discounts on the rent, which are itemized in a memorandum dated 6/12/1997, to the total amount of DM 442,775.00 in the form of five “free months” and omission of a broker’s fee.

Best regards,

Linotype-Hell AG

Department of Contracts and Legal Mattes

[signature]

Dr. Volker Stückradt

[footer]


1. Rent

 

1750 m2 x 22.00 Dm/m2 Mon x 60 Mon    2310.00 DM

Period of August 1997 through December 1997

 

./.    1750    m2    x    22.00    DM/m2    Mon    x 5    Mon    192,500    DM    Rent
./.    1750    m2    x    5.00    DM/m2    Mon    x 5    Mon    43,750    DM    Ancillary costs
./.    40    PP    x    70.00    DM/Mon       x 5    Mon    14,000    DM    Parking space
./.    100    m2    x    10.00    DM/m2    Mon    x 5    Mon    5,000    DM    Cellar
./.    100    m2    x    13.00    DM/m2    Mon    x 5    Mon    6,500    DM    Storage
./.    1750    m2    x    5.50    DM/m2    Mon    x 5    Mon    48,125    DM    Services
./.    One-time payment                132,900    DM    M-commission
   Subtotal                442,775    DM   
   Total                1,867,225    DM   

Total rent payment 1,867,225 DM

Rental space 1750 m2 x Full term of 60 months                         = 17.78 DM/m2 a month

(Additionally an “AVOIDED COST” of about 60,000 DM over the term of the lease agreement by affixing the rent in writing).

2. Total rent:

Du Pont-Str. 1

1,750 m2 x 17.78. DM/m2 per month x 60 months    1,867,225 DM

Alternatively

1,750 m2 x 18.37 DM/m2 per month x 60 months    1,928,850 DM

[initials]

Manfred Gant

June 12, 1997

[signature]


1 ST SUPPLEMENTAL CLAUSE

TO THE LEASE AGREEMENT FOR COMMERCIAL SPACE

BETWEEN

DU PONT DE NEMOURS (DEUTSCHLAND) GMBH

AND

LINOTYPE-HELL AG

OF JUNE 13, 1997

 

1. Clause 1.1 of the Lease Agreement is supplemented as follows:

 

 

 

the space leased as office space is being upgraded effective September 1, 1997 by the amount of space identified in Attachment 1 (C), i.e., by 125 m 2 to a total of 1,875 m 2 of office space,

 

 

 

the space leased as cellar space is being upgraded effective September 1, 1997 by the amount of space identified in Attachment 1 (A), i.e., by 224 m 2 to a total of 324 m 2 of cellar space,

 

   

the space leased as storage space is being cancelled effective September 1, 1997,

 

 

 

technical space 13 m 2 in size on the ground floor north is being additionally leased effective September 1, 1997 in the location identified in Attachment 1 (B) (room no. B-309) to be used as a photography laboratory.

There will be no additional employee parking spaces in the parking lot behind the administrative building.

 

2.1. The rent set forth in Clause 3.1

 

   

for office space is being increased for each month effective September 1, 1997 by 2750.00 DM

(in words: two thousand, seven hundred and fifty) to a total of 41,250.00 DM

(in words: forty-one thousand, two hundred and fifty),

 

   

for cellar space is being increased for each month effective September 1, 1997 by 2240.00 DM

(in words: two thousand, two hundred and forty) to a total of 3240.00 DM

(in words: three thousand, two hundred and forty),

 

   

is being cancelled effective September 1, 1997 for storage space.

 

2.2

The rent for the technical space shall be 25.00 DM per m 2 per month (in words: twenty-five), i.e., a total of 325.00 DM (in words: three hundred twenty-five)

[initials]

../2


3. Otherwise the terms of the lease agreement of June 13, 1997 shall remain unchanged. They shall apply without limitation to the additional space leased as office space, in particular Clauses 2 and 3.3.

In the case of the technical space, however, with the exception of “electricity” the ancillary costs shall be contained in the rent. An installment payment is to be paid for “electricity.”

Bad Homburg v.d.H., [handwritten:] 06/11/97

[signature] ppa. [signature]

Du Pont de Nemours (DEUTSCHLAND) GmbH

Bad Homburg v.d.H., [handwritten:] 11/7/97

[signature]

HEIDELBERGER DRUCKMASCHINEN AG

 

-2-


16 [illegible]

2 nd SUPPLEMENTAL CLAUSE

TO THE LEASE AGREEMENT FOR COMMERCIAL SPACE

BETWEEN

DU PONT DE NEMOURS (DEUTSCHLAND) GMBH

AND

LINOTYPE-HELL AG

OF JUNE 13, 1997

 

1.

Clause 1.1 of the lease agreement is being supplemented to the effect that as of June 1, 1998 15 m 2 of storage will be leased (Attachment 1 D).

 

2. The rent referred to in Clause 3.1 for storage space shall amount to DM 195.00 effective June 1, 1998.

 

3. Otherwise the terms of the lease agreement of June 13, 1997 shall remain unchanged.

Bad Homburg v.d.H., [handwritten:] June 22, 1998

[signature] ppa. [signature]

DU PONT DE NEMOURS (DEUTSCHLAND) GMBH

Bad Homburg v.d.H., [handwritten:] 07/08/98

[signature]

HEIDELBERGER DRUCKMASCHINEN AG

Exhibit 10.26

(English translation from the German original)

SUBLEASE AGREEMENT

between

Heidelberger Druckmaschinen AG

Kurfürsten-Anlage 52-60

D-69115 Heidelberg

and

Linotype GmbH

Du-Pont-Straße 1

D-61352 Bad Homburg

Recital clause

The Heidelberger Druckmaschinen AG (hereinafter referred to as “HDM”) is sole partner in the Linotype GmbH (hereinafter referred to as “Linotype”).

It plans to sell its business share this year and transfer it to the buyer this year as well.

Linotype’s offices are located at the above address. A verbal and/or implied sublease agreement is in place for this between Linotype as sublessee and HDM as sublessor that hands over, as it were, the terms of the lease agreement between HDM as legal successor to Linotype Hell AG and Du Pont de Nemours (Deutschland) GmbH (hereinafter referred to as “Du Pont”) from HDM to Linotype. The lease agreement between HDM and Du Pont is also a sublease agreement, but for the sake of simplicity it is referred to below as the “Main Lease Agreement” and is attached to this sublease agreement, including the 1 st and 2 nd Supplemental Clauses, as Attachment 1.

The reason for the sublease agreement is based on Linotype’s position as a subsidiary of HDM. Consequently, the sublease agreement shall not remain in existence for the long term after the shares are transferred, but terminated at the same time as the Main Lease Agreement still to be cancelled by HDM.

The present written sublease agreement is meant to replace the content of the existing sublease agreement identically, which was entered into only verbally or implicitly, as well as stipulate in writing the termination of the same.

Part of the space covered in the Main Lease Agreement was never used by Linotype. That space is described in an attachment to this agreement. The contract parties are in agreement that no commitments with respect to the unused space shall arise from the present contract.

 

Page 1 of 3


§1 Reference to the Main Lease Agreement

 

(1) The contract parties are required to render services for each other in accordance with the Main Lease Agreement of June 13, 1997 entered into between HDM and Du Pont, whereby HDM is to render the services for Linotype that Du Pont renders for HDM in the Main Lease Agreement and Linotype is to render the services for HDM that HDM renders for Du Pont in the Main Lease Agreement.

 

(2) The payment obligations that exist on account of this reference for Linotype to HDM are understood to include the respective amount of value-added tax. HDM shall issue invoices to Linotype for this as defined in §14 UStG [Turnover Tax Act].

 

(3) This reference to the Main Lease Agreement includes all amendments or supplements to the Main Lease Agreement.

 

(4) § 2 shall remain in full force.

 

§2 Decrease in obligations due to otherwise subleased space

 

(1) Linotype’s obligations as sublessee, in particular those obligations to pay rent and ancillary costs, are decreased where the Main Lease Agreement refers to office space not used by Linotype. Where payment claims are concerned, the decrease will be in proportion to the ratio of used space to unused space. The outcome is a monthly payment for rent and ancillary costs of 28,048.00 euros.

 

(2) The obligations of HDM as sublessor, in particular those obligations to ensure the rental property is being used, are decreased where the Main Lease Agreement refers to the space not used by Linotype, i.e., 274 m².

 

§3 Termination of the sublease contract

Since HDM exercised the option right in pursuance of (2.1) of the Main Lease Agreement by the deadline, the Main Lease Agreement shall terminate on July 31, 2007 if HDM terminates it by the deadline according to plan. Consequently, the term of the sublease agreement is herewith set to expire on July 31, 2007. Any terms in the Main Lease Agreement that contradict this time limitation by virtue of the reference in §1 are null and void.

 

§4 Commencement of the contract term

This contract shall take effect on July 1, 2006 notwithstanding the time of signature.

 

Page 2 of 3


§5 Invalidity of previous agreements, amendments

This contract replaces all previous agreements concerning the lease object, in particular the sublease agreement in place thus far, which was entered into verbally or implicitly. Amendments to this contract are only valid if done in writing.

Attachments:

Attachment 1: Main Lease Agreement between Du Pont and HDM

Heidelberg/Bad Homburg, July 31, 2006

 

Heidelberger Druckmaschinen AG     Linotype GmbH
[signature]     [signature]
Bernhard Schreier     Bruno Steinert
Chairman of the Board of Directors     Managing Director

[signature]

Wirnt Galster

Authorized Signatory

 

Page 3 of 3

Exhibit 10.27

Suite #640

OFFICE LEASE

THIS LEASE IS MADE AND ENTERED INTO THIS 17 TH DAY OF DECEMBER 2006 BY AND BETWEEN SHEILA L. ORTLOFF (HEREINAFTER CALLED “LESSOR”), AND MONOTYPE IMAGING, INC, A DELAWARE CORPORATION (HEREINAFTER CALLED “LESSEE”).

1. LEASED PREMISES. IN CONSIDERATION OF THE COVENANTS TO BE KEPT AND PERFORMED BY LESSEE PURSUANT TO THIS LEASE, LESSOR HEREBY LEASES AND RENTS TO LESSEE AND LESSEE DOES HEREBY TAKE, ACCEPT AND HIRE FROM LESSOR, UPON THE TERMS AND CONDITIONS HEREAFTER SET FORTH THOSE CERTAIN PREMISES OUTLINED ON THE FLOOR PLAN FOR THE 6 TH FLOOR, CONSISTING OF APPROXIMATELY 2662 SQUARE FEET OF SPACE, ATTACHED HERETO AS EXHIBIT “A” AND BY THIS REFERENCE MADE A PART IN THE BUILDING IN THE CITY OF REDWOOD CITY, COUNTY OF SAN MATEO, STATE OF CALIFORNIA, COMMONLY KNOWN AS 702 MARSHALL STREET (HEREINAFTER REFERRED TO AS THE “BUILDING”). LESSEE ACKNOWLEDGES THE SQUARE FOOTAGE ABOVE INCLUDES A LOAD FACTOR OF APPROXIMATELY 15%.

2. TERM . THE TERM OF THIS LEASE SHALL COMMENCE ON FEBRUARY 1, 2007 (HEREINAFTER REFERRED TO AS THE “COMMENCEMENT DATE”), SUBJECT TO EXTENSION AS HEREAFTER PROVIDED), OR ON SUCH EARLIER DATE AS LESSEE SHALL OCCUPY THE LEASED PREMISES OR ANY PART THEREOF, AND SHALL END ON JANUARY 31, 2012.

SUBJECT TO DELAYS BEYOND THE REASONABLE CONTROL OF LESSOR, AND/OR BY REASON OF ACTION OR INACTION OF LESSEE, LESSOR SHALL ENDEAVOR TO PERFORM SUCH ALTERATIONS WHICH MAY BE REQUIRED AND SPECIFIED AS BEING PERFORMED BY LESSOR IN PARAGRAPH 34L, AND TO SUBSTANTIALLY COMPLETE SUCH ALTERATIONS BY THE COMMENCEMENT DATE. IF ANY ALTERATIONS TO BE PERFORMED BY LESSOR ARE NOT SUBSTANTIALLY COMPLETED BY THE COMMENCEMENT DATE, THEN: (A) THE COMMENCEMENT DATE SHALL BE EXTENDED TO THE DATE THE LEASED PREMISES ARE SUBSTANTIALLY COMPLETED IN THE OPTION OF LESSOR; (B) IT IS SPECIFICALLY AGREED THAT THIS LEASE SHALL NOT BE VOIDABLE BY REASON THEREOF, NOR SHALL LESSOR OR LESSOR’S AGENTS BE LIABLE FOR ANY LOSS OR DAMAGE RESULTING FROM SUCH DELAY; (C) RENT SHALL BE ABATED TO THE EXTENDED COMMENCEMENT DATE SPECIFIED IN SUBPARAGRAPH (A) ABOVE; (D) THE DATE OF THE END OF THE TERM SHALL BE EXTENDED FOR A CORRESPONDING PERIOD. IF FOR ANY REASON ANY OF SUCH ALTERATIONS ARE NOT SUBSTANTIALLY COMPLETED WITHIN NINETY (90) DAYS FROM THE ORIGINALLY SPECIFIED COMMENCEMENT DATE, AND PROVIDED THAT LESSEE DOES NOT INTERFERE WITH OR DELAY THE WORK OF LESSOR, THEN, AT LESSEE’S OPTION, THE LEASE SHALL TERMINATE AND LESSOR AND LESSOR’S AGENTS SHALL NOT BE SUBJECT TO LIABILITY FOR ANY LOSS OR DAMAGE WITH RESPECT THERETO.

 

1


3. BASE RENT.

A. LESSEE AGREES TO PAY LESSOR AS BASE RENT FOR LEASED PREMISES THE SUM OF FIVE THOUSAND NINE HUNDRED EIGHTY NINE DOLLARS & 50/100’S ($5,989.50) IN ADVANCE ON OR BEFORE THE FIRST DAY OF THE FIRST CALENDAR MONTH OF THE TERM HEREOF AND A LIKE SUM ON OR BEFORE THE FIRST DAY OF EACH AND EVERY SUCCESSIVE MONTH THEREAFTER DURING THE TERM HEREOF, (HEREINAFTER REFERRED TO AS THE “BASE RENT”). IN THE EVENT THAT THE COMMENCEMENT DATE OF THE TERM OF THIS LEASE SHALL BE A DAY OTHER THAN THE FIRST DAY OF THE CALENDAR MONTH, THE BASE RENT FOR THE FIRST AND LAST MONTH DURING THE TERM HEREOF SHALL BE PRORATED ON THE BASIS OF A THIRTY (30) DAY MONTH.

THE BASE RENT SHALL BE ADJUSTED ON THE ANNIVERSARY OF EACH LEASE YEAR OF THE TERM HEREAFTER (STARTING WITH THE COMMENCEMENT OF THE SECOND LEASE YEAR) IN PROPORTION TO ANY INCREASE IN THE COST OF LIVING DURING THE LEASE TERM. IN DETERMINING THE AMOUNT OF INCREASE, IF ANY, THE BASE NUMBER SHALL BE THE CONSUMER PRICE INDEX NUMBER PUBLISHED BY THE BUREAU OF LABOR STATISTICS, FOR THE US CITY AVERAGE, ALL ITEMS, APPLICABLE TO THE MONTH WHICH IS TWO MONTHS PRIOR TO THE MONTH IN WHICH FALLS THE DATE OF COMMENCEMENT OF THE ORIGINAL LEASE TERM. THIS BASE NUMBER SHALL BE COMPARED TO THE CURRENT NUMBER INDICATED BY THE INDEX FOR THE MONTH THAT IS TWO MONTHS PRIOR TO THE MONTH OF THE ANNIVERSARY OF THE SUBJECT LEASE YEAR. IF THE CURRENT NUMBER EXCEEDS THE BASE NUMBER, THEN IN LIEU OF THE STATED BASE RENT, THE BASE RENT SHALL BE THE SUM DERIVED BY MULTIPLYING THE SUPERSEDED BASE RENT BY FRACTION, THE NUMERATOR OF WHICH IS THE CURRENT NUMBER AND THE DENOMINATOR OF WHICH IS THE BASE NUMBER. IF THE BUREAU OF LABOR STATISTICS NO LONGER PUBLISHES THE COST OF LIVING INDEX, THE LESSOR AND LESSEE SHALL MUTUALLY AGREE UPON A REASONABLY COMPARABLE INDEX. IN NO EVENT SHALL THE ANNUAL INCREASE OF BASE RENT BE LESS THAN THREE PERCENT (3%), NOR MORE THAN FIVE (5%) PERCENT.

*** LESSOR HEREBY GRANTS LESSEE A RENT CREDIT IN THE AMOUNT OF FOUR THOUSAND ONE HUNDRED NINETY TWO DOLLARS & 65/100’S ($4,192.65) TO BE APPLIED TO THE FIRST MONTH’S BASE RENT, IN FEBRUARY 2007. ***

B. LESSEE ADDITIONALLY AGREES TO PAY TO LESSOR, CONCURRENT WITH THE BASE RENT UNLESS OTHERWISE PROVIDED HEREIN, ALL OTHER SUMS OF MONEY THAT MAY BECOME DUE AND PAYABLE HEREUNDER, WHICH SUMS SHALL BE DEEMED ADDITIONAL RENTAL. AS USED IN THIS LEASE, THE TERM “RENT” SHALL MEAN AND INCLUDE ALL BASE RENT, ADDITIONAL RENT AND ALL OTHER CHARGES PAYABLE BY LESSEE UNDER THIS LEASE. ALL RENT SHALL BE PAID BY LESSEE TO LESSOR BY THE DUE DATE, WITHOUT DEDUCTION OR OFFSET, IN LAWFUL MONEY OF THE UNITED STATES, AT THE OFFICE OF THE LESSOR AS SPECIFIED HEREIN, OR AT SUCH OTHER LOCATION AS MAY BE SPECIFIED BY LESSOR IN WRITING. BASE RENT IS DUE AND PAYABLE ON THE FIRST OF EACH MONTH AND IS CONSIDERED LATE WHEN RECEIVED AFTER THE FIFTH DAY OF THE MONTH.

 

2


C. LATE CHARGE – TENANT ACKNOWLEDGES THAT LATE PAYMENT BY TENANT TO LANDLORD OF RENT WILL CAUSE LANDLORD TO INCUR COSTS NOT CONTEMPLATED BY THIS LEASE, THE EXACT AMOUNT OF SUCH COSTS BEING EXTREMELY DIFFICULT AND IMPRACTICABLE TO FIX. SUCH COSTS INCLUDE, WITHOUT LIMITATION, PROCESSING AND ACCOUNTING CHARGES, AND LATE CHARGES MAY BE IMPOSED ON LANDLORD BY THE TERMS OF ANY ENCUMBRANCE AND NOTE SECURED BY ENCUMBRANCE COVERING THE PREMISES. THEREFORE, IF ANY INSTALLMENT OF RENT DUE FROM TENANT IS NOT RECEIVED BY LANDLORD WITHIN FIVE DAYS FOLLOWING DATE DUE, TENANT SHALL PAY TO LANDLORD AN ADDITIONAL SUM OF TEN PERCENT (10%) OF THE OVERDUE RENT AS A LATE CHARGE. THE PARTIES AGREE THAT THIS LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COSTS THAT LANDLORD WILL INCUR BY REASON OF LATE PAYMENT BY TENANT. ACCEPTANCE OF ANY LATE CHARGE SHALL NOT CONSTITUTE A WAIVER OF TENANT’S DEFAULT WITH RESPECT TO THE OVERDUE AMOUNT, OR PREVENT LANDLORD FROM EXERCISING ANY OTHER RIGHTS AND REMEDIES AVAILABLE TO LANDLORD.

D. INTEREST ON UNPAID RENT – RENT NOT PAID WHEN DUE SHALL BEAR INTEREST FROM THE DATE DUE UNTIL PAID AT THE MAXIMUM RATE AN INDIVIDUAL IS PERMITTED BY LAW TO CHARGE.

E. RETURNED CHECKS – IN THE EVENT THAT A TENANT’S CHECK IS RETURNED UNPAID LANDLORD SHALL HAVE THE RIGHT TO REIMBURSEMENT FOR EXPENSES INCURRED. IN THE EVENT THAT A CHECK IS RETURNED UNPAID, LANDLORD MAY REQUIRE TENANT TO MAKE PAYMENT OF FUTURE RENT INSTALLMENT PAYMENTS BY MONEY ORDER, CERTIFIED OR CASHIER’S CHECK.

4. SECURITY DEPOSIT. LESSEE CONTEMPORANEOUSLY WITH THE EXECUTION OF THIS LEASE SHALL PAY LESSOR THE SUM OF FIVE THOUSAND NINE HUNDRED EIGHTY NINE DOLLARS & 50/100’S ($5,989.50). SAID DEPOSIT SHALL BE RECEIVED BY LESSOR, WITHOUT LIABILITY FOR INTEREST, AS SECURITY FOR THE FAITHFUL PERFORMANCE BY LESSEE OF ALL THE TERMS, COVENANTS, AND CONDITIONS OF THIS LEASE BY SAID LESSEE TO BE KEPT AND PERFORMED DURING THE TERM HEREOF. IF AT ANY TIME DURING THE TERM OF THIS LEASE, LESSEE SHALL COMMIT AN EVENT OF DEFAULT, AS SUCH TERM IS USED IN PARAGRAPH 22A, WITH RESPECT TO ANY OF THE RENT HEREIN RESERVED, OR ANY OTHER SUM PAYABLE BY LESSEE, THEN LESSOR MAY, AT THE OPTION OF LESSOR (BUT LESSOR SHALL NOT BE REQUIRED TO), APPROPRIATE AND APPLY ALL OR ANY PORTION OF SAID DEPOSIT TO THE PAYMENT OF ANY SUCH OVERDUE RENT OR OTHER SUM. FURTHERMORE, IN CASE OF AN EVENT OF DEFAULT DUE TO THE FAILURE OF LESSEE TO KEEP AND PERFORM ANY OF THE TERMS,

 

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COVENANTS AND CONDITIONS OF THIS LEASE TO BE KEPT AND PERFORMED BY LESSEE, THEN THE LESSOR AT ITS OPTION MAY APPROPRIATE AND APPLY SAID ENTIRE DEPOSIT, OR SO MUCH THEREOF AS MAY BE NECESSARY, TO COMPENSATE THE LESSOR FOR ALL OR A PORTION OF LOSS OR DAMAGE SUSTAINED OR SUFFERED BY LESSOR DUE TO SUCH BREACH ON THE PART OF LESSEE INCLUDING, BUT NOT LIMITED TO, FUTURE RENTS RECOVERABLE BY LESSOR AS PROVIDED IN CALIFORNIA CIVIL CODE SECTION 1951.2. SHOULD THE ENTIRE DEPOSIT, OR ANY PORTION THEREOF BE APPROPRIATED AND APPLIED BY LESSOR AS HEREIN PROVIDED, THEN LESSEE SHALL, FORTHWITH REMIT TO LESSOR A SUFFICIENT AMOUNT IN CASH TO RESTORE SAID SECURITY TO THE ORIGINAL SUM DEPOSITED, AND LESSEE’S FAILURE TO DO SO SHALL CONSTITUTE A BREACH OF THIS LEASE. SHOULD LESSEE COMPLY WITH ALL OF SAID TERMS, COVENANTS AND CONDITIONS AND PROMPTLY PAY ALL THE RENTAL HEREIN PROVIDED FOR AS IT FALLS DUE AND ALL OTHER SUMS PAYABLE BY LESSEE TO LESSOR HEREUNDER, SAID DEPOSIT SHALL BE RETURNED IN FULL TO LESSEE AFTER LESSEE HAS SURRENDERED THE LEASED PREMISES, AT THE END OF THE TERM OF THIS LEASE, OR UPON THE EARLIER TERMINATION OF THIS LEASE. NOTHING CONTAINED IN THIS PARAGRAPH SHALL IN ANY WAY DIMINISH OR BE CONSTRUED AS WAIVING ANY OF THE LESSOR’S OTHER REMEDIES SET FORTH IN THIS LEASE OR OTHERWISE PROVIDED BY LAW OR IN EQUITY. LESSOR SHALL HAVE THE FULL, COMPLETE AND UNRESTRICTED USE OF THE DEPOSIT DURING THE TERM OF THE LEASE AND LESSOR MAY DELIVER THE SECURITY DEPOSIT TO A PURCHASER OF LESSOR’S INTEREST IN THE PROPERTY, IN WHICH CASE LESSOR SHALL BE DISCHARGED FROM ANY FURTHER LIABILITY TO LESSEE WITH RESPECT TO SUCH DEPOSIT. LESSEE HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1950.7, AND ALL OTHER PRESENT AND FUTURE LAWS WHICH RESTRICT THE AMOUNT OR TYPES OF CLAIM THAT A LANDLORD MAY MAKE UP A SECURITY DEPOSIT OR IMPOSES UPON A LANDLORD OR A SUCCESSOR ANY OBLIGATION WITH RESPECT TO THE HANDLING OR RETURN OF SECURITY DEPOSITS.

5. REAL ESTATE. IN ADDITION TO THE BASE RENT HEREIN PROVIDED, LESSEE AGREES TO PAY LESSOR AS ADDITIONAL RENTAL, LESSEE’S PROPORTIONATE SHARE OF ANY INCREASE IN REAL ESTATE TAXES AND ASSESSMENTS LEVIED UPON OR ASSESSED AGAINST THE LAND AND BUILDING OF WHICH THE LEASED PREMISES ARE A PART, FOR EACH YEAR OF THE TERM HEREOF OVER AND ABOVE SUCH TAXES AND ASSESSMENTS FOR THE FISCAL YEAR OF 2007-2008. LESSEE’S PROPORTIONATE SHARE OF SUCH INCREASE OR LESSOR’S ESTIMATE THEREOF SHALL BE PAYABLE TO LESSOR MONTHLY SIMULTANEOUS WITH THE PAYMENT OF THE BASE RENT, IN AN AMOUNT NOT LESS THAN 1/12 OF THE ANNUAL AMOUNT OF THE INCREASE OR SUCH GREATER AMOUNT AS WILL ACCUMULATE A FUND FROM WHICH TO PAY LESSEE’S PORTION OF THE INCREASE AT LEAST 10 DAYS BEFORE THE DUE DATE THEREOF. THE LESSEE’S PROPORTIONATE SHARE FOR PURPOSES OF THIS PARAGRAPH SHALL BE THE APPROXIMATE RATIO WHICH THE SQUARE FOOTAGE OF THE LEASED PREMISES BEARS TO THE SQUARE FOOTAGE OF ALL LEASABLE AREA IN THE BUILDING WHICH “PROPORTIONATE SHARE” IS HEREBY MUTUALLY AGREED TO BE 4.44%. THE TERM “REAL ESTATE TAXES”

 

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AS USED HEREIN SHALL BE DEEMED TO INCLUDE ALL TAXES IMPOSED UPON THE REAL PROPERTY AND PERMANENT IMPROVEMENTS, AND ALL ASSESSMENTS LEVIED AGAINST SAID PREMISES, EXCEPTING ONLY PERSONAL INCOME TAXES, PERSONAL PROPERTY TAXES, INHERITANCE TAXES AND/OR FRANCHISE TAXES.

6. ADDITIONAL RENT/BUILDING OPERATING COSTS.

A. LESSEE AGREES TO PAY, AS ADDITIONAL RENT, A PRO-RATA PORTION OF THE AMOUNT BY WHICH THE YEARLY “BUILDING OPERATING COSTS”, INCURRED BY LESSOR DURING EACH CALENDAR YEAR OCCURRING DURING THE TERM OF THIS LEASE, (COMMENCING ON THE FIRST DAY OF THE YEAR IN WHICH THIS LEASE IS EXECUTED), EXCEED “BUILDING OPERATING COSTS” INCURRED BY LESSOR DURING THE CALENDAR YEAR 2007. LESSEE’S PRO-RATA SHARE OF SAID AMOUNT SHALL BE 4.44% OF SUCH INCREASE. IF LESS THAN 95% OF THE LEASABLE SPACE IN THE BUILDING IS LEASED DURING ALL OR A SUBSTANTIAL PORTION OF THE BASE OR EXPENSE YEAR USED FOR CALCULATING BUILDING OPERATING COSTS, ALL OCCUPANCY VARIABLE BUILDING OPERATING COSTS FOR SUCH BASE OR EXPENSE YEAR MAY BE GROSSED UP BY LESSOR, EMPLOYING REASONABLE AND SOUND ACCOUNTING AND PROPERTY MANAGEMENT PRINCIPLES, CONSISTENTLY APPLIED IN THE BASE YEAR AND ALL SUBSEQUENT YEARS OF THE TERM, TO THE AMOUNT SUCH BUILDING OPERATING COSTS WOULD HAVE BEEN IF THE BUILDING HAD BEEN 95% LEASED DURING ALL OF SUCH BASE YEAR OR EXPENSE YEAR, AND THE ADJUSTED AMOUNT SHALL BE USED BY LESSOR IN DETERMINING BUILDING OPERATING COSTS FOR SUCH BASE OR EXPENSE YEAR.

B. “BUILDING OPERATING COSTS” SHALL INCLUDE THE COST TO LESSOR OF ALL UTILITIES, FUEL, BUILDING SUPPLIES, JANITORIAL SERVICES, NORMAL MAINTENANCE AND REPAIRS, WAGES OF EMPLOYEES WHO WORK CUSTOMARILY IN AND ABOUT THE BUILDING, MANAGEMENT FEES, MAINTENANCE, REPAIRS (INCLUDING SOCIAL SECURITY TAXES, UNEMPLOYMENT INSURANCE COSTS, DISABILITY BENEFITS, AND PENSION/RETIREMENT PLAN COSTS), COSTS OF INSURANCE MAINTAINED BY LESSOR ON THE BUILDING AND LAND ON WHICH IT STANDS, AND OTHER EXPENSES INCURRED BY LESSOR IN THE COURSE OF OPERATION AND MAINTENANCE OF THE BUILDING. BUILDING OPERATING COSTS SHALL NOT INCLUDE ANY COST FOR WHICH LESSOR IS REIMBURSED BY INSURANCE; INCOME AND FRANCHISE TAXES OF LESSOR; EXPENSES INCURRED IN LEASING TO OR PROCURING OF TENANTS; INTEREST OR PRINCIPAL PAYMENTS, OR FINANCING COSTS ON OR FOR ANY MORTGAGE OR SIMILAR INDEBTEDNESS OF LESSOR; ANY DEPRECIATION ALLOWANCE ON ANY IMPROVEMENTS TO THE BUILDING; OR PENALTIES, FINES, OR INTEREST THAT LESSOR IS OBLIGATED TO PAY BY REASON OF ANY TORT LIABILITY OR VIOLATION OF LAW BY LESSOR.

C. LESSOR SHALL CONCLUSIVELY DETERMINE THE AMOUNT OF SUCH YEARLY “BUILDING OPERATING COSTS” AND ONCE EACH YEAR DURING THE TERM, SHALL NOTIFY LESSEE OF THE ADDITIONAL RENT PAYABLE ON

 

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ACCOUNT OF ITS PRO-RATA PORTION OF ANY SUCH INCREASE OF “BUILDING OPERATING COSTS” AS DETERMINED HEREIN, TOGETHER WITH AN ITEMIZED STATEMENT THEREOF AND SAID SUM SHALL BE DUE AND PAYABLE TO LESSOR WITHIN FIFTEEN (15) DAYS THEREAFTER. THEREAFTER IN THE THEN CURRENT CALENDAR YEAR LESSEE SHALL PAY ONE-TWELFTH (1/12) OF ITS PRO-RATA SHARE OF SAID INCREASED COSTS TO LESSOR CONCURRENT WITH THE PAYMENT OF THE BASE RENT. IN EACH OF THE FOLLOWING YEARS, IF THE LESSOR NOTIFIES LESSEE OF FURTHER ADDITIONAL RENT PAYABLE ON ACCOUNT OF FURTHER INCREASES DURING THE PRIOR CALENDAR YEAR, SUCH FURTHER ADDITIONAL RENT SHALL BE PAYABLE IN A LIKE MANNER.

D. LESSEE SHALL HAVE THE RIGHT, TO BE EXERCISED NOT MORE THAN ONCE IN ANY CALENDAR YEAR, WITHIN 90 DAYS FOLLOWING LESSOR’S FINAL STATEMENT, AND PROVIDED THAT LESSEE HAS PAID ALL BUILDING OPERATING COSTS ACCORDING TO LESSOR’S STATEMENT, AND OTHER CHARGES THEN DUE, TO AUDIT BUILDING OPERATING COSTS FOR THE PRIOR YEAR AND TO EXAMINE LESSOR’S RECORDS RELATING TO THE SAME. THE COSTS OF ANY SUCH AUDIT SHALL BE BORNE BY LESSEE, PROVIDED, HOWEVER, THAT IN THE EVENT SUCH AUDIT REVEALS THAT THE AMOUNTS CHARGED TO LESSEE WERE MORE THAN 10% GREATER THAN THE AMOUNTS PERMITTED BY THIS LEASE TO BE CHARGED TO LESSEE, THEN, UNLESS LESSOR CONTESTS THE RESULTS OF LESSEE’S AUDIT WITHIN 30 DAYS AFTER RECEIPT FROM LESSEE, LESSOR SHALL PAY THE REASONABLE COSTS OF THAT AUDIT AND LESSOR SHALL PAY TO LESSEE, WITHIN 10 DAYS AFTER RECEIPT OF NOTICE THEREOF, ANY AMOUNTS DETERMINED TO BE OWED TO LESSEE AS A RESULT OF SUCH AUDIT.

7. PERMISSIBLE USE. THE LEASED PREMISES SHALL BE USED ONLY FOR THE PURPOSE OF OFFICE SPACE, RESEARCH AND DEVELOPMENT.

8. MANNER OF OCCUPANCY. LESSEE SHALL NOT USE OR PERMIT UPON THE LEASED PREMISES, ANYTHING WHICH WILL IN ANY WAY INCREASE THE PREMIUM RATE, OR CAUSE THE CANCELLATION, OR ANY FIRE OR OTHER INSURANCE ON THE BUILDING. LESSEE AGREES PROMPTLY TO COMPLY WITH ANY LAW, ORDINANCE, RULE OR REGULATION AFFECTING THE OCCUPANCY AND USE OF THE LEASED PREMISES WHICH IS NOW IN EFFECT OR MAY HEREAFTER BE ENACTED OR PROMULGATED BY ANY FEDERAL, STATE, COUNTY, MUNICIPAL OR OTHER PUBLIC AUTHORITY AND/OR BY THE BOARD OF FIRE UNDERWRITERS OR ANY SIMILAR INSURANCE ORGANIZATION. LESSEE WILL NOT OBSTRUCT OR INTERFERE WITH THE RIGHTS OF OR DISTURB THE QUIET ENJOYMENT OF ANY OTHER LESSEES OR OCCUPANTS OF THE BUILDING, OR INJURE OR ANNOY THEM. LESSEE SHALL NOT USE, NOR ALLOW THE LEASED PREMISES TO BE USED, FOR ANY IMPROPER, IMMORAL, UNLAWFUL OR OBJECTIONABLE PURPOSE, OR FOR COOKING OR SLEEPING NOR SHALL LESSEE USE ANY APPARATUS, MACHINERY OR DEVICE WHICH SHALL MAKE EXCESSIVE NOISE OR SET UP VIBRATION OR WHICH SHALL INCREASE THE AMOUNT OF ELECTRICITY OR WATER TO BE FURNISHED UNDER THIS LEASE. LESSEE SHALL NOT ALLOW OBJECTIONABLE ODORS OR NOISE TO EMANATE FROM THE LEASED PREMISES AND SHALL NOT SUFFER OR COMMIT ANY WASTE OR NUISANCE ON THE PREMISES. LESSEE SHALL PROMPTLY

 

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UPON DEMAND REIMBURSE LESSOR FOR ANY ADDITIONAL INSURANCE PREMIUM CHARGED OR ADDITIONAL COSTS INCURRED BY REASON OF LESSEE’S FAILURE TO COMPLY WITH THE PROVISIONS OF THE PARAGRAPH, WHICH PAYMENT SHALL BE DEEMED ADDITIONAL RENT HEREUNDER. LESSEE SHALL KEEP THE LEASED PREMISES AT ALL TIMES IN A NEAT, CLEAN AND SANITARY CONDITION, FREE FROM WASTE AND DEBRIS AND SHALL NEITHER COMMIT NOR PERMIT ANY WASTE OR NUISANCE THEREON.

LESSEE SHALL NOT INSTALL, MAINTAIN, USE OR ALLOW IN OR UPON THE LEASED PREMISES ANY PINBALL MACHINE, COIN OPERATED MUSIC MACHINE OR OTHER COIN OPERATED DEVICE OF ANY KIND OR CHARACTER AND LESSEE, UPON REQUEST OF LESSOR, SHALL IMMEDIATELY REMOVE ANY SUCH DEVICE WHICH IN THE OPINION OF LESSOR IS OBJECTIONABLE, OFFENSIVE, OR NOT IN GOOD TASTE, AND IF LESSEE SHALL FAIL TO DO SO, LESSOR MAY RE-ENTER THE LEASED PREMISES AND REMOVE THE SAME AT THE EXPENSE OF LESSEE.

9. UTILITIES.

A. TO THE EXTENT EACH OF IS AVAILABLE FROM THE SUPPLIER THEREOF, LESSOR SHALL, AS A BUILDING OPERATING COST PURSUANT TO PARAGRAPH 6(A) HEREOF, PROVIDE REASONABLE QUANTITIES OF ELECTRICITY, GAS, WATER, ON A 24-HOUR BASIS; HEAT AND AIR CONDITIONING SERVICE MONDAY THROUGH FRIDAY DURING BUSINESS HOURS FROM 7:00 A.M. TO 7:00 P.M., EXCEPT RECOGNIZED HOLIDAYS; FIVE (5)-DAY A WEEK JANITORIAL SERVICE (COMPARABLE TO JANITORIAL SERVICE PROVIDED IN OTHER COMPARABLE OFFICE BUILDINGS IN THE VICINITY OF THE BUILDING); AND REFUSE PICK-UP SERVICE TO THE BUILDING. IN ADDITION TO ALL OTHER RENT PROVIDED HEREIN, LESSEE SHALL PAY TO LESSOR, WITH PAYMENT OF BASE RENT, THE COST, AS REASONABLY DETERMINED BY LESSOR, OF UTILITIES USED IN CONNECTION WITH ANY PORTABLE AIR CONDITIONING UNIT INSTALLED BY LESSEE IN ITS SERVER/FILE ROOM.

B. SUBJECT TO THE AVAILABILITY OF ELECTRICITY, LESSOR SHALL PROVIDE LESSEE AND THE PREMISES WITH HEATING AND AIR CONDITIONING SERVICE, IN ADDITION TO THE HOURS SET FORTH IN SUBPARAGRAPH (A) ABOVE, TO THE EXTENT THAT SUCH SERVICE IS REQUESTED BY LESSEE. IN THE EVENT OF SUCH A REQUEST BY LESSEE, LESSEE SHALL PAY TO LESSOR MONTHLY LESSOR’S CHARGE FOR SUCH ADDITIONAL HEATING AND AIR CONDITIONING SERVICE. LESSOR’S CHARGE SHALL BE BASED ON LESSOR’S ACTUAL DIRECT UTILITY COSTS, PLUS LESSOR’S OTHER DIRECT COSTS, INCLUDING A REASONABLE DEPRECIATION FACTOR OR REPLACEMENT RESERVE FOR THE SYSTEM ON ACCOUNT OF SAID ADDITIONAL HOURS OF OPERATION. LESSOR AGREES THAT SUCH HOURLY RATE SHALL BE ESTABLISHED AT AN AMOUNT WHICH WILL REIMBURSE LESSOR FOR THE ACTUAL COST TO LESSOR TO SUPPLY THE SERVICE PLUS A REASONABLE RESERVE FOR DEPRECIATION OR REPLACEMENT OF THE HVAC EQUIPMENT, BUT WITHOUT A PROFIT TO LESSOR.

 

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C. LESSEE ACKNOWLEDGES THAT THE PREMISES AND THE BUILDING MAY BECOME SUBJECT TO THE RATIONING OR BLACKOUT OF UTILITY SERVICES OR RESTRICTIONS ON UTILITY USE AS REQUIRED BY A PUBLIC UTILITY COMPANY, GOVERNMENTAL AGENCY OR OTHER SIMILAR ENTITY HAVING JURISDICTION THEREOF. LESSEE ACKNOWLEDGES AND AGREES THAT ITS TENANCY AND OCCUPANCY HEREUNDER SHALL BE SUBJECT TO SUCH RATIONING OR RESTRICTIONS AS MAY BE IMPOSED UPON LESSOR, LESSEE, THE PREMISES AND/OR THE BUILDING, AND LESSEE SHALL IN NO EVENT, BY REASON OF ANY SUCH RATIONING OR RESTRICTIONS, BE EXCUSED OR RELIEVED FROM ANY COVENANT OR OBLIGATION TO BE KEPT OR PERFORMED BY LESSEE UNDER THIS LEASE. NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, LESSOR SHALL NOT BE LIABLE TO LESSEE FOR ANY LOSS, INJURY OR DAMAGE TO LESSEE CAUSED BY OR RESULTING FROM ANY VARIATION, INTERRUPTION OR FAILURE OF UTILITIES DUE TO ANY CAUSE WHATSOEVER. NO TEMPORARY INTERRUPTION OR FAILURE OF SUCH SERVICES SHALL BE DEEMED AN EVICTION OF LESSEE OR RELIEVE LESSEE FROM ANY OF ITS OBLIGATIONS HEREUNDER.

D. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, IF AN INTERRUPTION OR CESSATION OF UTILITIES RESULTS FROM LESSOR’S BREACH OF THIS LEASE OR THE WILLFUL MISCONDUCT OF LESSOR, OR ITS EMPLOYEES, AGENTS OR CONTRACTORS, AND THE PREMISES ARE NOT USABLE BY LESSEE FOR THE CONDUCT OF LESSEE’S BUSINESS AS A RESULT THEREOF, RENT SHALL BE ABATED FOR THE PERIOD THAT COMMENCES THREE (3) BUSINESS DAYS AFTER THE DATE LESSEE GIVES TO LESSOR NOTICE OF SUCH INTERRUPTION UNTIL SUCH UTILITIES ARE RESTORED.

10. CONDITION OF THE PREMISES. CONDITION OF THE LEASED PREMISES AND TENANT IMPROVEMENTS NECESSARY FOR LESSEE’S OCCUPANCY ARE THE SUBJECT OF A SEPARATE LETTER AGREEMENT BETWEEN LESSEE AND LESSOR OF EVEN DATE HEREWITH.

11. ALTERATIONS AND REPAIRS. LESSEE SHALL MAKE NO ADDITIONS, ALTERATIONS, CHANGES OR IMPROVEMENTS IN THE LEASED PREMISES, OR ANY PART THEREOF WITHOUT THE CONSENT OF LESSOR FIRST OBTAINED IN WRITING UPON PLANS CONFORMING TO ALL GOVERNMENTAL REGULATIONS. ANY AND ALL WORK SHALL BE PERFORMED PURSUANT TO A WRITTEN CONTRACT BY A LICENSED, BONDABLE GENERAL CONTRACTOR IN SUCH A MANNER AS SHALL NOT INTERFERE, INCONVENIENCE OR CONSTITUTE A NUISANCE TO OTHER TENANTS. LESSEE AGREES TO GIVE LESSOR WRITTEN NOTICE OF THE COMMENCEMENT DATE OF ANY ALTERATIONS, IMPROVEMENTS OR REPAIRS TO BE MADE IN, OR UPON THE PREMISES NOT LATER THAN FIFTEEN (15) DAYS PRIOR TO THE COMMENCEMENT OF ANY SUCH WORK, IN ORDER TO GIVE LESSOR TIME TO (1) POST NOTICE OF NON-RESPONSIBILITY, OR (2) REQUIRE LESSEE TO TAKE OTHER ACTION TO PROTECT LESSOR’S INTEREST. LESSEE SHALL KEEP THE DEMISED PREMISES FREE OF ANY LIENS OR ENCUMBRANCES. PRIOR TO COMMENCEMENT OF ANY WORK OF IMPROVEMENT FOR ALTERATIONS, ADDITIONS, CHANGES OR REPAIRS TO THE LEASED PREMISES WHICH COULD CONCEIVABLY RESULT IN

 

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A CLAIM FOR A MECHANICS’ LIEN BEING FILED ON THE PROPERTY OWNED BY LESSOR, LESSEE SHALL FILE IN THE OFFICE OF THE COUNTY RECORDER WHERE THE LEASED PREMISES ARE LOCATED, EVERY ORIGINAL CONTRACT ENTERED INTO BY LESSEE OR LESSEE’S AGENTS TOGETHER WITH A PAYMENT BOND (AS DEFINED IN SECTION 3096 OF THE CALIFORNIA CIVIL CODE) WITH EACH ORIGINAL CONTRACTOR AS PRINCIPAL IN THE MINIMUM AMOUNT OF 50% OF EACH ORIGINAL CONTRACT PRICE. THE LESSOR SHALL PAY TOWARDS THE PREMIUMS FOR SUCH PAYMENT BONDS, 1% OF THE AMOUNT OF THE BOND; THE LESSEE SHALL PAY ALL PREMIUMS IN EXCESS OF THAT PAID BY LESSOR. LESSEE WAIVES ALL RIGHTS TO MAKE REPAIRS AT LESSOR’S EXPENSE UNDER THE PROVISIONS OF SECTIONS 1941 AND 1942 OF THE CIVIL CODE OF CALIFORNIA. IN RESPECT TO ANY PARTIAL DESTRUCTION WHICH LESSEE IS OBLIGATED TO REPAIR OR MAY REPAIR UNDER ANY OF THE PROVISIONS OF THIS LEASE, THE PROVISIONS OF SECTION 1932 SUBDIVISION 2, AND SECTION 1933 SUBDIVISION 4 OF THE CODE OF CIVIL PROCEDURE OF CALIFORNIA ARE WAIVED BY LESSEE. ALL ALTERATIONS, IMPROVEMENTS AND CHANGES SHALL BE DONE EITHER BY OR UNDER THE DIRECTION OF LESSOR BUT AT THE COST OF LESSEE, AND SHALL AT ONCE BECOME A PART OF THE REALTY AND BELONG TO LESSOR AND SHALL REMAIN UPON AND BE SURRENDERED WITH SAID PREMISES, PROVIDED THAT AT LESSOR’S OPTION, LESSEE SHALL, AT ITS EXPENSE WHEN SURRENDERING SAID PREMISES, REMOVE FROM SAID PREMISES AND SAID BUILDING ALL SUCH ALTERATIONS, ADDITIONS OR IMPROVEMENTS INSTALLED IN SAID PREMISES BY LESSEE, AND LESSEE SHALL REPAIR ANY DAMAGE TO THE PREMISES OCCASIONED BY SAID REMOVAL. IF LESSEE SHALL FAIL TO COMPLETE SUCH REMOVAL AND REPAIR SUCH DAMAGE, LESSOR MAY DO SO AND CHARGE THE REASONABLE COST THEREOF TO LESSEE WHICH SUM SHALL BE DEEMED ADDITIONAL RENT HEREUNDER AND SHALL BE DUE AND PAYABLE FROM LESSEE TO LESSOR TEN (10) DAYS AFTER LESSOR HAS RENDERED TO LESSEE A WRITTEN STATEMENT THEREFOR. ANY IMPROVEMENTS, EQUIPMENT OR PERSONAL PROPERTY NOT REMOVED BY LESSEE FROM THE PREMISES UPON THE END OF THE TERM SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN ABANDONED BY LESSEE AND TITLE THERETO SHALL THEREBY PASS TO LESSOR WITHOUT PAYMENT OR CREDIT BY LESSOR TO LESSEE, AND THE COST OF REMOVAL, STORAGE AND/OR SALE OF SAME SHALL BE DEEMED ADDITIONAL RENT HEREUNDER, PAYABLE FROM LESSEE TO LESSOR IN THE SAME MANNER AS PROVIDED ABOVE WITH RESPECT TO RESTORATION CHARGES. LESSEE SHALL, AT THE TERMINATION OF THIS LEASE BY THE EXPIRATION OF TIME OR OTHERWISE, SURRENDER AND DELIVER UP THE LEASED PREMISES AND PROPERTY TO LESSOR OR TO LESSOR’S AGENTS OR MANAGER IN AS GOOD CONDITION AS WHEN RECEIVED BY LESSEE, REASONABLE WEAR AND TEAR AND DAMAGE BY FIRE (UNLESS CAUSED BY LESSEE’S NEGLIGENCE), ACT OF GOD OR BY THE ELEMENTS, EXCEPTED. LESSEE FURTHER AGREES TO PAY FOR ALL DAMAGES TO THE BUILDING, AS WELL AS DAMAGE TO LESSEES OR OCCUPANTS THEREOF CAUSED BY LESSEE’S MISUSE OR NEGLECT BY LESSEE OR ITS AGENTS OR VISITORS. LESSEE SHALL REPLACE ALL BROKEN GLASS WITH GLASS OF THE SAME SIZE AND QUALITY. IF LESSEE DOES NOT MAKE REPAIRS PROMPTLY AND ADEQUATELY, OR FAILS TO MAINTAIN THE LEASED PREMISES IN GOOD ORDER AND REPAIR, LESSOR MAY, BUT NEED NOT, MAKE REPAIRS, AND LESSEE SHALL PAY PROMPTLY THE REASONABLE COST THEREOF, AS ADDITIONAL RENT HEREUNDER, ON THE NEXT RENT DATE THEREAFTER.

 

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12. ENTRY BY LESSOR. LESSOR AND LESSOR’S SERVANTS AND EMPLOYEES SHALL HAVE THE RIGHT AT ALL REASONABLE TIMES TO ENTER THE LEASED PREMISES (A) TO CARRY OUT AND PERFORM LESSOR’S OBLIGATIONS HEREUNDER, INCLUDING BUT NOT LIMITED TO WINDOW CLEANING AND JANITORIAL SERVICES, (B) TO SHOW THE LEASED PREMISES TO PROSPECTIVE TENANTS AND PURCHASERS, (C) FOR SUCH OTHER PURPOSES AS MAY BE REASONABLY NECESSARY IN CONNECTION WITH THE OPERATION OF THE BUILDING, AND (D) FOR THE PURPOSE OF EXAMINING THE LEASED PREMISES AND EFFECTING ALTERATIONS, ADDITIONS, IMPROVEMENTS AND/OR REPAIRS AND/OR TO REMODEL THE LEASED PREMISES OR ANY OTHER PORTION OF THE BUILDING. LESSOR MAY AT ANY TIME REMODEL, MAKE ALTERATIONS, ADDITIONS, IMPROVEMENTS AND/OR REPAIRS TO THE BUILDING, WITHOUT ABATEMENT FOR RENT, AND MAY, FOR SUCH PURPOSES, OR ANY OF THE SAME, ERECT SCAFFOLDING, AND ALL OTHER NECESSARY STRUCTURES, AND LESSEE SHALL NOT CLAIM OR BE ALLOWED OR BE PAID ANY DAMAGES FOR ANY INJURY OR INCONVENIENCE OCCASIONED THEREBY. ENTRY BY LESSOR AFTER LESSEE HAS VACATED THE LEASED PREMISES FOR THE PURPOSE OF MAKING REPAIRS OR DECORATING SHALL NOT CONSTITUTE A TERMINATION OF THIS LEASE, UNLESS LESSOR SO ELECTS IN WRITING.

FOR EACH OF THE AFORESAID PURPOSES, LESSOR SHALL AT ALL TIMES HAVE AND RETAIN A KEY WITH WHICH TO UNLOCK ALL OF THE DOORS IN, UPON AND ABOUT THE LEASED PREMISES, (EXCLUDING LESSEE’S PORTABLE VAULTS AND SAFES) AND LESSOR SHALL HAVE THE RIGHT TO USE AND ALL MEANS WHICH LESSOR MAY DEEM PROPER TO OPEN SAID DOORS IN ORDER TO OBTAIN ENTRY TO THE LEASED PREMISES, AND ANY ENTRY TO THE LEASED PREMISES OBTAINED BY LESSOR BY ANY OF SUCH MEANS, OR OTHERWISE, SHALL NOT UNDER ANY CIRCUMSTANCES CONSTITUTE A FORCIBLE OR UNLAWFUL ENTRY INTO, OR A DETAINER OF THE LEASED PREMISES, OR AN EVICTION OF LESSEE FROM THE LEASED PREMISES OR ANY PORTION THEREOF. LESSOR SHALL NOT BE LIABLE FOR THE CONSEQUENCES OF ADMITTING BY PASSKEY OR REFUSING TO ADMIT TO THE LEASED PREMISES, A LESSEE OR ANY AGENT OR EMPLOYEE OF LESSEE. ALL LOCKS ON THE LEASED PREMISES SHALL BE MADE TO FIT LESSOR’S PASSKEY AND SHALL NOT BE CHANGED WITHOUT WRITTEN PERMISSION OF LESSOR.

13. TAXES. LESSEE SHALL BE LIABLE FOR ALL TAXES LEVIED AGAINST PERSONAL PROPERTY AND TRADE FIXTURES PLACED BY LESSEE IN, ON, OR ABOUT THE LEASED PREMISES. IF ANY SUCH TAXES ARE LEVIED AGAINST LESSOR OR LESSOR’S PROPERTY AND LESSOR PAYS THE SAME (WHICH LESSOR SHALL HAVE THE RIGHT TO DO REGARDLESS OF THE VALIDITY OF SUCH LEVY), AFTER NOTICE IN WRITING TO LESSEE AND LESSEE’S CONTINUED FAILURE TO PAY THE SAME FOR TEN (10) DAYS, OR IF THE ASSESSED VALUE OF THE BUILDING IS INCREASED BY THE INCLUSION THEREIN OF A VALUE PLACED ON SUCH PROPERTY OF THE

 

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LESSEE, AND IF LESSOR PAYS THE TAXES BASED ON SUCH INCREASED ASSESSMENT (WHICH LESSOR SHALL HAVE THE RIGHT TO DO REGARDLESS OF THE VALIDITY THEREOF), AFTER NOTICE IN WRITING TO LESSEE AND LESSEE’S CONTINUED FAILURE TO PAY THE SAME FOR TEN (10) DAYS, LESSEE UPON DEMAND, SHALL REPAY TO LESSOR THE TAXES SO LEVIED AGAINST LESSOR OR THE PROPORTION OF SUCH TAXES RESULTING FROM SUCH INCREASE IN THE ASSESSMENT, AS ADDITIONAL RENT HEREUNDER.

IF ANY GOVERNMENTAL AUTHORITY OR UNIT UNDER ANY PRESENT OR FUTURE LAW OR REGULATION EFFECTIVE AT ANY TIME DURING THE TERM OF THIS LEASE SHALL IN ANY MANNER LEVY A TAX ON RENTALS PAYABLE UNDER THIS LEASE OR ON RENTALS ACCRUING FROM THE USE OF THE LEASED PREMISES UNDER THIS LEASE, OR A TAX IN ANY FORM AGAINST LESSOR BECAUSE OF OR MEASURED BY INCOME DERIVED FROM THE LEASING OR RENTAL OF THE PREMISES, THE AMOUNT OF THE NEXT SUCCEEDING MONTH’S RENT FOLLOWING PAYMENT OF SUCH TAX BY LESSEE SHALL BE INCREASED BY AN AMOUNT EQUAL TO SUCH TAX PAID. FOR LESSEE’S DEFAULT IN PAYING THE RENT THUS REVISED, LESSOR SHALL HAVE THE SAME REMEDIES AS UPON FAILURE TO PAY RENT. LESSEE SHALL NOT BE LIABLE TO PAY ANY AMOUNT BECAUSE OF ANY INCOME TAX OF A GENERAL NATURE APPLICABLE TO LESSEE’S VARIOUS INTEREST OR SOURCES OF INCOME OF ANY TAX IMPOSED ON LESSEE FOR INHERITANCE, GIFT OR SUCCESSION TAXES IMPOSED ON OR MEASURED BY RENTALS OR LOCKOUTS OR OTHER LABOR DISTURBANCES OR LABOR DISPUTES OF ANY CHARACTER, OR BY ANY OTHER CAUSE, SIMILAR OR DISSIMILAR, BEYOND THE REASONABLE CONTROL OF LESSOR. LESSOR SHALL NOT BE LIABLE UNDER ANY CIRCUMSTANCES FOR LOSS OF OR INJURY OF PROPERTY, HOWEVER, OCCURRING, THROUGH OR IN CONNECTION WITH OR INCIDENTAL TO FAILURE TO FURNISH ANY OF THE FOREGOING. SHOULD LESSEE MAKE USE OF MACHINES OR EQUIPMENT IN THE LEASED PREMISES WHICH AFFECT THE TEMPERATURE OTHERWISE MAINTAINED BY THE AIR CONDITIONING SYSTEM, LESSOR RESERVES THE RIGHT TO INSTALL SUPPLEMENTARY AIR CONDITIONING UNITS IN THE LEASED PREMISES AND THE COST THEREOF, INCLUDING THE COST OF INSTALLATION AND THE COST OF OPERATION AND MAINTENANCE THEREOF, SHALL BE PAID BY LESSEE TO LESSOR AS ADDITIONAL RENT.

LESSEE WILL NOT, WITHOUT THE WRITTEN CONSENT OF LESSOR, USE ANY APPARATUS OR DEVICE IN THE LEASED PREMISES, INCLUDING BUT WITHOUT LIMITATION ELECTRONIC DATA PROCESSING, PUNCH CARD, COPYING, HEATING OR COOKING MACHINES USING CURRENT IN EXCESS OF 110 VOLTS OR WHICH WILL IN ANY WAY INCREASE THE AMOUNT OF ELECTRICITY OR WATER USUALLY FURNISHED OR SUPPLIED FOR USE OF THE LEASED PREMISES AS GENERAL OFFICE SPACE; NOR CONNECT WITH ELECTRIC CURRENT, EXCEPT THROUGH EXISTING ELECTRICAL OUTLETS IN THE PREMISES, ANY APPARATUS OR DEVICE, FOR THE PURPOSES OF USING ELECTRIC CURRENT OR WATER. IF LESSEE SHALL REQUIRE WATER OR ELECTRIC CURRENT IN EXCESS OF THAT USUALLY FURNISHED OR SUPPLIED FOR USE OF THE PREMISES AS GENERAL OFFICE SPACE, LESSEE SHALL FIRST PROCURE THE CONSENT OF LESSOR TO THE USE THEREOF WHICH

 

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LESSOR MAY, IN LESSOR’S DISCRETION, REFUSE, AND LESSOR MAY CAUSE A WATER METER OR ELECTRIC CURRENT METER TO BE INSTALLED FOR THE LEASED PREMISES, SO AS TO MEASURE THE AMOUNT OF WATER AND ELECTRIC CURRENT CONSUMED FOR ANY SUCH OTHER USE. THE COST OF ANY SUCH METERS AND OF INSTALLATION, MAINTENANCE AND REPAIR THEREOF SHALL BE PAID FOR BY LESSEE AND LESSEE AGREES TO PAY TO LESSOR AS ADDITIONAL RENT FOR ALL SUCH WATER AND ELECTRIC CURRENT CONSUMED AS SHOWN BY SAID METERS AT THE RATES CHARGED FOR SUCH SERVICES BY THE ENTITY FURNISHING THE SAME, PLUS ANY ADDITIONAL EXPENSE INCURRED IN KEEPING ACCOUNT OF THE WATER AND CURRENT SO CONSUMED.

14. INDEMNITY; EXCULPATION. LESSEE COVENANTS AND AGREES THAT LESSOR SHALL NOT AT ANYTIME OR TO ANY EXTENT WHATSOEVER BE LIABLE, RESPONSIBLE OR IN ANY WAY ACCOUNTABLE FOR ANY LOSS, INJURY, DEATH OR DAMAGE TO PERSONS OR PROPERTY WHICH AT ANY TIME MAY BE SUFFERED OR SUSTAINED BY LESSEE OR BY ANY PERSON WHOSOEVER MAY AT ANY TIME BE USING, OCCUPYING OR VISITING THE LEASED PREMISES AND THE SURROUNDING AREAS, WHETHER SUCH LOSS, INJURY, DEATH OR DAMAGE SHALL BE CAUSED BY OR IN ANY WAY RESULT FROM OR ARISE OUT OF ANY ACT, OMISSION OR NEGLIGENCE OF LESSOR (WHETHER ACTIVE OR PASSIVE) OR OF ANY OCCUPANT, SUBLESSEE, VISITOR OR USER OF ANY PORTION OF THE LEASED PREMISES, OR SHALL RESULT FROM OR BE CAUSED BY ANY OTHER MATTER OR THING WHETHER OF THE SAME KIND AS OR OF A DIFFERENT KIND THAN THE MATTERS OR THINGS ABOVE SET FORTH, AND, WITH RESPECT TO THE LEASED PREMISES BUT NOT THE SURROUNDING AREAS, LESSEE SHALL FOREVER INDEMNIFY, DEFEND, HOLD AND SAVE LESSOR FREE AND HARMLESS OF, FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITY, LOSS OR DAMAGE WHATSOEVER ON ACCOUNT OF ANY SUCH LOSS, INJURY, DEATH OR DAMAGE, INCLUDING ATTORNEYS’ FEES AND COSTS IN ANY WAY INCURRED IN CONNECTION THEREWITH. LESSEE HEREBY WAIVES ALL CLAIMS AGAINST LESSOR FOR DAMAGES TO THE PROPERTY OF LESSEE NOW OR HEREAFTER IN, UPON OR ABOUT THE LEASED PREMISES, AND FOR INJURIES TO PERSONS OR PROPERTY IN OR ABOUT THE LEASED PREMISES OR ANY BUILDING AND IMPROVEMENTS NOW OR HEREAFTER THEREON FROM ANY CAUSE ARISING AT ANY TIME. THE FOREGOING RELEASE, WAIVER AND INDEMNITY OBLIGATIONS SHALL NOT APPLY TO THE EXTENT THAT ANY SUCH LOSS, INJURY, DEATH, DAMAGE, CLAIM, LIABILITY, FEES OR COSTS ARISE DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LESSOR, OR DUE TO LESSOR’S MATERIAL BREACH OF THIS LEASE.

15. INSURANCE. LESSEE SHALL, AT ALL TIMES DURING THE TERM HEREOF AND AT ITS OWN COST AND EXPENSE, PROCURE AND CONTINUE IN FORCE, BODILY INJURY AND PROPERTY DAMAGE, LIABILITY, WORKMEN’S COMPENSATION AND PLATE GLASS INSURANCE WHICH POLICIES SHALL NAME LESSOR AND LESSOR’S GENERAL PARTNERS AS AN ADDITIONAL INSURED. SUCH INSURANCE AT ALL TIMES SHALL BE IN AN AMOUNT SUFFICIENT TO COVER LESSEE’S OBLIGATIONS OF PARAGRAPH 13 (INDEMNITY) HEREOF AND NOT LESS THAN ONE MILLION ($1,000,000.00) DOLLARS FOR INJURY TO,

 

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OR DEATH OF, ANY ONE PERSON IN ANY ONE ACCIDENT OR OCCURRENCE AND IN AN AMOUNT OF NOT LESS THAN ONE MILLION ($1,000,000.00) DOLLARS FOR INJURY TO, OR DEATH OF, MORE THAN ONE PERSON IN ANY ONE ACCIDENT OR OCCURRENCE, AND AGAINST LIABILITY FOR PROPERTY DAMAGE OF AT LEAST ONE HUNDRED THOUSAND ($100,000.00) DOLLARS AND SHALL BE FOR A PERIOD OF NOT LESS THAN ONE YEAR. THE AFOREMENTIONED MINIMUM LIMITS OF POLICIES SHALL NOT, HOWEVER, LIMIT THE LIABILITY OF LESSEE HEREUNDER. THE AFORESAID INSURANCE SHALL BE WITH COMPANIES HAVING A RATING OF NOT LESS THAN BEST’S A+AAA RATING AND SHALL BE WRITTEN WITH A COMPANY ACCEPTABLE TO THE LESSOR AND AUTHORIZED TO ENGAGE IN THE BUSINESS OF GENERAL LIABILITY INSURANCE IN THE STATE IN WHICH THE LEASED PREMISES ARE LOCATED. CERTIFIED COPIES OF CERTIFICATES EVIDENCING THE EXISTENCE AND AMOUNTS OF SUCH INSURANCE SHALL BE DELIVERED TO LESSOR BY THE INSURANCE COMPANY ACCOMPANIED WITH CERTIFICATES EVIDENCING SUCH PAID UP INSURANCE AT LEAST FIFTEEN (15) DAYS PRIOR TO THE TIME SUCH INSURANCE IS FIRST REQUIRED TO BE CARRIED BY LESSEE, AND THEREAFTER AT LEAST THIRTY (30) DAYS PRIOR TO THE EXPIRATION OF ANY SUCH POLICY. NO SUCH POLICY SHALL BE CANCELABLE OF SUBJECT TO REDUCTION OF COVERAGE OR OTHER MODIFICATION EXCEPT AFTER THIRTY (30) DAYS PRIOR WRITTEN NOTICE TO LESSOR. IN THE EVENT LESSEE FAILS AT ANY TIME DURING THE TERM OF THIS LEASE TO OBTAIN INSURANCE REQUIRED TO BE CARRIED BY LESSEE HEREUNDER OR TO PROVIDE SUCH EVIDENCE THEREOF, LESSOR SHALL HAVE THE RIGHT TO PROCURE SUCH INSURANCE AND LESSEE SHALL PAY TO LESSOR THE COSTS AND EXPENSES THEREOF WHEN THE NEXT PAYMENT OF BASE RENT IS REQUIRED TO BE MADE. SHOULD LESSOR’S INSURANCE COST INCREASE DUE TO LESSEE’S USE OF THE LEASED PREMISES, THEN LESSEE SHALL PAY THE AMOUNT OF SUCH INCREASE.

16. DESTRUCTION OF THE PREMISES. IF DURING THE TERM OF THIS LEASE, MORE THAN 25% OF THE LEASED PREMISES ARE DAMAGED OR DESTROYED, OR ANY OTHER PORTION OF THE BUILDING IS DAMAGED OR DESTROYED IN SUCH A WAY THAT LESSEE’S USE OF THE LEASED PREMISES IS, OR IS EXPECTED TO BE, MATERIALLY INTERFERED WITH FOR MORE THAN 90 DAYS, AS REASONABLY DETERMINED BY LESSOR, BY FIRE, EARTHQUAKE, ACT OF GOD OR BY THE ELEMENTS OR BY OTHER CAUSES, SO AS TO RENDER THE SAME UNFIT FOR OCCUPANCY, LESSOR SHALL HAVE THE RIGHT TO RESTORE THE BUILDING AND/OR PREMISES AND/OR TO TERMINATE THIS LEASE. LESSOR SHALL NOTIFY LESSEE IN WRITING OF LESSOR’S DECISION WHETHER TO RESTORE AND/OR TERMINATE ON THE DATE THIRTY (30) DAYS AFTER THE SETTLEMENT OF INSURANCE LOSS ADJUSTMENT WITH REFERENCE TO THE EVENT OF DESTRUCTION OR DAMAGE, OR THE DATE NINETY (90) DAYS AFTER THE DATE OF THE DESTRUCTIVE EVENT, WHICHEVER IS EARLIER. IF LESSOR ELECTS NOT TO TERMINATE SAID LEASE AND TO REPAIR OR RESTORE SAID BUILDING AND/OR SAID PREMISES, LESSOR SHALL DO SO AFTER RECEIPT OF THE INSURANCE LOSS PROCEEDS, AND SHOULD THE DAMAGE BE SO EXTENSIVE AS TO RENDER THE PREMISES UNTENANTABLE, THEN THE RENT SHALL BE ADJUSTED UNTIL THE LEASED PREMISES ARE SUBSTANTIALLY RESTORED. PROVIDED, HOWEVER,

 

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SHOULD LESSOR ESTABLISH THAT SUCH DAMAGE WAS OCCASIONED BY THE NEGLIGENCE OF LESSEE, ITS AGENTS OR EMPLOYEES, THEN THERE SHALL BE NO ABATEMENT OR ADJUSTMENT OF RENT, EXCEPT TO THE EXTENT THAT SUCH LOSS IS COVERED BY INSURANCE CARRIED BY LESSOR, AND LESSEE SHALL REIMBURSE LESSOR FOR ALL COSTS AND EXPENSES OF REPAIR AND RESTORATION NOT COVERED BY INSURANCE CARRIED BY LESSOR. IF LESSOR ELECTS TO REPAIR OR RESTORE, BUT FAILS TO COMPLETE THE WORK WITHIN ONE HUNDRED EIGHTY (180) DAYS FOLLOWING THE DATE OF COMMENCEMENT OF SUCH WORK, LESSEE SHALL HAVE THE OPTION TO TERMINATE THIS LEASE BY NOTICE IN WRITING TO LESSOR. LESSEE HEREBY EXPRESSLY WAIVES ALL RIGHT IT MAY HAVE UNDER THE CALIFORNIA CIVIL CODE SECTIONS 1932 AND 1933.

17. CONDEMNATION. IF DURING THE TERM OF THIS LEASE, THE WHOLE OR SUCH PART OF THE LEASED PREMISES BE TAKEN OR CONDEMNED BY ANY COMPETENT AUTHORITY SO THAT THERE DOES NOT REMAIN A PORTION SUITABLE FOR OCCUPATION HEREUNDER, THIS LEASE SHALL TERMINATE; PROVIDED HOWEVER, THE TERM OF THIS LEASE SHALL END UPON AND NOT BEFORE THE DATE WHEN THE POSSESSION OF THE PART SO TAKEN SHALL BE REQUIRED FOR SUCH USE OR PURPOSE. CURRENT RENT SHALL BE APPORTIONED AS OF THE DATE OF SUCH TERMINATION. ALL COMPENSATION AWARDED UPON ANY CONDEMNATION OR TAKING SHALL GO TO LESSOR, AND LESSEE SHALL HAVE NO CLAIM THERETO, AND LESSEE HEREBY IRREVOCABLY ASSIGNS AND TRANSFERS TO LESSOR ANY RIGHT TO COMPENSATION OR DAMAGES TO WHICH LESSEE MAY BECOME ENTITLED DURING THE TERM HEREOF BY REASON OF ANY CONDEMNATION OR TAKING; PROVIDED, HOWEVER, LESSEE MAY CLAIM PART OF THE AWARD FOR ANY UNDEPRECIATED VALUE OF TENANT IMPROVEMENTS PAID FOR THE LESSEE IN THE DEMISED PREMISES, AND SUCH MOVING EXPENSE AWARD AS MAY BE GRANTED. FOR THIS PURPOSE, UNDEPRECIATED VALUE SHALL MEAN ORIGINAL COST OF SUCH TENANT IMPROVEMENTS PAID FOR BY LESSEE, DIVIDED BY THE NUMBER OF YEARS OF THE ORIGINAL LEASE TERM, TIMES THE NUMBER OF YEARS REMAINING ON THE LEASE TERM AT THE TIME OF CONDEMNATION. EXCEPT AS PROVIDED ABOVE, THIS LEASE SHALL NOT TERMINATE AND SHALL REMAIN IN FULL FORCE AND EFFECT IN THE EVENT OF A CONDEMNATION OF ONLY A PORTION OF THE PREMISES. HOWEVER, THE RENT SHALL BE ADJUSTED FOR THE REMAINDER OF THE TERM ACCORDING TO THE AMOUNT OF SPACE TAKEN AND THE AMOUNT OF SPACE REMAINING.

18. ASSIGNMENT AND SUBLEASE.

A. GENERAL – LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR IN EACH CASE, (I) MAKE OR ALLOW ANY ASSIGNMENT OR TRANSFER, BY OPERATION OF LAW OR OTHERWISE, OF ANY PART OF LESSEE’S INTEREST IN THIS LEASE, (II) GRANT OR ALLOW ANY LIEN OR ENCUMBRANCE, BY OPERATION OF LAW OR OTHERWISE, UPON ANY PART OF LESSEE’S INTEREST IN THIS LEASE, (III) SUBLET ANY PART OF THE PREMISES, OR (IV) PERMIT ANYONE OTHER THAN LESSEE AND ITS EMPLOYEES TO OCCUPY ANY PART OF THE PREMISES (ANY OF THE

 

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FOREGOING EVENTS BEING A “TRANSFER”). LESSEE SHALL REMAIN PRIMARILY LIABLE FOR ALL OF ITS OBLIGATIONS UNDER THIS LEASE, NOTWITHSTANDING ANY TRANSFER. NO CONSENT GRANTED BY LESSOR SHALL BE DEEMED TO BE A CONSENT TO ANY SUBSEQUENT TRANSFER. ANY TRANSFER WITHOUT LESSOR’S PRIOR WRITTEN CONSENT SHALL BE VOID. IF LESSEE SHALL TRANSFER THIS LEASE, ANY RIGHTS OF LESSEE TO RENEW THIS LEASE, EXTEND THE TERM, OR TO LEASE ADDITIONAL SPACE IN THE BUILDING SHALL BE EXTINGUISHED THEREBY AND WILL NOT BE TRANSFERRED TO THE TRANSFEREE, ALL SUCH RIGHTS BEING PERSONAL TO THE LESSEE.

B. LESSOR’S CONSENT – LESSOR MAY WITHHOLD ITS CONSENT, IN ITS SOLE AND ABSOLUTE DISCRETION, TO ANY TRANSFER OTHER THAN AN ASSIGNMENT OR SUBLETTING. LESSOR WILL NOT UNREASONABLY WITHHOLD ITS CONSENT TO ANY ASSIGNMENT OR SUBLETTING. IT SHALL BE REASONABLE FOR LESSOR TO WITHHOLD ITS CONSENT TO ANY ASSIGNMENT OR SUBLEASE IF (I) LESSEE IS IN DEFAULT UNDER THIS LEASE, (II) THE PROPOSED ASSIGNEE OR SUBLESSEE IS A TENANT IN THE BUILDING OR AN AFFILIATE OF SUCH A TENANT OR A PARTY THAT LESSOR HAS IDENTIFIED AS A PROSPECTIVE TENANT IN THE BUILDING, (III) THE FINANCIAL RESPONSIBILITY, NATURE OF BUSINESS, AND CHARACTER OF THE PROPOSED ASSIGNEE OR SUBTENANT ARE NOT ALL REASONABLY SATISFACTORY TO LESSOR, (IV) IN THE REASONABLE JUDGMENT OF LESSOR THE PURPOSE FOR WHICH THE ASSIGNEE OR SUBTENANT INTENDS TO USE THE PREMISES (OR A PORTION THEREOF) IS NOT IN KEEPING WITH LESSOR’S STANDARDS FOR THE BUILDING OR ARE IN VIOLATION OF THE TERMS OF THIS LEASE OR ANY OTHER LEASE IN THE BUILDING, OR (V) THE PROPOSED ASSIGNEE OR SUBTENANT IS A GOVERNMENT ENTITY. THE FOREGOING SHALL NOT EXCLUDE ANY OTHER REASONABLE BASIS FOR LESSOR TO WITHHOLD ITS CONSENT.

C. PROCEDURE – LESSEE SHALL NOTIFY LESSOR OF ANY PROPOSED TRANSFER AT LEAST THIRTY (30) DAYS PRIOR TO ITS PROPOSED EFFECTIVE DATE (“LESSEE’S NOTICE”). LESSEE’S NOTICE SHALL INCLUDE A WRITTEN DESCRIPTION OF ALL TERMS AND CONDITIONS OF THE PROPOSED TRANSFER, COPIES OF THE PROPOSED DOCUMENTATION, AND THE FOLLOWING INFORMATION ABOUT THE PROPOSED TRANSFEREE: NAME AND ADDRESS; REASONABLY SATISFACTORY INFORMATION ABOUT ITS BUSINESS AND BUSINESS HISTORY; ITS PROPOSED USE OF THE PREMISES; BANKING, FINANCIAL, AND OTHER CREDIT INFORMATION; AND GENERAL REFERENCES SUFFICIENT TO DETERMINE THE PROPOSED TRANSFEREE’S CREDITWORTHINESS AND CHARACTER. CONCURRENTLY WITH DELIVERY OF LESSEE’S NOTICE, LESSEE SHALL PAY TO LESSOR A FEE OF $500.00 TO DEFRAY LESSOR’S EXPENSES IN REVIEWING LESSEE’S NOTICE, AND LESSEE SHALL ALSO REIMBURSE LESSOR, IMMEDIATELY UPON REQUEST, FOR LESSOR’S REASONABLE ATTORNEYS’ FEES INCURRED IN CONNECTION WITH CONSIDERING ANY REQUEST FOR CONSENT TO A TRANSFER. AS A CONDITION TO ANY EFFECTIVE ASSIGNMENT OF THIS LEASE, THE ASSIGNEE SHALL EXECUTE AND DELIVER IN FORM SATISFACTORY TO LESSOR AT LEAST FIFTEEN (15) DAYS PRIOR TO THE EFFECTIVE DATE OF THE ASSIGNMENT,

 

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AN ASSUMPTION OF ALL OF THE OBLIGATIONS OF LESSEE UNDER THIS LEASE. AS A CONDITION TO ANY EFFECTIVE SUBLEASE, SUBTENANT SHALL EXECUTE AND DELIVER IN FORM SATISFACTORY TO LESSOR AT LEAST FIFTEEN (15) DAYS PRIOR TO THE EFFECTIVE DATE OF THE SUBLEASE, AN AGREEMENT TO COMPLY WITH ALL OF LESSEE’S OBLIGATIONS UNDER THIS LEASE, AND AN AGREEMENT TO ATTORN TO LESSOR, AT LESSOR’S OPTION, UNDER THE TERMS OF THE SUBLEASE IN THE EVENT THIS LEASE TERMINATES BEFORE THE SUBLEASE EXPIRES.

D. CHANGE OF MANAGEMENT OR OWNERSHIP – ANY TRANSFER OF THE DIRECT OR INDIRECT POWER TO AFFECT THE MANAGEMENT OR POLICIES OF LESSEE OR DIRECT OR INDIRECT CHANGE IN 50% OR MORE OF THE OWNERSHIP INTEREST IN LESSEE SHALL CONSTITUTE A TRANSFER. THIS PROVISION SHALL NOT APPLY IF, PRIOR TO SUCH CHANGE OF OWNERSHIP, LESSEE PROVIDES LESSOR WITH DOCUMENTATION SHOWING, TO LESSOR’S REASONABLE SATISFACTION, THAT SUCH CHANGE WILL NOT CAUSE ANY MATERIAL ADVERSE CHANGE IN LESSEE’S FINANCIAL CONDITION OR ANY MATERIAL CHANGE IN LESSEE’S USE OF THE PREMISES.

E. ADDITIONAL COMPENSATION – IF LESSEE SHALL ASSIGN THIS LEASE OR SUBLET ANY PART OF THE PREMISES FOR CONSIDERATION IN EXCESS OF THE PRO-RATA PORTION OF BASE RENT APPLICABLE TO THE SPACE SUBJECT TO THE ASSIGNMENT OR SUBLET, THEN LESSEE SHALL PAY TO LESSOR AS ADDITIONAL RENT 100% OF ANY EXCESS (LESS ANY BROKERAGE COMMISSION PAID BY LESSEE IN CONNECTION WITH SUCH ASSIGNMENT OR SUBLETTING) IMMEDIATELY UPON RECEIPT THEREOF.

F. RECAPTURE – IN THE EVENT OF ANY ASSIGNMENT OR OF ANY SUBLEASE OF MORE THAN 50% OF THE PREMISES FOR ALL OR SUBSTANTIALLY ALL OF THE REMAINDER OF THE TERM, LESSOR MAY, BY GIVING WRITTEN NOTICE TO LESSEE WITHIN THIRTY (30) DAYS AFTER RECEIPT OF LESSEE’S NOTICE, TERMINATE THIS LEASE WITH RESPECT TO THE SPACE DESCRIBED IN LESSEE’S NOTICE, AS OF THE EFFECTIVE DATE OF THE PROPOSED TRANSFER AND ALL OBLIGATIONS UNDER THIS LEASE AS TO SUCH SPACE SHALL EXPIRE EXCEPT AS TO ANY OBLIGATIONS THAT EXPRESSLY SURVIVE ANY TERMINATION OF THIS LEASE.

19. FREE FROM LIENS. LESSEE SHALL KEEP THE LEASED PREMISES AND THE BUILDING FREE FROM ANY LIENS ARISING OUT OF ANY WORK PERFORMED, MATERIAL FURNISHED, OR OBLIGATION INCURRED BY LESSEE.

20. ABANDONMENT. LESSEE SHALL NOT VACATE FOR MORE THAN 60 DAYS OR ABANDON THE LEASED PREMISES AT ANY TIME DURING THE TERM OF THIS LEASE; AND IF LESSEE SHALL ABANDON, SO VACATE OR SURRENDER THE LEASED PREMISES OR BE DISPOSSESSED BY PROCESS OF LAW, OR OTHERWISE, ANY PERSONAL PROPERTY BELONGING TO LESSEE AND LEFT ON THE LEASED PREMISES SHALL BE DEEMED TO BE ABANDONED, AT THE OPTION OF LESSOR. THIS PROVISION SHALL NOT APPLY TO ANY PERIOD OF TIME DURING WHICH THE PREMISES HAVE BEEN VACATED IN CONNECTION WITH A BONA FIDE LEASE TRANSFER IN ACCORDANCE WITH PARAGRAPH 18.

 

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21. SIGNS. NO SIGN, PLACARD, PICTURE, NAME, ADVERTISEMENT OR NOTICE, VISIBLE FROM THE EXTERIOR OF THE LEASED PREMISES SHALL BE INSCRIBED, PAINTED, AFFIXED OR OTHERWISE DISPLAYED BY LESSEE ON ANY PART OF THE LEASED PREMISES OR OF THE BUILDING WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, AND LESSOR SHALL HAVE THE RIGHT TO REMOVE ANY SUCH SIGN, PLACARD, PICTURE, NAME, ADVERTISEMENT OR NOTICE AT LESSEE’S EXPENSE AND WITHOUT NOTICE TO LESSEE. IF LESSOR SHALL HAVE GIVEN SUCH CONSENT AT ANY TIME, SUCH CONSENT SHALL BE DEEMED TO RELATE ONLY TO THE PARTICULAR SIGN, PLACARD, PICTURE, NAME, ADVERTISEMENT OR NOTICE SO CONSENTED TO BY LESSOR AND SHALL NOT BE CONSTRUED AS DISPENSING WITH THE NECESSITY OF OBTAINING THE SPECIFIC WRITTEN CONSENT OF LESSOR WITH RESPECT TO EACH AND EVERY OTHER SIGN, PLACARD, PICTURE, NAME, ADVERTISEMENT OR NOTICE AND MAY BE REVOKED AT ANY TIME. LESSOR MAY ADOPT AND FURNISH TO LESSEE UNIFORM RULES AND REGULATIONS. ALL SIGNS OR LETTERING ON DOORS OR ELSEWHERE SHALL BE PRINTED, PAINTED, AFFIXED OR INSCRIBED AT THE EXPENSE OF LESSEE BY A PERSON IN THE FORM APPROVED BY LESSOR.

22. EVENTS OF DEFAULT. IT IS EXPRESSLY AGREED THAT ANY OF THE FOLLOWING SHALL CONSTITUTE AN “EVENT OF DEFAULT” BY LESSEE HEREUNDER:

A. THAT LESSEE SHALL FAIL, NEGLECT OR REFUSE TO PAY ALL OR ANY PART OF THE RENT AT THE TIME AND IN THE AMOUNT AS HEREIN PROVIDED, OR PAY ANY OTHER MONEYS TO LESSOR OR OTHERS AGREED BY IT TO BE PAID PROMPTLY WHEN AND AS THE SAME SHALL BECOME DUE AND PAYABLE UNDER THE TERMS HEREOF, PROVIDED, HOWEVER, THAT WITH RESPECT TO THE FIRST SUCH DEFAULT IN ANY 12 MONTH PERIOD BEGINNING ON THE COMMENCEMENT DATE (“LEASE YEAR”), LESSOR SHALL NOT DECLARE AN EVENT OF DEFAULT UNLESS SAID DEFAULT CONTINUES FOR MORE THAN 10 DAYS FOLLOWING WRITTEN NOTICE FROM LESSOR TO LESSEE;

B. THAT ANY VOLUNTARY OR INVOLUNTARY PETITION OR SIMILAR PLEADING UNDER ANY SECTION OR SECTIONS OF ANY BANKRUPTCY ACT SHALL BE FILED BY OR AGAINST LESSEE ON ANY PROCEEDINGS FOR REORGANIZATION OR ARRANGEMENT, OR ANY OTHER VOLUNTARY OR INVOLUNTARY PROCEED, IN ANY COURT OF TRIBUNAL, FEDERAL OR STATE, SHALL BE INSTITUTED TO DECLARE LESSEE INSOLVENT OR UNABLE TO PAY LESSEE’S DEBTS, AND THE SAME SHALL NOT BE DISMISSED OR DISCHARGED WITHIN THIRTY (30) DAYS AFTER FILING.

C. THAT LESSEE SHALL FAIL, NEGLECT OR REFUSE TO KEEP AND PERFORM ANY OF THE OTHER COVENANTS, CONDITIONS, STIPULATIONS OR AGREEMENTS HEREIN CONTAINED AND COVENANTED AND AGREED TO BE KEPT AND PERFORMED BY IT OR IN ANY MANNER BREACH ANY PROVISION OF THIS LEASE, OTHER THAN PAYMENT OF RENT, PROVIDED, HOWEVER, THAT WITH

 

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RESPECT TO THE FIRST SUCH DEFAULT IN ANY LEASE YEAR, LESSOR SHALL NOT DECLARE ANY EVENT OF DEFAULT UNLESS SAID DEFAULT CONTINUES FOR MORE THAN 30 DAYS FOLLOWING WRITTEN NOTICE FROM LESSOR TO LESSEE.

D. THAT LESSEE MAKES ANY ASSIGNMENT OF ITS PROPERTY FOR THE BENEFIT OF CREDITORS OR SHOULD THE LEASED PREMISES BE TAKEN UNDER A LEVY OF EXECUTION OR ATTACHMENT IN AN ACTION AGAINST LESSEE AND SUCH LEVY, ATTACHMENT OR ASSIGNMENT IS NOT DISMISSED, AND DISCHARGED WITHIN THIRTY (30) DAYS AFTER SUCH ASSIGNMENT OR LEVY.

23. REMEDIES UPON DEFAULT. LESSOR AND LESSEE AGREE AS FOLLOWS UPON LESSOR’S REMEDIES FOR ANY DEFAULT BY LESSEE IN THIS LEASE:

A. IN THE EVENT OF ANY SUCH DEFAULT BY LESSEE, AND IN ADDITION TO ANY OTHER REMEDIES AVAILABLE TO LESSOR AT LAW OR IN EQUITY, LESSOR SHALL HAVE THE IMMEDIATE OPTION TO TERMINATE THIS LEASE AND ALL RIGHTS OF LESSEE HEREUNDER BY GIVEN WRITTEN NOTICE OF TERMINATION. IN THE EVENT THAT LESSOR SHALL ELECT TO SO TERMINATE THIS LEASE THEN LESSOR MAY RECOVER FROM LESSEE; (1) THE WORTH AT THE TIME OF AWARD OF ANY UNPAID RENT WHICH HAD BEEN EARNED AT THE TIME OF SUCH TERMINATION; PLUS (2) THE WORTH AT THE TIME OF AWARD OF THE AMOUNT BY WHICH THE UNPAID RENT WHICH WOULD HAVE BEEN EARNED AFTER TERMINATION UNTIL THE TIME OF AWARD EXCEEDS THE AMOUNT OF SUCH RENTAL LOSS THAT LESSEE PROVES COULD BE REASONABLY AVOIDED; PLUS (3) THE WORTH AT THE TIME OF AWARD OF THE AMOUNT BY WHICH THE UNPAID RENT FOR THE BALANCE OF THE TERM AFTER THE TIME OF AWARD EXCEEDS THE AMOUNT OF SUCH RENTAL LOSS THAT LESSEE PROVES COULD BE REASONABLY AVOIDED; PLUS (4) ANY OTHER AMOUNT NECESSARY TO COMPENSATE LESSOR FOR ALL THE DETRIMENT PROXIMATELY CAUSED BY LESSEE’S FAILURE TO PERFORM HIS OBLIGATIONS UNDER THIS LEASE OR WHICH IN THE ORDINARY COURSE OF THINGS WOULD BE LIKELY TO RESULT THEREFROM; AND (5) AT LESSOR’S ELECTION, SUCH OTHER AMOUNTS IN ADDITION TO OR IN LIEU OF THE FOREGOING AS MAY BE PERMITTED FROM TIME TO TIME BY APPLICABLE CALIFORNIA LAW.

B. THE TERM “RENT” AS USED HEREIN, SHALL BE DEEMED TO BE AND TO MEAN BASE RENT AND ALL OTHER SUMS REQUIRED TO BE PAID BY LESSEE PURSUANT TO THE TERMS OF THIS LEASE.

C. AS USED IN SUBPARAGRAPHS A(1) AND (2) ABOVE, THE “WORTH AT THE TIME OF AWARD” IS COMPUTED BY ALLOWING INTEREST AT THE RATE OF TEN PERCENT (10%) PER ANNUM. AS USED IN SUBPARAGRAPH A(3) ABOVE, THE “WORTH AT THE TIME OF AWARD” IS COMPUTED BY DISCOUNTING SUCH AMOUNT AT THE DISCOUNT RATE OF THE FEDERAL RESERVE BANK OF SAN FRANCISCO AT THE TIME OF AWARD PLUS ONE PERCENT (1%).

 

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D. IN THE EVENT OF ANY SUCH DEFAULT BY LESSEE, INCLUDING AN ABANDONMENT AS PROVIDED IN PARAGRAPH 20, LESSOR SHALL ALSO HAVE THE RIGHT TO CONTINUE THIS LEASE IN EFFECT FOR SO LONG AS LESSOR DOES NOT TERMINATE LESSEE’S RIGHT TO POSSESSION AS PROVIDED IN SUBPARAGRAPH A ABOVE, AND LESSOR MAY ENFORCE ALL ITS RIGHTS AND REMEDIES UNDER THIS LEASE, INCLUDING THE RIGHT TO RECOVER RENT AS IT BECOMES DUE UNDER THIS LEASE. IN SUCH EVENT, LESSOR MAY EXERCISE ALL OF THE RIGHTS AND REMEDIES OF A LANDLORD UNDER SECTION 1951.4 OF THE CALIFORNIA CIVIL CODE (WHICH PROVIDES THAT A LANDLORD MAY CONTINUE A LEASE IN EFFECT AFTER A TENANT’S BREACH AND ABANDONMENT AND RECOVER RENT AS IT BECOMES DUE, IF THE TENANT HAS THE RIGHT TO SUBLET OR ASSIGN, SUBJECT ONLY TO REASONABLE LIMITATIONS), OR ANY SUCCESSOR STATUTE. ACTS OF MAINTENANCE OR PRESERVATION OR EFFORTS TO RELET THE PREMISES, OR THE APPOINTMENT OF A RECEIVER UPON INITIATIVE OF LESSOR TO PROTECT LESSOR’S INTEREST UNDER THIS LEASE SHALL NOT CONSTITUTE A TERMINATION OF LESSEE’S RIGHT TO POSSESSION.

E. INTENTIONALLY LEFT BLANK.

F. IN THE EVENT THAT LESSOR SHALL ELECT TO SO RELET, THEN RENTALS RECEIVED BY LESSOR FROM SUCH RELETTING SHALL BE APPLIED TO: FIRST, TO THE PAYMENT OF ANY INDEBTEDNESS OTHER THAN RENT DUE HEREUNDER FROM LESSEE TO LESSOR; SECOND, TO THE PAYMENT OF ANY COST OF SUCH RELETTING; THIRD, TO THE PAYMENT OF THE COST OF ANY ALTERATIONS AND REPAIR TO THE PREMISES; FOURTH, TO THE PAYMENT OF RENT DUE AND UNPAID HEREUNDER; AND THE RESIDUE, IF ANY, SHALL BE HELD BY LESSOR AND APPLIED IN PAYMENT OF FUTURE RENT AS THE SAME MAY BECOME DUE AND PAYABLE HEREUNDER. SHOULD THAT PORTION OF SUCH RENTALS RECEIVED FROM SUCH RELETTING DURING ANY MONTH, WHICH IS APPLIED BY THE PAYMENT OF RENT HEREUNDER, BE LESS THAN THE RENT PAYABLE DURING THAT MONTH BY LESSEE HEREUNDER, THEN LESSEE SHALL PAY SUCH DEFICIENCY TO LESSOR IMMEDIATELY UPON DEMAND THEREFOR BY LESSOR. SUCH DEFICIENCY SHALL BE CALCULATED AND PAID MONTHLY. LESSEE SHALL ALSO PAY TO LESSOR, AS SOON AS ASCERTAINED, ANY COSTS AND EXPENSES INCURRED BY LESSOR IN SUCH RELETTING OR IN MAKING SUCH ALTERATIONS AND REPAIRS NOT COVERED BY THE RENTALS RECEIVED FROM SUCH RELETTING.

G. NO RE-ENTRY OR TAKING POSSESSION OF THE PREMISES BY LESSOR PURSUANT TO THIS LEASE SHALL BE CONSTRUED AS AN ELECTION TO TERMINATE THIS LEASE UNLESS A WRITTEN NOTICE OF SUCH INTENTION BE GIVEN TO LESSEE OR UNLESS THE TERMINATION THEREOF BE DECREED BY A COURT OF COMPETENT JURISDICTION. NOTWITHSTANDING ANY RELETTING WITHOUT TERMINATION BY LESSOR BECAUSE OF ANY DEFAULT BY LESSEE, LESSOR MAY AT ANY TIME AFTER SUCH RELETTING ELECT TO TERMINATE THIS LEASE FOR ANY SUCH DEFAULT.

 

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H. IN THE EVENT OF ANY DEFAULT BY LESSEE AS IN THIS LEASE PROVIDED, LESSOR SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, IN ADDITION TO ANY OTHER REMEDIES OR ELECTIONS LESSOR MAY HAVE, TO REMOVE FROM THE LEASED PREMISES ALL PERSONAL PROPERTY LOCATED THEREIN AND MAY PLACE THE SAME IN STORAGE AT A PUBLIC WAREHOUSE FOR THE ACCOUNT OF AND AT THE EXPENSE AND RISK OF LESSEE; LESSEE HEREBY IRREVOCABLY APPOINTING LESSOR THE AGENT AND ATTORNEY-IN-FACT OF LESSEE FOR SUCH PURPOSE. THE COST OF REMOVAL AND STORAGE SHALL BE DEEMED ADDITIONAL RENT HEREUNDER. LESSOR NEED NOT PAY ANY SUCH STORAGE CHARGES HOWEVER, AND LESSEE AGREES THAT SUCH WAREHOUSE MAY DISPOSE OF SAID GOODS WITHOUT NOTICE TO LESSEE, AND LESSEE HEREBY WAIVES ANY CLAIMS AGAINST LESSOR BY REASON OF SUCH REMOVAL AND/OR DISPOSITION OF SUCH GOODS. LESSOR SHALL NOT BE DEEMED TO HAVE TERMINATED THIS LEASE OR THE LIABILITY OR LESSEE TO PAY RENT AND/OR OTHER PAYMENTS HEREUNDER THEREAFTER TO ACCRUE AND/OR DAMAGES BY ANY SUCH RE-ENTRY AS IN THIS LEASE PROVIDED OR BY ANY NOTICES REQUIRED FOR OR BY ANY ACTION IN UNLAWFUL DETAINER OR OTHERWISE, UNLESS LESSOR NOTIFIES LESSEE IN WRITING THAT LESSOR HAS TERMINATED AT THE TIME OF SAID NOTICE. NO ENTRY OR RELETTING OF SAID PREMISES BY LESSOR SHALL CONSTITUTE AN ACCEPTANCE BY LESSOR OF THE SURRENDER OF SAID PREMISES, UNLESS LESSOR SO NOTIFIES LESSEE IN WRITING. ALL REMEDIES GRANTED TO LESSOR HEREIN AND ELSEWHERE IN THIS LEASE IN THE EVENT OF THE DEFAULT OF LESSEE, ARE CUMULATIVE AND ARE GIVEN WITHOUT IMPAIRING ANY OTHER RIGHTS OR REMEDIES OF LESSOR.

24. LESSOR’S ELECTIONS NON-EXCLUSIVE. THE EXERCISE OF ANY RIGHT OR OPTION OR PRIVILEGE HEREUNDER BY LESSOR SHALL NOT EXCLUDE LESSOR FROM EXERCISING ANY AND ALL OTHER RIGHTS, PRIVILEGES AND OPTIONS HEREUNDER, AND LESSOR’S FAILURE TO EXERCISE ANY RIGHT, OPTION OR PRIVILEGE HEREUNDER SHALL NOT BE DEEMED A WAIVER OF SAID RIGHT, OPTION OR PRIVILEGE NOR SHALL IT RELIEVE LESSEE FROM LESSEE’S OBLIGATIONS TO PERFORM EACH AND EVERY COVENANT AND CONDITION OF LESSEE’S PART TO BE PERFORMED HEREUNDER NOR FROM DAMAGES OR OTHER REMEDY FOR FAILURE TO PERFORM OR MEET THE OBLIGATIONS OF THIS LEASE.

25. SURRENDER. LESSEE SHALL, UPON TERMINATION OF THIS LEASE, WHETHER BY LAPSE OF TIME OR OTHERWISE, SURRENDER TO LESSOR THE LEASED PREMISES TOGETHER WITH ALL REPLACEMENTS THERETO IN GOOD ORDER, CONDITION AND REPAIR, EXCEPT FOR ORDINARY WEAR AND TEAR. THE VOLUNTARY OR OTHER SURRENDER OF THIS LEASE BY LESSEE, OR A MUTUAL CANCELLATION THEREOF SHALL NOT WORK A MERGER AND SHALL, AT THE OPTION OF LESSOR, TERMINATE ALL OR ANY EXISTING SUBLEASES OR SUBTENANCIES, OR MAY, AT THE OPTION OF LESSOR OPERATE AS AN ASSIGNMENT TO LESSOR OF ANY OR ALL SUCH SUBLEASES OR SUBTENANCIES.

 

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26. DEFAULT BY LESSOR. LESSOR SHALL IN NO EVENT BE CHARGED WITH DEFAULT IN THE PERFORMANCE OF ANY OF ITS OBLIGATIONS HEREUNDER UNLESS AND UNTIL LESSOR SHALL HAVE FAILED TO PERFORM SUCH OBLIGATIONS WITHIN NINETY (90) DAYS (OR SUCH ADDITIONAL TIME AS IS REASONABLY REQUIRED TO CORRECT ANY SUCH DEFAULTS) AFTER NOTICE BY LESSEE TO LESSOR PROPERLY SPECIFYING WHEREIN LESSOR HAS FAILED TO PERFORM ANY SUCH OBLIGATION. THIS LEASE AND THE OBLIGATIONS OF LESSEE HEREUNDER SHALL NOT BE AFFECTED OR IMPAIRED IF LESSOR IS UNABLE TO FULFILL ANY OF ITS OBLIGATIONS HEREUNDER OR IS DELAYED IN DOING SO BY REASON OF STRIKE OR LABOR TROUBLES OR OTHER MATTERS BEYOND THE REASONABLE CONTROL OF LESSOR.

27. LEASEHOLD PRIORITY, SUBORDINATION AND OFFSET. LESSEE COVENANTS AND AGREES THAT UPON WRITTEN REQUEST OF LESSOR, AND PROVIDED THAT LESSEE RECEIVES A COMMERCIALLY REASONABLE NON-DISTURBANCE AGREEMENT IN CONNECTION WITH ANY FUTURE SUBORDINATION, LESSEE WILL MAKE, EXECUTE, ACKNOWLEDGE AND DELIVER ANY AND ALL INSTRUMENTS REQUESTED BY LESSOR WHICH ARE NECESSARY OR PROPER TO EFFECT THE SUBORDINATION OF THIS LEASE TO ANY MORTGAGE, DEED OF TRUST, INDENTURE, NET LEASE, OR OTHER ENCUMBRANCE AND HEREBY IRREVOCABLY APPOINTS LESSOR AS LESSEE’S ATTORNEY-IN-FACT TO MAKE, EXECUTE, ACKNOWLEDGE AND DELIVER ANY SUCH INSTRUMENTS IN THE NAME AND ON BEHALF OF ANY SALE OR OTHER PROCEEDING UNDER THE TERMS OF ANY SUCH FIRST MORTGAGE, DEED OF TRUST, INDENTURE, NET LEASE, OR OTHER ENCUMBRANCE SUCH PERSON MAY ELECT TO CONTINUE THIS LEASE IN FULL FORCE AND EFFECT, AS AFORESAID, AND LESSEE HEREBY ATTORNS AND AGREES TO ATTORN TO SUCH PERSON.

AT ANY TIME AND FROM TIME TO TIME, LESSEE AGREES UPON REQUEST IN WRITING FROM LESSOR TO EXECUTE, ACKNOWLEDGE AND DELIVER TO LESSOR A STATEMENT IN WRITING CERTIFYING THAT THIS LEASE IS UNMODIFIED AND IN FULL FORCE AND EFFECT (OR IF THERE HAVE BEEN MODIFICATIONS, THAT THE SAME IS IN FULL FORCE AND EFFECT AS MODIFIED AND STATING THE MODIFICATIONS) AND THE DATES TO WHICH FIXED MINIMUM RENT, PERCENTAGE RENT AND OTHER CHARGES HAVE BEEN PAID. IT IS UNDERSTOOD AND AGREED THAT ANY SUCH STATEMENT MAY BE RELIED UPON BY AND SUCH STATEMENT MAY BE RELIED UPON BY ANY PROSPECTIVE PURCHASER OF THE FEE OR ANY LEASEHOLD OR THE MORTGAGEE, BENEFICIARY OR GRANTERS OF ANY SECURITY OR INTEREST OR ANY ASSIGNEE OF ANY THEREOF, UNDER ANY MORTGAGE OR DEED OF TRUST NOW OR HEREAFTER MADE COVERING THE FEE OF ANY LEASEHOLD INTEREST IN THE LEASED PREMISES OR THE REAL PROPERTY COVERED BY THIS LEASE. FAILURE TO DELIVER SUCH STATEMENT SHALL BE CONCLUSIVE THAT THE LEASE IS THEN IN FULL FORCE AND EFFECT AND UNMODIFIED, THAT THE LESSOR IS NOT IN DEFAULT HEREUNDER, AND THAT NOT MORE THAN ONE MONTH’S RENTAL HAS BEEN PAID IN ADVANCE.

 

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28. WAIVER. ONE OR MORE WAIVERS OF ANY COVENANT, TERM OR CONDITION OF THIS LEASE BY EITHER PARTY SHALL NOT BE CONSTRUED BY THE OTHER PARTY AS A WAIVER OF A SUBSEQUENT BREACH OF THE SAME COVENANT, TERM OR CONDITION. THE CONSENT OR APPROVAL OF EITHER PARTY TO OR OF ANY ACT BY THE OTHER PARTY OF A NATURE REQUIRING CONSENT OR APPROVAL SHALL NOT BE DEEMED TO WAIVE OR RENDER UNNECESSARY CONSENT TO, OR APPROVAL OF, ANY SUBSEQUENT SIMILAR ACT.

29. NOTICE. ANY NOTICES REQUIRED TO BE GIVEN TO A PARTY HEREUNDER SHALL BE GIVEN IN WRITING, SENT BY CERTIFIED MAIL WITH POSTAGE PREPAID, TO THE ADDRESS OF THE RESPECTIVE PARTIES SET FORTH BELOW THEIR RESPECTIVE SIGNATURES TO THIS LEASE, OR SUCH OTHER PLACE AS MAY FROM TIME TO TIME BE DESIGNATED IN WRITING.

30. SALE OF PREMISES BY LESSOR. IN THE EVENT OF ANY SALE OF THE LEASED PREMISES BY LESSOR, LESSOR SHALL BE AND IS HEREBY ENTIRELY FREED AND RELIEVED OF ALL LIABILITY UNDER ANY AND ALL OF ITS COVENANTS AND OBLIGATIONS CONTAINED IN OR DERIVED FROM THIS LEASE ARISING OUT OF ANY ACT, OCCURRENCE OR OMISSION OCCURRING AFTER THE CONSUMMATION OF SUCH SALE: AND THE PURCHASER, AT SUCH SALE OR ANY SUBSEQUENT SALE OF THE LEASED PREMISES SHALL BE DEEMED, WITHOUT ANY FURTHER AGREEMENT BETWEEN THE PARTIES OR THEIR SUCCESSORS IN INTEREST OR BETWEEN THE PARTIES AND ANY SUCH PURCHASER, TO HAVE ASSUMED AND AGREED TO CARRY OUT ANY AND ALL OF THE COVENANTS AND OBLIGATIONS OF THE LESSOR UNDER THIS LEASE.

31. INTENTIONALLY LEFT BLANK.

32. RULES AND REGULATIONS. LESSEE AGREES THAT LESSEE, TOGETHER WITH ALL OTHER PERSONS ENTERING AND/OR OCCUPYING THE LEASED PREMISES WILL ABIDE BY, KEEP AND OBSERVE ALL REASONABLE RULES AND REGULATIONS WHICH LESSOR MAY MAKE FROM TIME TO TIME FOR THE MANAGEMENT SAFETY, CARE AND CLEANLINESS OF THE BUILDING, AND THE PRESERVATION OF GOOD ORDER THEREIN, AS WELL AS FOR THE CONVENIENCE OF OTHER OCCUPANTS AND TENANTS OF THE BUILDING, INCLUDING THOSE SET FORTH BELOW. THE VIOLATION OF ANY SUCH RULES AND REGULATIONS SHALL BE DEEMED A MATERIAL BREACH OF THIS LEASE BY LESSEE.

33. ATTORNEY’S FEES. SHOULD EITHER PARTY HERETO INSTITUTE ANY ACTION OR PRECEDING AGAINST THE OTHER PARTY TO ENFORCE ANY PROVISION OF THIS LEASE OR FOR DAMAGES BY REASON OF ANY ALLEGED BREACH OF ANY PROVISION HEREOF OR FOR A DECLARATION OF SUCH PARTY’S RIGHTS OR OBLIGATIONS HEREUNDER, OR FOR ANY OTHER JUDICIAL REMEDY WITH RESPECT TO THIS LEASE OR THE HEREIN DEMISED PREMISES, THE PREVAILING PARTY SHALL BE ENTITLED TO REASONABLE ATTORNEY’S FEES.

 

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34. OTHER PROVISIONS.

A. ALL PROVISIONS HEREIN CONTAINED SHALL BE BINDING ON, AND INURE TO THE BENEFIT OF, THE HEIRS, SUCCESSORS, EXECUTORS, ADMINISTRATORS, AND ASSIGNS OF THE PARTIES HERETO.

B. IF ANY TERM, COVENANT OR CONDITION OF THIS LEASE SHALL BE HELD TO BE INVALID OR UNENFORCEABLE BY A COURT OR COMPETENT JURISDICTION, THE REMAINING PROVISIONS HEREOF SHALL REMAIN IN FULL FORCE AND EFFECT AND SHALL NOT BE AFFECTED, IMPAIRED OR INVALIDATED THEREBY.

C. TIME IS OF THE ESSENCE OF THIS LEASE AND EVERY PROVISION HEREOF EXCEPT THE DELIVERY OF POSSESSION TO LESSEE BY LESSOR.

D. THIS LEASE CONSTITUTES THE ENTIRE AGREEMENT BETWEEN LESSOR AND LESSEE AND IT MAY BE AMENDED ONLY BY A WRITTEN AGREEMENT SIGNED BY THE PARTIES HERETO, EXCEPT THAT LESSOR MAY FROM TIME TO TIME, SPECIFY REASONABLE RULES GOVERNING THE OPERATION OF THE LEASED PREMISES AND SAID RULES SHALL BE INCORPORATED HEREIN AND BE MADE A PART HEREOF BY REFERENCE, AND LESSEE AGREES TO ABIDE THERETO.

E. THIS LEASE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT AS MODIFIED HEREIN.

F. THE MARGINAL HEADINGS OR TITLES TO THE PARAGRAPHS OF THIS LEASE ARE NOT A PART OF THIS LEASE AND SHALL HAVE NO EFFECT UPON THE CONSTRUCTION OR INTERPRETATION HEREOF.

G. NOTHING HEREIN CONTAINED SHALL BE DEEMED TO CREATE ANY RELATIONSHIP BETWEEN LESSOR AND LESSEE OTHER THAN LANDLORD AND TENANT AND THE PARTIES ARE NOT, FOR ANY PURPOSE, PARTNERS OR JOINT VENTURES.

H. EACH SIGNATOR AS LESSEE SHALL BE JOINTLY AND SEVERALLY LIABLE HEREON AND OBLIGATED TO PERFORM EACH PROVISION HEREOF.

I. LESSEE HEREBY AGREES TO PLACE PLASTIC MAT UNDER EVERY DESK CHAIR TO PROTECT THE CARPET.

J. LESSEE HEREBY AGREES NOT TO PUT MOLLYS, LARGE SCREWS OR LARGE NAILS IN THE PARTITION WALLS.

K. LESSEE ACKNOWLEDGES THAT MOVING INTO AND MOVING OUT OF THE PREMISES MUST BE PERFORMED DURING BUSINESS HOURS, MONDAY THROUGH FRIDAY, 8:00 A.M. TO 5:00 P.M. ONLY PROFESSIONAL MOVING COMPANIES ARE ALLOWED ON THE PREMISES. A CERTIFICATE OF INSURANCE AND AN ADDITIONAL INSURED ENDORSEMENT NAMING J & S MANAGEMENT MUST BE ISSUED FOR PROPERTY LIABILITY, PROPERTY DAMAGE, AND WORKMEN’S COMPENSATION INSURANCE. THESE CERTIFICATES

 

23


MUST BE ON FILE WITH J & S MANAGEMENT BEFORE THE MOVING COMPANY IS ALLOWED ON THE PREMISES. THE MOVING COMPANY CANNOT BE SELF-INSURED AND WE DO NOT ALLOW STARVING STUDENTS AND/OR SHMOOVER MOOVERS ON THE PREMISES.

L. LESSOR, AT ITS SOLE COST AND EXPENSE, SHALL DELIVER THE PREMISES WITH A TURN-KEY BUILD-OUT, AS SHOWN IN EXHIBIT A, WITH THE FOLLOWING TENANT IMPROVEMENTS:

1. CONSTRUCT TWO (2) PRIVATE OFFICES APPROXIMATELY 10’X12’.

2. SEPARATE AN EXISTING 10’X12’ ROOM INTO A SERVER ROOM APPROXIMATELY 10’X4’8” AND A PRIVATE OFFICE APPROXIMATELY 10’X7’, AND INSTALL A VENT AT THE BOTTOM OF THE SERVER ROOM DOOR.

3. INSTALL NEW VCT TILE IN THE SERVER ROOM AND NEW CARPET THROUGHOUT THE SUITE.

4. PAINT THE INTERIOR OF THE SUITE.

M. PROVIDED THAT LESSEE IS NOT THEN IN DEFAULT HEREUNDER, LESSEE SHALL HAVE ONE (1) THREE (3) YEAR EXTENSION OPTION AT THE EXPIRATION OF THE AGREED UPON TERM. LESSEE’S OPTION TO EXTEND SHALL BE AT THE THEN FAIR MARKET RATE FOR COMPARABLE OFFICE SPACE WITHIN THE DOWNTOWN REDWOOD CITY AREA, AS REASONABLY DETERMINED BY LESSOR. LESSEE SHALL PROVIDE NO LESS THAN SIX (6) AND NO MORE THAN TWELVE (12) MONTHS WRITTEN NOTICE OF ITS INTENTION TO EXERCISE THE OPTION.

35. HOLDOVER.

IF, WITHOUT OBJECTION BY LESSOR, LESSEE HOLDS POSSESSION OF THE PREMISES AFTER EXPIRATION OR TERMINATION OF THIS LEASE, LESSEE SHALL BECOME A MONTH-TO-MONTH TENANT UPON THE TERMS HEREIN SPECIFIED, BUT AT A BASE RENT EQUAL TO ONE HUNDRED FIFTY PERCENT (150%) OF THE BASE RENT IN EFFECT AT THE EXPIRATION OR TERMINATION OF THIS LEASE. LESSOR MAY ELECT TO TREAT ANY HOLDING OVER AS A TENANCY AT SUFFERANCE, WITH BASE RENT PAYABLE DAILY, IN ADVANCE, AT A RENTAL RATE EQUAL TO ONE HUNDRED AND FIFTY PERCENT (150%) OF THE BASE RENT IN EFFECT AT THE TIME OF THE EXPIRATION OR TERMINATION OF THIS LEASE, AND UPON THE OTHER TERMS AND CONDITIONS HEREIN SPECIFIED, SO FAR AS APPLICABLE. LESSEE ACKNOWLEDGES THAT IF LESSEE HOLDS OVER WITHOUT LESSOR’S CONSENT, SUCH HOLDING OVER MAY COMPROMISE OR OTHERWISE AFFECT LESSOR’S ABILITY TO ENTER INTO A LEASE WITH A PROSPECTIVE TENANT FOR THE PREMISES. THEREFORE, IF LESSEE FAILS TO SURRENDER THE PREMISES UPON THE EXPIRATION OR TERMINATION OF THIS LEASE, IN ADDITION TO ANY OTHER LIABILITIES TO LESSOR ACCRUING THEREFROM, LESSEE SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD LESSOR HARMLESS FROM AND

 

24


AGAINST ALL CLAIMS RESULTING FROM SUCH FAILURE, INCLUDING, WITHOUT LIMITATION, ANY CLAIMS MADE BY ANY SUCCEEDING TENANT FOUNDED UPON SUCH FAILURE TO SURRENDER, AND ANY LOSSES SUFFERED BY LESSOR, INCLUDING LOST PROFITS, RESULTING FROM SUCH FAILURE TO SURRENDER.

IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS LEASE ON THE DATE FIRST ABOVE WRITTEN.

 

LESSOR –   SHEILA L. ORTLOFF DBA     LESSEE – MONOTYPE IMAGING, INC.
  J & S MANAGEMENT    
BY   /s/ Kim C. Wilkins     BY   /s/ Robert M. Givens
  KIM C. WILKINS      
  AGENT FOR J & S MANAGEMENT     TITLE:   President
DATE:   December 12, 2006     DATE:   December 11, 2006

 

25

Exhibit 10.28

Execution Copy

STOCK PURCHASE AGREEMENT

dated as of

November 5, 2004

among

AGFA CORPORATION,

AGFA MONOTYPE CORPORATION,

AND

IMAGING ACQUISITION CORPORATION


TABLE OF CONTENTS

 

          Page
ARTICLE I — DEFINITIONS    1
    1.01.    Definitions    1
ARTICLE II — PURCHASE AND SALE    8
    2.01.    Purchase and Sale    8
    2.02.    Closing    8
    2.03.    Closing Balance Sheet    9
    2.04.    Purchase Price Adjustment    10
ARTICLE III — REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY    11
    3.01.    Corporate Existence and Power    11
    3.02.    Consents    11
    3.03.    Non-Contravention    11
    3.04.    Capitalization    12
    3.05.    Subsidiaries    12
    3.06.    Financial Statements    13
    3.07.    No Undisclosed Material Liabilities    13
    3.08.    Absence of Certain Changes    14
    3.09.    Property and Equipment    15
    3.10.    Litigation    16
    3.11.    Material Contracts    16
    3.12.    Insurance Coverage    17
    3.13.    Compliance with Laws; No Defaults    17
    3.14.    Finder’s Fees    18
    3.15.    Intellectual Property    18
    3.16.    Taxes    20
    3.17.    Employees    21
    3.18.    Transactions with Affiliates    21
    3.19.    Environmental Matters    21
    3.20.    Customers    22
    3.21.    Disclosure    22
ARTICLE IV — REPRESENTATIONS AND WARRANTIES RELATING TO SELLER    23
    4.01.    Organization and Existence    23
    4.02.    Corporate Authorization    23
    4.03.    Governmental Authorization; Consents    23
    4.04.    Non-Contravention    23
    4.05.    Title to and Validity of Shares    24
    4.06.    Litigation    24
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF BUYER    24
    5.01.    Organization and Existence    24
    5.02.    Corporate Authorization    24
    5.03.    Governmental Authorization; Consents    24
    5.04.    Non-Contravention    25
    5.05.    Finders’ Fees    25
    5.06.    Financing    25
    5.07.    Purchase for Investment    25
    5.08.    Litigation    25
    5.09.    Inspections    25
ARTICLE VI — COVENANTS OF SELLER    26
    6.01.    Notices of Certain Events    26

 

i


          Page
    6.02.    Confidentiality    26
    6.03.    Agreement not to Hire Employees    27
    6.04.    Settlement of Inter-Company Accounts; Dividend Payment    27
    6.05.    Agreement Not to Compete    27
ARTICLE VII — COVENANTS OF BUYER    29
    7.01.    Confidentiality    29
    7.02.    Access    29
    7.03.    Corporate Name; Trademark and Domain Names; Patent License    29
    7.04.    Directors and Officers Indemnification    30
ARTICLE VIII — COVENANTS OF ALL PARTIES    30
    8.01.    Best Efforts    30
    8.02.    Certain Filings    31
    8.03.    Public Announcements    31
    8.04.    Non-Disparagement    31
    8.05.    Transaction Bonus Plan Payments    32
    8.06.    Adobe Litigation    32
    8.07.    Subsidiary Stock Certificate    35
ARTICLE IX — EMPLOYEE BENEFITS    35
    9.01.    Employee Benefits    35
    9.02.    ERISA Representations    36
    9.03.    No Third Party Beneficiaries    37
ARTICLE X — TAX MATTERS    38
    10.01.    Tax Sharing Agreements    38
    10.02.    Tax Periods Through the Closing Date    38
    10.03.    Tax Periods Beginning Before and Ending After the Closing Date    38
    10.04.    Cooperation on Tax Matters    39
    10.05.    Refunds and Tax Benefits    39
    10.06.    Post-Closing Elections    39
    10.07.    Section 338(h)(10) Election    40
    10.08.    Audits    40
    10.09.    Transfer Taxes    40
    10.10.    Tax-Related Proceedings    40
    10.11.    Post-Closing    41
    10.12.    TBP Payment Reporting    41
ARTICLE XI — CONDITIONS TO CLOSING    41
    11.01.    Conditions to the Obligations of Each Party    41
    11.02.    Conditions to Obligation of Buyer    42
    11.03.    Conditions to Obligation of Seller    43
ARTICLE XII — SURVIVAL; INDEMNIFICATION    43
    12.01.    Survival    43
    12.02.    Indemnification    44
    12.03.    Procedure for Indemnification Claims; No Waiver; Exclusivity    45
    12.04.    Purchase Price Adjustment    46
ARTICLE XIII — TERMINATION    47
    13.01.    Grounds for Termination    47
ARTICLE XIV — MISCELLANEOUS    47
    14.01.    Notices    47
    14.02.    Amendments; No Waivers    49

 

ii


          Page
    14.03.    Expenses    49
    14.04.    Successors and Assigns    49
    14.05.    Further Assurances    49
    14.06.    Governing Law    50
    14.07.    Counterpart    50
    14.08.    Entire Agreement    50
    14.09.    Captions    50
    14.10.    Dispute Resolution    50
    14.11.    Severability    52
    14.12.    Currency    52

 

Exhibits
A   Denmark Services Agreement
B   Japan Type License Amendment
C   Note Termination Agreement
D   Transition Services Agreement
E   Disclosure Schedules
F   Assignment and Assumption Agreement
G   Mutual Termination and Release
H   Trademark Agreement
I   Patent License
J   Purchase Price Allocation Methodology
K   Seller’s Counsel Opinion

 

Schedules
1.01A   Company Proprietary Rights
1.01B   Minimum Net Operating Working Capital
2.03   Accounting Policies
3.02   Consents
3.04   Capitalization
3.05   Subsidiaries
3.06   Financial Statements
3.07   Undisclosed Material Liabilities
3.08   Absence of Certain Changes
3.11   Material Contracts
3.13   Compliance with Laws
3.15   Intellectual Property
3.16   Taxes
3.17   Employees
3.18   Transactions with Affiliates
3.20   Customers
6.04   Intercompany Settlement; Closing Dividend
9.02   ERISA

 

iii


STOCK PURCHASE AGREEMENT

AGREEMENT dated as of November 5, 2004 among Agfa Corporation, a Delaware corporation (“ Seller ”), Agfa Monotype Corporation, a Delaware Corporation (the “ Company ”) and Imaging Acquisition Corporation, a Delaware Corporation (“ Buyer ”).

W I T N E S S E T H :

WHEREAS , Buyer desires to purchase from Seller all of the outstanding shares of capital stock of the Company consisting of 1,000 shares of Common Stock (the “ Shares ”); and

WHEREAS , Seller desires to sell to Buyer the Shares owned by Seller;

NOW, THEREFORE , in consideration of the mutual premises, covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby being acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.01. Definitions . (a) The following terms, as used herein, have the following meanings:

Adobe ” shall mean Adobe Systems Incorporated and its affiliates.

Adobe Litigation ” shall mean any and all litigation arising out of the actions before the United States District Court for the Northern District of Illinois (Case No. 02 C 6320 and Case No. 02 C 8256) brought by International Typeface Corporation and/or the Company against Adobe, including any compulsory counter-claims filed in connection with those two actions, but excluding any non-compulsory counter-claims.

Adobe Litigation Costs ” shall mean any and all third-party costs, expenses, disbursements and other amounts (including, without limitation, fees and expenses of counsel, consultants and experts) incurred in respect of the Adobe Litigation, and in the collection of any judgment or award associated therewith; provided , however , that it shall not include any retainers, or success fees and shall not include fees for counsel overseeing the litigation on behalf of any investors of the Company.

Adobe Litigation Expense Cap ” shall mean $4,000,000.


Adobe UK Arbitration ” shall mean the arbitration proceeding initiated by Adobe in London, England, against the Company and Agfa Monotype Ltd. and subject to the arbitrators ruling of June 28, 2004, including any counter-claims filed in connection with such arbitration.

Adobe UK Arbitration Costs ” shall mean (i) any and all third-party costs, expenses, disbursements and other amounts (including, without limitation, fees and expenses of counsel, consultants and experts) incurred in respect of the Adobe UK Arbitration and in the collection of any judgment or award associated therewith, (ii) any and all payments of any damages or awards associated with the Adobe UK Arbitration or (iii) any and all payments of any settlement, compromise, discharge or other resolution associated with the Adobe UK Arbitration.

Affiliate ” means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with such Person.

Affiliated Group ” means any affiliated group within the meaning of Section 1504(a) of the Code or any similar group defined under a similar provision of state, local or foreign law.

Ancillary Agreements ” means the Denmark Services Agreement, the Japan Type License Amendment, the Transition Services Agreement, the Patent License and the Trademark Agreement.

Anticipated Working Capital Amount ” means a deficit of US$2,400,000.00.

Balance Sheet ” means the unaudited consolidated balance sheet of the Company and its consolidated subsidiaries as of September 30, 2004 referred to in Section 3.09.

Balance Sheet Date ” means September 30, 2004.

Buyer’s Counsel ” means the law firm of Goodwin Procter LLP, Boston, Massachusetts.

Closing Balance Sheet ” means a consolidated balance sheet of the Company and its Subsidiaries as of 12:01 AM on November 1, 2004, together with the notes thereto, if any.

Closing Date ” means the date of the Closing.

Code ” means the Internal Revenue Code of 1986, as amended.

Common Stock ” means the common stock, $0.01 par value, of the Company.

Company’s Proprietary Rights ” means all Proprietary Rights that are owned or purported to be owned or licensed by the Company or any Subsidiary or used or held for use by the Company or any Subsidiary, including, without limitation, the typefaces and typeface names set forth on Schedule 1.01A .

 

2


Denmark Services Agreement ” means that agreement by and between the Company and Agfa-Gevaert A/S providing for the distribution of the Company’s and its subsidiaries’ Typefaces by an employee of such entity in Denmark and substantially in the form attached hereto as Exhibit A .

Environment ” shall mean any soil, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins and wetlands), groundwaters, drinking water supplies, sediments, surface or subsurface strata, real property, flora, fauna, ambient air (including indoor air), and any other environmental medium or natural resources.

Environmental Claim ” means any claim, action, cause of action or notice alleging potential liability (including potential liability for investigation costs, cleanup costs, response or remediation costs, natural resources damages, property damages, personal injuries, fines or penalties) under any Environmental Law, including any claim, action, cause of action or notice arising out of, based on or resulting from (a) the presence or Release of any Materials of Environmental Concern at any location, whether or not owned by that party or any of its Affiliates or (b) circumstances forming the basis of any violation, or alleged violation of any Environmental Law.

Environmental Laws ” shall mean any federal, state, and local law, statute, common-law standard, regulation, rule, ordinance, by-law, order or other binding decision of any governmental entity, whether existing on the date hereof, previously enforced, or subsequently enacted, regarding health, safety, natural resources, or the Environment, including, without limitation, laws relating to Release of Materials of Environmental Concern or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, Release, transport, disposal or handling of Materials of Environmental Concern. “Environmental Law” shall include, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §§9601 et seq .), the Hazardous Materials Transportation Act (49 U.S.C. §§180 et seq .), the Resource Conservation and Recovery Act (42 U.S.C. §§6901 et seq .), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq .), the Clean Air Act (42 U.S.C. §§ 7401 et seq .), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq .), the Oil Pollution Act (33 U.S.C. §§ 2701 et seq .), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. §§11001 et seq .), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), and all other state laws analogous to any of the above.

Environmental Permits ” shall mean any federal, state or local permit, license, registration, approval, consent or authorization required by any Governmental Authority under or in connection with any Environmental Law, and includes, without limitation, any and all orders, consent orders or binding agreements issued or entered into by a Governmental Authority under any applicable Environmental Law.

Excluded Matters ” means any one or more of the following effects, events or changes: (a) general changes in economic conditions or changes in the industry in which the Company does business except to the extent of such changes that have a materially disproportionate effect on the Company and the Subsidiaries taken as a whole in relation to other companies in the

 

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industry, (b) the effect of any change arising in connection with any “act of God” including, without limitation, weather, natural disasters and earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage, terrorism or military actions, (c) changes, effects or events resulting from or arising out of changes, effects or events caused by the taking of any action required or expressly permitted by this Agreement other than with respect to the public announcement of the transactions contemplated by or the terms of this Agreement, (d) the taking of any action by the Company that has been approved by the Buyer, (e) any change or effect resulting from a change in accounting rules or procedures announced by the Financial Accounting Standards Board or any other accounting body with authority to promulgate U.S. generally accepted accounting principles (“ GAAP ”), or (f) any effect, event or change resulting from a breach of this Agreement by Buyer.

HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Japan Type License Amendment ” means an amendment to that certain Type License Agreement by and between Agfa-Gevaert Japan and Agfa Monotype Corporation and dated as of November 1, 1995 and substantially in the form attached hereto as Exhibit B .

Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, restriction or encumbrance of any kind in respect of such asset.

Material Adverse Change ” means a material adverse change in the business, assets, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries taken as a whole other than as a result of Excluded Matters.

Material Adverse Effect ” means a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries taken as whole other than as a result of Excluded Matters.

Materials of Environmental Concern ” shall mean (a) any petrochemical or petroleum products, oil or coal ash, radon gas, asbestos or asbestos-containing material, PCBs or transformers or other equipment that contains PCBs, lead-based paint, or urea formaldehyde foam insulation, (b) any chemicals, materials, substances or wastes which are defined or regulated as “hazardous substances,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “hazardous wastes,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “ toxic air pollutants,” “pollutants,” “contaminants” or words of similar meaning and regulatory effect, including, without limitation, as the foregoing may be defined under any Environmental Law, (c) any toxic mold, mildew, or fungi, and (d) other chemicals, materials, wastes or substances, the exposure to or treatment, storage, transportation, disposal or Release of which is prohibited, limited or regulated by any Environmental Law.

 

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Minimum Net Operating Working Capital ” shall be determined by the Closing Date Balance Sheet, and shall mean the Company’s current assets (including Minimum Cash, cash and cash equivalents, accounts receivables and prepaid expenses but excluding deferred tax assets) minus the Company’s current liabilities (including accounts payable and accrued expenses but excluding deferred revenue and any liabilities relating to the Granite Systems earnout), each as set forth on the Closing Balance Sheet, each in accordance with GAAP and accounting policies and practices on or prior to the Closing Date; provided , however , that for purposes of the definition of “Minimum Net Operating Working Capital” the Company’s current assets and liabilities shall not include any Tax receivables relating to Tax refunds or credits of pre-closing Taxes contemplated in section 10.05 of this Agreement or liabilities for any Taxes. For purposes of determining the Minimum Net Operating Working Capital, (i) the Company’s liability for LIC shall be US$3,700,000, (ii) the Company’s liability for payments under the Transaction Bonus Plan shall be US$0 (iii) the intercompany settlement and Closing Dividend provided for in Schedule 6.04 , shall be treated as having occurred on October 31, 2004, (vi) the payment to Adobe of $1,834,500 in settlement of certain matters in connection with the Adobe UK Arbitration shall be treated as having occurred on October 31, 2004 and (v) the Company’s liability for Adobe Litigation Costs and Adobe UK Arbitration Costs shall be US$0. For avoidance of doubt and by way of example, the attached Schedule 1.01B sets forth a calculation of Minimum Net Operating Working Capital determined in accordance with the foregoing definition.

Minimum Cash ” means US$1,000,000.00 in cash.

Note Termination Agreement ” means that certain Mutual Termination and Release Agreement between the Company and Parent terminating the intercompany promissory notes and substantially in the form attached hereto as Exhibit C .

Person ” means an individual, corporation, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

Products ” means those consumer device fonts and technologies, independent software vendor fonts, printer fonts, software drivers for printer manufacturers, printer color tools and other products and/or services and related documentation designed, manufactured, marketed, sold and/or distributed by the Company and/or any Subsidiary.

Proprietary Rights ” means all (A) patents, patent applications, inventions, discoveries, patent disclosures and all related continuation, continuation-in-part, divisional, reissue, re-examination, utility, model, certificate of invention and design patents, patent applications, registrations and applications for registrations, (B) trademarks, service marks, trade dress, logos, tradenames, service names and corporate names and registrations and applications for registration of any of the foregoing, (C) copyrights and registrations and applications for registration thereof, (D) mask works and registrations and applications for registration thereof, (E) computer software, data and documentation, (F) trade secrets and confidential business information, whether patentable or nonpatentable and whether or not reduced to practice, know-how,

 

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manufacturing and product processes and techniques, research and development information, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information (collectively, “ Trade Secrets ”), (G) domain name registrations, (H) other proprietary rights relating to any of the foregoing (including without limitation associated goodwill and remedies against infringements thereof and rights of protection of an interest therein under the laws of all jurisdictions) and (I) copies and tangible embodiments thereof.

Release ” means any actual or threatened release, spill, leak, pumping, pouring, emission, emptying, injecting, leaching, dumping, migration, seepage, discharge, disposal, or allowing to escape into or through the Environment.

Seller’s Counsel ” means the law firm of Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.

Subsidiary ” means any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are owned directly or indirectly by the Company.

Transition Services Agreement ” means a transition services agreement by and between Seller and the Company substantially in the form attached hereto as Exhibit D .

Working Capital Shortfall ” means the amount by which the Anticipated Working Capital Amount exceeds Minimum Net Operating Working Capital.

(b) Each of the following terms is defined in the Section set forth opposite such term:

 

Term

  

Section

Access    2.03
Additional Payment    8.06
Adobe Damages    8.06
Adobe Damages Cap    8.06
Adobe Recovery    8.06
Aggrieved Party    12.03
Allocation Schedule    10.07
AML    7.03
Audited Financial Statements    3.06
Benefit Arrangement    9.01
Buyer    Recitals
Buyer Qualifying Claim    12.02
Closing    2.02
Closing Dividend    6.04
Company    Recitals
Company Entities    8.04

 

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Term

  

Section

Company Offer    6.05
Company Securities    3.04
Company Trade Secrets    3.15
Damages    12.02
Disagreement    14.10
Disclosure Schedules    3.00
Eligible Employees    8.06
Employee Plan    9.01
ERISA    9.01
ERISA Affiliate    9.01
Filings    14.05
Financial Statements    3.06
Font Business    6.05
Forms    10.07
GAAP    1.01
Indemnified Parties    7.04
Indemnifying Party    12.03
LIC    2.01
Major Customers    3.20
Multiemployer Plan    9.01
Negotiation Period    6.05
Net Intercompany Balance    6.04
Patent License    7.03
Permit    3.13
Printer Driver Business    6.05
Purchase Price    2.01
Records    2.03
Required Consents    3.02
Right of First Offer    6.05
Section 338(h)(10) Election    10.07
Seller    Recitals
Seller Entities    8.04
Seller Notice    6.05
Seller Response    6.05
Seller Qualifying Claim    12.02
Shares    Recitals
Subsidiary Securities    3.05
Tax    3.16
Tax Return    3.16
TBP Employees    8.05
TBP Payment    8.05
Third Party Offer    6.05
Third Party Rights    3.15
Trademark Agreement    7.03
Trade Secrets    1.01
Transaction Bonus Notes    8.05
Transaction Bonus Plan    8.05
Unaudited Financial Statements    3.06
Upside    8.06

 

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ARTICLE II

PURCHASE AND SALE

2.01. Purchase and Sale . Upon the terms and subject to the conditions of this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from Seller, at the Closing, the Shares. The purchase price for the Shares is US$194,000,000 in the aggregate and consisting of US$164,729,612 in cash plus assumption of obligations under the Transaction Bonus Notes in an amount not to exceed US$23,796,000 as set forth in Section 8.05 (plus US$474,388 relating to the Company’s portion of employment taxes relating to the Transaction Bonus Notes), assumption of obligations in an amount not to exceed US$3,700,000 relating to amounts owed under the Company’s Long-Term Incentive Compensation Plan (the “ LIC ”) and assumption of obligations in an amount not to exceed US$1,300,000 relating to amounts expected to be earned in connection with the Granite Systems earnout arrangement (in the aggregate, the “ Purchase Price ”), subject to adjustment as set forth in Section 2.04. The Purchase Price shall be paid as provided in Section 2.02.

2.02. Closing . The closing (the “ Closing ”) of the purchase and sale of the Shares hereunder shall take place at the offices of Goodwin Proctor LLP in Boston, MA on November 5, 2004, or at such other time thereafter or place as Buyer and Seller may agree, but in no event prior to the expiration of the waiting period under the HSR Act (November 1, 2004, 11:59 p.m. Boston time). At the Closing:

(i) Buyer shall deliver to Seller an amount equal to US$164,729,612, in immediately available funds by wire transfer to an account of Seller, such account to be designated by the Seller by written notice to Buyer not later than two business days prior to the Closing Date.

(ii) Seller shall deliver to Buyer certificates for the Shares duly endorsed or accompanied by stock powers duly endorsed in blank, with any required transfer stamps affixed thereto.

(iii) Seller shall deliver the original corporate record books and stock record books of the Company and each wholly-owned Subsidiary and the stock certificates and investment documents in connection with the Company’s investments.

(iv) The appropriate parties shall execute and deliver the Ancillary Agreements.

 

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(v) The parties shall execute and deliver, and shall cause the other parties thereto to execute and deliver, any other instruments, documents and certificates that are required to be delivered pursuant to this Agreement or as may be reasonably requested by any party in order to consummate the transactions contemplated by this Agreement.

2.03. Closing Balance Sheet .

(i) Within 90 days of the Closing Date, Buyer (itself or through a firm of independent public accountants designated by Buyer) shall in good faith prepare and deliver to Seller (a) the Closing Balance Sheet reflecting all balance sheet items of the Company as of 12:01 AM on the Closing Date, without giving effect to any of the transactions contemplated by this Agreement or any of the Ancillary Agreements (other than the Closing Dividend provided for in Section 6.04) and (b) a reasonably detailed calculation of Minimum Net Operating Working Capital as of the Closing Date. The Closing Balance Sheet shall (x) fairly present the consolidated financial position of the Company and its consolidated subsidiaries as of 12:01 AM on the Closing Date in accordance with GAAP and (y) be prepared in accordance with accounting policies and practices used by the Company on or prior to the Closing and set forth on Schedule 2.03 . Upon request of Seller which request shall be made within 45 days of receipt of the Closing Balance Sheet, the Buyer shall, within 30 days of such request, provide (a) Seller with such additional information, documents, records and the like (the “ Records ”) and (b) Seller and its advisors and representatives access to Company personnel and Records (the “ Access ”) as is reasonably necessary in order for Seller (and its accountants and advisors) to evaluate Buyer’s calculation of Minimum Net Operating Working Capital.

(ii) If Seller disagrees with Buyer’s calculation of Minimum Net Operating Working Capital delivered pursuant to Section 2.03(i), Seller may, within 45 days after delivery and/or provision of all Records and/or Access, respectively, requested by Seller within the 45-day period referred to in Section 2.03(i), deliver a notice to Buyer disagreeing with such calculation and setting forth in reasonable detail the reasons for disagreement and Seller’s calculation of such amount. Any such notice of disagreement shall specify those items or amounts as to which Seller disagrees, and Seller shall be deemed to have agreed with all other items and amounts contained in the Closing Balance Sheet and the calculation of Minimum Net Operating Working Capital delivered pursuant to Section 2.03(i).

(iii) If a notice of disagreement shall be duly delivered by Seller to Buyer pursuant to Section 2.03(ii), the parties shall, during the 45 days following such delivery, use their best efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of Minimum Net Operating Working Capital, which amount shall not be less than the amount thereof shown in Buyer’s calculations delivered pursuant to Section 2.03(i), nor more than the amount thereof shown in Seller’s calculation delivered pursuant to Section 2.03(ii). If, after such 45-day period, the parties are unable to reach such agreement, either Buyer or Seller may thereafter cause an independent accounting firm of internationally recognized standing reasonably satisfactory to Seller and Buyer (who shall not have any material relationship with the Seller, the Company, or the Buyer or any other of their Affiliates), promptly

 

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to review this Agreement and the disputed items or amounts for the purpose of calculating Minimum Net Operating Working Capital. In making such calculation, such independent accountants shall consider only those items or amounts in the Closing Balance Sheet or Buyer’s calculation of Minimum Net Operating Working Capital as to which Seller has disagreed. Such independent accountants shall provide such calculation of Minimum Net Operating Working Capital in accordance with GAAP and the accounting policies and practices used by the Company on or prior to the Closing and set forth on Schedule 2.03 . Correspondence with the independent accountant shall be in writing, with a copy to the Seller or Buyer, as applicable. If correspondence is verbal, both of Seller and Buyer or their representatives must be present during such verbal discussions. Such independent accountants shall deliver to Seller and Buyer, as promptly as practicable, a report in reasonable detail setting forth such calculation. Such report shall be final and binding upon the parties hereto. The cost of such review and report shall be borne (a) by Buyer if the Minimum Net Operating Working Capital as determined by the independent accountant is not revised in favor of the Seller, (b) by Seller if the Minimum Net Operating Working Capital as determined by the independent accountant is revised in favor of Seller and (c) otherwise equally by Seller and Buyer.

(iv) The parties hereto agree that they will, and agree to cause their respective independent accountants and the Company to cooperate and assist in the preparation of the Closing Balance Sheet and the calculation of Minimum Net Operating Working Capital and in the conduct of the reviews referred to in this Section 2.03, including without limitation the making available to the extent necessary of books, records, work papers and personnel.

2.04. Purchase Price Adjustment .

(i) If, based on the Closing Balance Sheet (as agreed to following resolution of any disagreement pursuant to Section 2.03 above), there is a Working Capital Shortfall, Seller shall refund from the Purchase Price paid by Buyer to Seller at the Closing the amount of such Working Capital Shortfall. Any such refund pursuant to this Section 2.04(i) shall be made at a mutually convenient time and place (a) within 45 days after the Buyer’s delivery and/or provision of all of the Records and/or Access, respectively, requested by Seller within the 45-day period referred to in Section 2.03(i), if no notice of disagreement with respect to Minimum Net Operating Working Capital is duly delivered pursuant to Section 2.03(ii) or (b) if a notice of disagreement with respect to Minimum Net Operating Working Capital is duly delivered pursuant to Section 2.03(ii) above, then within five (5) business days after the earlier of (1) agreement between the parties pursuant to Section 2.03(iii) with respect to the calculations of Minimum Net Operating Working Capital and (2) delivery of the calculation of Minimum Net Operating Working Capital by the independent accountants referred to in Section 2.03(iii).

(ii) Method and Nature of Payment . Any such refund to Buyer to be made pursuant to this Section 2.04 shall be made by Seller via wire transfer, certified check or official bank check payable in immediately available funds to Buyer as may be designated at such time by Buyer. Any such refund made in accordance with this Section 2.04 shall be deemed an adjustment to the Purchase Price.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES RELATING TO

THE COMPANY

Except as disclosed on the disclosure schedules attached hereto as Exhibit E (the “ Disclosure Schedules ”), such Disclosure Schedules to be arranged in sections to correspond to the sections of Articles III and IV and all information disclosed therein to be deemed to be disclosed under and incorporated into any section therein where the applicability of such disclosure would be reasonably apparent, the Seller and the Company hereby represent and warrant to Buyer as of the date hereof and as of the Closing Date that:

3.01. Corporate Existence and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. The Company has made available to Buyer or Buyer’s Counsel true and complete copies of the corporate charter and bylaws of the Company and each Subsidiary as currently in effect.

3.02. Consents . Except as otherwise set forth in Section 3.02, no consent, approval, waiver or other action by any Person (other than in connection with compliance with any applicable requirements of the HSR Act) under any material contract, agreement, indenture, lease, instrument or other document to which the Company or any Subsidiary is a party or by which any of them is bound is required or necessary for the execution, delivery and performance of this Agreement by the Seller or the consummation of the transactions contemplated hereby. Each of the consents identified on Schedule 3.02 under the heading “Required Consents” shall be referred to herein as the “ Required Consents. ” The Buyer and Seller agree to, as soon as practicable after the Closing, assign the Japan Agreements (as defined on Schedule 3.02 of the Disclosure Schedule) to the Company pursuant to the form of Assignment and Assumption to be entered into by and between Agfa-Gevaert Japan, Limited and the Company with such form attached hereto as Exhibit F , subject to the written consent of the third party prior to such assignments, where required. The Buyer and Seller hereby acknowledge and agree that such assignment to the Company of the Japan Agreements shall be governed by the Japan Type License Amendment.

3.03. Non-Contravention . The execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene or conflict with the corporate charter or bylaws of the Company or any Subsidiary, (ii) assuming compliance with any applicable requirements of the HSR Act referred to in Section 4.03, contravene or conflict with any provision of any law, regulation, judgment,

 

11


injunction, order or decree binding upon or applicable to the Company or any Subsidiary; (iii) assuming the receipt of all Required Consents, constitute a default under or give rise to any right of termination, cancellation or acceleration of any material right or obligation of the Company or any Subsidiary or to a loss of any material benefit to which the Company or any Subsidiary is entitled under any provision of any agreement, contract or other instrument binding upon the Company or any Subsidiary or any material permit held by the Company or any Subsidiary or (iv) assuming the receipt of all Required Consents result in the creation or imposition of any material Lien on any asset of the Company or any Subsidiary.

3.04. Capitalization . Immediately prior to the Closing, the authorized capital stock of the Company consists of one thousand (1,000) shares of Common Stock. As of the date hereof and prior to the Closing, one thousand (1,000) shares of Common Stock are issued and outstanding. There are no agreements or understandings to which Seller or the Company is a party, or which are in existence, with respect to the transfer, ownership, sale or voting of the Shares and no shares of capital stock of the Company are reserved for issuance. Except as set forth in this Section, as of the date hereof, there are no outstanding (i) shares of capital stock, other securities or any other equity interests of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or other securities of the Company or (iii) options or other rights to acquire from the Company any capital stock, other securities or any other equity interests of the Company (the items in clauses (i), (ii) and (iii) being referred to collectively as the “ Company Securities ”). There are no other obligations of the Company, actual or contingent, to issue or deliver or to repurchase, redeem or otherwise acquire any Company Securities. All outstanding shares of the Company’s capital stock are duly authorized, validly issued, fully paid, nonassessable and are shown as the Company’s stockholders of record on the stock books of the Company. Except as contemplated in Section 6.04 or as set forth on Schedule 3.04 , there no declared or accrued but unpaid dividends with respect to any shares of the Company Common Stock.

3.05. Subsidiaries . (a) Except as set forth on Schedule 3.05 , the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any equity or similar interest in, any Person.

(b) Each Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities make such qualification necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. The names of all Subsidiaries, the number and type of outstanding equity interest of each Subsidiary a list of the beneficial and record holders of each Subsidiary, and their respective jurisdictions of incorporation are identified on Schedule 3.05 .

(c) All of the outstanding capital stock of, or other ownership interests in, each Subsidiary, is owned by the Company, directly or indirectly, free and clear of any Lien and free

 

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of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests). There are no outstanding (i) securities of the Company or any Subsidiary convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any Subsidiary or (ii) options or other rights to acquire from the Company or any Subsidiary to issue, any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable for any capital stock, voting securities or ownership interests in, any Subsidiary (the items in clauses (i) and (ii) being referred to collectively as the “ Subsidiary Securities ”). There are no outstanding obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities. There are no declared or accrued but unpaid dividends with respect to any shares of the capital stock of any Subsidiary.

3.06. Financial Statements . (a) The Seller has attached hereto as Schedule 3.06 and has previously furnished Buyer with true and complete copies of:

(i) the audited consolidated balance sheets of the Company and its Subsidiaries as of December 31, 2003 and December 31, 2002, the audited consolidated statements of operations, the audited consolidated statements of changes in stockholders equity and the audited consolidated statements of cash flows, of the Company and its Subsidiaries for the years ended December 31, 2003 and December 31, 2002 (the “ Audited Financial Statements ”); and

(ii) the unaudited consolidated balance sheets and statement of operations of the Company and its Subsidiaries as of and for the nine-month period ended September 30, 2004 (“ Unaudited Financial Statements ” and together with the Audited Financial Statements, the “ Financial Statements ”).

(b) Each of the balance sheets included in the Financial Statements fairly presents in all material respects the consolidated financial position of the Company and its Subsidiaries as of its date, and the other statements included in the Financial Statements fairly present in all material respects the consolidated results of operations, changes in stockholders’ equity and cash flows, as the case may be, of the Company and its Subsidiaries for the periods therein set forth, in each case in accordance with GAAP consistently applied during the periods involved except as otherwise stated therein and, in the case of the Unaudited Financial Statements, for the omission of footnote disclosures and to the extent consistent with GAAP, normally occurring year-end adjustments.

3.07. No Undisclosed Material Liabilities . Neither the Company nor any Subsidiary has any liabilities of any nature, whether accrued, unaccrued, absolute, contingent, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances that could reasonably be expected to result in such a liability, other than (a) as listed on Schedule 3.07 , (b) liabilities disclosed or provided for in the Financial Statements and (c) liabilities that have arisen in the usual, regular and ordinary course of business consistent with past practices since the Balance Sheet Date, none of which individually or in the aggregate has resulted or would result in a Material Adverse Effect.

 

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3.08. Absence of Certain Changes . Since the Balance Sheet Date, except as reflected in the Financial Statements or in Schedule 3.08 , the Company and the Subsidiaries have conducted their businesses in the ordinary course consistent with past practices and there has not been:

(a) except as otherwise provided in Section 6.04, any declaration, setting aside or payment of any dividend or other distribution with respect to any Company Securities or any repurchase, redemption or other acquisition by the Company or any Subsidiary of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or any Subsidiary;

(b) any amendment of any outstanding security of the Company or any Subsidiary;

(c) any incurrence, assumption or guarantee by the Company or any Subsidiary of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practices;

(d) any creation or assumption by the Company or any Subsidiary of any Lien on any asset;

(e) any making of any loan, advance or capital contributions to or investment in any Person other than loans, advances or capital contributions to or investments in wholly-owned Subsidiaries and other than loans or advances to Seller, all made in the ordinary course of business consistent with past practices;

(f) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of the Company or any Subsidiary that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect;

(g) any transaction or commitment made, or any contract or agreement entered into, by the Company or any Subsidiary relating to its assets or business (including the acquisition or disposition of any assets) or any relinquishment by the Company or any Subsidiary of any contract or other right, in either case, material to the Company and the Subsidiaries taken as a whole, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement;

(h) any (i) grant of any severance or termination pay to any director, officer or employee of the Company or any Subsidiary, (ii) entering into of any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, officer or employee of the Company or any Subsidiary, (iii) change in benefits payable under existing severance or termination pay

 

14


policies of the Company or any Subsidiary or employment agreements to which the Company or any Subsidiary is a party or (iv) change in compensation, bonus or other benefits payable to directors, officers or employees of the Company or any Subsidiary, other than in the ordinary course of business and consistent with past practice;

(i) any claim of wrongful discharge or labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representation thereof to organize any employees of the Company or any Subsidiary, which employees were not subject to a collective bargaining agreement at the Balance Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to any employees of the Company or any Subsidiary;

(j) any waiver or release of any right or claim of the Company or any Subsidiary, including any write-off or other compromise of any account receivable of the Company or any Subsidiary except where such amounts do not in the aggregate exceed $150,000 or otherwise in the ordinary course of business and consistent with past practices;

(k) any sale by the Company or any Subsidiary of any Proprietary Rights or the entering into of any license agreement, distribution agreement, reseller agreement or original equipment manufacturer (OEM) agreement by the Company or any Subsidiary (other than agreements entered into by the Company or any Subsidiary where such agreements provide for annual payments of not more than $400,000 or otherwise in the ordinary course of business consistent with past practices) with respect to any Proprietary Rights; or

(l) any agreement by the Company or any Subsidiary to do any of the things described in the preceding clauses (a) through (k).

3.09. Property and Equipment . (a) The Company and the Subsidiaries have good and marketable title to, or in the case of leased property have valid leasehold interests in, all personal property and assets (whether real or personal, tangible or intangible) reflected on the Balance Sheet or acquired after the Balance Sheet Date, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business consistent with past practices. None of such properties or assets is subject to any Liens, except:

(i) Liens disclosed on the Balance Sheet;

(ii) Liens for ad valorem Taxes not yet due and payable (and for which adequate accruals or reserves have been established on the Balance Sheet); or

(iii) Liens that, individually or in the aggregate, do not materially detract from the value of such property or assets as now used, or materially interfere with any present or intended use of such property or assets.

 

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(b) The assets owned, leased or licensed by the Company and the Subsidiaries, or which it otherwise has the right to use, constitute all of the assets held for use or used in connection with the business of the Company and the Subsidiaries.

3.10. Litigation . Except as set forth on the Disclosure Schedules, there is no action, suit, investigation or proceeding pending against, or, to the knowledge of the Seller or the Company, threatened against, relating to or affecting, the Company or any Subsidiary or any of their respective properties or the transactions contemplated hereby before any court or arbitrator or any governmental body, agency, official or authority.

3.11. Material Contracts . Except for agreements, contracts, plans, leases, arrangements or commitments disclosed in Schedule 3.11 or any other schedule to this Agreement, as of the date of this Agreement neither the Company nor any Subsidiary is a party to or subject to:

(i) any lease providing for annual rentals of $150,000 or more;

(ii) any contract relating to indebtedness for borrowed money or the deferred purchase price of property (whether incurred, assumed, guaranteed or secured by any asset), except contracts relating to indebtedness incurred in the ordinary course of business in an amount not exceeding $250,000;

(iii) any contract for the purchase of materials, supplies, goods, services, equipment or other assets providing for annual payments by the Company or any Subsidiary of $200,000 or more;

(iv) any sales, distribution or other similar agreement providing for the sale by the Company or any Subsidiary of materials, supplies, goods, services, equipment or other assets providing for annual payments to the Company or any Subsidiary of $200,000 or more;

(v) any agency, dealer, sales representative or other similar agreement of $250,000 or more;

(vi) any employment agreement providing for annual payments or severance pay or post-employment liabilities or obligations of $150,000 or more;

(vii) any consulting agreement providing for annual payments of $150,000 or more;

(viii) any partnership, joint venture or other similar contract, arrangement or agreement;

(ix) any license agreement, franchise agreement or agreement in respect of similar rights granted to the Company or any Subsidiary providing for annual payments of $500,000 or more;

 

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(x) any license agreement, franchise agreement or agreement in respect of similar rights held by the Company or any Subsidiary providing for annual payments of $400,000 or more;

(xi) any contract or other document that limits the freedom of the Company or any Subsidiary to compete in any line of business or with any Person or in any area or which would so limit the freedom of the Company or any Subsidiary after the Closing Date;

(xii) any agreement of indemnification or guaranty other than customer agreements entered into in the ordinary course of business consistent with past practices;

(xiii) any mortgages, indentures, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit, other than extensions of trade credit on customary terms in customer agreements entered into in the ordinary course of business consistent with past practices;

(xiv) any agreement relating to the disposition or acquisition of assets or any interest in any business enterprise outside the ordinary course of business consistent with past practices;

(xv) any collective bargaining agreements; or

(xvi) any other contract or commitment not made in the ordinary course of business that is material to the Company and the Subsidiaries taken as a whole.

3.12. Insurance Coverage . The Seller has made available to Buyer a schedule of all insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors of the Company and the Subsidiaries. There is no claim by Seller relating to the Company or any Subsidiary pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums payable under all such policies and bonds have been paid and the Company and the Subsidiaries are otherwise in full compliance with the terms and conditions of all such policies and bonds. Such policies of insurance and bonds (or other policies and bonds providing substantially similar insurance coverage) have been in effect since three years and remain in full force and effect. Such policies of insurance and bonds are of the type and in amounts customarily carried by Persons conducting businesses similar to those of the Company and the Subsidiaries. Neither the Seller nor the Company knows of any threatened termination of, or material premium increase with respect to, any of such policies or bonds.

3.13. Compliance with Laws; No Defaults . (a) Neither the Company nor any Subsidiary is in violation of, or has violated, any applicable provisions of any laws, statutes, ordinances or regulations, except for violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

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(b) Schedule 3.13 correctly describes each license and permit (a “ Permit ”) material to the business of the Company, together with the name of the governmental agency or entity issuing such license or permit. Such licenses and permits are valid and in full force and effect, and none of such licenses or permits will be terminated or impaired or become terminable as a result of the transactions contemplated hereby.

(c) Neither the Company nor any Subsidiary is in default under, and no condition exists that with notice or lapse of time or both would constitute a default under, any judgment, order or injunction of any court, arbitrator or governmental body, agency, official or authority, which defaults or potential defaults individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.

3.14. Finder’s Fees . Except for Harris Williams & Co., whose fees will be paid by Seller and its Affiliates other than the Company, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Seller, the Company or any Subsidiary who might be entitled to any fee or commission from Seller, the Company or any of their respective Affiliates upon consummation of the transactions contemplated by this Agreement.

3.15. Intellectual Property . (a)  Schedule 3.15(a) includes a list of the Company’s Proprietary Rights, as follows: all United States and foreign (A) patent and patent applications, (B) registered and material unregistered trademarks and service marks and trademark and service mark applications, (C) registered and material unregistered copyrights and applications for copyright registration, (D) mask work registrations and applications to register mask works, and (E) any other such Proprietary Rights that is subject to an application to, or certificate or registration issued by, any state, government or other public legal authority, specifying as to each, as applicable: (i) the nature of such right; (ii) the owner of such right; (iii) the jurisdictions by or in which such right has been issued or registered or in which an application for such issuance or registration has been filed, including the respective registration or application numbers.

(b)(i) Except as set forth on Schedule 3.15(b) , neither the Company nor any Subsidiary during the four years preceding the date of this Agreement has been sued or charged in writing with or been a defendant in any claim, suit, action or proceeding relating to its business that has not been finally terminated prior to the date hereof and that involves a claim of infringement or misappropriation of any rights of others under any Proprietary Rights, including but not limited to, patents, trademarks, service marks or copyrights (“ Third Party Rights ”) and there are no such claims, suits, actions or proceedings pending or, to the knowledge of Seller and the Company, threatened, and (ii) neither the Seller nor Company has any knowledge of any other claim of infringement or misappropriation by the Company or any Subsidiary, and no knowledge of any continuing infringement or misappropriation by any other Person of any of the Company’s Proprietary Rights. Except as may be set forth in the license agreement where the Company is the licensee of such Proprietary Right, no Company Proprietary Right is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use thereof by the Company or any Subsidiary or restricting the licensing thereof by the Company or any Subsidiary to any Person.

 

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(c) The Company and each Subsidiary has taken reasonable security measures to protect the secrecy, confidentiality and value of all processes and formulae, research and development results and other know-how of the Company or any Subsidiary and any other Trade Secrets included in the Company Proprietary Rights, the value of which to the Company or such Subsidiary is or would have been contingent upon maintenance of the confidentiality thereof (collectively, “ Company Trade Secrets ”) including, without limitation, requiring each Company employee and consultant to execute a binding confidentiality agreement with the Company or a Subsidiary, copies or forms of which have been made available to Buyer or Buyer’s Counsel, and to the knowledge of the Seller and the Company, there has not been any breach by any such party to such confidentiality agreements.

(d) To the knowledge of the Company and the Seller, no third party has asserted any claim, or has any reasonable basis to assert any valid claim, against the Company or any Subsidiary with respect to (i) the continued employment by, or association with, the Company or any Subsidiary of any of the present officers, employees of or consultants to the Company or any Subsidiary or (ii) the use by the Company or any Subsidiary or any of such Persons in connection with their activities for or on behalf of the Company or any Subsidiary of any information which the Company or any Subsidiary or any of such Persons would be prohibited from using under any prior agreements or arrangements or any laws applicable to unfair competition, trade secrets or proprietary information.

(e) The Company or a Subsidiary exclusively owns all Company Proprietary Rights owned by or purportedly owned by Company or a Subsidiary or possesses adequate and enforceable rights to use all Company Proprietary Rights licensed to Company in a manner sufficient for the conduct of its business free and clear of any Liens (other than pursuant to the terms of the license agreements).

(f) Except as set forth on Schedule 3.15(f) , all patents, patent applications, trademarks, service marks and copyrights owned or purported to be owned by the Company or a Subsidiary which have been issued by, or registered or the subject of an application filed with, as applicable, the U.S. Patent and Trademark Office, the U.S. Copyright Office or in any similar office or agency anywhere in the world are enforceable, have been duly maintained (including the payment of maintenance fees), are not expired, cancelled or abandoned and, to Company or the Seller’s knowledge, are valid.

(g) Neither the operation of the Company’s business as currently conducted nor any Company Proprietary Right infringes or conflicts with any Third Party Right, other than the rights of any Person under any patent, and to the knowledge of the Company and the Seller, neither the operation of the Company’s business as currently conducted nor any Company’s Proprietary Rights infringes or violates the rights of any Person under any patent.

 

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(h) No current or former employee or consultant of the Company or any Subsidiary owns any rights in or to any of the Company’s Proprietary Rights.

(i) The Company’s Products perform in accordance with their documented specifications and as the Company and any Subsidiary has warranted to its customers, except to the extent any such failure to so perform would not reasonably be expected to have a Material Adverse Effect.

(j) Neither the Company nor any Subsidiary has embedded any open source, copyleft or community source code in any of its Products which are generally available or in development, including but not limited to any libraries or code licensed under the GNU General Public License, GNU Lesser General Public License or similar license arrangement.

3.16. Taxes . Except as set forth in Schedule 3.16 :

(a) The Company and its Subsidiaries have filed all Tax Returns that they have been required to file with respect to the Company and its Subsidiaries and have paid all Taxes owed with respect to the Company and its Subsidiaries.

(b) Neither the Company nor any of its Subsidiaries is a party to any agreement, contract, arrangement, or plan that has resulted or would result, separately or in the aggregate, in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code (or any corresponding provision of state, local or foreign law). Neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(c) The Seller has filed a consolidated federal income Tax Return with the Company and its Subsidiaries for the taxable year immediately preceding the current taxable year, and the Company and its Subsidiaries are, and will be through the Closing Date, members of the consolidated group (as defined in Treasury Regulation Section 1.1502-1(h)) of which Seller is the common parent.

(d) To the knowledge of the Company and the Seller, there is no action, suit, proceeding, investigation, audit, extensions of statutes of limitation or claim now pending or asserted that relates to Tax liabilities of the Company or any of its Subsidiaries.

(e) The Company and its Subsidiaries have withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party. The Company and its Subsidiaries have not withheld or paid any Taxes with respect to the Transaction Bonus Notes and/or the TBP Payment.

(f) None of the Company and its Subsidiaries has any liability for the Taxes of any Person other than the Company and its Subsidiaries and Seller and any other members of the Affiliated Group of which Seller is the common parent under Treas. Reg. §1.1502-6 (or any similar provision of state, local or foreign law).

 

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(g) The Affiliated Group of which Seller is the common parent has filed all Tax Returns that it was required to file for each taxable period during which any of the Company and its Subsidiaries was a member of such Affiliated Group and has paid all Taxes owed with respect to such Affiliated Group.

(h) “ Tax ” or, collectively, “ Taxes ,” means any and all federal, state, local and foreign taxes, including but not limited to income, gross receipts, profits, sales, use, value added, ad valorem, transfer, franchise, withholding, estimated, payroll, employment, excise, capital, lease, service, license, severance, stamp, occupation, premium, environmental, windfall profit and property taxes, together with all interest, penalties and additions imposed with respect to such amounts.

(i) “ Tax Returns ” means all returns, declarations, reports, claims for refund, information statements and other documents relating to Taxes, including all schedules and attachments thereto, and including all amendments thereof, and the term “ Tax Return ” means any one of the foregoing Tax Returns.

(j) There are no liens for Taxes (other than for Taxes not yet due and payable) on the assets of the Company and its Subsidiaries.

(k) Neither the Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

3.17. Employees . Schedule 3.17 sets forth a true and complete list of (a) the names, titles, annual salaries and other compensations of all employees of the Company and the Subsidiaries as of September 15, 2004 . None of such employees and no other key employee of the Company or a Subsidiary has indicated to the Company or Seller that he or she intends to resign or retire as a result of the transactions contemplated by this Agreement or otherwise.

3.18. Transactions with Affiliates . Except as set forth on Schedule 3.18 , there are no loans, leases, license agreements, royalty agreements or other continuing transactions between the Company and Seller, or the Company and any Affiliate of Seller. To the knowledge of the Company and the Seller, none of the officers or directors of the Company or Seller (a) has any material direct or indirect interest in any entity that does business with the Company; (b) has any direct or indirect interest in any property, asset or right that is used by the Company in the conduct of its business; or (c) has any contractual relationship with the Company other than such relationships that results solely from being an officer, director or stockholder of the Company. No director, officer or other employee of the Company or any Subsidiary is seeking indemnification from the Company or any Subsidiary, and to the knowledge of the Seller and the Company, no such claim for indemnification has been threatened.

3.19. Environmental Matters . (a) The Company and the Subsidiaries have been in compliance, and presently are in compliance in all material respects with all applicable

 

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Environmental Laws (which compliance includes the possession by the Company and each Subsidiary of all Environmental Permits, and compliance with the terms and conditions thereof). The Company and the Subsidiaries have not received any communication that alleges that the Company or any Subsidiary is not in compliance in any respect with all applicable Environmental Laws. To the knowledge of the Seller, there are no circumstances that may prevent, and there are no circumstances specific to the Company or any Subsidiary that may interfere with, compliance by the Company or the Subsidiaries in the future with all applicable Environmental Laws. The management, handling, storage, transportation, treatment, and disposal by the Company and the Subsidiaries of all Materials of Environmental Concern have been in compliance in all material respects with all applicable Environmental Laws. All Environmental Permits currently held by the Company or any Subsidiary are in full force and effect and no appeal or any other proceeding is pending to modify or revoke any such Environmental Permit.

(b) There is no Environmental Claim pending or, to the knowledge of the Seller, threatened against or involving the Company or any Subsidiary or, to the knowledge of the Seller, against any Person whose liability for any Environmental Claim the Company or any Subsidiary has or may have retained or assumed, or which may be attributed to the Company or any Subsidiary, either contractually or by operation of law.

(c) To the knowledge of the Seller, there are no past or present actions or activities by the Seller, the Company or any Subsidiary, or any past or present circumstances, conditions, events or incidents, including, without limitation, the storage, treatment, Release, arrangement for disposal or presence of any Materials of Environmental Concern, that reasonably could: (i) result in liability for the Company or any Subsidiary under Environmental Laws; or (ii) form the basis of any Environmental Claim against the Company or any Subsidiary, or against any Person whose liability for any Environmental Claim the Company or any Subsidiary may have retained or assumed, or which may be attributed to the Company or any Subsidiary, either contractually or by operation of law.

(d) The execution, delivery and performance by Seller of this Agreement do not require any notice to or consent or approval of any governmental authority under Environmental Laws and will not trigger any requirements of notice, investigation, remediation, reporting, consent, or approval under any Environmental Laws.

3.20. Customers . Schedule 3.20 sets forth a list of all customers of the Company who accounted for in excess of $1,000,000 of the Company’s consolidated sales in one or more of the Company’s three (3) fiscal years ending December 31, 2003 and in the nine months ended September 30, 2004 (the “ Major Customers ”). Except as set forth on Schedule 3.20 , since December 31, 2000, no such Major Customer has cancelled or terminated such customer’s relationship with the Company or any Subsidiary or notified the Company or any Subsidiary in writing that it intends to terminate or materially change its relationship with the Company or such Subsidiary, except where such change would not have a Material Adverse Effect.

3.21. Disclosure . The representations and warranties made or contained in this Agreement, the Schedules and exhibits hereto and the certificates and statements executed or

 

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delivered in connection herewith do not contain any untrue statement of a material fact required to be stated herein or therein or necessary in order to make such representations, warranties or other material not misleading in the light of the circumstances in which they were made or delivered.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

RELATING TO SELLER

Seller hereby represents and warrants to Buyer that:

4.01. Organization and Existence . Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.

4.02. Corporate Authorization . The execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements to which Seller is a party and the consummation by Seller of the transactions contemplated hereby and thereby are within the corporate powers of Seller and have been duly authorized by all necessary corporate action on the part of Seller. This Agreement and the Ancillary Agreements to which Seller is a party have been duly executed and delivered by Seller, as the case may be, and constitute valid and binding agreements of Seller, enforceable in accordance with their terms.

4.03. Governmental Authorization; Consents . The execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements to which Seller is a party require no action by or in respect of, or filing with, any governmental body, agency, official or authority other than compliance with any applicable requirements of the HSR Act. No consent, approval waiver or other action by any other Person (other than any governmental body, agency, official or authority referred to above) under any material contract, agreement, indenture, lease, instrument or other document to which the Seller is a party or by which it is bound is required or necessary for the execution, delivery, and performance of this Agreement by the Seller or the consummation of the transactions contemplated hereby.

4.04. Non-Contravention . The execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements to which Seller is a party and the consummation by Seller of the transactions contemplated hereby and thereby do not and will not (i) contravene or conflict with the corporate charter or bylaws of Seller or (ii) assuming compliance with the matters referred to in Section 4.03, contravene or conflict with any provision of any law, regulation, judgment, injunction, order, decree, agreement or instrument binding upon or applicable to Seller.

 

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4.05. Title to and Validity of Shares . Seller now has, and on the Closing Date will have, good and marketable title to and unrestricted power to vote and sell the Shares, free and clear of any Lien and, upon purchase and payment therefor and delivery to Buyer thereof in accordance with the terms of this Agreement, Buyer will obtain good and marketable title to such Shares free and clear of any Lien. All Shares owned by Seller, beneficially and of record, have been duly authorized and validly issued and are fully paid and non-assessable. All Shares to be sold by Seller are registered in the name of Seller.

4.06. Litigation . There is no action, suit, investigation or proceeding pending against, or to the knowledge of Seller threatened against or affecting, Seller before any court or arbitrator or any governmental body, agency or official that in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated hereby.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as of the date hereof and as of the Closing Date that:

5.01. Organization and Existence . Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and have all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on their business as now conducted. Buyer is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. Buyer has heretofore delivered to Seller true and complete copies of the corporate charter and bylaws of Buyer as currently in effect.

5.02. Corporate Authorization . The execution, delivery and performance by each of Buyer of this Agreement and the Ancillary Agreements to which Buyer is a party and the consummation by Buyer of the transactions contemplated hereby and thereby are within the corporate powers of and have been duly authorized by all necessary corporate action on the part of Buyer. This Agreement and the Ancillary Agreements to which Buyer is a party have been duly executed and delivered by Buyer, as the case may be and constitute valid and binding agreements of Buyer enforceable in accordance with their terms.

5.03. Governmental Authorization; Consents . The execution, delivery and performance by Buyer of this Agreement and the Ancillary Agreements to which each is a party require no action by or in respect of, or filing with, any governmental body, agency, official or authority other than compliance with any applicable requirements of the HSR Act. No consent, approval, waiver or other action by any Person (other than any governmental body, agency, official or authority referred to above) under any material contract, agreement, indenture, lease,

 

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instrument or other document to which Buyer is a party or by which either is bound is required or necessary for the execution, delivery and performance of this Agreement by Buyer or the consummation of the transactions contemplated hereby.

5.04. Non-Contravention . The execution, delivery and performance by Buyer of this Agreement and the Ancillary Agreements to which Buyer is a party and the consummation by Buyer of the transactions contemplated hereby and thereby do not and will not (i) contravene or conflict with the corporate charter or bylaws of Buyer, (ii) assuming compliance with the matters referred to in Section 5.03, contravene or conflict with any provision of any law, regulation, judgment, injunction, order, decree, agreement or instrument binding upon or applicable to Buyer, or (iii) constitute a default under or give rise to any right of termination, cancellation or acceleration of any material right or obligation of the Buyer or any subsidiary thereof or to a loss of any material benefit to which Buyer or any subsidiary thereof is entitled under any provision of any agreement, contract or other instrument binding upon Buyer or any subsidiary thereof or any material permit held by Buyer or any subsidiary thereof or (iv) result in the creation or imposition of any material Lien on any asset of the Company or any subsidiary thereof.

5.05. Finders’ Fees . There is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Buyer who might be entitled to any fee or commission from Buyer or any Affiliate thereof upon consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

5.06. Financing . Buyer has sufficient funds available to purchase the Shares.

5.07. Purchase for Investment . Buyer is purchasing the Shares for investment for its own account and not with a view to, or for sale in connection with, any distribution thereof.

5.08. Litigation . There is no action, suit, investigation or proceeding pending against, or to the knowledge of Buyer threatened against or affecting, Buyer or any subsidiary thereof or any of their respective properties on the transactions hereof before any court or arbitrator or any governmental body, agency or official or authority or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated hereby.

5.09. Inspections . Buyer is an informed and sophisticated purchaser, and has engaged expert advisors, experienced in the evaluation and purchase of companies such as the Company as contemplated hereunder. Buyer has undertaken such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement and the Ancillary Agreements. Buyer agrees to accept the Shares and the Company as they exist on the Closing Date based upon its own inspection, examination and determination with respect thereto as to all matters, and without reliance upon any express or implied representations or warranties of any nature made by or on behalf of or imputed to Seller except as expressly set forth in this Agreement. For avoidance of doubt, nothing in this Section 5.09 is intended to supersede any express representation or warranty made by the Seller in this Agreement.

 

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ARTICLE VI

COVENANTS OF SELLER

Seller agrees that:

6.01. Notices of Certain Events . The Seller will promptly notify Buyer of:

(i) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(ii) any notice or other communication from any governmental or regulatory agency or authority in connection with the approval or consent to the consummation of the transactions contemplated by this Agreement by such governmental or regulatory agency or authority;

(iii) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting the Company or any Subsidiary; and

(iv) the occurrence or non-occurrence of any event, which in each case is likely to cause any representation or warranty of Seller, the Company or its Subsidiaries contained in this Agreement to be untrue or inaccurate in any material respect on the Closing Date.

6.02. Confidentiality . Prior to the Closing Date and after any termination of this Agreement, Seller and its Affiliates, will hold, and will use their best efforts to cause their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning Buyer and its Affiliates furnished to the Company, Seller or its Affiliates, in connection with the transactions contemplated by this Agreement including this Agreement and Section 8.06 herein, and after the Closing Date all confidential documents and information concerning the Company, except to the extent that such information can be shown to have been (i) in the case of confidential information of Buyer and its Affiliates, previously known on a non-confidential basis by Seller, (ii) in the public domain through no fault of Seller, (iii) later lawfully acquired by Seller, on a non-confidential basis, from sources other than the Company or Buyer or (iv) in the case of confidential information of Buyer, independently developed by Seller or its Affiliates without using any information furnished to them by Buyer or its Affiliates pursuant to this Agreement, provided that Seller may disclose such information to its respective officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement so long as such persons are informed by Seller of

 

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the confidential nature of such information and are directed by Seller to treat such information confidentially. This Section 6.02 together with Section 7.01 shall expressly supercede the existing Confidentiality and Non-Disclosure Agreement dated August 6, 2002 by and between TA Associates and the Company.

6.03. Agreement not to Hire Employees . The Seller agrees that from and after the Closing Date until the fourth anniversary of the Closing Date, Seller shall not knowingly and shall cause their Affiliates not to recruit or hire any employees of the Company and its Subsidiaries; provided , that a general advertisement in the public media shall not constitute a violation of the non-recruitment obligations of this Section 6.03; and, provided further , that this Section 6.03 shall not prohibit solicitation or hiring of employees terminated by Buyer, the Company or its Subsidiaries; and provided further , that this Section 6.03 shall not prohibit the solicitation or hiring of Kenji Shibuya, Fuminobu Satoh or Dirk Debaer by the Company or its Subsidiaries.

6.04. Settlement of Inter-Company Accounts; Dividend Payment . (a) The parties acknowledge that immediately prior to the Closing, the Company will declare and pay a dividend to the Seller (the “ Closing Dividend ”) in an amount equal to all of the cash of the Company on such date other than the Minimum Cash and as set forth on Schedule 6.04 attached hereto.

(b) The parties acknowledge that Seller and the Company have intercompany accounts reflecting transactions between the two entities. Immediately prior to the Closing and payment of the Closing Dividend, the Seller and the Company shall settle the intercompany accounts in the manner set forth on the schedule attached hereto as Schedule 6.04 with the remaining balance being deemed the “ Net Intercompany Balance .” The parties hereby agree that the Net Intercompany Balance shall be reduced to zero as of the Closing.

6.05. Agreement Not to Compete . (a) The Seller agrees that from and after the Closing Date until the fourth anniversary of the Closing Date, the Seller shall not and will cause its Affiliates not to, without the prior written consent of Buyer, engage either directly or indirectly, as a principal or for its own account or solely or jointly with others, or as a controlling stockholder in any corporation or joint stock association, in any business that derives in excess of 50% its consolidated revenues from (1) the development, sale or licensing, on a standalone basis, of (i) fonts, typefaces or typeface names, and (ii) font rasterizers, font compression or font utilities (collectively, a “ Font Business ”) and/or (2) the development, sale or licensing, on a standalone basis, of printer drivers, including printer command language (PCL), PostScript, or graphical device interface (GDI) printer drivers (a “ Printer Driver Business ”) and, to the extent that Seller acquires a Font Business and/or a Printer Driver Business, (x) the Company shall have a Right of First Offer (as defined below), and (y) if the Seller and the Company can not agree on acceptable terms to dispose of the Font Business and/or Printer Driver Business pursuant to the Company’s Right of First Offer prior to or during the Negotiation Period (as defined below), then Seller shall have no further obligation to the Company under the Right of First Offer and Seller shall use commercially reasonable efforts to divest that acquired Font Business and/or Printer Driver Business on terms reasonably acceptable to the Seller within three (3) years from the date of Seller’s acquisition of the acquired Font Business and/or Printer Driver Business; provided ,

 

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however , that this agreement not to compete is not intended to prohibit, and shall not be interpreted as prohibiting Seller or its Affiliates directly or indirectly, as a principal or for its own account or solely or jointly with others, or as a stockholder in any corporation or joint stock association from (i) developing, selling or licensing so-called raster image processors in any medium (e.g. hardware or software), printing or pre-press machines or software workflow solutions or other devices containing fonts or typefaces, (ii) developing, selling or licensing specific processing, viewing or printing software or hardware for medical information (images, graphics and/or text) on any media (hard copy or soft copy), (iii) developing, selling or licensing specific processing, viewing or printing software or hardware for professional proofing (images, graphics and/or text) on any media (hard copy or soft copy), or (iv) providing a link from any web site of Seller or any of its Affiliates to any web site of the Company or any of its Affiliates, including without limitation www.fonts.com , www.agfamonotype.com and www.agfamonotype.co.uk , for a period of eighteen months after the Closing. Notwithstanding the foregoing, nothing herein shall prohibit the Seller, or its Affiliates from owning, directly or indirectly, less than 30% of any class of securities listed on a national exchange or traded publicly in the over-the-counter market.

(b) In the event that Seller acquires a Font Business and/or a Printer Driver Business, Seller shall notify the Company in writing (the “ Seller Notice ”) of such fact within 60 days of the closing of such acquisition. The Company has the right (the “ Right of First Offer ”), but not the obligation, within 60 days of receipt of the Seller Notice, to deliver a written offer (the “ Company Offer ”) to the Seller offering to purchase, whether by stock purchase, asset purchase or merger, or otherwise, the Font Business and/or the Printer Driver Business identified in the Seller Notice. The Company Offer must contain all material terms on which the Company is offering to purchase the Font Business and/or the Printer Driver Business. The Seller, within 90 days of the receipt of the Company Offer shall deliver a written notice (the “ Seller Response ”) to the Company indicating whether the Seller will (i) accept the Company Offer in whole, (ii) accept the Company Offer if certain Seller proposed changes to the Company Offer are acceptable to the Seller, or (iii) reject the Company Offer in whole. The Company and Seller agree to use commercially reasonable efforts to negotiate, for a period of up to 90 days following receipt of the Seller Response, the terms of an acquisition by the Company of the Seller’s Font Business and/or Printer Driver Business. Such 90-day negotiation period shall be exclusive with the Buyer and/or the Company. The 90-day period of negotiation may be extended by agreement of both the Seller and the Company (the “ Negotiation Period ”).

(c) If, prior to the termination of the Negotiation Period, the Seller receives an unsolicited bona fide written offer from a third party (a “ Third Party Offer ”) to purchase the Font Business and/or the Printer Driver Business on terms that the Seller deems acceptable, then the Seller shall give the Company written notice of such offer providing the material terms thereof and the option for a period of 30 days from the date of receipt of notice of the Third Party Offer, but not the obligation, to purchase the Font Business and/or the Printer Driver Business on the terms contained in the notice of Third Party Offer. After the expiration of such 30-day period, the Seller shall have no further obligation to the Company under this Section 6.05(b) and may, but is not obligated to, sell the Font Business and/or Printer Driver Business to such third party.

 

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ARTICLE VII

COVENANTS OF BUYER

Buyer agrees that:

7.01. Confidentiality . Prior to the Closing Date and after any termination of this Agreement, Buyer and its Affiliates will hold, and will use their best efforts to cause their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the Seller and its Affiliates furnished to Buyer or its Affiliates in connection with the transactions contemplated by this Agreement including this Agreement and Section 8.06 herein, except to the extent that such information can be shown to have been (i) previously known on a non-confidential basis by Buyer, (ii) in the public domain through no fault of Buyer, (iii) later lawfully acquired by Buyer on a non-confidential basis from sources other than the Seller or its Affiliates or (iv) was independently developed by Buyer or its Affiliates without using any information furnished to them by the Seller or its Affiliates pursuant to this Agreement, provided that Buyer may disclose such information to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement and to its financing sources in connection with obtaining the financing for the transactions contemplated by this Agreement so long as such Persons are informed by Buyer of the confidential nature of such information and are directed by Buyer to treat such information confidentially. This Section 7.01 together with Section 6.02 shall expressly supercede the existing Confidentiality and Non-Disclosure Agreement dated August 6, 2002 by and between TA Associates and the Company.

7.02. Access . The Company and the Subsidiaries, on and after the Closing Date, will afford promptly to Seller and its agents reasonable access to their properties, books, records, employees and auditors to the extent necessary to permit Seller to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date, including in connection with Section 2.03. Seller will hold, and will use their best efforts to cause their representatives, officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the Company and the Subsidiaries provided to it pursuant to this Section 7.02.

7.03. Corporate Name; Trademark and Domain Name; Patent License . (a) The Buyer will and shall cause the Company to, within 3 business days from the Closing Date, (i) prepare and obtain all necessary corporate authorization to change the Company’s corporate name to one bearing no resemblance to the present corporate name “Agfa” (as opposed to Monotype) and all variations thereof, (ii) deliver to the Seller a copy of the certificate of amendment or Certificate of Merger to the Company’s Certificate of Incorporation certified by the Secretary of State of the State of Delaware reflecting the change in the Company’s corporate

 

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name, and (iii) deliver to the Seller a copy of all documentation filed with the Secretary of State of the State of Illinois and the Commonwealth of Massachusetts amending the Company’s qualification to do business in each such jurisdiction as a foreign corporation to reflect the change in the Company’s corporate name in a manner consistent with (i) above. The Buyer and the Company shall cause Agfa Monotype Limited (“ AML ”) to, as promptly as practicable after the Closing Date, but in no event later than 30 days after the Closing Date, prepare and obtain all necessary corporate name to one bearing no resemblance to the present corporate name “Agfa” (as opposed to Monotype) and all variations thereof and to deliver a copy of such documentation from AML’s jurisdictions of organization to Seller reflecting the change in AML’s corporate name.

(b) The parties hereto acknowledge that the use of the tradename “Agfa” and related trademarks in certain typeface names and certain domain names used by the Company shall be governed by the terms of that certain Trademark and Domain Name License Agreement dated as of the date hereof by and among the parties thereto (the “ Trademark Agreement ”) and substantially in the form attached hereto as Exhibit H .

(c) The parties acknowledge that a license to certain patents of the Company shall be governed by the terms of that certain Patent License Agreement dated as of the date hereof by and among the parties thereto (the “ Patent License ”) and substantially in the form attached hereto as Exhibit I .

7.04. Directors and Officers Indemnification . The Company shall indemnify, defend and hold harmless each person who is now, or has been at any time prior to the date hereof or who becomes prior to the Closing Date, an officer or director of the Company or any Subsidiary (the “ Indemnified Parties ”) to the same extent that such Indemnified Parties are currently indemnified by the Company or any Subsidiary pursuant to the Company’s or any Subsidiary’s Certificate of Incorporation and by-laws for acts or omissions occurring at or prior to the Closing Date. This Section 7.04 will survive the consummation of the transactions contemplated by this Agreement, is intended to benefit the Indemnified Parties, and will be binding on all successors and assigns of the Company.

ARTICLE VIII

COVENANTS OF ALL PARTIES

The parties hereto agree that:

8.01. Best Efforts . Subject to the terms and conditions of this Agreement, each party will use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. Seller and Buyer each agree, and Seller, prior to the Closing, and Buyer, after the Closing, agree to cause the Company, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement.

 

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8.02. Certain Filings . The Company, Seller and Buyer shall cooperate with each other (a) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and (b) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.

8.03. Public Announcements . The parties agree not to issue any press release or make any public statement with respect to this Agreement or the transactions contemplated hereby and, except as may be required by applicable law or any listing agreement with any national securities exchange, without the prior written consent as to the form and substance of the press release by each other party hereto. The parties agree that such prior written consent shall not be unreasonably withheld or delayed.

8.04. Non-Disparagement . (a) Seller hereby agrees that during the period commencing on the date hereof and ending on the date that is four (4) years after the date hereof, it shall not directly or indirectly, and will cause each of its Affiliates not to, disparage any of the Buyer or the Company or any direct or indirect subsidiary or Affiliate of the Company or the Buyer (collectively, the “ Company Entities ”) or any of their respective businesses, activities, products or services to any employee, customer or client (or prospective employee, customer or client) of any Company Entity or encourage any customer or client (or prospective customer or client) of any Company Entity not to purchase a product or retain a service offered or provided by any Company Entity. This Section 8.04(a) is not intended to, and shall not, limit the Seller Entities (as defined below) from (i) competing with any of the Company Entities or any product or service offered thereby, or (ii) encouraging any customer or client (or prospective customer or client) to purchase any product or service offered by any Seller Entity in favor or any product or service offered by any Company Entity. The prior sentence shall not relieve the Seller from compliance with the provisions of Section 6.04 herein.

(b) Buyer and the Company hereby agree that during the period commencing on the date hereof and ending on the date that is four (4) years after the date hereof, it shall not directly or indirectly, and will cause each of its Affiliates not to, disparage any of the Seller or any direct or indirect subsidiary, parent or sister entity or Affiliate of the Seller (collectively, the “ Seller Entities ”) or any of their respective businesses, activities, products or services to any employee, customer or client (or prospective employee, customer or client) of any Seller Entity or encourage any customer or client (or prospective customer or client) of any Seller Entity not to purchase a product or retain a service offered or provided by any Seller Entity. This Section 8.04(b) is not intended to, and shall not, limit the Company Entities from (i) competing with any of the Seller Entities or any product or service offered thereby, or (ii) encouraging any customer or client (or prospective customer or client) to purchase any product or service offered by any Company Entity in favor or any product or service offered by any Seller Entity.

 

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8.05. Transaction Bonus Plan Payments . Prior to the Closing, the Company shall issue promissory notes (the “ Transaction Bonus Notes ”) to certain employees of the Company and its Subsidiaries (the “ TBP Employees ”) in the aggregate principal amount equal to $23,796,000 (the “ TBP Payment ”) evidencing the liability of the Company to the TBP Employees upon a fundamental change of the Company with respect to the Company’s Letter Agreements (the “ Transaction Bonus Plan ”) dated as of December 5, 2003, April 30, 2004 and July 6, 2004 by and between the Company and certain employees of the Company and its Subsidiaries. The Company agrees, and effective upon the Closing, the Buyer agrees to cause the Company, to pay the full principal amounts owed (subject to any applicable Tax withholding) under the Transaction Bonus Notes to the TBP Employees within ten (10) business days of the Closing Date.

8.06. Adobe Litigation .

(a) Control of Adobe Litigation . Seller acknowledges and agrees that the Company has a material interest in the Adobe Litigation and that its outcome may impact the value of the Company’s intellectual property. Accordingly, following the Closing Date, the Company shall be entitled to: (i) manage counsel; (ii) conduct; determine strategy for; enter into and conduct alternative dispute resolution with respect to; (iii) subject to the limitations set forth in Section 8.06(e) below, settle, compromise, discharge or otherwise resolve (including through alternative dispute resolution); and (iv) otherwise manage and take actions (including in connection with the collection of a judgment) with respect to, the Adobe Litigation in its sole discretion; provided , however , that the Company is prohibited from electing not to pursue a final, non-appealable judgment awarded to the Company in connection with the Adobe Litigation which results in the payment of an award to the Company without the Seller’s prior written consent. If a judgment is rendered or if a written settlement offer is proposed by Adobe, then the Company shall promptly inform the Seller. The Company will afford the Seller an opportunity to consult with the Company with respect to matters set forth above in this Section 8.06(a) and with respect to any settlement offer, and its decision whether or not to accept or reject the offer, whether in whole or in part such decision to be in the best interests of the Company. To the extent that the Seller desires to pursue such consultation further, Seller may elect to have such matter discussed by a senior executive of the Seller (or of Seller’s parent company) and a senior executive or non-employee director of the Company. Consultation shall not affect the Company’s ability to settle, compromise, discharge or otherwise resolve the Adobe Litigation subject to compliance with the provisions of this 8.06. With respect to the selection of principal counsel responsible for the conduct of the Adobe Litigation, the Company agrees to continue to retain Paul F. Stack of Stack and Filpi Chartered for the duration of the Adobe Litigation; provided , however , that in the event that the Board of Directors of the Company determines, in good faith, that such continued representation may adversely affect the interests of the Company, or that additional counsel is necessary to protect the interests of the Company, the Company may engage additional or alternative counsel, subject to Seller’s approval, which may not be unreasonably withheld or delayed, and any fees and expenses of such approved additional or alternative counsel shall be deemed Adobe Litigation Costs. Any Adobe Litigation Costs incurred by the Company shall be reimbursed by the Seller in accordance with Section 8.06(b)

 

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below. Seller agrees to make available such records and information, and such officers and employees, during normal business hours, as the Company may reasonably request as necessary to assist with the Adobe Litigation.

(b) Payment of Adobe Litigation Costs and Adobe UK Arbitration Costs . Seller agrees that it is responsible for the payment of (i) all Adobe Litigation Costs incurred and unpaid prior to the Closing Date, and such amounts that have been billed have been paid by the Company prior to the Closing Date, (ii) all Adobe Litigation Costs incurred on or after the Closing Date but prior to the third anniversary of the Closing Date; provided , however , that the Seller shall not be responsible for any Adobe Litigation Costs pursuant to this Section 8.06(b)(ii) to the extent that such Adobe Litigation Costs exceed the Adobe Litigation Expense Cap; provided , further , however , that at the conclusion of such three-year period, Seller may elect to continue to fund the Adobe Litigation Costs and, by so doing, for the duration of time when the Seller funds the Adobe Litigation Costs, Seller shall remain eligible to receive, pursuant to the terms of Section 8.06(c) below, its share of any Adobe Recovery (as defined below); and (iii) all Adobe UK Arbitration Costs whenever incurred and unpaid, and such amounts that have been billed to date and in payment of fees and costs of the Company (other than £29,144.82) and Adobe (in the amount of $1,834,500) having been paid prior to Closing. The Company and Seller shall make arrangements to have all invoices and charges related to the Adobe Litigation, for which Seller is responsible to pay, billed directly to the Seller and not to the Company. All invoices shall be in reasonable detail to allow the Seller to determine that such costs are appropriately related to the Adobe Litigation and/or the Adobe UK Arbitration. In addition, the Company shall provide Seller with quarterly reports of to-date Adobe Litigation Costs incurred and quarterly budgets of anticipated Adobe Litigation Costs. All invoices, charges and reports to be delivered to Seller shall be subject to suitable arrangements with respect to notice, conflicts, attorney-client privilege protection and the protection of confidential information, as may be required. Seller may object to any amount that the Company has claimed as an Adobe Litigation Cost or Adobe UK Arbitration Cost as not reasonably related to such actions by a written notice to the Company and an explanation of the reason for such objection. The Company shall provide such information as the Seller may reasonably request to support its claim that such costs are Adobe Litigation Costs or Adobe UK Arbitration Costs, as applicable.

(c) Distribution of Amounts Recovered . In the event that the Company (or any of its Subsidiaries) obtains and collects upon a final non-appealable cash award or judgment in the Adobe Litigation or upon a settlement, compromise, discharge or other resolution (the amount actually collected, the “ Adobe Recovery ”), such Adobe Recovery shall be applied as follows: (i) first, to reimburse Seller for all Adobe Litigation Costs actually paid by Seller or then required to be paid by Seller; (ii) second, to reimburse the Company for any non-reimbursed Adobe Litigation Costs incurred by the Company; and (iii) third, any remaining Adobe Recovery shall be distributed 66  2 / 3 % to the Seller, if any, and 33  1 / 3 % to the Company. The Company shall have no obligation to distribute any Adobe Recovery until actually collected in connection with a final settlement or a non-appealable award or judgment. The Company and Adobe have agreed in principle to a settlement of all outstanding matters in the Adobe UK Arbitration with result being a net payment to the Company of $125,000. If the Company obtains and collects any amounts from Adobe in connection with the Adobe UK Arbitration (including the $125,000 referred to in the previous sentence), whether related to reimbursement of costs, for damages or any other reason whatsoever, the Company shall pay all such amounts to Seller within three (3) business days of its receipt.

 

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(d) Damages or Other Amounts Payable to Adobe. In the event that the Company (or any of its Subsidiaries) is the subject of a final non-appealable cash award or judgment or is a party to a settlement, compromise, discharge or other resolution associated with the Adobe Litigation, in each case, that results in any amounts payable by the Company (or any of its Subsidiaries) to Adobe, including, without limitation, legal fees and/or expenses (the amount payable to Adobe, the “ Adobe Damages ”), Seller shall be responsible for the payment of all Adobe Damages in an amount up to $4,000,000 (the “ Adobe Damages Cap ”). The Seller’s obligation to pay the Adobe Damages is in addition to, and independent of, its obligations to pay the Adobe Litigation Costs, in each case, subject to the Adobe Litigation Expense Cap and the Adobe Damages Cap, respectively. The Adobe UK Arbitration Costs shall be the sole responsibility of the Seller and shall not impact the Adobe Damages Cap or the Adobe Litigation Expense Cap. The Company shall be responsible for any Adobe Damages in excess of $4,000,000.

(e) Consent To Settlement. In the event of any settlement, compromise, discharge or other resolution associated with the Adobe Litigation that would result in Adobe Damages, the Company shall obtain Seller’s prior written consent to any such settlement, compromise, discharge or other resolution without the prior written consent of the Seller, such consent not to be unreasonably withheld or delayed.

(f) Additional Payment Triggered by Adobe Recovery . Upon receipt of any (i) Adobe Recovery or (ii) the amount by which the Adobe Litigation Costs upon a final, non-appealable cash award or dismissal with prejudice of the Adobe Litigation are below the Adobe Litigation Expense Cap, without duplication ((i) and (ii) collectively, the “ Upside ”), the Company shall, in good faith, calculate the aggregate amount due to then-current employees of the Company eligible to receive a payment under the Transaction Bonus Plan as a result of the Upside (such employees, the “ Eligible Employees ” and such payment, the “ Additional Payment ”). The Company shall then provide such good faith calculation to Seller in reasonable detail, along with such other documents and records (including, without limitation, payroll records and other proof of employment) as Seller reasonably requests to substantiate such calculation. Seller shall then pay to the Company the amount of such aggregate Additional Payment (or, alternatively, may request that the Company offset such amount against the amount of any such Adobe Recovery payable by the Company to Seller). Upon receipt of such aggregate Additional Payment amount (whether by cash payment by Seller or offset of payment owed by the Company to the Seller), the Company shall promptly and in any case pursuant to the Acknowledgment and Release Agreements between the Company and certain employees of the Company, pay such amount received from Seller to the Eligible Employees (with each such Eligible Employee receiving the portion of such Additional Payment to which such Eligible Employee is entitled as set forth in the notice delivered to Seller.

(g) Information Rights . For the duration of the Adobe Litigation and subject to reasonable constraints imposed by attorney-client privilege, the Company shall provide the Seller with all information, documents and materials related to the Adobe Litigation and the Adobe UK Arbitration as Seller may reasonably request.

 

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(h) Survival . Notwithstanding anything to the contrary in this Agreement, the agreements and covenants made by Seller in this Section 8.06 shall survive the Closing and any liabilities Seller has or may have pursuant to this Section 8.06 shall not terminate or expire in any manner whatsoever, except that the obligation of the Company to pay Adobe Litigation Costs shall be limited those incurred prior to the expiration of the three (3) year period (including extensions at the option of Seller) set forth in 8.06(b)(ii).

In the event of any dispute arising in relation to this Section 8.06, the parties agree that the resolution of such dispute shall be resolved in accordance with the procedures set forth in Section 14.10 hereof.

8.07. Subsidiary Stock Certificate . Seller hereby agrees that on or prior to the close of business on the date that is 1 business day after the Closing Date, Seller shall deliver to Buyer (or its agent or designee) a certificate representing the shares of stock of Agfa Monotype Limited owned by the Company, as well as a stock power with respect thereto endorsed in blank. To the extent that such certificate is lost, destroyed or otherwise unavailable for physical delivery to Buyer within the time period provided in the foregoing sentence, Seller shall, in place of such certificate, deliver to Buyer an affidavit of lost stock certificate with respect thereto. Seller hereby reiterates its agreement to undertake the further assurances set forth in Section 14.05 with respect to the foregoing matter, including to the extent necessary executing documents to evidence such ownership.

ARTICLE IX

EMPLOYEE BENEFITS

9.01. Employee Benefits . The following terms, as used herein, having the following meanings:

Benefit Arrangement ” means each employment, severance or other similar contract, arrangement or policy (written or oral) and each plan or arrangement (written or oral) providing for severance benefits, insurance coverage (including any self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits or for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights or other forms of incentive compensation or post-retirement insurance, compensation or benefits which (i) is not an Employee Plan, (ii) is entered into, maintained or contributed to, as the case may be, by the Company and (iii) covers any employee or director or former employee or director of the Company.

Employee Plan ” means each “employee benefit plan”, as such term is defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA and (ii) is maintained or contributed to by the Company and (iii) covers any employee or director or former employee or director of the Company.

 

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ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate ” of any entity means any other entity that, together with such entity, would be treated as a single employer under Section 414 of the Code.

Multiemployer Plan ” means each Employee Plan that is a multiemployer plan, as defined in Section 3(37) of ERISA.

9.02. ERISA Representations . The Company and Seller, jointly and severally, hereby represent and warrant to Buyer that:

(a) Schedule 9.02 lists every Employee Plan copies or descriptions of all of which have previously been made available or furnished to Buyer. With respect to each Employee Plan, the Company has provided the most recently filed Form 5500 and an accurate summary description of such plan.

(b) Schedule 9.02 also includes a list of every Benefit Arrangement, copies or descriptions of which have been made available or furnished previously to Buyer.

(c) None of the Employee Plans or Benefit Arrangements listed on Schedule 9.02 is subject to the laws of any jurisdiction outside the United States.

(d) No Employee Plan is a Multiemployer Plan and no Employee Plan is subject to Title IV of ERISA. Neither the Company nor any ERISA Affiliate has incurred, within the past six years, nor reasonably expects to incur any liability under Title IV of ERISA arising in connection with the termination of any plan covered or previously covered by Title IV of ERISA.

(e) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code has been the subject of a favorable determination letter from the Internal Revenue Service. The Company has furnished to Buyer copies of the most recent determination letter with respect to each such Employee Plan. Each Employee Plan has been maintained in compliance in all material respects with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code, which are applicable to such Employee Plan.

(f) Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations that are applicable to such Benefit Arrangement.

(g) With respect to the employees and former employees of the Company, there are no employee post-retirement medical or health plans in effect, except as required by Section 4980B of the Code. The Company has no obligation to provide such post termination benefits.

 

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(h) All contributions and payments accrued under each Employee Plan and Benefit Arrangement, determined in accordance with prior funding and accrual practices, as adjusted to include proportional accruals for the period ending on the Closing Date, will be discharged and paid on or prior to the Closing Date except to the extent (i) reflected on the Closing Balance Sheet or (ii) retained by Seller. Except as disclosed in writing to Buyer prior to the date hereof, there has been no amendment to, written interpretation of or announcement (whether or not written) by the Company relating to, or change in employee participation or coverage under, any Employee Plan or Benefit Arrangement that would increase materially the expense of maintaining such Employee Plan or Benefit Arrangement above the level of the expense incurred in respect thereof for the fiscal year ended prior to the date hereof. Each asset held under any Employee Plan may be liquidated or terminated without the imposition of any redemption fee, surrender charge or comparable liability. No litigation or governmental administrative proceeding (or investigation) or other proceeding (other than those relating to routine claims for benefits) is pending, or to the knowledge of the Company and the Seller threatened, with respect to any Employee Plan or Benefit Arrangement.

(i) Except as set forth on Schedule 9.02 , no employee of the Company will become entitled to any bonus, retirement, severance or similar benefit or enhanced benefit solely as a result of the transactions contemplated hereby.

(j) Each Employee Plan and Benefit Arrangement may be amended, terminated or otherwise modified by the Company to the greatest extent permitted by applicable law, including the elimination of any and all future benefit accruals, and no employee communications or provision of any Employee Plan or Benefit Arrangement document has failed to effectively reserve the right of the Company to so amend, terminate or otherwise modify such Employee Plan or Benefit Arrangement.

9.03. No Third Party Beneficiaries . No provision of this Article IX shall create any third party beneficiary or other rights in any employee or former employee (including any beneficiary or dependent thereof) of the Company in respect of continued employment (or resumed employment) with the Company and no provision of this Article IX shall create any such rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any Employee Plan or Benefit Arrangement or any plan or arrangement that may be established by Buyer or any of its Affiliates. No provision of this Agreement shall constitute a limitation on rights to amend, modify or terminate after the Closing Date any Employee Plan or Benefit Arrangement.

 

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ARTICLE X

TAX MATTERS

Unless otherwise explicitly provided in this Article X, each of the covenants contained in this Article X shall survive until the expiration of the applicable statutory period of limitation plus fourteen (14) days.

10.01. Tax Sharing Agreements . Any Tax sharing or allocation agreements or arrangements, whether formal or informal, that may exist between the Seller and the Company or any of its Subsidiaries shall terminate with respect to the Company and its Subsidiaries as of the Closing. All Taxes related to the periods (or partial periods) ending on or before the Closing Date will be included in the intercompany accounts and will be settled under the provisions of Section 6.04 of this Agreement.

10.02. Tax Periods Through the Closing Date . Seller shall include the income of the Company and its Subsidiaries (including any deferred items triggered into income by Treasury Regulation Section 1.1502-13 and any excess loss account taken into income under Treasury Regulation Section 1.1502-19) on Seller’s consolidated federal income Tax Returns for all periods through the Closing Date and pay any federal income Taxes attributable to such income. The Company and its Subsidiaries shall furnish Tax information to Seller for inclusion in Seller’s federal consolidated Tax Return for the period that includes the Closing Date in accordance with the Company’s past custom and practice. The income of the Company and its Subsidiaries shall be apportioned to the period up to and including the Closing Date and the period after the Closing Date by the closing the books of the Company and its Subsidiaries as of the end of the Closing Date. Seller shall pay, in a timely manner, all unpaid Taxes (other than any Taxes for which Buyer is liable pursuant to Section 10.11 of this Agreement) (i) of the Company and its Subsidiaries for all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date, (ii) of each member of an affiliated, consolidated, combined or unitary group of which Seller is the common parent and the Company or any of its Subsidiaries (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date for which the Company or its Subsidiaries has liability under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), and (iii) of any Person (other than the Company and its Subsidiaries) imposed on the Company or its Subsidiaries as a transferee or successor, by contract or otherwise for all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date.

10.03. Tax Periods Beginning Before and Ending After the Closing Date . Seller shall prepare or cause to be prepared and file or cause to be filed any Tax Returns of the Company and its Subsidiaries for Tax periods that begin before the Closing Date and end after the Closing Date. Buyer shall pay to Seller within fifteen (15) days after the date on which Taxes are paid with respect to such periods an amount equal to the portion of such Taxes which relates to the portion of such Tax period beginning after the Closing Date. For purposes of this section, in the case of any Taxes that are imposed on a periodic basis and are payable for a Tax period that includes (but does not end on) the Closing Date, the portion of such Tax which relates to the portion of such Tax period beginning after the Closing Date shall (x) in the case of any Taxes other than Taxes based upon or related to income or receipts, be deemed to be the amount of

 

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such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the portion of the Tax period beginning after the Closing Date and the denominator of which is the number of days in the entire Tax period (provided that such allocation of Taxes shall be equitably adjusted to reflect any material acquisitions or dispositions of property during the Tax period) and (y) in the case of any Tax based upon or related to income or receipts be deemed equal to the amount which would be payable if the relevant Tax period began after the Closing Date. Any credits relating to a Tax period that begins before and ends after the Closing Date shall be taken into account as though the relevant Tax period ended on the Closing Date. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with reasonable prior practice of the Company and its Subsidiaries.

10.04. Cooperation on Tax Matters . The Buyer and Seller shall cooperate fully, as and to the extent reasonably requested by one party of another, in connection with the filing of Tax Returns pursuant to this section and any audit, litigation, or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon another party’s request) the provision of records and information which are reasonably relevant to any such Tax Return or audit, litigation, or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer and Seller agree (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any Tax period beginning before the Closing until the expiration of the statute of limitations (and, to the extent notified by Buyer or the Seller, any extensions thereof) of the respective Tax periods, and to abide by all record-retention agreements entered into with any Tax authority, and (B) to give the other parties reasonable written notice prior to transferring, destroying or discarding any such books and records. Buyer and Seller further agree, upon request, to use their best efforts to obtain any certificate or other document from any Tax authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including with respect to transactions contemplated hereby).

10.05. Refunds and Tax Benefits . Tax refunds that are received by Buyer or any of the Company or its Subsidiaries, and any amounts credited against Tax to which Buyer or any of the Company or its Subsidiaries become entitled, that relate to Tax periods or partial periods ending on or before the Closing Date, shall be paid by Buyer to Seller within 10 days after receipt or entitlement thereto.

10.06. Post-Closing Elections . At Seller’s request, Buyer will cause any of the Company or its Subsidiaries to make or join with Seller in making any election if the making of such election does not have a Material Adverse Effect on Buyer (or any of the Company or its Subsidiaries) for any post-Closing Tax period. Buyer shall not (and shall cause the Company and its Subsidiaries not to) make, amend, or revoke any Tax election or take any other action with respect to Taxes if such action would adversely affect the Seller or any of its Affiliates. Buyer shall not make any Code §338(g) elections with respect to any of the Company’s Subsidiaries without the Seller’s prior written consent.

 

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10.07. Section 338(h)(10) Election.

(a) Notwithstanding any other provision of this Agreement, Seller and Buyer shall join in making an election under Section 338(h)(10) of the Code (and any corresponding elections under state, local or foreign tax law) (collectively, a “ Section 338(h)(10) Election ”) with respect to Buyer’s purchase from Seller of the shares of the Company and with respect to the stock of any Subsidiary for which a Section 338(h)(10) Election may be made.

(b) Buyer shall deliver to Seller, at least ten (10) days prior to the Closing Date, drafts of IRS Form 8023 and any similar forms under applicable state, local, or foreign Tax law (collectively, the “ Forms ”). Seller shall review such Forms and provide any proposed revisions to Buyer at least two (2) days prior to the Closing Date. Buyer and Seller agree to negotiate in good faith such proposed revisions and to attempt to resolve any differences between the parties. The Forms, in the form reasonably determined by Seller, shall be duly executed by an authorized person for Seller and Buyer at the Closing. Buyer shall duly and timely file the Forms as prescribed by Treasury Regulation Section 1.338(h)(10)-1 or the corresponding provisions of applicable state, local or foreign Tax law.

(c) As soon as practicable after the Closing Date and at least thirty (30) days prior to the due date and filing of IRS Form 8883 by either party, Buyer shall provide Seller with a draft of IRS Form 8883 (including the calculation and proposed allocation of the Purchase Price in a manner consistent with the purchase price allocation methodology set forth in Exhibit J (the “ Allocation Schedule ”). Seller shall review such Form 8883 and provide any proposed revisions to Buyer at least ten (10) days prior to the due date of such Form 8883 for either party. Buyer and Seller agree to negotiate in good faith such proposed revisions and to attempt to resolve any differences between the parties. Form 8883 shall be timely filed by each party as required by law. Each of Buyer and Seller shall report the allocation of the Purchase Price (and any adjustments thereto) for Tax purposes and file its Tax Returns (including the Form 8883) in a manner consistent with the Allocation Schedule.

10.08. Audits . Seller shall not settle any Tax audit in a manner that would adversely affect the Company and its Subsidiaries after the Closing Date without the prior written consent of Buyer, which consent shall not be unreasonably withheld. Neither Buyer, the Company nor its Subsidiaries shall settle any Tax audit in a manner that would adversely affect Seller after the Closing Date without the prior consent of Seller, which consent shall not be unreasonably withheld.

10.09. Transfer Taxes . All transfer, documentary, sales, use, value-added, stamp, and registration Taxes, all conveyance fees, recording fees, and deed stamps, and all other such Taxes and fees (including any penalties and interest) incurred in connection with any of the transactions under this Agreement shall be borne and paid by Buyer, either directly or through reimbursement of Seller (if any such Taxes are initially paid by Seller).

10.10. Tax-Related Proceedings . Seller shall have the right to control all audits or other proceedings, initiate any claim for refund or file any amended return, and contest or resolve any assessment or other adjustment or proposed adjustment relating to Taxes or Tax Returns with respect to the Company or any of its Subsidiaries that involve Tax periods or partial periods

 

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ending on or before the Closing Date; provided , however , that Buyer shall have the right to review and comment upon any proposed settlement with respect to any Taxes for which the Buyer or the Company and its Subsidiaries may be responsible. Buyer shall give Seller prompt and timely written notice of its receipt of oral or written notice of any Tax examination, claims, proposed adjustments, or related matters subject to this Section.

10.11. Post-Closing . Buyer agrees to pay Seller promptly in full for any Tax (including Tax with respect to any payment made pursuant to this Section 10.11) owed by Seller and its Affiliates (including the Company and its Subsidiaries) resulting from any transaction not contemplated in this Agreement and not in the ordinary course of business occurring on the Closing Date after Buyer’s purchase of the Shares. For avoidance of doubt, the merger of Buyer with and into the Company, with the Company surviving, occurring after the Buyer’s purchase of the Shares shall be treated as a transaction not contemplated in this Agreement and not in the ordinary course of business. Buyer and Seller agree to report all transactions not in the ordinary course of business occurring on the Closing Date after Buyer’s purchase of the Shares on Buyer’s federal income Tax Return to the extent permitted by Treas. Reg. §1.1502-76(b)(1)(B) and Treas. Reg. §1.338-1(d). Notwithstanding any provision in this Agreement to the contrary, Buyer shall be responsible for the withholding and payment of any Taxes that the Company or its Subsidiaries are required to withhold and/or pay with respect to the Transaction Bonus Notes and/or the TBP Payment.

10.12. TBP Payment Reporting . Seller shall report the TBP Payment as a deductible expense on its consolidated federal income Tax Return and on any other Tax Returns that include the Company (or on any separate Tax Returns of the Company) for any Tax periods that end on or before the Closing Date. In addition, Seller shall report the TBP Payment as a deductible expense on any Tax Returns that include the Company (or on any separate Tax Returns of the Company) for any Tax periods that include (but do not end on) the Closing Date, and such deductible expense shall be allocated for purposes of this Article X to that portion of such Tax periods ending on the Closing Date. Buyer, Seller and the Company hereby agree not to report or otherwise take any position inconsistent with the foregoing.

ARTICLE XI

CONDITIONS TO CLOSING

11.01. Conditions to the Obligations of Each Party . The obligations of Buyer and the Seller to consummate the Closing are subject to the satisfaction of the following conditions:

(a) Any applicable waiting period under the HSR Act relating to the transactions contemplated hereby shall have expired or been terminated.

(b) No proceeding challenging this Agreement or the transactions contemplated hereby or seeking to prohibit, alter, prevent or materially delay the Closing shall have been instituted by any Person before any court, arbitrator or governmental body, agency or official and be pending.

 

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(c) Each other party to this Agreement shall have executed and delivered each of the Ancillary Agreements to be entered into by it at Closing, in each case substantially in the forms attached as exhibits to this Agreement.

11.02. Conditions to Obligation of Buyer . The obligation of Buyer to consummate the Closing is subject to the satisfaction of the following further conditions:

(a)(i) the Company and Seller shall have performed in all material respects all of its obligations hereunder required to be performed on or prior to the Closing Date, (ii) the representations and warranties relating to the Company contained in this Agreement at the time of its execution and delivery and in any certificate or other writing delivered by the Seller pursuant hereto, disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect, shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such date with only such exceptions as would not in the aggregate reasonably be expected to have a Material Adverse Effect and (iii) Buyer shall have received a certificate signed by the President of the Seller to the foregoing effect.

(b) No court, arbitrator or governmental body, agency or official shall have issued any order, and there shall not be any statute, rule or regulation, restraining the effective operation by Buyer of the business of the Company and the Subsidiaries after the Closing Date.

(c) Execution and delivery of the Ancillary Agreements (other than the Denmark Services Agreement).

(d) The Company shall have received all consents, authorizations or approvals from the governmental agencies referred to in Section 3.02, in each case in form and substance reasonably satisfactory to Buyer, and no such consent, authorization or approval shall have been revoked.

(e) Execution and delivery of Employment Agreements in form satisfactory to Buyer with Robert Givens, Douglas Shaw, Jeffrey Burk, John Seguin and David McCarthy.

(f) Execution and delivery of a Mutual Termination and Release in substantially the form attached hereto as Exhibit G and providing for termination the Note Agreement, AMT Promissory Note and Agfa Promissory Note (as such terms are defined therein).

(g) Buyer shall have received the legal opinion of Seller’s counsel, in substantially the form attached hereto as Exhibit K .

(h) Buyer shall received a certificate of non-foreign status from Seller satisfying the requirements of Treasury Regulation Section 1.1445-2(b).

(i) There shall have occurred no Material Adverse Change.

(j) Buyer shall have received all other closing documents specified in Section 2.02 of this Agreement.

 

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11.03. Conditions to Obligation of Seller . The obligation of Seller to consummate the Closing is subject to the satisfaction of the following further conditions:

(a)(i) Buyer shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date, (ii) the representations and warranties of Buyer contained in this Agreement at the time of its execution and delivery and in any certificate or other writing delivered by Buyer pursuant hereto, disregarding all qualifications and exceptions relating to materiality and Material Adverse Effect, shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such date with only such exceptions as would not in the aggregate reasonably be expected to have a Material Adverse Effect and (iii) Seller shall have received a certificate signed by the President of Buyer to the foregoing effect.

(b) Execution and delivery of the Ancillary Agreements.

(c) Buyer shall have received all consents, authorizations or approvals from governmental agencies referred to in Section 5.03, in each case in form and substance reasonably satisfactory to Seller, and no such consent, authorization or approval shall have been revoked.

(d) Seller shall have received all items specified in Section 2.02 of this Agreement.

ARTICLE XII

SURVIVAL; INDEMNIFICATION

12.01. Survival . All representations and warranties made in this Agreement shall survive the Closing until the date that is one year after the Closing Date, except that the representations and warranties contained in Sections 3.16 and Article X, shall survive until the expiration of the applicable statutory period of limitations plus fourteen (14) days, if later, whereupon they shall terminate, expire and be of no further effect. All agreements and covenants made in this Agreement shall survive the Closing in accordance with their terms. The indemnities and other obligations of Seller and Buyer contained in Section 8.06, Articles X and XII hereof shall survive for the period of the applicable representations, warranties, agreements and covenants. Notwithstanding the first sentence of this Section 12.01, any expiration of the survival period pursuant to such sentence shall not terminate or limit in any manner whatsoever any liabilities either party has or may have for (i) fraud or (ii) knowing and intentional misrepresentations, knowing and intentional breaches, and knowing and intentional nonfulfillments of any agreement or covenant. Notwithstanding the preceding sentences, any covenant, agreement, representation or warranty in respect of which indemnity may be sought under Section 12.02 shall survive the time at which it would otherwise terminate pursuant to the

 

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preceding sentences, if notice of the inaccuracy or breach thereof giving rise to such right to indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.

12.02. Indemnification . (a) Subject to the provisions of Section 12.03 hereof, Seller hereby indemnifies Buyer and, effective at the Closing, without duplication, the Company and their respective successors and permitted assigns, and the affiliates, officers, employees, directors and stockholders of Buyer and the Company, as the case may be and their heirs and personal representatives against and agrees to hold them harmless against losses, liabilities, damages and out-of-pocket expenses (including reasonable legal and accounting expenses) as a result of the incurrence or payment of such losses, liabilities, damages and out-of-pocket expenses (“ Damages ”) which they may suffer or incur insofar as such Damages arise out of or are based upon the inaccuracy of any representation or warranty, or a breach of any covenant or agreement made or to be performed by Seller or the Company (on or prior to the Closing); provided that (i) Seller shall not be liable under this Section 12.02(a) with respect to an inaccuracy of a representation or warranty made by Seller (or the Company (on or prior to the Closing) unless (X) the Damages suffered or incurred by the Buyer or the Company for the inaccuracy of any individual representation or warranty made by Seller or the Company (on or prior to the Closing) shall exceed US$100,000.00 (a “ Buyer Qualifying Claim ”) and (Y) the aggregate amount of Damages suffered or incurred by Buyer or the Company in relation to all Buyer Qualifying Claims exceeds US$2,000,000.00 and then only to the extent of such excess, and (ii) Seller’s aggregate maximum liability under this Section 12.02(a) for the inaccuracy of representations or warranties contained in this Agreement or breaches of covenants or agreements contained in this Agreement made or to be performed by Seller and for any Adobe Damages shall not exceed US$12,500,000.00; provided , however , that Buyer or the Company shall give the Seller written notice in respect of such claim for Damages within the period specified in Section 12.03; provided , further , that if any such claim for Damages shall have been made in writing by Buyer or the Company prior to the termination of the applicable indemnification obligation, such termination shall not affect the indemnification obligation in respect of the particular matter as to which such claim for Damages was made, whether or not the amount of indemnification to which Buyer or the Company is entitled in respect of such matter shall have been determined prior to such termination. Notwithstanding the foregoing, the dollar thresholds contained in clause (i) above, and the dollar limitation of liability contained in clause (ii) above, shall not apply with respect to (x) Damages arising from any inaccuracy of the representations and warranties contained in Section 3.16 hereof, (y) breach by Seller or the Company of representations and warranties and covenants contained in Article IX and breach of covenants contained in Article X, or (z) Damages as a result of fraud, knowing and intentional misrepresentations or willful breach of any representation or warranty of Seller or the Company. For avoidance of doubt, the dollar thresholds continued in clause (i) above shall not apply to Seller’s obligation to pay any Adobe Damages. For avoidance of doubt and notwithstanding anything herein to the contrary, upon the Closing, Seller shall have no liability to Buyer, the Company, any other indemnified parties under Section 12.02(a), relating to (i) the assumed obligation for payment of $3,700,000under the LIC by Buyer pursuant to Section 2.01 hereof and (ii) relating to the Transaction Bonus Plan (other than payment to the Company of the Additional Payment, if any, pursuant to Section 8.06(f)) or the Transaction Bonus Notes.

 

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(b) Subject to the provisions of Section 12.03 hereof, Buyer and, effective at the Closing, without duplication, the Company hereby indemnifies Seller and its successors and permitted assigns, and the affiliates, officers, employees, directors and stockholders of Seller and their heirs and personal representatives against and agrees to hold them harmless against Damages which they may suffer or incur insofar as and to the extent that such Damages arise out of or are based upon the inaccuracy of any representation or warranty, or a breach of any covenant or agreement of Buyer herein contained; provided that (i) Buyer and the Company (effective at the Closing) shall not be liable under this Section 12.02(b) with respect to an inaccuracy of a representation or warranty made by Buyer unless (X) the Damages suffered or incurred by the Seller for the inaccuracy of any individual representation or warranty made by Buyer shall exceed US$100,000.00 (a “ Seller Qualifying Claim ”) and (Y) the aggregate amount of Damages suffered or incurred by the Seller in relation to all Seller Qualifying Claims exceeds US$2,000,000.00 and then only to the extent of such excess, and (ii) Buyer and the Company’s maximum liability under this Section 12.02(b) for the inaccuracy of representations or warranties of Buyer or breaches of covenants or agreements made or to be performed by Buyer or the Company (effective at the Closing) shall not exceed US$12,500,000.00; provided , however , that Seller shall give the Buyer or the Company written notice in respect of such claim for Damages within the period specified in Section 12.03; and provided , further , that if any such claim for Damages shall have been made in writing by Seller asserting such claim for Damages prior to the termination of the applicable indemnification obligation, such termination shall not affect the indemnification obligation in respect of the particular matter as to which such claim for Damages was made, whether or not the amount of indemnification to which Seller is entitled in respect of such matter shall have been determined prior to such termination. Notwithstanding the foregoing, the dollar thresholds contained in clause (i) above, and the dollar limitation of liability contained in clause (ii) above, shall not apply with respect to (x) breach by Buyer of representations and warranties or breach by Buyer or the Company (effective at the Closing) of covenants contained in Article X, or (y) Damages as a result of fraud or knowing and intentional misrepresentations or willful breach of any representation or warranty of Buyer.

(c) The amount of Damages recoverable by an indemnified party pursuant to this Section 12.02 shall be reduced by any proceeds received by the indemnified party, or which the indemnified party is legally entitled to receive, from an insurance carrier, net of any cost of collection, deductible, premium adjustment, reimbursement or other cost directly related to such insurance claim.

12.03. Procedure for Indemnification Claims; No Waiver; Exclusivity . (a) The respective indemnification obligations of Seller, Buyer and the Company (effective at the Closing) pursuant to Section 12.02 hereof shall be conditioned upon compliance by Seller, Buyer and the Company with the following procedures for indemnification claims based upon or arising out of any claim, action or proceeding by any person not a party to this Agreement:

(i) The party seeking indemnification under Section 12.02 (the “ Aggrieved Party ”) agrees to give prompt notice in writing to the party against whom indemnity is sought (the “ Indemnifying Party ”) of the assertion of any claim, or the commencement of any suit,

 

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action or proceeding in respect of which indemnity may be sought under such Section. The failure of the Aggrieved Party to promptly deliver notice in writing to the Indemnifying Party under this Section 12.03(i) will not adversely affect the applicable Aggrieved Party’s right to indemnification except to the extent the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party may participate in and control the defense of any third party suit, action or proceeding at its own expense. The Indemnifying Party shall not be liable under Section 12.02 for any settlement effected without its consent of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder.

(ii) If the Indemnifying Party assumes the defense of any such claim, action or proceeding, (a) the obligation of the Indemnifying Party as to such claim, action or proceeding shall be limited to taking all steps necessary in the defense or settlement thereof and to holding the Aggrieved Party harmless from and against any and all losses, damages, and liabilities caused by or arising out of any settlement approved by the Indemnifying Party or any judgment rendered in connection with such claim, action or proceeding, and (b) the Aggrieved Party agrees to cooperate and make available to the Indemnifying Party all books and records and such officers, employees and agents as are reasonably necessary and useful in connection with the defense. The Indemnifying Party shall not, in the defense of such claim, action or proceeding, consent to the entry of any judgment, or enter into any settlement, except in either event with the prior consent of the Aggrieved Party, which judgment or settlement does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Company or the Aggrieved Party (as the case may be) of a release from all liability in respect of such claim or litigation.

(iii) If the Indemnifying Party does not assume the defense of any such claim, action or proceeding, (a) the Indemnifying Party agrees to cooperate and make available to the Aggrieved Party (X) all such books and records as in the possession or control of the Indemnifying Party, and (Y) such officers, employees and agents of the Indemnifying Party as are in any such case reasonably necessary and useful in connection with the defense.

(b) After the Closing, Article XII will provide the exclusive remedy for any misrepresentation, the inaccuracy of any representation or warranty, the breach of any covenant or other agreement, or the losses, liabilities, damages, out-of-pocket expenses suffered or incurred in connection with any of the foregoing or any action, proceeding or other claim arising out of this Agreement or the transactions contemplated hereby.

12.04 Purchase Price Adjustment . All indemnification payments made under this Agreement shall be treated as adjustments to the purchase price.

 

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ARTICLE XIII

TERMINATION

13.01. Grounds for Termination . This Agreement may be terminated at any time prior to the Closing:

(a) by written agreement of Seller and Buyer;

(b) by either Seller or Buyer if the Closing shall not have been consummated on or before December 31, 2004; or

(c) by either Seller or Buyer if there shall be any law or regulation that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited or if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction.

The party desiring to terminate this Agreement pursuant to clauses (b) or (c) shall give notice of such termination to the other parties.

ARTICLE XIV

MISCELLANEOUS

14.01. Notices . All notices, requests and other communications to either party hereunder shall be in writing and shall be delivered by hand or overnight courier service, mailed or sent by telex, telecopy or other telegraphic communications equipment of the sending party, as follows:

if to Buyer, to:

c/o TA Associates, Inc.

High Street Tower

Boston, MA 02110

Attn: A. Bruce Johnston

Jonathan Meeks

Telecopy: (617) 574-6778

with a copy to:

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA 02109

Attn: Jeffrey C. Hadden, P.C.

Telecopy: (617) 523-1231

 

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if to the Company, to:

Agfa Monotype Corporation

200 Ballardvale Street

Wilmington, MA 01887

Attn: Robert Givens

Telecopy: (978) 657-5238

with a copy to:

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA 02109

Attn: Jeffrey C. Hadden, P.C.

Telecopy: (617) 523-1231

if to the Seller, to:

Robert K. Sarafian, Esq.

Agfa Corporation

200 Ballardvale Street

Wilmington, MA 01887

Telecopy: (978) 658-5168

with a copy to:

Mitchell S. Bloom, Esq.

Testa, Hurwitz & Thibeault, LLP

125 High Street

Boston, MA 02110

Telecopy: (617) 248-7100

or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall only be effective upon receipt. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telex, telecopy or other telegraphic communications equipment of the sender, or on the date five business days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 14.01 or in accordance with the latest unrevised direction from such party given in accordance with this Section 14.01.

 

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14.02. Amendments; No Waivers . (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed by Buyer and Seller.

(b) No failure or delay by either party in exercising any right, power or privilege hereunder 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.

14.03. Expenses . All costs and expenses incurred in connection with this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby, including all accounting, legal and investment banking fees and expenses, shall be paid by the party incurring such cost or expense.

14.04. Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of his or its rights or obligations under this Agreement without the consent of the other parties hereto, except that Buyer may transfer or assign, in whole or from time to time in part, to one or more of its Affiliates and their respective successors in interests and lenders, its rights under this Agreement, including the right to purchase all or a portion of the Shares and its right to indemnification, but no such transfer or assignment will relieve Buyer or the Company of its obligations hereunder.

14.05. Further Assurances . (a) If at any time, or from time to time, at or after the Closing Date, any party to this Agreement shall consider or be advised that any further agreements or other instruments of conveyance and transfer, assignments or assurances in law or any other things are reasonably necessary, desirable or proper more effectively to carry out the purposes of this Agreement, each other party hereto agrees that it will execute and deliver (or cause such of its subsidiaries as is appropriate to execute and deliver) all such agreements, instruments, assignments and assurances in law and do all things reasonably necessary, desirable or proper to assist such party if it so requests.

(b) The parties acknowledge that there may be patents, trademark registrations/applications and/or copyright registrations/applications that have been issued by, registered with or filed with the United States Patent and Trademark Office or Register of Copyrights or the corresponding offices of other countries that should be in the name of the Company or one of its Subsidiaries, but instead are now in the name of a predecessor in interest of the Company (the “ Filings ”). Seller and its Affiliates shall cooperate with the Company at the Company’s expense after the Closing to update or correct the chain of title of the Filings to the extent necessary. Such cooperation shall include, but not be limited to, arranging for Seller or the appropriate Affiliate thereof to execute and deliver any further agreements or other instruments of conveyance and transfer, assignments or assurances in law or any other things that are reasonably necessary, desirable or proper to update or correct the Filings.

 

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14.06. Governing Law . This Agreement and, except as otherwise set forth therein, the Ancillary Agreements shall be construed in accordance with and governed by the law of the Commonwealth of Massachusetts, USA without regard to the conflicts of law rules of such state.

14.07. Counterpart. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

14.08. Entire Agreement . This Agreement, the Ancillary Agreements and the other written agreements referenced herein together with schedules and exhibits hereto and thereto, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter hereof. No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by any party hereto. Neither this Agreement nor any provision hereof is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.

14.09. Captions . The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

14.10. Dispute Resolution . (a) Subsequent to the procedures set forth in Section 12.03 hereof, if applicable, if any dispute, claim or controversy (each a “ Disagreement ”) arises out of or relating to (i) this Agreement or any Ancillary Agreements other than a Disagreement related to the adjustment to Minimum Net Operating Working Capital (which shall be governed by Section 2.03 hereof), or (ii) the negotiation, validity or performance hereof or thereof or the transactions contemplated hereby and thereby, the parties shall engage in good faith negotiations to seek a fair and equitable resolution of the Disagreement. If, after such negotiations, the parties are not able to reach a mutually agreeable resolution of the Disagreement, then either party may deliver a notice of disagreement to the other party, which notice describes the Disagreement in reasonable detail and sets forth the complaining party’s complaint in reasonable detail and details the specific points in dispute. Thereafter, the parties shall promptly thereafter submit the Disagreement to mediation before J.A.M.S./Endispute, Inc. for an additional ninety (90) day period, such mediation to be in accordance with the J.A.M.S./Endispute, Inc. rules and regulations governing mediation, as reasonably acceptable to the parties. The parties shall each pay their own fees and expenses and one-half of the costs and charges of any such mediation.

(b) If, following the mediation period, which shall not exceed such ninety (90) days from the date of the applicable notice of Disagreement unless the parties hereto consent to a longer period of mediation, the parties still have not reached agreement on or resolved the Disagreement, either: (i) both the parties hereto shall agree to enter binding arbitration in accordance with the procedures set forth in section 14.10(c) below or (ii) either party may bring an action or proceeding seeking to resolve any Disagreement, such action or proceeding to be brought against the other party hereto in any court of competent jurisdiction in the Commonwealth of Massachusetts, USA, or in the United States District Court for the District of

 

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Massachusetts, and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein.

(c) If, following the mediation period set forth in Sections 14.10(a) and (b) above, the parties hereto agree to submit a Disagreement to binding arbitration, any such arbitration proceeding shall be held before a single neutral arbitrator on a list of approved arbitrators as shall be provided by J.A.M.S./Endispute, Inc. in Boston, Massachusetts or such other location as is mutually agreed to by the parties hereto. Any such arbitration proceeding shall be conducted in accordance with the laws of the Commonwealth of Massachusetts and the rules and regulations promulgated by J.A.M.S./Endispute, Inc. unless specifically modified herein. The parties covenant and agree that any such arbitration hearing shall commence within one hundred twenty (120) days of the date on which any party hereto files a written demand for arbitration of a Disagreement; provided that upon the submission by one party of a demand for arbitration, such filing party shall, within three (3) business days, provide the other party with notification of the submission of a Disagreement to arbitration, which notice shall explain, in reasonable detail, the nature of the Disagreement and the specific points in dispute. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents by each party and any third-party witnesses. In addition, each party may take up to three (3) depositions as of right, and the arbitrator may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall not have the power to order the answering of interrogatories or the response to requests for admission. In connection with any arbitration, each party shall provide to the other, no later than fourteen (14) business days before the date of the arbitration hearing, the identity of all persons who may testify at the arbitration, a copy of all documents that may be introduced at the arbitration and a summary of the opinions of any experts whose services may be called upon in any such arbitration hearing, as well as the basis for said opinions. The arbitrator’s decision and award shall be made and delivered within sixty (60) days of the conclusion of the arbitration hearing. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or finding of liability. The arbitrator shall not have power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages or any other damages that are specifically excluded under this Agreement, and each party hereby irrevocably waives any claim to such damages in the event of any such arbitration hearing. The parties covenant and agree that they will participate in the arbitration hearing in good faith and that they will share equally its costs, except as otherwise provided herein. The arbitrator may, in his or her discretion, assess costs and expenses (including the reasonable attorney fees and expenses of the prevailing party) against any party to an arbitration proceeding. Any party unsuccessfully refusing to comply with an order of the arbitrators shall be liable for costs and expenses, including attorneys’ fees, incurred by the other party in enforcing the award. If the parties hereto elect to submit any Disagreement to binding arbitration, the provisions of this Section 14.10(c) shall be enforceable in any court of competent jurisdiction. Except as provided above with regard to the arbitrator’s right to assess costs and expenses against any party, the parties shall bear their own attorneys’ fees, costs and expenses in connection with any such arbitration. The parties will share equally in the fees and expenses charged by J.A.M.S./Endispute, Inc.

 

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Nothing set forth in this Section 14.10 shall prevent either party hereto from seeking temporary or preliminary injunctive relief from any court of competent jurisdiction in the Commonwealth of Massachusetts, USA or from the United States District Court for the District of Massachusetts, provided such party seeks relief in order to avoid immediate and irreparable harm.

14.11. Severability . In the event that any provision of this Agreement shall be determined to be unenforceable by reason of its extension for too great a period of time or over too large a geographic area or over too great a range of activities, it shall be interpreted to extend only over the maximum period of time, geographic area or range of activities as to which it may be enforceable. If, after application of the preceding sentence, any provision of this Agreement shall be determined to be invalid, illegal or otherwise unenforceable by a court of competent jurisdiction, the validity, legality and enforceability of the other provisions of this Agreement shall not be affected thereby. Any invalid, illegal or unenforceable provision of this Agreement shall be severable, and after any such severance, all other provisions hereof shall remain in full force and effect.

14.12. Currency . All references herein to monetary amounts shall refer to United States dollars and shall be referenced herein as US$ or $.

[Remainder of Page Left Intentionally Blank]

 

52


IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

IMAGING ACQUISITION CORPORATION
By:  

  /s/ A. Bruce Johnston

Name:   A. Bruce Johnston
Title:   Vice President
AGFA CORPORATION
By:  

  /s/ Timothy J. Coakley III

Name:   Timothy J. Coakley III
Title:   Vice President, CFO
AGFA MONOTYPE CORPORATION
By:  

  /s/ Robert M. Givens

Name:   Robert M. Givens
Title:     President

S IGNATURE P AGE TO S TOCK P URCHASE A GREEMENT

Exhibit 10.36

Execution Copy

 


CREDIT AGREEMENT

by and among

MONOTYPE IMAGING HOLDINGS CORP.,

as Parent,

IMAGING ACQUISITION CORPORATION,

AGFA MONOTYPE CORPORATION,

and

INTERNATIONAL TYPEFACE CORPORATION,

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO,

as the Lenders,

and

WELLS FARGO FOOTHILL, INC.,

as the Arranger and Administrative Agent

Dated as of November 5, 2004

 



TABLE OF CONTENTS

 

              Page

1.

  DEFINITIONS AND CONSTRUCTION    2
 

1.1

   Definitions    2
 

1.2

   Accounting Terms    2
 

1.3

   Code    2
 

1.4

   Construction    3
 

1.5

   Schedules and Exhibits    3

2.

  LOAN AND TERMS OF PAYMENT    3
 

2.1

   Revolver Advances    3
 

2.2

   Term Loan    3
 

2.3

   Borrowing Procedures and Settlements    4
 

2.4

   Payments    8
 

2.5

   Overadvances    12
 

2.6

   Interest Rates: Rates, Payments, and Calculations    12
 

2.7

   Cash Management    13
 

2.8

   Crediting Payments    14
 

2.9

   Designated Account    14
 

2.10

   Maintenance of Loan Account; Statements of Obligations    14
 

2.11

   Fees    14
 

2.12

   Intentionally Omitted    14
 

2.13

   LIBOR Option    15
 

2.14

   Capital Requirements    16
 

2.15

   Joint and Several Liability of Borrowers    17
 

2.16

   Registration of Notes    19
 

2.17

   Securitization    19

3.

  CONDITIONS; TERM OF AGREEMENT    19
 

3.1

   Conditions Precedent to the Initial Extension of Credit    19
 

3.2

   Conditions Precedent to all Extensions of Credit    20
 

3.3

   Term    20
 

3.4

   Effect of Termination    20
 

3.5

   Early Termination by Borrowers    20
 

3.6

   Conditions Subsequent to the Initial Extension of Credit    21

4.

  REPRESENTATIONS AND WARRANTIES    22
 

4.1

   No Encumbrances    22
 

4.2

   Intentionally Omitted    22

 

-i-


 

4.3

   Intentionally Omitted    22
 

4.4

   Equipment    22
 

4.5

   Location of Inventory and Equipment    22
 

4.6

   Intentionally Omitted    22
 

4.7

   Jurisdiction of Organization; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims    22
 

4.8

   Due Organization and Qualification; Subsidiaries    23
 

4.9

   Due Authorization; No Conflict    23
 

4.10

   Litigation    25
 

4.11

   No Material Adverse Change    25
 

4.12

   Fraudulent Transfer    25
 

4.13

   Employee Compliance    25
 

4.14

   Environmental Condition    26
 

4.15

   Intellectual Property    26
 

4.16

   Leases    26
 

4.17

   Deposit Accounts and Securities Accounts    26
 

4.18

   Complete Disclosure    27
 

4.19

   Indebtedness    27
 

4.20

   Acquisition Documents    27
 

4.21

   D.B. Zwirn Loan Documents    28
 

4.22

   Material Contract    28
 

4.23

   Senior Indebtedness, Etc.    28

5.

  AFFIRMATIVE COVENANTS    28
 

5.1

   Accounting System    28
 

5.2

   Collateral Reporting    28
 

5.3

   Financial Statements, Reports, Certificates    29
 

5.4

   Guarantor Reports    29
 

5.5

   Inspection    29
 

5.6

   Maintenance of Properties    29
 

5.7

   Taxes    29
 

5.8

   Insurance    29
 

5.9

   Location of Inventory and Equipment    30
 

5.10

   Compliance with Laws    31
 

5.11

   Leases    31
 

5.12

   Existence    31
 

5.13

   Environmental    31
 

5.14

   Disclosure Updates    31

 

-ii-


 

5.15

   Control Agreements    31
 

5.16

   Formation of Subsidiaries    32
 

5.17

   Acquisition Transaction    32
 

5.18

   D.B. Zwirn Loan Documents    32
 

5.19

   Material Contracts    32
 

5.20

   ERISA Compliance    33
 

5.21

   Further Assurances    33
 

5.22

   Japanese Documents    34

6.

  NEGATIVE COVENANTS    34
 

6.1

   Indebtedness    34
 

6.2

   Liens    35
 

6.3

   Restrictions on Fundamental Changes    35
 

6.4

   Disposal of Assets    35
 

6.5

   Change Name    35
 

6.6

   Nature of Business    35
 

6.7

   Prepayments and Amendments    35
 

6.8

   Intentionally Omitted    36
 

6.9

   Consignments    36
 

6.10

   Distributions    36
 

6.11

   Accounting Methods    36
 

6.12

   Investments    36
 

6.13

   Transactions with Affiliates    36
 

6.14

   Use of Proceeds    37
 

6.15

   Inventory and Equipment with Bailees    37
 

6.16

   Financial Covenants    37
 

6.17

   ERISA    39

7.

  EVENTS OF DEFAULT    40

8.

  THE LENDER GROUP’S RIGHTS AND REMEDIES    43
 

8.1

   Rights and Remedies    43
 

8.2

   Remedies Cumulative    43

9.

  TAXES AND EXPENSES    44

10.

  WAIVERS; INDEMNIFICATION    44
 

10.1

   Demand; Protest; etc.    44
 

10.2

   The Lender Group’s Liability for Collateral    44
 

10.3

   Indemnification    44

 

-iii-


11.

  NOTICES    45

12.

  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER    46

13.

  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS    46
 

13.1

   Assignments and Participations    46
 

13.2

   Successors    49

14.

 

AMENDMENTS; WAIVERS

   49
 

14.1

   Amendments and Waivers    49
 

14.2

   Replacement of Holdout Lender    50
 

14.3

   No Waivers; Cumulative Remedies    50

15.

  AGENT; THE LENDER GROUP    50
 

15.1

   Appointment and Authorization of Agent    50
 

15.2

   Delegation of Duties    52
 

15.3

   Liability of Agent    52
 

15.4

   Reliance by Agent    52
 

15.5

   Notice of Default or Event of Default    52
 

15.6

   Credit Decision    52
 

15.7

   Costs and Expenses; Indemnification    53
 

15.8

   Agent in Individual Capacity    53
 

15.9

   Successor Agent    54
 

15.10

   Lender in Individual Capacity    54
 

15.11

   Withholding Taxes    54
 

15.12

   Collateral Matters    56
 

15.13

   Restrictions on Actions by Lenders; Sharing of Payments    57
 

15.14

   Agency for Perfection    57
 

15.15

   Payments by Agent to the Lenders    57
 

15.16

   Concerning the Collateral and Related Loan Documents    58
 

15.17

   Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information    58
 

15.18

   Several Obligations; No Liability    59
 

15.19

   Bank Product Providers    59

16.

  GENERAL PROVISIONS    59
 

16.1

   Effectiveness    59
 

16.2

   Section Headings    59
 

16.3

   Interpretation    59
 

16.4

   Severability of Provisions    59
 

16.5

   Counterparts; Electronic Execution    59
 

16.6

   Revival and Reinstatement of Obligations    60
 

16.7

   Confidentiality    60
 

16.8

   Integration    60
 

16.9

   Monotype as Agent for Loan Parties    60
 

16.10

   Public Disclosure    61

 

-iv-


EXHIBITS AND SCHEDULES

 

Exhibit A-1

   Form of Assignment and Acceptance

Exhibit B-1

   Form of Facility Limiter Report

Exhibit C-1

   Form of Compliance Certificate

Exhibit L-1

   Form of LIBOR Notice

Exhibit M-1

   Merger Agreement

Schedule A-1

   Agent’s Account

Schedule C-1

   Commitments

Schedule D-1

   Designated Account

Schedule M-1

   Material Contracts

Schedule P-1

   Permitted Holders

Schedule P-2

   Permitted Liens

Schedule R-1

   Real Property Collateral

Schedule 1.1

   Definitions

Schedule 2.7(a)

   Cash Management Banks

Schedule 3.1

   Conditions Precedent

Schedule 3.6(h)

   Intellectual Property

Schedule 4.5

   Locations of Inventory and Equipment

Schedule 4.7(a)

   Jurisdictions of Organization

Schedule 4.7(b)

   Chief Executive Offices

Schedule 4.7(c)

   Organizational Identification Numbers

Schedule 4.7(d)

   Commercial Tort Claims

Schedule 4.8(b)

   Capitalization of Parent, each Borrower and their Subsidiaries

Schedule 4.8(c)

   Capitalization of Parent’s and Borrowers’ Subsidiaries

Schedule 4.10

   Litigation

Schedule 4.13(a)

   ERISA Plans

Schedule 4.13(d)

   ERISA Exceptions

Schedule 4.14

   Environmental Matters

Schedule 4.17

   Deposit Accounts and Securities Accounts

Schedule 4.19

   Permitted Indebtedness

Schedule 5.2

   Collateral Reporting

Schedule 5.3

   Financial Statements, Reports, Certificates


CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “ Agreement ”), is entered into as of November 5, 2004, by and among the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “ Lenders ”), and WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “ Agent ”), MONOTYPE IMAGING HOLDINGS CORP. , a Delaware corporation (“ Parent ”), IMAGING ACQUISITION CORPORATION , a Delaware corporation (“ Newco ”), AGFA MONOTYPE CORPORATION , a Delaware corporation (“ Monotype ”), and INTERNATIONAL TYPEFACE CORPORATION , a New York corporation (“ Typeface ”).

W I T N E S S E T H

WHEREAS , Newco has entered into that certain Stock Purchase Agreement, dated as of November 5, 2004 (the “ Stock Purchase Agreement ”), among Newco, Monotype and Agfa Corporation, a Delaware corporation (the “ Seller ”) pursuant to which Newco will acquire the stock of Monotype (the “ Monotype Stock ”), in an acquisition (the “ Acquisition Transaction ”), such Acquisition Transaction to be effective (the “ Acquisition Effectiveness Time ”) immediately upon receipt by the Seller of the purchase price described in the Stock Purchase Agreement for the Monotype Stock;

WHEREAS , immediately following the Acquisition Transaction, Newco will merge with and into Monotype (the “ Merger ”), with Monotype surviving the Merger as a wholly-owned subsidiary of Parent, pursuant to an Agreement and Plan of Merger substantially in the form of Exhibit M-1 hereto (the “ Merger Agreement ”), which provides, among other things, that (a) the Merger shall be automatically effective immediately following the consummation of the Acquisition Transaction and (b) Monotype shall be the surviving corporation (with its name changed to Monotype Imaging, Inc.) and shall become a wholly-owned subsidiary of Parent; and

WHEREAS , in order to (a) finance the Acquisition Transaction, (b) pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, the Acquisition Documents, and the transactions contemplated hereby and thereby, and (c) finance ongoing working capital, capital expenditures, and general corporate needs of Parent and its subsidiaries following the Acquisition Transaction and the Merger, Borrowers have requested that Agent and Lenders extend credit to Borrowers pursuant to, and in accordance with, this Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

 

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions . Capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1 .

1.2 Accounting Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto. Whenever the term “Borrowers” or the term “Parent” is used in respect of a financial covenant or a related definition, it shall be understood to mean Borrowers and their Subsidiaries or Parent and its Subsidiaries, as applicable, on a consolidated basis unless the context clearly requires otherwise.

1.3 Code . Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein; provided , however , that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 shall govern.

 

2


1.4 Construction . Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in accordance with the terms hereof) of all Obligations other than contingent indemnification Obligations and other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding and are not required to be repaid or cash collateralized pursuant to the provisions of this Agreement. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a Record and any Record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein.

1.5 Schedules and Exhibits . All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

 

2. LOAN AND TERMS OF PAYMENT.

2.1 Revolver Advances .

(a) Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender with a Revolver Commitment agrees (severally, not jointly or jointly and severally) to make advances (“ Advances ”) to Borrowers in an amount at any one time outstanding not to exceed such Lender’s Pro Rata Share of an amount equal to the result of (i) the Maximum Revolver Amount less (ii) the Bank Product Reserve.

(b) Lenders shall have no obligation to make additional Advances to the extent such additional Advances would cause the sum of (i) the Revolver Usage, plus (ii) the Bank Product Reserve to exceed the Maximum Revolver Amount.

(c) Lenders shall have no obligation to make additional Advances to the extent such additional Advances would cause the sum of the Revolver Usage plus the outstanding principal amount of the Term Loan plus the outstanding principal amount of the D.B. Zwirn Term Loan to exceed the Facility Limiter Amount.

(d) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement.

2.2 Term Loan . Subject to the terms and conditions of this Agreement, on the Closing Date each Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and severally) to make term loans (collectively, the “ Term Loan ”) to Borrowers in an amount equal to such Lender’s Pro Rata Share of the Term Loan Amount. The principal amount of the Term Loan shall be repaid in monthly installments, beginning on the first day of the first month following the Closing Date, as follows: (a) during the period of time from the Closing Date through the first anniversary of the Closing Date, $750,000 per month; (b) during the period of time from the first anniversary of the Closing Date through the second anniversary of the Closing

 

3


Date, $833,333 per month; and (c) $1,083,333 per month thereafter, such installments to be due and payable on the first day of each month, continuing until and including the Maturity Date, on which date the unpaid balance of the Term Loan would be due and payable in full. The outstanding unpaid principal balance and all accrued and unpaid interest under the Term Loan shall be due and payable on the date of termination of this Agreement, whether by its terms, by prepayment, or by acceleration. All amounts outstanding under the Term Loan shall constitute Obligations. Once any portion of the Term Loan has been paid or prepaid, it may not be reborrowed.

2.3 Borrowing Procedures and Settlements .

(a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable written request by an Authorized Person delivered to Agent. Unless Swing Lender is not obligated to make a Swing Loan pursuant to Section 2.3(b) below, such notice must be received by Agent no later than 10:00 a.m. (California time) on the Business Day that is the requested Funding Date specifying (i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall be a Business Day; provided , however , that if Swing Lender is not obligated to make a Swing Loan as to a requested Borrowing, such notice must be received by Agent no later than 10:00 a.m. (California time) on the Business Day prior to the date that is the requested Funding Date. At Agent’s election, in lieu of delivering the above-described written request, any Authorized Person may give Agent telephonic notice of such request by the required time. In such circumstances, Borrowers agree that any such telephonic notice will be confirmed in writing within 24 hours of the giving of such telephonic notice, but the failure to provide such written confirmation shall not affect the validity of the request.

(b) Making of Swing Loans. In the case of a request for an Advance and so long as either (i) the aggregate amount of Swing Loans made since the last Settlement Date plus the amount of the requested Advance does not exceed $2,000,000, or (ii) Swing Lender, in its sole discretion, shall agree to make a Swing Loan notwithstanding the foregoing limitation, Swing Lender, as a Lender, shall make an Advance in the amount of such Borrowing (any such Advance made solely by Swing Lender as a Lender pursuant to this Section 2.3(b) being referred to as a “ Swing Loan ” and such Advances being referred to collectively as “ Swing Loans ”) available to Borrowers on the Funding Date applicable thereto by transferring immediately available funds to Borrowers’ Designated Account. Each Swing Loan shall be deemed to be an Advance hereunder and shall be subject to all the terms and conditions applicable to other Advances, except that all payments on any Swing Loan shall be payable to Swing Lender as a Lender solely for its own account. Subject to the provisions of Section 2.3(d)(ii) , Swing Lender as a Lender shall not make and shall not be obligated to make any Swing Loan if Swing Lender has actual knowledge that (i) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the requested Borrowing would exceed the Availability on such Funding Date. Swing Lender as a Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making any Swing Loan. The Swing Loans shall be secured by the Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are Base Rate Loans.

(c) Making of Loans.

(i) In the event that Swing Lender is not obligated to make a Swing Loan, then promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a) , Agent shall notify the Lenders, not later than 1:00 p.m. (California time) on the Business Day immediately preceding the Funding Date applicable thereto, by telecopy, telephone, or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After Agent’s receipt of the proceeds of such Advances, Agent shall make the proceeds thereof available to Administrative Borrower on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Administrative Borrower’s

 

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Designated Account; provided , however , that, subject to the provisions of Section 2.3(d)(ii) , Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any Advance if Agent shall have actual knowledge that (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing would exceed the Availability on such Funding Date.

(ii) Unless Agent receives notice from a Lender prior to 9:00 a.m. (California time) on the date of a Borrowing, that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to Agent in immediately available funds and Agent in such circumstances has made available to Borrowers such amount, that Lender shall on the Business Day following such Funding Date make such amount available to Agent, together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender’s Advance on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Advances composing such Borrowing. The failure of any Lender to make any Advance on any Funding Date shall not relieve any other Lender of any obligation hereunder to make an Advance on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on any Funding Date.

(iii) Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender’s Advance was funded by the other members of the Lender Group) or, if so directed by Administrative Borrower and if no Default or Event of Default had occurred and is continuing (and to the extent such Defaulting Lender’s Advance was not funded by the Lender Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender had made Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero. This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such Defaulting Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrowers of their duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be

 

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deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (other than Bank Product Obligations) without any premium or penalty of any kind whatsoever; provided however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.

(d) Protective Advances and Optional Overadvances.

(i) Agent hereby is authorized by Borrowers and the Lenders, from time to time in Agent’s sole discretion, (A) after the occurrence and during the continuance of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 3 are not satisfied, to make Advances to Borrowers on behalf of the Lenders that Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the likelihood of repayment of the Obligations (other than the Bank Product Obligations), or (3) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement, including Lender Group Expenses and the costs, fees, and expenses described in Section 10 (any of the Advances described in this Section 2.3(d)(i) shall be referred to as “ Protective Advances ”).

(ii) Any contrary provision of this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Advances (including Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would be created, so long as after giving effect to such Advances, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount. In the event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the immediately foregoing provisions, regardless of the amount of, or reason for, such excess, Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral or its value), and the Lenders with Revolver Commitments thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of the Advances to Borrowers to an amount permitted by the preceding paragraph. In such circumstances, if any Lender with a Revolver Commitment disagrees over the proposed terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders. Each Lender with a Revolver Commitment shall be obligated to settle with Agent as provided in Section 2.3(e) for the amount of such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(d)(ii) , and any Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses.

(iii) Each Protective Advance and each Overadvance shall be deemed to be an Advance hereunder, except that no Protective Advance or Overadvance shall be eligible to be a LIBOR Rate Loan and all payments on the Protective Advances shall be payable to Agent solely for its own account. The Protective Advances and Overadvances shall be repayable on demand, secured by the Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. The provisions of this Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended to benefit any Borrower in any way, except to the extent provided under subclause (d)(ii) above.

(iv) Notwithstanding anything to the contrary contained in this Agreement, (A) the aggregate principal amount of Protective Advances and Overadvances outstanding at any time shall not exceed an amount equal to the lesser of (1) $3,000,000 and (2) the result of (x) the Facility Limiter Amount plus $3,000,000 minus (y) the Revolver Usage at such time plus the outstanding principal balance of the Term

 

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Loan at such time plus the outstanding principal balance of the D.B. Zwirn Term Loan at such time, and (B) in no event shall the sum of (1) the Revolver Usage, plus (2) the then outstanding principal amount of Protective Advances, plus (3) the then outstanding principal amount of Overadvances exceed the Maximum Revolver Amount.

(e) Settlement. It is agreed that each Lender’s funded portion of the Advances is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which agreement shall not be for the benefit of any Borrower) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Advances, the Swing Loans, and the Protective Advances shall take place on a periodic basis in accordance with the following provisions:

(i) Agent shall request settlement (“ Settlement ”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for itself, with respect to the outstanding Protective Advances, and (3) with respect to Borrowers’ or their respective Subsidiaries’ Collections received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. (California time) on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “ Settlement Date ”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances, Swing Loans, and Protective Advances for the period since the prior Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(b)(iii) ): (y) if a Lender’s balance of the Advances (including Swing Loans and Protective Advances) exceeds such Lender’s Pro Rata Share of the Advances (including Swing Loans and Protective Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Protective Advances), and (z) if a Lender’s balance of the Advances (including Swing Loans and Protective Advances) is less than such Lender’s Pro Rata Share of the Advances (including Swing Loans and Protective Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Protective Advances). Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans or Protective Advances and, together with the portion of such Swing Loans or Protective Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.

(ii) In determining whether a Lender’s balance of the Advances, Swing Loans, and Protective Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the Advances, Swing Loans, and Protective Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such Lender after such application, such net amount shall be distributed by Agent to that Lender as part of such next Settlement.

(iii) Between Settlement Dates, Agent, to the extent no Protective Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Advances, for application to Swing Lender’s Pro Rata Share of the Advances. If, as of any Settlement Date, Collections of Borrowers or their respective Subsidiaries received since the then immediately preceding Settlement Date have

 

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been applied to Swing Lender’s Pro Rata Share of the Advances other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding Advances of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances. During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect to Protective Advances, and each Lender (subject to the effect of agreements between Agent and individual Lenders) with respect to the Advances other than Swing Loans and Protective Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable.

(f) Notation. Agent shall record on its books the principal amount of the Advances owing to each Lender, including the Swing Loans owing to Swing Lender, and Protective Advances owing to Agent, and the interests therein of each Lender, from time to time and such records shall, absent manifest error, conclusively be presumed to be correct and accurate.

(g) Lenders’ Failure to Perform. All Advances (other than Swing Loans and Protective Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Advance (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

2.4 Payments .

(a) Payments by Borrowers.

(i) Except as otherwise expressly provided herein, all payments by Borrowers shall be made to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time), shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

(ii) Unless Agent receives notice from Administrative Borrower prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

 

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(b) Apportionment and Application.

(i) Except as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in the Loan Documents (including any agreements between Agent and individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and payments of fees and expenses (other than fees or expenses that are for Agent’s separate account, after giving effect to any agreements between Agent and individual Lenders) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee relates. Except as provided in Section 2.4(b)(iii) , all payments shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied as follows:

(A) first , ratably to pay any Lender Group Expenses then due to Agent or any of the Lenders under the Loan Documents, until paid in full,

(B) second , ratably to pay any fees or premiums then due to Agent (for its separate account, after giving effect to any agreements between Agent and individual Lenders) or any of the Lenders under the Loan Documents, until paid in full,

(C) third , to pay interest due in respect of all Protective Advances, until paid in full,

(D) fourth , to pay the principal of all Protective Advances, until paid in full,

(E) fifth , ratably to pay interest due in respect of the Advances (other than Protective Advances), the Swing Loans, and the Term Loan, until paid in full,

(F) sixth , ratably to pay all principal amounts then due and payable (other than as a result of an acceleration thereof) in respect of the Term Loan, until paid in full,

(G) seventh , to pay the principal of all Swing Loans, until paid in full,

(H) eighth , so long as no Event of Default has occurred and is continuing, and at Agent’s election (which election Agent agrees will not be made if an Overadvance would be created thereby), to pay amounts then due and owing by Parent, any Borrower or any of their respective Subsidiaries in respect of Bank Products, until paid in full,

(I) ninth , so long as no Event of Default has occurred and is continuing, to pay the principal of all Advances, until paid in full,

(J) tenth , if an Event of Default has occurred and is continuing, then ratably (i) to pay the principal of all Advances, until paid in full, and (ii) to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount of the Bank Product Reserve established prior to the occurrence of, and not in contemplation of, the subject Event of Default until the obligations of Parent, Borrowers and their respective Subsidiaries in respect of Bank Products have been paid in full or the cash collateral amount has been exhausted,

(K) eleventh , (i) if an Event of Default has occurred and is continuing and the Term Loan has been accelerated, to pay the outstanding principal balance of the Term Loan (in the inverse order of the maturity of the installments due thereunder) until the Term Loan is paid in full, or (ii) if an Event of Default has occurred and is continuing, but the Term Loan has not been accelerated, to Agent, to be deposited into a cash collateral account in the name of Agent (the “ Term Loan Cash Collateral Account ”), which funds shall either be applied (x) to the outstanding principal balance of the Term Loan upon the acceleration of the Term Loan, (y) to pay all principal amounts then due and payable (other than as a result of an acceleration thereof) in respect of the Term Loan, until paid in full, or (z) to the outstanding principal balance of the Term Loan and/or disbursed to Borrowers pursuant to a mutual agreement between Borrowers and Agent,

(L) twelfth , if an Event of Default has occurred and is continuing, to pay any other Obligations (including the provision of amounts to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount determined by Agent in its

 

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Permitted Discretion as the amount necessary to secure the obligations of Parent, Borrowers and their respective Subsidiaries in respect of Bank Products, but excluding the outstanding principal balance of the Term Loan to the extent provided in clause (K) above), and

(M) thirteenth , to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(ii) Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(e) .

(iii) In each instance, so long as no Event of Default has occurred and is continuing, this Section 2.4(b) shall not apply to any payment made by Borrowers to Agent and specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement or any other Loan Document.

(iv) For purposes of the foregoing, “paid in full” means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(v) In the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4 shall control and govern.

(c) Prepayments . All prepayments under this Section shall be made in accordance with Section 2.4(a) .

(i) Optional Prepayments of the Term Loan . Borrowers may voluntarily prepay the Term Loan in full or in part at any time upon ten (10) Business Days prior written notice to the Agent.

(ii) Optional Reductions of the Revolver Commitment. Borrowers may voluntarily reduce the Revolver Commitment and the Maximum Revolver Amount in full or in part at any time upon ten (10) Business Days prior written notice to the Agent so long as (A) the Revolver Usage does not exceed the Revolver Commitment and the Maximum Revolver Amount as so modified and (B) such reduction would not result in the Revolver Commitment being less than $3,000,000.

(iii) Mandatory Prepayments.

(A) Borrowers shall immediately prepay the outstanding principal amount of the Term Loan in the event that the Revolver Commitment is terminated for any reason.

(B) Subject to Section 5.8 , upon the receipt by any Loan Party or any of its Subsidiaries of any Extraordinary Receipts in an aggregate amount in excess of $500,000 (other than proceeds of insurance with respect to which the proviso to Section 5.8(b) would otherwise be applicable) in any fiscal year of Parent and its Subsidiaries, Borrowers shall prepay the outstanding principal of the Term Loan, the D.B. Zwirn Term Loan and the Advances in accordance with Section 2.4(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith.

 

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(C) Upon the sale or issuance by any Loan Party or any of its Subsidiaries of any shares of Stock, or the issuance or incurrence by any Loan Party or any of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness), Borrowers shall prepay the outstanding principal amount of the Term Loan, the D.B. Zwirn Term Loan and the Advances in accordance with Section 2.4(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith. The provisions of this subsection (C) shall not be deemed to be implied consent to any issuance, incurrence or sale otherwise prohibited by the terms and conditions of this Agreement.

(D) If the Leverage Ratio as of the most recent fiscal year of Parent then ended (determined based upon the audited annual financial statements and annual Compliance Certificate delivered to Agent pursuant to Section 5.3 ) was greater than or equal to 2.00:1.00, then within 5 days of delivery to Agent and Lenders of such audited annual financial statements pursuant to Section 5.3 , commencing with the delivery to Agent and Lenders of the audited annual financial statements for the fiscal year ended December 31, 2005 or, if such audited annual financial statements are not delivered to Agent and Lenders on the date such audited annual financial statements are required to be delivered pursuant to Section 5.3 , 5 days after the date such audited annual financial statements are required to be delivered to Agent and Lenders pursuant to Section 5.3 , Borrowers shall prepay the outstanding principal amount of the Term Loan, the D.B. Zwirn Term Loan and the Advances in accordance with Section 2.4(d) in an amount equal to 50% of the Excess Cash Flow of Parent, Borrowers and their respective Subsidiaries for such fiscal year.

(E) If, on any date, the sum of (1) the Revolver Usage, plus (2) the outstanding principal amount of the Term Loan, plus (3) the outstanding principal amount of the D.B. Zwirn Term Loan exceeds the Facility Limiter Amount, Borrowers shall immediately prepay the outstanding principal amount of the Term Loan, the D.B. Zwirn Term Loan and the Advances in accordance with Section 2.4(d) in an amount equal to the amount of such excess.

(d) Application of Mandatory Prepayments .

(i) Each prepayment pursuant to subclause (c)(iii)(B) above shall, subject to Section 5.8 , be applied, first, to the outstanding principal amount of the Term Loan, until paid in full, second, to the outstanding principal amount of the Advances (together with a corresponding reduction in the Revolver Commitment and the Maximum Revolver Amount), until paid in full, and third, to the outstanding principal amount of the D.B. Zwirn Term Loan to the extent required by the D.B. Zwirn Credit Agreement, until paid in full.

(ii) Each prepayment pursuant to subclause (c)(iii)(C) above shall be applied, first, to the outstanding principal amount of the Term Loan, until paid in full, second, to the outstanding principal amount of the Advances (together with a corresponding reduction in the Revolver Commitment and the Maximum Revolver Amount), until paid in full, and third, to the outstanding principal amount of the D.B. Zwirn Term Loan to the extent required by the D.B. Zwirn Credit Agreement, until paid in full.

(iii) Each prepayment pursuant to subclause (c)(iii)(D) above shall be applied, first, to the outstanding principal amount of the Term Loan, until paid in full, second, to the outstanding principal amount of the Advances (together with a corresponding reduction in the Revolver Commitment and the Maximum Revolver Amount), until paid in full, and third, to the outstanding principal amount of the D.B. Zwirn Term Loan to the extent required by the D.B. Zwirn Credit Agreement, until paid in full.

(iv) Each prepayment pursuant to subclause (c)(iii)(E) above shall be applied, first, to the outstanding principal amount of the Advances, until paid in full, second, to the outstanding principal amount of the Term Loan, until paid in full, and third, to the outstanding principal amount of the D.B. Zwirn Term Loan to the extent required by the D.B. Zwirn Credit Agreement, until paid in full.

 

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(e) Interest and Fees; Application of Prepayments of the Term Loan and Reduction of the Revolver Commitment. Any prepayment of the Term Loan or reduction of the Revolver Commitment made pursuant to Section 2.4(c) shall be accompanied by (i) accrued interest on the principal amount being prepaid to the date of prepayment and (ii) the Applicable Prepayment Premium, other than with respect to (x) mandatory prepayments made pursuant to Section 2.4(c)(iii)(D) and (y) voluntary prepayments made pursuant to Section 2.4(c)(i) or Section 2.4(c)(ii) to the extent that such voluntary prepayments are made with the proceeds of Excess Cash Flow (to the extent such Excess Cash Flow was not used to make a mandatory prepayment under Section 2.4(c)(iii)(D) ). All prepayments of the Term Loan shall be applied (i) fifty percent (50%) to reduce the principal payments thereof coming due in the next twelve months and (ii) any remaining amounts to the remaining installments thereof in the inverse order of maturity.

(f) Cumulative Prepayments. Except as otherwise expressly provided in Section 2.4(c) , payments with respect to any subsection of Section 2.4(c) are in addition to payments made or required to be made under any other subsection of Section 2.4(c) .

2.5 Overadvances . If, at any time or for any reason, the amount of Obligations owed by Borrowers to the Lender Group pursuant to Section 2.1 is greater than any of the limitations set forth in Section 2.1 (an “ Overadvance ”), Borrowers immediately shall, except as otherwise arranged in accordance with the terms of Section 2.3(d)(ii) , pay to Agent, in cash, the amount of such excess, which amount shall be used by Agent to reduce the Obligations in accordance with the priorities set forth in Section 2.4(b) . In addition, Borrowers hereby promise to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full as and when due and payable under the terms of this Agreement and the other Loan Documents.

2.6 Interest Rates: Rates, Payments, and Calculations .

(a) Interest Rates. Except as provided in clause (c) below, all Obligations (except for Bank Product Obligations), whether or not charged to the Loan Account pursuant to the terms hereof, shall bear interest on the Daily Balance thereof as follows: (i) if the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, (ii) if the relevant Obligation is a portion of the Term Loan that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, (iii) if the relevant Obligation is a portion of the Term Loan that is a Base Rate Loan, at a per annum rate equal to the Base Rate plus the Base Rate Margin, and (iv) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

(b) Intentionally Omitted.

(c) Default Rate. Upon the occurrence and during the continuation of an Event of Default (and at the election of Agent or the Required Lenders), all Obligations (except for Bank Product Obligations), whether or not charged to the Loan Account pursuant to the terms hereof, shall bear interest on the Daily Balance thereof at a per annum rate equal to 2 percentage points above the per annum rate otherwise applicable hereunder.

(d) Payment. Except as provided to the contrary in Section 2.11 , interest and all fees payable hereunder shall be due and payable, in arrears, on the first day of each month at any time that Obligations or Commitments are outstanding. Borrowers hereby authorize Agent, from time to time, without prior notice to Borrowers, to charge all interest and fees (when due and payable), all Lender Group Expenses (as and when incurred), all fees and costs provided for in Section 2.11 (as and when accrued or incurred and due and payable), and all other payments as and when due and payable under any Loan Document (including the amounts due and payable with respect to the Term Loan and including any amounts due and payable to the Bank Product Providers in respect of Bank Products up to the amount of the Bank Product Reserve) to Borrowers’ Loan Account, which amounts thereafter shall constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances hereunder; provided , however , that, with respect to any Lender

 

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Group Expense greater than $100,000, Agent shall, concurrently with charging such amount to Borrowers’ Loan Account, provide notice of such charge to Administrative Borrower. Any interest not paid when due shall be compounded by being charged to Borrowers’ Loan Account and shall thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances that are Base Rate Loans hereunder.

(e) Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360-day year for the actual number of days elapsed. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate.

(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided , however , that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto , as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

2.7 Cash Management .

(a) Subject to Section 3.6(f) , the Loan Parties shall and shall cause each of their Subsidiaries to (i) establish and maintain cash management services of a type and on terms satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a) (each a “ Cash Management Bank ”), and shall request in writing and otherwise take such reasonable steps to ensure that all of their and their respective Subsidiaries’ Account Debtors forward payment of the amounts owed by them directly to such Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all of their Collections (including those sent directly by their Account Debtors to the Loan Parties or their respective Subsidiaries) into a bank account in Agent’s name (a “ Cash Management Account ”) at one of the Cash Management Banks.

(b) Each Cash Management Bank shall establish and maintain Cash Management Agreements with Agent and the applicable Loan Party, in form and substance acceptable to Agent. Each such Cash Management Agreement shall provide, among other things, that (i) the Cash Management Bank will comply with any instructions originated by Agent directing the disposition of the funds in such Cash Management Account without further consent by the applicable Loan Party or its Subsidiaries, as applicable, (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Cash Management Account, other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of payment, and (iii) it will forward by daily sweep all amounts in the applicable Cash Management Account to the Agent’s Account.

(c) So long as no Default or Event of Default has occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank or Cash Management Account; provided , however , that (i) such prospective Cash Management Bank shall be reasonably satisfactory to Agent, and (ii) prior to the time of the opening of such Cash Management Account, the applicable Loan Party or its Subsidiary, as applicable, and such prospective Cash Management Bank shall have executed and delivered to Agent a Cash Management Agreement. The Loan Parties (or their Subsidiaries, as applicable) shall close any of their Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of notice from Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in

 

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Agent’s reasonable judgment, or as promptly as practicable and in any event within 60 days of notice from Agent that the operating performance, funds transfer, or availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or Agent’s liability under any Cash Management Agreement with such Cash Management Bank is no longer acceptable in Agent’s reasonable judgment.

(d) The Cash Management Accounts shall be cash collateral accounts subject to Control Agreements.

2.8 Crediting Payments . The receipt of any payment item by Agent (whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to the Agent’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then the applicable Loan Party shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into the Agent’s Account on a Business Day on or before 11:00 a.m. (California time). If any payment item is received into the Agent’s Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.

2.9 Designated Account . Agent is authorized to make the Advances and the Term Loan under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d) . Administrative Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Advances requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower, any Advance, Protective Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account.

2.10 Maintenance of Loan Account; Statements of Obligations . Agent shall maintain an account on its books in the name of Borrowers (the “ Loan Account ”) on which Borrowers will be charged with the Term Loan, all Advances (including Protective Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, and with all other payment Obligations hereunder or under the other Loan Documents (except for Bank Product Obligations), including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.8 , the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers’ account, including all amounts received in the Agent’s Account from any Cash Management Bank. Agent shall render statements regarding the Loan Account to Administrative Borrower, including principal, interest and fees, and including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within 60 days after receipt thereof by Administrative Borrower, Administrative Borrower shall deliver to Agent written objection thereto describing the error or errors contained in any such statements.

2.11 Fees . Borrowers shall pay to Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.

2.12 Intentionally Omitted .

 

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2.13 LIBOR Option .

(a) Interest and Interest Payment Dates. In lieu of having interest charged at the rate based upon the Base Rate, Borrowers shall have the option (the “ LIBOR Option ”) to have interest on all or a portion of the Advances or the Term Loan be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable monthly in accordance with Section 2.6(d) . On the last day of each applicable Interest Period, unless Administrative Borrower properly has exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event of Default has occurred and is continuing, Borrowers no longer shall have the option to request that Advances or the Term Loan bear interest at a rate based upon the LIBOR Rate and Agent shall have the right to convert the interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder.

(b) LIBOR Election.

(i) Administrative Borrower may, at any time and from time to time, so long as no Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement of the proposed Interest Period (the “ LIBOR Deadline ”). Notice of Administrative Borrower’s election of the LIBOR Option for a permitted portion of the Advances or the Term Loan and an Interest Period pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. (California time) on the same day). Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the Lenders.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the Lenders harmless against any loss, cost, or expense incurred by Agent or any Lender as a result of (A) the payment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (B) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto (including as a result of an Event of Default), or (C) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses, collectively, “ Funding Losses ”). Funding Losses shall, with respect to Agent or any Lender, be deemed to equal the amount determined by Agent or such Lender to be the excess, if any, of (1) the amount of interest that would have accrued on the principal amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would have been applicable thereto, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period therefor), minus (2) the amount of interest that would accrue on such principal amount for such period at the interest rate which Agent or such Lender would be offered were it to be offered, at the commencement of such period, on Dollar deposits of a comparable amount and period in the London interbank market. A certificate of Agent or a Lender delivered to Administrative Borrower setting forth any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.13 shall be conclusive absent manifest error.

(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and integral multiples of $500,000 in excess thereof.

(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any time; provided , however , that in the event that LIBOR Rate Loans are prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any automatic prepayment through the required application by Agent of proceeds of Borrowers’ and their respective Subsidiaries’ Collections in accordance with Section 2.4(b) or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with clause (b)(ii) above.

 

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(d) Special Provisions Applicable to LIBOR Rate.

(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs, in each case, due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including changes in tax laws (except changes of general applicability in laws imposing tax on the overall net income of a Lender, including taxes in lieu of net income taxes such as franchise or branch profits taxes to the extent that such taxes are based on the overall net income of a Lender) and changes in the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any successor), excluding the Reserve Percentage, which additional or increased costs would increase the cost of funding loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give Administrative Borrower and Agent notice of such a determination and adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Administrative Borrower may, by notice to such affected Lender (x) require such Lender to furnish to Administrative Borrower a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, (y) convert the LIBOR Rate Loans into Base Rate Loans, or (z) repay the LIBOR Rate Loans with respect to which such adjustment is made (in the case of each of clauses (y) and (z), together with any amounts due under clause (b)(ii) above).

(ii) In the event that any change in market conditions or any law, regulation, treaty, or directive, or any change in the interpretation of application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Administrative Borrower and Agent promptly shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate. The provisions of this Section shall apply as if each Lender or its Participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans.

2.14 Capital Requirements . If, after the date hereof, any Lender determines that (i) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any change in the interpretation or application thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by such Lender or its parent bank holding company with any guideline, request or directive of any such entity regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on such Lender’s or such holding company’s capital as a consequence of such Lender’s Commitments hereunder to a level below that which such Lender or such holding company could have achieved but for such adoption, change, or compliance (taking into consideration such Lender’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be material, then such Lender may notify Administrative Borrower and Agent thereof (such notice to be delivered by such Lender within 120 days after such Lender becomes aware of any event described in clause (i) or (ii) of this Section

 

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2.14 ). Following receipt of such notice, Borrowers agree to pay such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 90 days after presentation by such Lender of a statement in the amount and setting forth in reasonable detail such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, such Lender may use any reasonable averaging and attribution methods.

2.15 Joint and Several Liability of Borrowers .

(a) Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations.

(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 2.15 ), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them.

(c) If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation.

(d) The Obligations of each Borrower under the provisions of this Section 2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.

(e) Except as otherwise expressly provided in this Agreement, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any Advances, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.15 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.15 , it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.15 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each Borrower under this Section 2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Borrower, Agent or any Lender.

 

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(f) Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g) Each Borrower waives all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement against such Borrower by the operation of law or otherwise.

(h) Each Borrower waives all rights and defenses that such Borrower may have because the Obligations are secured by Real Property. This means, among other things:

(i) Agent and Lenders may collect from such Borrower without first foreclosing on any Collateral pledged by Borrowers.

(ii) If Agent or any Lender forecloses on any Real Property Collateral pledged by Borrowers:

(A) The amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.

(B) Agent and Lenders may collect from such Borrower even if Agent or Lenders, by foreclosing on the Real Property Collateral, has destroyed any right such Borrower may have to collect from the other Borrowers.

This is an unconditional and irrevocable waiver of any rights and defenses such Borrower may have because the Obligations are secured by Real Property.

(i) The provisions of this Section 2.15 are made for the benefit of Agent, Lenders and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of any such Agent, Lender, successor or assign first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by any Agent or Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.15 will forthwith be reinstated in effect, as though such payment had not been made.

(j) Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to any Agent or Lender hereunder or under any other Loan Documents are hereby expressly made subordinate

 

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and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

2.16 Registration of Notes . Agent (or in the case of an assignment not recorded in the Register in accordance with Section 13.1(h) , the assigning Lender), on behalf of Borrowers, agrees to record each Term Loan on the Register (or in the case of an assignment not recorded in the Register in accordance with Section 13.1(h) , a register comparable to the Register) referred to in Section 13.1(h) . Each Term Loan recorded on the Register (or comparable register) may not be evidenced by promissory notes other than Registered Notes (as defined below). Upon the registration of each Term Loan, each Borrower agrees, at the request of any Lender, to execute and deliver to such Lender a promissory note, in conformity with the terms of this Agreement, in registered form to evidence such Registered Loan, in form and substance reasonably satisfactory to such Lender, and registered as provided in Section 13.1(h) (a “ Registered Note ”), payable to the order of such Lender and otherwise duly completed. Once recorded on the Register (or comparable register), each Term Loan may not be removed from the Register (or comparable register) so long as it or they remain outstanding, and a Registered Note may not be exchanged for a promissory note that is not a Registered Note.

2.17 Securitization . Each Borrower hereby acknowledges that each Lender with a Term Loan and each of its Affiliates and Related Funds may sell or securitize the Term Loan (a “ Securitization ”) through the pledge of the Term Loan as collateral security for loans to such Lender or its Affiliates or Related Funds or through the sale of the Term Loan or the issuance of direct or indirect interests in the Term Loan, which loans to such Lender or its Affiliates or Related Funds or direct or indirect interests will be rated by Moody’s, S&P’s or one or more other rating agencies (the “ Rating Agencies ”). Each Borrower agrees to cooperate with such Lenders and their Affiliates and Related Funds to effect the Securitization including, without limitation, by (a) executing such additional documents, as reasonably requested by such Lenders in connection with the Securitization, provided that (i) any such additional documentation does not impose material additional costs on Borrowers, and (ii) any such additional documentation does not materially adversely affect the rights, or increase the obligations, of such Borrower under the Loan Documents or change or affect in a manner adverse to such Borrower the financial terms of the Term Loan, (b) providing such information as may be reasonably requested by such Lenders in connection with the rating of the Term Loan or the Securitization, and (c) providing in connection with any rating of the Term Loan a certificate (i) agreeing to indemnify such Lenders and any of their Affiliates and Related Funds, any of the Rating Agencies, or any party providing credit support or otherwise participating in the Securitization (collectively, the “ Securitization Parties ”) for any losses, claims, damages or liabilities (the “ Securitization Liabilities ”) to which such Lenders or any of their Affiliates or Related Funds, or such Securitization Parties, may become subject insofar as the Securitization Liabilities arise out of or are based upon a breach of the representation and warranty contained in Section 4.18 , and (ii) agreeing to reimburse such Lenders and their Affiliates and Related Funds, and such Securitization Parties, for any legal or other expenses reasonably incurred by such Persons in connection with defending the Securitization Liabilities. Notwithstanding the foregoing, this Section 2.17 is subject to Agent’s and the Required Lenders’ rights and obligations under Sections 13 and 14 hereof in all respects and, in the event of a direct conflict between this Section 2.17 and any provision of Section 13 or 14 with respect to Agent’s and the Required Lenders’ rights and obligations, it is the intent of the parties that the applicable provision of Section 13 or 14 shall control and govern.

 

3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit . The obligation of each Lender to make its initial extension of credit provided for hereunder, is subject to the fulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent set forth on Schedule 3.1 (the making of such initial extension of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent).

 

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3.2 Conditions Precedent to all Extensions of Credit . The obligation of the Lender Group (or any member thereof) to make any Advances hereunder at any time (or to extend any other credit hereunder) shall be subject to the following conditions precedent:

(a) the representations and warranties contained in this Agreement and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date);

(b) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof;

(c) no injunction, writ, restraining order, or other order of any nature restricting or prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against any Borrower, Agent, any Lender, or any of their Affiliates;

(d) no Material Adverse Change shall have occurred; and

(e) all United States federal taxes of Parent, Borrowers and their respective Subsidiaries then due and payable by, or imposed, levied or assessed against, such Persons shall have been paid in full before delinquency or before the expiration of any extension period.

3.3 Term . This Agreement shall continue in full force and effect for a term ending on the fifth anniversary of the Closing Date (the “ Maturity Date ”). The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement immediately and without notice upon the occurrence and during the continuation of an Event of Default.

3.4 Effect of Termination . On the date of termination of this Agreement, all Obligations (including contingent reimbursement obligations and all Bank Product Obligations) immediately shall become due and payable without notice or demand (including providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations). No termination of this Agreement, however, shall relieve or discharge Parent, Borrowers or their respective Subsidiaries of their duties, Obligations, or covenants hereunder or under any other Loan Document and the Agent’s Liens in the Collateral shall remain in effect until all Obligations have been paid in full and the Lender Group’s obligations to provide additional credit hereunder have been terminated. When this Agreement has been terminated and all of the Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, the Agent’s Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations.

3.5 Early Termination by Borrowers . Borrowers have the option, at any time upon 10 Business Days prior written notice by Administrative Borrower to Agent, to terminate this Agreement by paying to Agent, in cash, the Obligations (including providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Products Obligations), in full, together with the Applicable Prepayment Premium. If Administrative Borrower has sent a notice of termination pursuant to the

 

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provisions of this Section, then the Commitments shall terminate and Borrowers shall be obligated to repay the Obligations (including providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Products Obligations), in full, together with the Applicable Prepayment Premium, on the date set forth as the date of termination of this Agreement in such notice.

3.6 Conditions Subsequent to the Initial Extension of Credit . The obligation of the Lender Group (or any member thereof) to continue to make Advances (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of each of the conditions subsequent set forth below (the failure by Borrowers to so perform or cause to be performed constituting an Event of Default):

(a) on or prior to the date that is 90 days after the Closing Date, Agent shall have received (i) a collateral assignment of each key man life insurance policy required by Section 5.8 and (ii) proof of acceptance of each such collateral assignment by the issuer of such key man life insurance policy, the form and substance of which shall be reasonably satisfactory to Agent;

(b) on or prior to the date that is 60 days after the Closing Date, Agent shall have received satisfactory evidence that not less than the Required Library of all existing copyrights of Parent, Borrowers and their respective Subsidiaries have been registered with the United States Copyright Office;

(c) on or prior to the date that is 60 days after the Closing Date, Agent shall have received a Source Code Escrow Agreement, duly executed by the Loan Parties, Agent, D.B. Zwirn and an escrow agent reasonably satisfactory to Agent, with respect to the source and object code for each version or versions of each item of computer software programs or other technology of Parent, Borrowers and their respective Subsidiaries constituting the Required Library;

(d) on or prior to the date that is 10 days after the effective date of the Source Code Escrow Agreement, Agent shall have received evidence reasonably satisfactory to it that the source and object code for each version or versions of each item of computer software programs or other technology of Parent, Borrowers and their respective Subsidiaries constituting the Required Library has been deposited with the escrow agent in accordance with the terms and conditions of the Source Code Escrow Agreement, as provided in Section 6(g)(viii) of the Security Agreement;

(e) on or prior to the date that is 60 days after the Closing Date, Agent shall have received duly executed Cash Management Agreements and Control Agreements, in form and substance reasonably satisfactory to Agent;

(f) on or prior to the date that is 60 days after the Closing Date, Agent shall have received duly executed Collateral Access Agreements, in form and substance reasonably satisfactory to Agent, with respect to the following locations: 200 Ballardvale Street, Wilmington, Massachusetts 01887 and 985 Busse Road, Elk Grove Village, IL 60007;

(g) on or prior to the date that is 15 days after the Closing Date, Agent shall have received evidence reasonably satisfactory to it that the TBP Payment (as defined in the Stock Purchase Agreement) shall have been made in accordance with the terms of Section 8.05 of the Stock Purchase Agreement;

(h) on or prior to the date that is 75 days after the Closing Date, Borrowers shall prepare and deliver, or cause to be delivered, to the U.S. Patent and Trademark Office or the U.S. Copyright Office, as applicable, in good faith in accordance with the procedures and regulations of such office all documents, instruments or other information necessary, in the reasonable judgment of Agent, for the (i) accurate and proper recordation of the assignments and releases described on Schedule 3.6(h) (but only to the extent that the applicable Intellectual Property is material to the conduct of the business of Parent, any Borrower or any of

 

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their respective Subsidiaries) and (ii) accurate and proper documentation of the ownership and chain of title of the Intellectual Property described on Schedule 3.6(h) (but only to the extent that the applicable Intellectual Property is material to the conduct of the business of Parent, any Borrower or any of their respective Subsidiaries). Following such delivery, Borrowers shall promptly provide to Agent reasonable documentation of such delivery, including verification of receipt by the applicable entity, together with any backup documentation reasonably requested by Agent in connection with clause (ii) above. On or prior to the date that is 20 days after the Closing Date, Borrowers shall deliver to Agent a list of the Intellectual Property listed on Schedule 3.6(h) that is material to the conduct of the business of Parent, any Borrower or any of their respective Subsidiaries; and

(i) on or prior to the date that is 2 Business Days after the Closing Date, Agent shall have received a certificate representing the shares of Stock of Agfa Monotype Limited pledged under the Security Agreement, as well as a Stock power with respect thereto endorsed in blank.

 

4. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, Parent and each Borrower make the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:

4.1 No Encumbrances . Parent, Borrowers and their respective Subsidiaries have good and indefeasible title to, or a valid leasehold interest in, their personal property assets and good and marketable title to, or a valid leasehold interest in, their Real Property, in each case, free and clear of Liens except for Permitted Liens.

4.2 Intentionally Omitted .

4.3 Intentionally Omitted .

4.4 Equipment . Each material item of Equipment of Parent, Borrowers and their respective Subsidiaries is used or held for use in their business and is in good working order, ordinary wear and tear and damage by casualty excepted.

4.5 Location of Inventory and Equipment . The Inventory and Equipment (other than vehicles or Equipment out for repair) of Parent, Borrowers and their respective Subsidiaries are not stored with a bailee, warehouseman, or similar party and are located only at, or in-transit between, the locations identified on Schedule 4.5 (as such Schedule may be updated pursuant to Section 5.9 ).

4.6 Intentionally Omitted .

4.7 Jurisdiction of Organization; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims .

(a) The jurisdiction of organization of Parent, Borrowers and each of their respective Subsidiaries is set forth on Schedule 4.7(a) (which Administrative Borrower may amend from time to time solely to reflect new Subsidiaries formed in accordance with Section 5.16 ).

 

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(b) The chief executive office of Parent, Borrowers and each of their respective Subsidiaries is located at the address indicated on Schedule 4.7(b) (as such Schedule may be updated pursuant to Section 5.9 ).

(c) Parent, Borrowers’ and each of their respective Subsidiaries’ organizational identification number, if any, are identified on Schedule 4.7(c) (which Administrative Borrower may amend from time to time solely to reflect new Subsidiaries formed in accordance with Section 5.16 ).

(d) As of the Closing Date, Parent, Borrowers and their respective Subsidiaries do not hold any commercial tort claims, except as set forth on Schedule 4.7(d) .

4.8 Due Organization and Qualification; Subsidiaries .

(a) Parent and each Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of their organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change.

(b) Set forth on Schedule 4.8(b) (which Administrative Borrower may amend from time to time solely to reflect new classes of capital Stock of Parent and new Subsidiaries formed in accordance with Section 5.16 ) is a complete and accurate description of the authorized capital Stock of Parent, each Borrower and their respective Subsidiaries, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on Schedule 4.8(b) (which Administrative Borrower may amend from time to time solely to reflect new classes of capital Stock of Parent and new Subsidiaries formed in accordance with Section 5.16 ), there are no subscriptions, options, warrants, or calls relating to any shares of Parent’s, any Borrower’s or any of their respective Subsidiaries’ capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. None of Parent, any Borrower or any of their respective Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock.

(c) Set forth on Schedule 4.8(c) (which Administrative Borrower may amend from time to time solely to reflect new Subsidiaries formed in accordance with Section 5.16 ) is a complete and accurate list of Parent’s and each Borrower’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries, and (iii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by Parent or the applicable Borrower. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable.

4.9 Due Authorization; No Conflict .

(a) The execution, delivery, and performance by Parent and each Borrower of this Agreement, the other Loan Documents and the Acquisition Documents to which each is a party have been duly authorized by all necessary action on the part of Parent and such Borrower.

(b) The execution, delivery, and performance by Parent and each Borrower of this Agreement, the other Loan Documents and the Acquisition Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation applicable to Parent or any Borrower, the Governing Documents of Parent or any Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on Parent or any Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of Parent or any Borrower, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Parent or any Borrower, other than Permitted Liens, or (iv) require any approval of Parent’s or any Borrower’s shareholders or any approval or consent of any Person under any material contractual obligation of Parent or any Borrower, other than consents or approvals that have been obtained and that are still in force and effect.

 

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(c) Other than (i) the filing of financing statements (ii) the recording of the Copyright Security Agreement in the United States Copyright Office and the recording of the Patent Security Agreement and the Trademark Security Agreement in the United States Patent and Trademark Office, and (iii) the recordation of the Mortgages (if any), the execution, delivery, and performance by Parent and each Borrower of this Agreement, the other Loan Documents and the Acquisition Documents to which it is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect.

(d) This Agreement, the other Loan Documents and the Acquisition Documents to which Parent and each Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by Parent and such Borrower will be the legally valid and binding obligations of Parent and such Borrower, enforceable against Parent and such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(e) The Agent’s Liens are validly created, perfected, and first priority Liens, subject only to Permitted Liens.

(f) The execution, delivery, and performance by each Guarantor of the Loan Documents and the Acquisition Documents to which it is a party have been duly authorized by all necessary action on the part of such Guarantor.

(g) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation applicable to such Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or decree of any court or other Governmental Authority binding on such Guarantor, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of such Guarantor, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of such Guarantor, other than Permitted Liens, or (iv) require any approval of such Guarantor’s shareholders or any approval or consent of any Person under any material contractual obligation of such Guarantor, other than consents or approvals that have been obtained and that are still in force and effect.

(h) Other than (i) the filing of financing statements (ii) the recording of the Copyright Security Agreement in the United States Copyright Office and the recording of the Patent Security Agreement and the Trademark Security Agreement in the United States Patent and Trademark Office, and (iii) the recordation of the Mortgages (if any), the execution, delivery, and performance by each Guarantor of the Loan Documents and the Acquisition Documents to which such Guarantor is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect.

(i) The Loan Documents and the Acquisition Documents to which each Guarantor is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Guarantor will be the legally valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

 

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4.10 Litigation . Other than those matters disclosed on Schedule 4.10 , there are no actions, suits, or proceedings pending or, to the best knowledge of Parent and each Borrower, threatened against Parent, any Borrower or any of their respective Subsidiaries that (a) if adversely determined, could result in a Material Adverse Change or (b) relate to this Agreement or any other Loan Document or any transaction contemplated hereby or thereby.

4.11 No Material Adverse Change . All financial statements relating to Parent, Borrowers and their respective Subsidiaries that have been delivered by Parent or Borrowers to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Parent’s, Borrowers’ and their respective Subsidiaries’ financial condition as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change with respect to Parent, Borrowers and their respective Subsidiaries since the later of (a) the date of the latest audited financial statements submitted to Agent on or before the Closing Date and (b) the date of the latest audited financial statements delivered to Agent pursuant to Section 5.3 .

4.12 Fraudulent Transfer .

(a) Parent, each Borrower and each of their respective Subsidiaries is Solvent.

(b) No transfer of property is being made by Parent, any Borrower or any of their respective Subsidiaries and no obligation is being incurred by Parent, any Borrower or any of their respective Subsidiaries in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Parent, Borrowers or any of their respective Subsidiaries.

4.13 Employee Compliance .

(a) Set forth on Schedule 4.13(a) is a complete and accurate list of all Plans that meet the definition of an “employee pension benefit plan” under Section 3(2) of ERISA and that are currently maintained or contributed to by Parent, any Borrower, any of their respective Subsidiaries or any of their respective ERISA Affiliates as of the Closing Date.

(b) Parent, each Borrower, their respective Subsidiaries, and their respective ERISA Affiliates are in compliance in all material respects with all applicable provisions and requirements of ERISA and the regulations and published interpretations thereunder with respect to each Plan, and have performed all their obligations in all material respects under each Plan.

(c) No ERISA Event has occurred or is reasonably expected to occur.

(d) Except to the extent required under Section 4980B of the IRC, or as described on Schedule 4.13(d) hereto, no Plan provides health benefits (through the purchase of insurance or otherwise) for any retired or former employee of Parent, any Borrower, any of their respective Subsidiaries or any of their respective ERISA Affiliates.

(e) As of the most recent valuation date for any Pension Plan, the amount of outstanding benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities), does not exceed $250,000.

(f) Provided that the assets of the Lenders used to fund Advances and the Term Loan do not and will not constitute “plan assets” within the meaning of United States Department of Labor Regulations set forth in 29 C.F.R. §2510.3-101, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which taxes could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the IRC.

 

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(g) All liabilities under each Plan are (i) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing the Plans, (ii) insured with a reputable insurance company, (iii) provided for or recognized in the financial statements most recently delivered to Agent pursuant to Section 5.3 hereof to the extent required by GAAP or (iv) estimated in the formal notes to the financial statements most recently delivered to Agent pursuant to Section 5.3 hereof to the extent required by GAAP.

(h) To the best knowledge of Parent and each Borrower, there are no circumstances which may give rise to a material liability in relation to any Plan which is not funded, insured, provided for, recognized or estimated in the manner described in subsection (g) above.

(i) (i) Parent, Borrowers and their respective Subsidiaries are not and will not be a “plan” within the meaning of Section 4975(e) of the IRC; (ii) the assets of Parent, Borrowers and their respective Subsidiaries do not and will not constitute “plan assets” within the meaning of the United States Department of Labor Regulations set forth in 29 C.F.R. §2510.3-101; (iii) Parent, Borrowers and their respective Subsidiaries are not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA; and (iv) provided that the assets of the Lenders used to fund Advances and the Term Loan do not and will not constitute assets of a governmental plan, transactions by or with Parent, Borrowers and their respective Subsidiaries are not and will not be subject to state statutes applicable to Parent, Borrowers and their respective Subsidiaries regulating investments of fiduciaries with respect to governmental plans.

4.14 Environmental Condition . Except as set forth on Schedule 4.14 , (a) to Parent’s and Borrowers’ knowledge, none of Parent’s, Borrowers’ or their respective Subsidiaries’ properties has ever been used by Parent, Borrowers, any of their respective Subsidiaries, or by previous owners or operators, to dispose of or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such disposal, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) to Parent’s and Borrowers’ knowledge, none of Parent’s, Borrowers’ nor any of their respective Subsidiaries’ properties has ever been designated or identified as a Hazardous Materials disposal site under the National Priorities List promulgated pursuant to CERCLA, CERCLIS, or any equivalent list of sites for cleanup under any analogous state program, (c) none of Parent, Borrowers nor any of their respective Subsidiaries have received notice that a Lien arising under any Environmental Law has attached to any Real Property owned or operated by, Parent, Borrowers or their respective Subsidiaries, and (d) none of Parent, Borrowers nor any of their respective Subsidiaries have received a summons, citation, notice, or directive from the United States Environmental Protection Agency or any other federal or state governmental agency alleging that any action or omission by Parent, any Borrower or any of their respective Subsidiaries has resulted in the release or disposal of Hazardous Materials into the environment.

4.15 Intellectual Property . Parent, each Borrower and each of their respective Subsidiaries owns, or holds licenses in, all trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted.

4.16 Leases . Parent, Borrowers and their respective Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating and all of such material leases are valid and subsisting and no material default by Parent, Borrowers or their respective Subsidiaries exists under any of them.

4.17 Deposit Accounts and Securities Accounts . Set forth on Schedule 4.17 is a listing of all of Parent’s, Borrowers’ and their respective Subsidiaries’ Deposit Accounts and Securities Accounts, including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person.

 

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4.18 Complete Disclosure . All factual information (taken as a whole) furnished by or on behalf of Parent, Borrowers or their respective Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents, the Acquisition Documents, the D.B. Zwirn Loan Documents, or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Parent, Borrowers or their respective Subsidiaries in writing to Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. On the Closing Date, the Closing Date Projections represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent Parent’s and Borrowers’ good faith estimate of their and their respective Subsidiaries’ future performance for the periods covered thereby; provided , however , that no assurance can be given that actual results will match the Projections.

4.19 Indebtedness . Set forth on Schedule 4.19 is a true and complete list of all Indebtedness of Parent, each Borrower and each of their respective Subsidiaries outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately reflects the aggregate principal amount of such Indebtedness and describes the principal terms thereof as of the Closing Date.

4.20 Acquisition Documents .

(a) (i) As of the Closing Date, no party to any Acquisition Document is in default on any of its material obligations under such Acquisition Document, and after the Closing Date, no party to any Acquisition Document is in default on any of its material obligations under such Acquisition Document the default of which could reasonably be expected to adversely affect the Lender Group, (ii) all representations and warranties made by Parent or any Borrower in the Acquisition Documents and in the certificates delivered in connection therewith are true and correct in all material respects as of the date hereof and, to the best knowledge of Parent and each Borrower, all material representations and warranties made in the Acquisition Documents by or on behalf of the Seller, or any other party thereto other than any Loan Party party thereto, are true and correct in all material respects as of the date hereof, (iii) all written information with respect to the Acquisition Transaction furnished to Agent by or on behalf of any Loan Party, was, at the time the same was so furnished, complete and correct in all material respects, or has been subsequently supplemented by other written information to the extent necessary to give Agent and Lenders a true and accurate knowledge of the subject matter thereof, (iv) no representation, warranty or statement made by any Loan Party party thereto or, to the best knowledge of Parent and each Borrower, the Seller or any other party thereto other than any Loan Party party thereto, at the time made in any Acquisition Document, or any agreement, certificate, statement or document required to be delivered pursuant to any Acquisition Document, contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances in which they were made, and (v) in connection with the Acquisition Transaction, Newco is acquiring the Monotype Stock, and, on the date hereof, after giving effect to the transactions contemplated by the Acquisition Documents, will have good title to the Monotype Stock, free and clear of all Liens.

(b) (i) Parent and Borrowers have delivered to Agent a complete and correct copy of the Acquisition Documents, including all schedules and exhibits thereto, (ii) each Acquisition Document sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby, (iii) no Acquisition Document has been amended or otherwise modified without the prior written consent of Agent, (iv) the execution, delivery and performance of each of the Acquisition Documents has been duly authorized by all necessary action on the part of each Loan Party party thereto and, to the best knowledge of Parent and each Borrower, each other Person party thereto, (v) the Acquisition Transaction has been

 

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effected in accordance with the terms of the Acquisition Documents and all applicable law, (vi) at the time of consummation of the Acquisition Transaction, there does not exist any judgment, order or injunction prohibiting or imposing any material adverse condition upon the consummation of the Acquisition Transaction, (vii) at the time of consummation thereof, all consents and approvals of, and filings and registrations with, and all other actions in respect of, all Government Authorities required in order to consummate the Acquisition Transaction shall have been obtained, given, filed or taken and shall be in full force and effect, (viii) all actions taken by the Loan Parties pursuant to or in furtherance of the Acquisition Transaction have been taken in compliance in all material respects with the Acquisition Documents and the applicable law, and (ix) each Acquisition Document is the legal, valid and binding obligation of each Loan Party party thereto and, to the best knowledge of Parent and each Borrower, the other parties thereto, enforceable against such parties in accordance with its terms.

4.21 D.B. Zwirn Loan Documents . Borrowers have delivered to Agent true and correct copies of the D.B. Zwirn Loan Documents. The transactions contemplated by the D.B. Zwirn Loan Documents will be, contemporaneously with the making of the Term Loan and initial Advances hereunder, consummated in accordance with their respective terms and nothing has come to Parent’s or Borrowers’ attention that would indicate that any of the representations and warranties contained in the D.B. Zwirn Loan Documents are not true and correct. All of the representations and warranties of Parent, Borrowers and the Guarantors in the D.B. Zwirn Loan Documents are true and correct.

4.22 Material Contract . Set forth on Schedule M-1 is a complete and accurate list of all Material Contracts of Parent, Borrowers and their respective Subsidiaries as of the Closing Date (and as updated from time to time pursuant to Section 5.19 ), showing the parties and subject matter thereof and amendments and modifications thereto. Except for matters which, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change, each Material Contract (a) is in full force and effect and is binding upon and enforceable against each Person that is a party thereto in accordance with its terms, (b) has not been otherwise amended or modified (other than to the extent permitted by Section 6.7(c) ), and (c) is not in default due to the action of Parent, any Borrower or any of their respective Subsidiaries.

4.23 Senior Indebtedness, Etc. The subordination provisions set forth in the Investor Intercreditor Agreement are and will be enforceable against the holders of the Subordinated Notes by Agent and Lenders. All Obligations, including those to pay principal of and interest (including post-petition interest) on the Advances and the Term Loan and fees and expenses in connection therewith, constitute Senior Indebtedness (as defined in the Investor Intercreditor Agreement), and all such Obligations are entitled to the benefits of the subordination created by the subordination provisions set forth in the Investor Intercreditor Agreement. Parent and each Borrower acknowledges that Agent and Lenders are entering into this Agreement, and extending their Commitments, in reliance upon the subordination provisions set forth in the Investor Intercreditor Agreement and this Section 4.23 .

 

5. AFFIRMATIVE COVENANTS.

Parent and each Borrower covenant and agree that, until termination of all of the Commitments and payment in full of the Obligations, Parent and Borrowers shall and shall cause each of their respective Subsidiaries to do all of the following:

5.1 Accounting System . Maintain a system of accounting that enables Parent and Borrowers to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Parent and Borrowers also shall keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to their and their respective Subsidiaries’ sales.

5.2 Collateral Reporting . Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the reports set forth on Schedule 5.2 at the times specified therein. In addition, Parent and each Borrower agree to cooperate fully with Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of each of the items set forth above.

 

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5.3 Financial Statements, Reports, Certificates . Deliver to Agent, with copies to each Lender, each of the financial statements, reports, or other items set forth on Schedule 5.3 at the time specified therein. In addition, Parent agrees that no Subsidiary of Parent will have a fiscal year different from that of Parent.

5.4 Guarantor Reports . Cause each Guarantor to deliver its annual financial statements at the time when Parent provides its audited financial statements to Agent, but only to the extent such Guarantor’s financial statements are not consolidated with Parent’s financial statements.

5.5 Inspection . Permit Agent, each Lender, and each of their duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees at such reasonable times and intervals as Agent or any such Lender may designate and, so long as no Default or Event of Default exists (a) with reasonable prior notice to Administrative Borrower and (b) with each Lender accompanied by Agent.

5.6 Maintenance of Properties . Maintain and preserve all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear, tear, and casualty excepted (and except where the failure to do so could not be expected to result in a Material Adverse Change), and comply at all times with the provisions of all material leases to which it is a party as lessee, so as to prevent any loss or forfeiture thereof or thereunder.

5.7 Taxes . Cause all material assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against Parent, Borrowers, their respective Subsidiaries, or any of their respective assets to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Parent and Borrowers will and will cause their respective Subsidiaries to make timely payment or deposit of all tax payments and withholding taxes required of them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Agent with proof reasonably satisfactory to Agent indicating that Parent, the applicable Borrower or applicable Subsidiary has made such payments or deposits.

5.8 Insurance .

(a) At Parent’s and Borrowers’ expense, maintain insurance respecting their and their respective Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Parent and Borrowers also shall maintain business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance shall be in such amounts and with such insurance companies as are reasonably satisfactory to Agent. Parent and Borrowers shall deliver copies of all such policies to Agent with an endorsement naming Agent as a loss payee (under a satisfactory lender’s loss payable endorsement as its interest may appear) or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever.

(b) Administrative Borrower shall give Agent prompt notice of any loss exceeding $250,000 covered by such insurance. So long as no Event of Default has occurred and is continuing, Borrowers shall have the exclusive right to adjust any losses payable under any such insurance policies which are less than $1,000,000. Following the occurrence and during the continuation of an Event of Default, or in the case of any losses payable under such insurance exceeding $1,000,000, Agent shall have the exclusive right

 

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to adjust any losses payable under any such insurance policies, without any liability to Borrowers whatsoever in respect of such adjustments. Any monies received as payment for any loss under any such insurance policy (other than liability insurance policies) or as payment of any award or compensation for condemnation or taking by eminent domain, shall be paid over to Agent to be applied in accordance with Section 2.4(c)(iii)(B) ; provided , however , that, with respect to any such monies in an aggregate amount during any 12 consecutive month period not in excess of (x) $3,000,000 solely with respect to such monies received as payment for losses under insurance policies insuring tangible property located at 200 Ballardvale Street, Wilmington, Massachusetts 01887, and (y) $1,000,000 with respect to all other such monies, so long as (A) no Default or Event of Default shall have occurred and is continuing, (B) Administrative Borrower shall have given Agent prior written notice of the intention of Borrowers or their respective Subsidiaries’ to apply such monies to the costs of repairs, replacement, or restoration of the property which is the subject of the loss, destruction, or taking by condemnation or, in the case of business interruption insurance, to utilize such monies in its operations, (C) the monies are held in a cash collateral account in which Agent has a perfected first-priority security interest, and (D) Borrowers or their respective Subsidiaries complete such repairs, replacements, or restoration (or, in the case of business interruption insurance, utilize such monies in its operations) within 180 days after the initial receipt of such monies, Borrowers shall have the option to apply such monies to the costs of repairs, replacement, or restoration of the property which is the subject of the loss, destruction, or taking by condemnation (or, in the case of business interruption insurance, utilize such monies in its operations) unless and to the extent that such applicable period shall have expired without such repairs, replacements, or restoration being made (or, in the case of business interruption insurance, such monies have been used in its operations), in which case, any amounts remaining in the cash collateral account shall be paid to Agent and applied as set forth above.

(c) Parent and Borrowers will not, and will not suffer or permit their respective Subsidiaries to, take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.8 , unless Agent is included thereon as an additional insured or loss payee under a lender’s loss payable endorsement. Administrative Borrower promptly shall notify Agent whenever such separate insurance is taken out, specifying the insurer thereunder and full particulars as to the policies evidencing the same, and copies of such policies promptly shall be provided to Agent.

(d) From and after the date that is 90 days after the Closing Date, at their expense, Parent and Borrowers shall maintain key man life insurance policies with respect to the following individuals and in the following amounts (so long as such individuals are insurable in the ordinary course):

 

Name

   Amount

Robert Givens

   $ 5,000,000

John Seguin

   $ 5,000,000

Doug Shaw

   $ 5,000,000

Parent and Borrowers shall furnish Agent with a collateral assignment of each such key man life insurance policy, shall record each such collateral assignment with the issuer of the respective policy, and shall furnish proof of such issuer’s acceptance of such collateral assignment. All proceeds payable under such key man life insurance policies shall be payable to Agent to be applied on account of the Obligations in accordance with Section 2.4(c) .

5.9 Location of Inventory and Equipment . Keep Parent’s, Borrowers’ and their respective Subsidiaries’ Inventory and Equipment (other than vehicles and Equipment out for repair) only at the locations identified on Schedule 4.5 and their chief executive offices only at the locations identified on Schedule 4.7(b) ; provided , however , that Administrative Borrower may amend Schedule 4.5 or Schedule 4.7 so long as such amendment occurs by written notice to Agent not less than 30 days prior to the date on which such Inventory or Equipment is moved to such new location or such chief executive office is relocated, so long as such new location is within the continental United States, and so long as, at the time of such written notification, the applicable Loan Party provides Agent a Collateral Access Agreement with respect thereto.

 

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5.10 Compliance with Laws . Comply in all material respects with the requirements of all applicable laws, rules, regulations, and orders, judgments and awards (including any settlement of any claim that, if breached, could give rise to any of the foregoing) of any Governmental Authority, such compliance to include (a) paying before the same become delinquent all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any of its properties, and (b) paying all lawful material claims which if unpaid might become a Lien or charge upon any of its properties, except, in each case, to the extent subject to a Permitted Protest.

5.11 Leases . Pay when due all rents and other amounts payable under any material leases to which Parent, any Borrower or any of their respective Subsidiaries is a party or by which Parent’s, any Borrower’s or any of their respective Subsidiaries’ properties and assets are bound, unless such payments are the subject of a Permitted Protest.

5.12 Existence . At all times preserve and keep in full force and effect Parent’s, each Borrower’s and each of their respective Subsidiaries’ valid existence and good standing and any rights, franchises, permits, licenses, authorizations, approvals, entitlements and accreditations material to their businesses.

5.13 Environmental .

(a) Keep any Real Property free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability of Parent, any Borrower, or any of their respective Subsidiaries evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably requests, (c) promptly, after receiving notice, notify Agent of any release of a Hazardous Material in any quantity reportable under Environmental Law from or onto property owned or operated by Parent, any Borrower or any of their respective Subsidiaries and take any Remedial Actions required of Parent, any Borrower, or any of their respective Subsidiaries under Environmental Law to abate said release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly, but in any event within 5 days of its receipt thereof, provide Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of Parent, any Borrower or any of their respective Subsidiaries, (ii) commencement of any Environmental Action against Parent, any Borrower, or any of their respective Subsidiaries or notice that an Environmental Action will be filed against Parent, any Borrower or any of their respective Subsidiaries, and (iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change.

5.14 Disclosure Updates . Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to the Lender Group contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto.

5.15 Control Agreements . Take all reasonable steps in order for Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject to the proviso contained in Section 6.12 ) all of its Securities Accounts, Deposit Accounts, electronic chattel paper, investment property, and letter of credit rights.

 

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5.16 Formation of Subsidiaries . At the time that Parent, any Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, Parent, such Borrower or such Guarantor shall (a) cause such new Subsidiary to provide to Agent a joinder to the Guaranty and the Security Agreement, together with such other security documents (including Mortgages with respect to any Real Property of such new Subsidiary), as well as appropriate financing statements (and with respect to all property subject to a Mortgage, fixture filings), all in form and substance satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Agent a pledge agreement and appropriate certificates and powers or financing statements, hypothecating all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to Agent, and (c) provide to Agent all other documentation, including updates to Schedules 4.5 , 4.7(a) , 4.7(b) , 4.7(c) , 4.8(b) , 4.8(c) , 4.15 and 4.17 and one or more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property subject to a Mortgage). Notwithstanding the foregoing, if a Subsidiary that is so formed or acquired is a Controlled Foreign Corporation and, except in the case of the Japanese Subsidiary, if Parent and Administrative Borrower can reasonably demonstrate to Agent that the granting of a Lien in the assets of such Subsidiary would result in an increase in tax liability of Parent and its Subsidiaries (with respect to an acquired Subsidiary, based on the amount of retained earnings at the time of such acquisition and the amount of projected retained earnings set forth in the projections delivered pursuant to clause (6) of the definition of Permitted Acquisitions in Schedule 1.1 ) in excess of $500,000 per fiscal year, then clause (a) of the immediately preceding sentence shall not be applicable and, with respect to clause (b) of the immediately preceding sentence, such pledge shall be limited to 65% of the voting power of all classes of capital Stock of such Subsidiary entitled to vote; provided , that immediately upon the amendment of the IRC to allow for the pledge of a greater percentage of the voting power of capital Stock in such Subsidiary without adverse tax consequences, such pledge shall include such greater percentage of capital Stock of such Subsidiary from that time forward. Any document, agreement, or instrument executed or issued pursuant to this Section 5.16 shall be a Loan Document. Notwithstanding the foregoing, Agent and Lenders shall not be obligated to consent to any such formation or acquisition of a Subsidiary unless such formation or acquisition is otherwise expressly permitted hereunder.

5.17 Acquisition Transaction .

(a) Contemporaneously with the initial extension of credit hereunder: (i) cause all transactions contemplated by the Acquisition Documents to be consummated; (ii) cause the Acquisition Transaction and the Merger to become effective; and (iii) furnish evidence thereof to Agent, as well as certified (as of the Closing Date) true and complete copies of the Acquisition Documents, which shall be in compliance with all applicable laws and for which all necessary approvals shall have been obtained in connection therewith.

(b) Promptly provide Agent with true and complete copies of any and all material documents delivered by or to any Loan Party pursuant to the terms of the Acquisition Documents except any such documents otherwise required to be delivered hereunder.

5.18 D.B. Zwirn Loan Documents . Promptly provide Agent with true and complete copies of any and all documents and other information delivered by or to any Loan Party pursuant to the terms of the D.B. Zwirn Loan Documents except any such documents otherwise required to be delivered hereunder.

5.19 Material Contracts . Contemporaneously with the delivery of a quarterly Compliance Certificate to Agent, (a) provide copies of each Material Contract entered into since the delivery of the previous quarterly Compliance Certificate to Agent and (b) provide Agent with an amendment to Schedule M-1 to reflect the addition of such Material Contract thereon.

 

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5.20 ERISA Compliance .

(a) Parent and each Borrower shall do, and shall cause each of their respective Subsidiaries and ERISA Affiliates to do, each of the following: (i) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the IRC and each other applicable federal or state law; (ii) cause each Qualified Plan to maintain its qualified status under Section 401(a) of the IRC; (iii) make all required contributions to each Plan; (iv) not become a party to any Multiemployer Plan; (v) ensure that all liabilities under each Plan are (A) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing such Plan; (B) insured with a reputable insurance company; and (C) provided for or recognized in the financial statements most recently delivered to Agent under Section 5.3 (to the extent required by GAAP); and (vi) ensure that the contributions or premium payments to or in respect of each Plan are and continue to be promptly paid at no less than the rates required under the rules of such Plan and in accordance with the most recent actuarial advice received in relation to such Plan and applicable law.

(b) Deliver to Agent such certifications or other evidence of compliance with the provisions of Section 4.13 as Agent may from time to time reasonably request.

(c) Promptly notify Agent of each of the following ERISA events affecting Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliates (but in no event more than ten (10) days after such event), together with a copy of each notice with respect to such event that may be required to be filed with a Governmental Authority and each notice delivered by a Governmental Authority to Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliates with respect to such event:

(i) an ERISA Event;

(ii) the adoption of any new Pension Plan by Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliates;

(iii) the adoption of any amendment to a Pension Plan, if such amendment will result in a material increase in benefits or unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA); or

(iv) the commencement of contributions by Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliate to any Plan that is subject to Title IV of ERISA or section 412 of the IRC;

(d) Promptly deliver to Agent copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (ii) all notices received by Parent, any Borrower, any of their respective Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (iii) such other documents or governmental reports or filings relating to any Plan as Agent shall reasonably request.

5.21 Further Assurances . Take such action and execute, acknowledge and deliver, and cause each of its Subsidiaries to take such action and execute, acknowledge and deliver, at its sole cost and expense, such agreements, instruments or other documents as are necessary, or as Agent may reasonably request, from time to time in order (a) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (b) to subject to valid and perfected first priority Liens (subject only to Permitted Liens) any of the Collateral or any other property of any Loan Party and its Subsidiaries, (c) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (d) to better assure, convey, grant, assign, transfer and confirm unto Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document.

 

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5.22 Japanese Documents . If, on any date after the Closing Date, the Japanese Subsidiary shall have been formed or any of the Japanese Documents shall have been entered into, Borrowers shall promptly deliver true and complete copies of (a) such Japanese Documents, each of which shall be satisfactory to Agent, and (b) the Governing Documents of the Japanese Subsidiary, as amended, modified, or supplemented to such date, together with a certificate from the Secretary of the Japanese Subsidiary (i) certifying such Governing Documents, (ii) attesting to the resolutions of the Japanese Subsidiary’s Board of Directors authorizing its execution, delivery, and performance of the Japanese Documents and authorizing specific officers of the Japanese Subsidiary to execute the same, (iii) attesting to the incumbency and signatures of such specific officers of the Japanese Subsidiary and (iv) certifying that the Japanese Documents so delivered are true and complete copies thereof and that such documents have been entered into by the parties thereto in compliance with all applicable laws and all necessary approvals and are in full force and effect.

 

6. NEGATIVE COVENANTS.

Parent and each Borrower covenant and agree that, until termination of all of the Commitments and payment in full of the Obligations, Parent and Borrowers will not and will not permit any of their respective Subsidiaries to do any of the following:

6.1 Indebtedness . Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:

(a) Indebtedness evidenced by this Agreement and the other Loan Documents,

(b) Indebtedness set forth on Schedule 4.19 ,

(c) Permitted Purchase Money Indebtedness,

(d) refinancings, renewals, or extensions of Indebtedness permitted under clauses (b) and (c) of this Section 6.1 (and continuance or renewal of any Permitted Liens associated therewith) so long as with respect to refinancings, renewals, or extensions of Indebtedness permitted under clause (b): (i) such refinancings, renewals, or extensions do not result in an increase in the principal amount of, or interest rate with respect to, the Indebtedness so refinanced, renewed, or extended or add one or more Loan Parties as liable with respect thereto if such additional Loan Parties were not liable with respect to the original Indebtedness, (ii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions, that, taken as a whole, are materially more burdensome or restrictive to any Loan Party, (iii) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness must include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or extended Indebtedness, and (iv) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended,

(e) Indebtedness evidenced by the Subordinated Notes in an aggregate original principal amount outstanding at any time not to exceed $20,000,000.

(f) endorsement of instruments or other payment items for deposit,

(g) Indebtedness under the D.B. Zwirn Loan Documents, and

(h) Indebtedness composing Permitted Investments.

 

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6.2 Liens . Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under Section 6.1(d) and so long as the replacement Liens only encumber those assets that secured the refinanced, renewed, or extended Indebtedness).

6.3 Restrictions on Fundamental Changes .

(a) Except for the Merger, enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock,

(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution),

(c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its assets, or

(d) Suspend or go out of a substantial portion of its business.

6.4 Disposal of Assets . Other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of any of the assets of Parent, any Borrower or any of their respective Subsidiaries.

6.5 Change Name . Except in connection with the Merger, change Parent’s, any Borrower’s or any of their respective Subsidiaries’ name, organizational identification number, jurisdiction of organization, or organizational identity; provided , however , that Parent, a Borrower or any of their respective Subsidiaries may change its name upon at least 30 days prior written notice by Parent or Administrative Borrower to Agent of such change so long as, (a) at the time of such written notification, Parent, such Borrower or such Subsidiary provides any financing statements necessary to perfect and continue perfected the Agent’s Liens and (b) immediately after such name change, Administrative Borrower provides Agent with evidence of such name change (including copies of any related public filings).

6.6 Nature of Business . Make any change in the principal nature of its business and related businesses.

6.7 Prepayments and Amendments . Except in connection with a refinancing permitted by Section 6.1(d) ,

(a) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of Parent, any Borrower or any of their respective Subsidiaries, other than (i) the Obligations in accordance with this Agreement or (ii) the Transaction Bonus Notes (as defined in the Stock Purchase Agreement) in accordance with Section 8.05 of the Stock Purchase Agreement,

(b) make any payment on account of Indebtedness evidenced by the Subordinated Notes or any other Indebtedness that has been contractually subordinated in right of payment to the Obligations if such payment is not permitted at such time under the applicable subordination terms and conditions related to such Indebtedness,

(c) directly or indirectly, amend, modify, alter, increase, or change any of the terms or conditions of, or waive any of its rights under, (i) any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted under Section 6.1(b) , (ii) any of the D.B. Zwirn Loan Documents, (iii) any of the Acquisition Documents, (iv) any Material Contract, or (v) any Subordinated Note Document, in each case in any manner materially adverse to Borrowers or the Lender Group.

 

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6.8 Intentionally Omitted .

6.9 Consignments . Consign any of their Inventory or sell any of their Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale.

6.10 Distributions . Other than distributions or declaration and payment of dividends by (x) a Borrower to another Borrower, or (y) a Subsidiary of any Borrower to any Borrower or to any other wholly-owned Subsidiary of any Borrower, make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire any of any of Parent’s or any Borrower’s Stock, of any class, whether now or hereafter outstanding (collectively, “ Distributions ”); provided , that (a) Borrowers may make Distributions to Parent (i) in amounts necessary to pay customary third party advisor fees and expenses of Parent owing to Persons other than Loan Parties, the Investors or any of their respective Affiliates in the ordinary course of its business as a holding company (including salaries and related reasonable and customary expenses incurred by employees of Parent) in an aggregate amount not to exceed $1,000,000 in any fiscal year (but only to the extent such fees and expenses are actually incurred in such fiscal year), and (ii) in amounts necessary to enable Parent to pay taxes when due and owing by it in the ordinary course of its business as a holding company, and (b) any Borrower or Parent may repurchase the Stock of such Borrower or Parent, as applicable, from former employees, consultants or directors pursuant to repurchase agreements or similar agreements approved by the Board of Directors; provided , that the aggregate amount paid in respect of Stock so repurchased shall not exceed $500,000 in any fiscal year.

6.11 Accounting Methods . Modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP) or enter into, modify, or terminate any agreement currently existing, or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of Parent’s, Borrowers’ or any of their respective Subsidiaries’ accounting records without said accounting firm or service bureau agreeing to provide Agent information regarding Parent’s, Borrowers’ and their respective Subsidiaries’ financial condition.

6.12 Investments . Except for Permitted Investments, directly or indirectly, make or acquire any Investment, or incur any liabilities (including contingent obligations) for or in connection with any Investment; provided , however , that Parent, Borrowers and their respective Subsidiaries shall not have Permitted Investments (other than in the Cash Management Accounts) in Deposit Accounts or Securities Accounts in an aggregate amount in excess of $50,000 at any one time unless Parent, the applicable Borrower or the applicable Subsidiary, and the applicable securities intermediary or bank have entered into Control Agreements governing such Permitted Investments in order to perfect (and further establish) the Agent’s Liens in such Permitted Investments. Subject to the foregoing proviso, Parent and Borrowers shall not and shall not permit their respective Subsidiaries to establish or maintain any Deposit Account or Securities Account unless Agent shall have received a Control Agreement in respect of such Deposit Account or Securities Account.

6.13 Transactions with Affiliates .

(a) Except for the Subordinated Note Documents and as set forth in subsection (b) below, directly or indirectly enter into or permit to exist any transaction with any Affiliate of Parent or any Borrower except for transactions that (i) are in the ordinary course of Parent’s or Borrowers’ business, (ii) are upon fair and reasonable terms, (iii) if they involve one or more payments by Parent or any Borrower or any of their respective Subsidiaries in excess of $100,000, are fully disclosed to Agent, and (iv) are no less favorable to Parent, Borrowers or their respective Subsidiaries, as applicable, than would be obtained in an arm’s length transaction with a non-Affiliate.

(b) Except as set forth in subsection (a) above, make any payment to an Affiliate other than (i) payments for directors’ fees and expenses in an aggregate amount not to exceed $500,000 in any fiscal year, and (ii) payments of Accounts incurred in the ordinary course of business and that are upon fair and reasonable terms.

 

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6.14 Use of Proceeds . Use the proceeds of the Advances and the Term Loan for any purpose other than (a) on the Closing Date, to (i) finance the Acquisition Transaction and (ii) pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, the Acquisition Documents, and the transactions contemplated hereby and thereby, and (b) thereafter, consistent with the terms and conditions hereof, to finance ongoing working capital, capital expenditures, and general corporate needs of Parent and Borrowers following the Acquisition Transaction and the Merger and for its lawful and permitted purposes.

6.15 Inventory and Equipment with Bailees . Store the Inventory or Equipment of Parent, Borrowers or their respective Subsidiaries at any time now or hereafter with a bailee, warehouseman, or similar party.

6.16 Financial Covenants .

(a) Fail to maintain or achieve:

(i) Minimum TTM EBITDA. TTM EBITDA, measured on a quarter-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

 

Applicable
Amount
  

Applicable Period

$ 25,000,000    For the 12 month period ending December 31, 2004
$ 25,000,000    For the 12 month period ending each quarter thereafter

(ii) Minimum Quarterly EBITDA. EBITDA, measured on a quarter-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

 

Applicable
Amount
  

Applicable Period

$ 5,000,000    For the 3 month period ending December 31, 2004
$ 5,000,000    For the 3 month period ending each quarter thereafter

 

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(iii) Fixed Charge Coverage Ratio. A Fixed Charge Coverage Ratio, measured on a quarter-end basis, of at least the required ratio set forth in the following table for the applicable period set forth opposite thereto:

 

Applicable
Ratio
  

Applicable Period

1.00:1.00    For the 3 month period ending December 31, 2004
1.00:1.00    For the 6 month period ending March 31, 2005
1.00:1.00    For the 9 month period ending June 30, 2005
1.00:1.00    For the 12 month period ending September 30, 2005
1.00:1.00    For the 12 month period ending each quarter thereafter

(b) Leverage Ratio. Permit the Leverage Ratio, as at the end of each period set forth below, to exceed the required ratio set forth in the following table for the applicable period.

 

Applicable
Ratio
  

Applicable Period

4.25:1.00    For the 12 month period ending December 31, 2004
4.25:1.00    For the 12 month period ending March 31, 2005
4.25:1.00    For the 12 month period ending June 30, 2005
4.00:1.00    For the 12 month period ending September 30, 2005
4.00:1.00    For the 12 month period ending December 31, 2005
3.75:1.00    For the 12 month period ending March 31, 2006
3.75:1.00    For the 12 month period ending June 30, 2006
3.50:1.00    For the 12 month period ending September 30, 2006
3.50:1.00    For the 12 month period ending December 31, 2006
3.25:1.00    For the 12 month period ending March 31, 2007
3.25:1.00    For the 12 month period ending June 30, 2007

 

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Applicable
Ratio
  

Applicable Period

3.00:1.00    For the 12 month period ending September 30, 2007
3.00:1.00    For the 12 month period ending December 31, 2007
2.75:1.00    For the 12 month period ending March 31, 2008
2.75:1.00    For the 12 month period ending June 30, 2008
2.50:1.00    For the 12 month period ending September 30, 2008
2.50:1.00    For the 12 month period ending December 31, 2008
2.25:1.00    For the 12 month period ending March 31, 2009
2.25:1.00    For the 12 month period ending June 30, 2009
2.00:1.00    For the 12 month period ending September 30, 2009
2.00:1.00    For the 12 month period ending December 31, 2009

(c) Capital Expenditures. Make Capital Expenditures in any fiscal year in excess of the amount set forth in the following table for the applicable period:

 

Applicable
Amount
  

Applicable Period

$2,000,000    Fiscal Year 2004
$2,000,000    Fiscal Year 2005
$2,000,000    Fiscal Year 2006
$2,000,000    Fiscal Year 2007
$2,000,000    Fiscal Year 2008
$2,000,000    Fiscal Year 2009

6.17 ERISA . (a) Terminate, or permit any of their ERISA Affiliates to terminate, any Pension Plan so as to result in any material liability to Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliate, (b) permit to exist any ERISA Event, or any other event or condition, which is reasonably likely to present the risk of a material liability to any ERISA Affiliate, (c) make a complete or partial withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in any material liability to Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliate, (d) enter

 

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into any new Plan or modify any existing Plan so as to increase its obligations thereunder which would reasonably be expected to result in any material liability to any ERISA Affiliate, (e) permit the present value of all nonforfeitable accrued benefits under any Pension Plan or Multiemployer Plan (using the actuarial assumptions utilized by the PBGC upon termination of a Pension Plan or Multiemployer Plan) materially to exceed the fair market value of the assets of any such Pension Plan or Multiemployer Plan allocable to such benefits, all determined as of the most recent valuation date for each such Pension Plan or Multiemployer Plan, or (f) engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Agent or any Lender of any of their rights under this Agreement, any Registered Note or the other Loan Documents) to be a non-exempt (under a statutory or administrative exemption) prohibited transaction under ERISA or Section 4975 of the IRC.

 

7. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an “ Event of Default ”) under this Agreement:

7.1 If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of 3 Business Days, or (b) all or any portion of the principal of the Obligations;

7.2 If Parent, any Borrower or any of their respective Subsidiaries

(a) fails to perform or observe any covenant or other agreement contained in any of Sections 2.7 , 5.2 , 5.3 , 5.4 , 5.5 , 5.8 , 5.12 , 5.14 , 5.15 , 5.16 , 5.17 , and 6.1 through 6.17 of this Agreement or Section 6 of the Security Agreement;

(b) fails to perform or observe any covenant or other agreement contained in any of Sections 5.6 , 5.7 , 5.9 , 5.10 , 5.11 , 5.18 , 5.19 , 5.20 and 5.21 of this Agreement and such failure continues for a period of 10 Business Days after the earlier of (i) the date on which such failure shall first become known to any officer of Parent, any Borrower or any of their respective Subsidiaries or (ii) written notice thereof is given to Administrative Borrower by Agent; or

(c) fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents; in each case, other than any such covenant or agreement that is the subject of another provision of this Section 7 (in which event such other provision of this Section 7 shall govern), and such failure continues for a period of 20 Business Days after the earlier of (i) the date on which such failure shall first become known to any officer of Parent, any Borrower or any of their respective Subsidiaries or (ii) written notice thereof is given to Administrative Borrower by Agent;

7.3 If any of Parent’s, any Borrower’s or any of their respective Subsidiaries’ assets with an aggregate fair market value in excess of $500,000 is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any third Person and the same is not discharged before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such property or asset is subject to forfeiture by Parent, such Borrower or the applicable Subsidiary;

7.4 If an Insolvency Proceeding is commenced by Parent, any Borrower or any of their respective Subsidiaries;

 

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7.5 If an Insolvency Proceeding is commenced against Parent, any Borrower or any of their respective Subsidiaries, and any of the following events occur: (a) Parent, or the applicable Borrower or Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, Parent, any Borrower or any such Subsidiary, or (e) an order for relief shall have been issued or entered therein;

7.6 If Parent, any Borrower or any of their respective Subsidiaries is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

7.7 If one or more judgments or other claims involving an aggregate amount of $500,000, or more (except to the extent fully covered by insurance, subject to deductibles, pursuant to which the insurer has not denied coverage therefor in writing) shall be entered or filed against Parent, any Borrower or any of their respective Subsidiaries or with respect to any of their respective assets, and the same is not released, discharged, bonded against, or stayed pending appeal before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such asset is subject to being forfeited by Parent, the applicable Borrower or the applicable Subsidiary;

7.8 If there is an Event of Default in, and as such term is defined in, the D.B. Zwirn Loan Documents;

7.9 If there is a default in one or more agreements to which Parent, any Borrower or any of their respective Subsidiaries is a party with one or more third Persons relative to Indebtedness of Parent, any Borrower or any of their respective Subsidiaries involving an aggregate amount of $500,000 or more, and such default (a) occurs at the final maturity of the obligations thereunder, or (b) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of Parent’s, the applicable Borrower’s or Subsidiary’s obligations thereunder;

7.10 If any warranty, representation, statement, or Record made herein or in any other Loan Document or delivered to Agent or any Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect as of the date of issuance or making or deemed making thereof;

7.11 Parent, any Borrower or any of their respective Subsidiaries shall lose, fail to keep in force, suffer the termination, suspension or revocation of or terminate, forfeit or suffer a material adverse amendment to any Material Contract, unless, in the case of termination of any Material Contract, such Material Contract is simultaneously replaced by an agreement of a type and on terms substantially similar to such Material Contract with the same Person (or another Person reasonably satisfactory to Agent);

7.12 If the obligation of any Guarantor under the Guaranty is limited or terminated by operation of law or by such Guarantor;

7.13 If the Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby, except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement or any other Loan Document;

7.14 If any provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by Parent, any Borrower or any of their respective Subsidiaries, or a proceeding shall be commenced by Parent, any Borrower or any of their

 

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respective Subsidiaries, or by any Governmental Authority having jurisdiction over Parent, any Borrower or any of their respective Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or Parent, any Borrower or any of their respective Subsidiaries shall deny that it has any liability or obligation purported to be created under any Loan Document;

7.15 If any Change of Control shall have occurred;

7.16 If any bank at which any Cash Management Account or Deposit Account of any Loan Party containing deposits in excess of $100,000 is maintained shall fail to comply with any of the material terms of any Cash Management Agreement or Control Agreement to which such bank is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of any Loan Party in excess of $100,000 shall fail to comply with any of the material terms of any Control Agreement to which such Person is a party;

7.17 If there is any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than 30 consecutive days, the cessation or substantial curtailment of revenue producing activities of any Loan Party and such event or circumstance could reasonably be expected to result in a Material Adverse Change;

7.18 If there is any cessation of a substantial part of the business of any Loan Party or any of its Subsidiaries for a period which could reasonably be expected to result in a Material Adverse Change;

7.19 If there is a loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by any Loan Party or any of its Subsidiaries and such loss, suspension, revocation or failure to renew could reasonably be expected to result in a Material Adverse Change;

7.20 If there is an indictment, or a threatened indictment of any Loan Party or any of its Subsidiaries under any criminal statute, or a commencement or a threatened commencement of criminal proceedings against any Loan Party or any of its Subsidiaries, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture to any Governmental Authority of any portion of the property of such Person with a fair market value in excess of $250,000;

7.21 If any Loan Party or any of its Subsidiaries shall be liable for any Environmental Liabilities the payment of which could reasonably be expected to result in a Material Adverse Change;

7.22 If (a) there shall occur and be continuing any “Event of Default” (or any comparable term) under, and as defined in any Subordinated Note Document or any document evidencing or governing any other Subordinated Indebtedness, (b) any of the Obligations for any reason shall cease to be “Senior Indebtedness” or “Designated Senior Indebtedness” (or any comparable terms) under, and as defined in the Investor Intercreditor Agreement or any document evidencing or governing any other Subordinated Indebtedness, (c) any Indebtedness other than the Obligations shall constitute “Designated Senior Indebtedness” (or any comparable term) under, and as defined in, the Investor Intercreditor Agreement or any document evidencing or governing any other Subordinated Indebtedness, (d) any holder of any Subordinated Note or any other Subordinated Indebtedness shall fail to perform or comply with any of the subordination provisions of the documents evidencing or governing such Indebtedness, or (e) the subordination provisions of the Investor Intercreditor Agreement or any document evidencing or governing any other Subordinated Indebtedness shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of such Indebtedness; or

7.23 If there occurs one or more ERISA Events which individually or in the aggregate results in or otherwise is associated with liability of Parent, any Borrower, any of their respective Subsidiaries, or any of their respective ERISA Affiliates that is a member of a “controlled group of corporations”, under “common

 

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control” or an “affiliated service group” with Parent, any Borrower or any of their respective Subsidiaries within the meaning of Section 414(b), (c) or (m) of the IRC (collectively, the “Controlled Group ERISA Affiliates”) (or is reasonably likely,   as determined in the reasonable discretion of Agent, to result in liability to Parent, any Borrower, any of their respective Subsidiaries or any of their respective Controlled Group ERISA Affiliates in the case of liability of any of their respective ERISA Affiliates that are not Controlled Group ERISA Affiliates) in excess of $250,000 during the term of this Agreement; or there exists, an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans maintained, sponsored or obligated to be contributed by Parent, any Borrower, any of their respective Subsidiaries or any of their Controlled Group ERISA Affiliates (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities) which exceeds $250,000; or there exists, an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans maintained, sponsored or obligated to be contributed by ERISA Affiliate that are not Controlled Group ERISA Affiliates (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities) which exceeds $250,000 and which is reasonably likely, as determined in the reasonable discretion of Agent, to result in liability of Parent, any Borrower, any of their respective Subsidiaries, or any of their respective Controlled Group ERISA Affiliates.

 

8. THE LENDER GROUP’S RIGHTS AND REMEDIES.

8.1 Rights and Remedies . Upon the occurrence, and during the continuation, of an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Parent and Borrowers:

(a) Declare all or any portion of the Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;

(b) Cease or restrict advancing money or extending credit to or for the benefit of Borrowers under this Agreement, under any of the Loan Documents, or under any other agreement between Borrowers and the Lender Group;

(c) Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent’s Liens in the Collateral and without affecting the Obligations; and

(d) Exercise any and all other rights and remedies available at law or in equity or pursuant to any other Loan Document.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 7.4 or Section 7.5 , in addition to the remedies set forth above, without any notice to Parent, Borrowers or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations then outstanding, together with all accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by Parent and Borrowers.

8.2 Remedies Cumulative . The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

 

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9. TAXES AND EXPENSES.

If Parent, any Borrower or any of their respective Subsidiaries fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, Agent, in its sole discretion and without prior notice to any such Person, may do any or all of the following: (a) make payment of the same or any part thereof, or (b) in the case of the failure to comply with Section 5.8 hereof, obtain and maintain insurance policies of the type described in Section 5.8 and take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence (for purposes of this Section 9 ) that the same was validly due and owing.

 

10. WAIVERS; INDEMNIFICATION.

10.1 Demand; Protest; etc. Parent and each Borrower waive demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which Parent or any Borrower may in any way be liable.

10.2 The Lender Group’s Liability for Collateral . Parent and each Borrower hereby agree that: (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers.

10.3 Indemnification . Each Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an “ Indemnified Person ”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties and damages, and all reasonable fees and disbursements of attorneys, experts and consultants and other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Parent’s, Borrowers’ and their respective Subsidiaries’ compliance with the terms of the Loan Documents; provided that the reimbursement of Lender Group Expenses shall be subject to any limitations with respect thereto contained in this Agreement, (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties at any time owned, leased or operated by Parent, any Borrower or any of their respective Subsidiaries or any Environmental Actions, Environmental Liabilities or Remedial Actions related in any way to any such assets or properties at any time owned, leased or operated by Parent, any Borrower or any of their respective Subsidiaries (all the foregoing, collectively, the “ Indemnified

 

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Liabilities ”). The foregoing to the contrary notwithstanding, Borrowers shall have no obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person or the willful breach by an Indemnified Person of its obligations hereunder. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

11. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by Parent, Borrowers or Agent to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Parent, Administrative Borrower or Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile to Parent or Borrowers in care of Administrative Borrower or to Agent, as the case may be, at its address set forth below:

 

If to Parent or Administrative Borrower:   

MONOTYPE IMAGING, INC.

200 Ballardvale Street

Wilmington, Massachusetts 01887

Attn: Jeff Burk, Vice President Finance

Fax No.: (978) 657-8268

with copies to:   

GOODWIN PROCTER LLP

Exchange Place

53 State Street

Boston, MA 02109

Attn: Edward Matson Sibble, Jr., Esq.

Fax No.: (617) 523-1231

If to Agent:   

WELLS FARGO FOOTHILL, INC.

One Boston Place

Boston, Massachusetts 02108

Attn: Business Finance Manager

Fax No.: (617) 523-5839

with copies to:   

MORRISON & FOERSTER LLP

1290 Avenue of the Americas, 40 th Floor

New York, New York 10104-0050

Attn: Mark B. Joachim, Esq.

Fax No.: (212) 468-7900

Agent, Parent and Borrowers may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 11 , other than notices by Agent in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Parent and each Borrower acknowledge and

 

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agree that notices sent by the Lender Group in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above.

 

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED , HOWEVER , THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. PARENT, EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b) .

(c) PARENT, EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. PARENT, EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1 Assignments and Participations .

(a) Any Lender may assign and delegate to one or more assignees (each an “ Assignee ”) that are Eligible Transferees all, or any ratable part of all, of the Obligations, the Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000 (except such minimum amount shall not apply to (x) an assignment or delegation by any Lender to any other Lender or an Affiliate of any Lender or any Related Fund or (y) a group of new Lenders, each of whom is an Affiliate of each other or a fund or account managed by any such new Lender or an Affiliate of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $5,000,000); provided , however , that Borrowers and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been

 

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given to Administrative Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Administrative Borrower and Agent an Assignment and Acceptance, and (iii) the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in the amount of $3,500. Anything contained herein to the contrary notwithstanding, the payment of any fees shall not be required and the Assignee need not be an Eligible Transferee if (xx) such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or substantially all of the business or loan portfolio of the assigning Lender or (yy) the assignee is a Lender or an Affiliate of a Lender or a Related Fund.

(b) From and after the date that Agent notifies the assigning Lender (with a copy to Administrative Borrower) that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee (if required), (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents and the WFF and D.B. Zwirn Intercreditor Agreement, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, the other Loan Documents and the WFF and D.B. Zwirn Intercreditor Agreement, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation between Borrowers and the Assignee; provided , however , that nothing contained herein shall release any assigning Lender from such assigning Lender’s obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Article 15 and Section 16.7 of this Agreement. Notwithstanding anything to the contrary contained in this Section 13.1 , a Lender may assign any or all of its rights hereunder to an Affiliate of such Lender or a Related Fund by the execution of an Assignment and Acceptance by such assigning Lender and its Affiliate or Related Fund but without written notice of such assignment to any Borrower or Agent or delivery of such executed Assignment and Acceptance to Agent or any Borrower, and without the payment of the above-referenced processing fee; provided , however , that (x) Borrowers and Agent may continue to deal solely and directly with the assigning Lender until such Assignment and Acceptance has been delivered to Agent, and (y) the failure of such assigning Lender to deliver such notice or to deliver the Assignment and Acceptance to Agent or any other Person shall not affect the legality, validity, or binding effect of such assignment.

(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or the WFF and D.B. Zwirn Intercreditor Agreement furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement and the WFF and D.B. Zwirn Intercreditor Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement, the other Loan Documents and the WFF and D.B. Zwirn Intercreditor Agreement as are delegated to Agent, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender and (vii) such Assignee expressly assumes all rights and obligations of such assigning Lender under the WFF and D.B. Zwirn Intercreditor Agreement and agrees to be bound by the terms thereof.

 

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(d) Immediately upon Agent’s receipt of any required processing fee payment and the fully executed Assignment and Acceptance (or the assigning Lender’s receipt of a fully executed Assignment and Acceptance, in the case of an assignment from a Lender to one or more of its Affiliates or Related Funds, as to which the assigning Lender has not delivered an Assignment and Acceptance to Agent or Borrowers and in which case the payment of a processing fee is not required), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto .

(e) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “ Participant ”) participating interests in all or any portion of its Obligations, the Commitment, and the other rights and interests of that Lender (the “ Originating Lender ”) hereunder and under the other Loan Documents; provided , however , that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Originating Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled principal repayments or prepayments or premiums, and (v) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collections of Borrowers or their respective Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves.

(f) In connection with any such assignment or participation or proposed assignment or participation, a Lender may, subject to the provisions of Section 16.7 , disclose all documents and information which it now or hereafter may have relating to Parent, Borrowers and their respective Subsidiaries and their respective businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of (i) any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR § 203.24, and (ii) any Person providing financing or other credit support to a Lender or any of its Affiliates or Related Funds in accordance with Section 2.17 , and such Federal Reserve Bank or other Person may enforce such pledge or security interest in any manner permitted under applicable law.

 

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(h) Agent (on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “ Register ”) on which it enters the name of a Lender as the registered owner of each Term Loan held by such Lender. Other than in connection with an assignment by a Lender of all or any portion of its Term Loan to an Affiliate of such Lender or a Related Fund of such Lender (i) a Registered Loan (and the Registered Note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each Registered Note shall expressly so provide) and (ii) any assignment or sale of all or part of such Registered Loan (and the Registered Note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the Registered Note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such Registered Note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new Registered Notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the Registered Note, if any evidencing the same), Borrowers shall treat the Person in whose name such Loan (and the Registered Note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by a Lender of all or any portion of its Term Loan to an Affiliate of such Lender or a Related Fund of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register.

(i) In the event that a Lender sells participations in the Registered Loan, such Lender, on behalf of Borrowers, shall maintain a register on which it enters the name of all participants in the Registered Loans held by it (the “ Participant Register ”). A Registered Loan (and the Registered Note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each Registered Note shall expressly so provide). Any participation of such Registered Loan (and the Registered Note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.

13.2 Successors . This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided , however , that neither Parent nor Borrowers may assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio . No consent to assignment by the Lenders shall release Parent or any Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 hereof and, except as expressly required pursuant to Section 13.1 hereof, no consent or approval by Parent or any Borrower is required in connection with any such assignment.

 

14. AMENDMENTS; WAIVERS.

14.1 Amendments and Waivers . No amendment or waiver of any provision of this Agreement or any other Loan Document (other than the Fee Letter and Bank Product Agreements), and no consent with respect to any departure by Parent, Borrowers or any of their respective Subsidiaries therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Administrative Borrower (on behalf of all Loan Parties) and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided , however , that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders affected thereby and Administrative Borrower (on behalf of all Loan Parties), do any of the following:

(a) increase or extend any Commitment of any Lender,

 

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(b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

(c) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document,

(d) change the Pro Rata Share that is required to take any action hereunder,

(e) amend or modify this Section or any provision of this Agreement providing for consent or other action by all Lenders,

(f) other than as permitted by Section 15.12 , release Agent’s Lien in and to any of the Collateral,

(g) change the definition of “Required Lenders” or “Pro Rata Share”,

(h) contractually subordinate any of the Agent’s Liens,

(i) release any Borrower or any Guarantor from any obligation for the payment of money,

(j) change the definition of Maximum Revolver Amount or Term Loan Amount, or

(k) amend any of the provisions of Section 15 ,

and, provided further , however , that no amendment, waiver or consent shall, unless in writing and signed by Agent or Swing Lender, as applicable, affect the rights or duties of Agent or Swing Lender, as applicable, under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrowers, shall not require consent by or the agreement of Borrowers.

14.2 Replacement of Holdout Lender .

(a) If any action to be taken by the Lender Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender (“ Holdout Lender ”) fails to give its consent, authorization, or agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Lenders (each, a “ Replacement Lender ”), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.

(b) Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms of Section 13.1 . Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances.

 

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14.3 No Waivers; Cumulative Remedies . No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by Parent, Borrowers or any of their respective Subsidiaries of any provision of this Agreement. Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.

 

15. AGENT; THE LENDER GROUP.

15.1 Appointment and Authorization of Agent . Each Lender hereby designates and appoints WFF as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Section 15 . The provisions of this Section 15 (other than the proviso to Section 15.11(a) ) are solely for the benefit of Agent, and the Lenders, and Parent, Borrowers and their respective Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word “Agent” is for convenience only, that WFF is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Parent, Borrowers and their respective Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Parent, Borrowers and their respective Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of Parent, Borrowers and their respective Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to the Loan Parties, the Obligations, the Collateral, the Collections of Parent, Borrowers and their respective Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.

 

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15.2 Delegation of Duties . Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.

15.3 Liability of Agent . None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by Parent, any Borrower or any Subsidiary or Affiliate of Parent or any Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of Parent, any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of Parent or Borrowers or the books or records or properties of any of Parent’s or Borrowers’ Subsidiaries or Affiliates.

15.4 Reliance by Agent . Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

15.5 Notice of Default or Event of Default . Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 15.4 , Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 8 ; provided , however , that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

15.6 Credit Decision . Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Parent, Borrowers and their respective Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent

 

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that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Parent, Borrowers and any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Parent, Borrowers and any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Parent, Borrowers and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.

15.7 Costs and Expenses; Indemnification . Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of Parent, Borrowers and their respective Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses (to the extent such out-of-pocket costs and expenses constitute Lender Group Expenses) prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from the Collections of Parent, Borrowers and their respective Subsidiaries received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided , however , that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein or therein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

15.8 Agent in Individual Capacity . WFF and its Affiliates and Related Funds may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Parent, Borrowers and their respective Subsidiaries and Affiliates and any other Person party to any Loan Documents as though WFF were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, WFF or its Affiliates or Related Funds may receive information regarding Parent, Borrowers or their respective Affiliates and any other Person party to any Loan Documents that is subject to confidentiality

 

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obligations in favor of Parent, Borrowers or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms “Lender” and “Lenders” include WFF in its individual capacity.

15.9 Successor Agent . Agent may resign as Agent upon 45 days notice to the Lenders. If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.

15.10 Lender in Individual Capacity . Any Lender and its respective Affiliates and Related Funds may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with Parent, Borrowers and their respective Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates and Related Funds may receive information regarding Parent, Borrowers or their Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them. With respect to the Swing Loans and Protective Advances, Swing Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the sub-agent of Agent.

15.11 Withholding Taxes .

(a) All payments made by any Borrower hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Taxes, and in the event any deduction or withholding of Taxes is required, each Borrower shall comply with the penultimate sentence of this Section 15.11(a) . “Taxes” shall mean, any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein measured by or based on the net income or net profits of any Lender or Agent) and all interest, penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, each Borrower agrees to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to this Section 15.11(a) after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein; provided , however , that Borrowers shall not be required to increase any such amounts if the increase in such amount

 

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payable results from Agent’s or such Lender’s own willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction). Each Borrower will furnish to Agent as promptly as possible after the date the payment of any Tax is due pursuant to applicable law certified copies of tax receipts evidencing such payment by any Borrower.

(b) If a Lender claims an exemption from United States withholding tax, such Lender shall deliver to Agent (or in the case of a Lender party to an Assignment and Acceptance not recorded in the Register, the assigning Lender):

(i) if such Lender claims an exemption from United States withholding tax pursuant to its portfolio interest exception, (A) a statement of the Lender, signed under penalty of perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation related to any Borrower within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before receiving its first payment under this Agreement and at any other time reasonably requested by Agent, Administrative Borrower or the assigning Lender, as applicable;

(ii) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed and executed IRS Form W-8BEN before receiving its first payment under this Agreement and at any other time reasonably requested by Agent, Administrative Borrower or the assigning Lender, as applicable;

(iii) if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before receiving its first payment under this Agreement and at any other time reasonably requested by Agent, Administrative Borrower or the assigning Lender, as applicable; and/or

(iv) such other form or forms, including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent, Administrative Borrower or the assigning Lender, as applicable.

Each Lender agrees promptly to notify Agent, Administrative Borrower or the assigning Lender, as applicable, of any change in circumstances which would modify or render invalid any claimed exemption or reduction and to timely provide such forms and other certifications claiming such exemptions and/or reductions to which it is legally entitled.

(c) If a Lender claims an exemption from withholding tax in a jurisdiction other than the United States, such Lender shall deliver to Agent (or, in the case of a Lender party to an Assignment and Acceptance not recorded in the Register, the assigning Lender) any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent, Administrative Borrower or the assigning Lender, as applicable.

Each Lender agrees promptly to notify Agent, Administrative Borrower or the assigning Lender, as applicable, of any change in circumstances which would modify or render invalid any claimed exemption or reduction and to timely provide such forms and other certifications claiming such exemptions and/or reductions to which it is legally entitled.

(d) If any Lender claims exemption from, or reduction of, withholding tax and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrowers to such Lender (other than to an Affiliate or a Related Fund), such Lender agrees to notify Agent and

 

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Administrative Borrower of the percentage amount in which it is no longer the beneficial owner of Obligations of Borrowers to such Lender. To the extent of such percentage amount, Agent and Borrowers will treat such Lender’s documentation provided pursuant to Sections 15.11(b) or 15.11(c) as no longer valid. With respect to such percentage amount, Lender may provide new documentation, pursuant to Sections 15.11(b) or 15.11(c) , if applicable.

(e) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (b) or (c) of this Section 15.11 are not delivered in accordance with such subsections, then Agent or the assigning Lender, as applicable, may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax.

(f) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or for the account of any Lender due to a failure on the part of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the proper Person of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid, directly or indirectly, by Agent, as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under this Section 15.11 , together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent.

(g) If any Lender requests indemnification or additional amounts under Section 15.11 , then such Lender shall use reasonable efforts to designate a different one of its lending offices or assign its rights and obligations hereunder to another of its offices or branches, if (i) in the reasonable judgment of such Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 15.11 in the future, and (ii) in the reasonable judgment of such Lender, such designation or assignment would not subject it to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to it. Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred by such Lender in connection with any such designation or assignment.

15.12 Collateral Matters .

(a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by Borrowers of all Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Administrative Borrower certifies to Agent that the sale or disposition is permitted under Section 6.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which none of Parent, any Borrower or any of their respective Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to Parent, a Borrower or any of their respective Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Administrative Borrower at any time, the Lenders will confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 15.12 ; provided , however , that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrowers in respect of) all interests retained by Parent, Borrowers or any of their respective Subsidiaries, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

 

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(b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Parent, Borrowers or any of their respective Subsidiaries or is cared for, protected, or insured or has been encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein.

15.13 Restrictions on Actions by Lenders; Sharing of Payments .

(a) Each of the Lenders agrees that it shall not, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set off against the Obligations (to the extent then due and payable), any amounts owing by such Lender to Parent, Borrowers or any of their respective Subsidiaries or any deposit accounts of Parent, Borrowers or any of their respective Subsidiaries now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

(b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s ratable portion of all such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided , however , that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

15.14 Agency for Perfection . Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.

15.15 Payments by Agent to the Lenders . All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.

 

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15.16 Concerning the Collateral and Related Loan Documents . Each member of the Lender Group authorizes and directs Agent to enter into this Agreement, the other Loan Documents, the Investor Intercreditor Agreement, and the WFF and D.B. Zwirn Intercreditor Agreement. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement, the other Loan Documents, the Investor Intercreditor Agreement, and the WFF and D.B. Zwirn Intercreditor Agreement relating to the Collateral or otherwise and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

15.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information . By becoming a party to this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a “ Report ” and collectively, “ Reports ”) prepared by or at the request of Agent, and Agent shall so furnish each Lender with such Reports,

(b) expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Parent, Borrowers and their respective Subsidiaries and will rely significantly upon the books and records of Parent, Borrowers and their respective Subsidiaries, as well as on representations of Parent’s, Borrowers’ and their respective Subsidiaries’ personnel,

(d) agrees to keep all Reports and other material, non-public information regarding Parent, Borrowers and their respective Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 16.7 , and

(e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Parent, Borrowers and their respective Subsidiaries to Agent that has not been contemporaneously provided by Parent, Borrowers and their respective Subsidiaries to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Parent, Borrowers and their respective Subsidiaries, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of the applicable Person the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from the applicable Person, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Administrative Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

 

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15.18 Several Obligations; No Liability . Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 15.7 , no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to Parent, any Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.

15.19 Bank Product Providers . Each Bank Product Provider shall be deemed a party hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it being understood and agreed that the rights and benefits of such Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and collections out of the Collateral as more fully set forth herein. In connection with any such distribution of payments and collections, Agent shall be entitled to assume no amounts are due to any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the amount of any such liability owed to it prior to such distribution.

 

16. GENERAL PROVISIONS.

16.1 Effectiveness . This Agreement shall be binding and deemed effective when executed by Parent, each Borrower, Agent, and each Lender whose signature is provided for on the signature pages hereof.

16.2 Section Headings . Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

16.3 Interpretation . Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group, Parent or Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

16.4 Severability of Provisions . Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

16.5 Counterparts; Electronic Execution . This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis .

 

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16.6 Revival and Reinstatement of Obligations . If the incurrence or payment of the Obligations by any Borrower or any Guarantor or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a “ Voidable Transfer ”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers or such Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

16.7 Confidentiality . Agent and Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding Parent, Borrowers and their respective Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except: (a) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries, Affiliates and Related Funds of any member of the Lender Group (including the Bank Product Providers), provided that any such Subsidiary, Affiliate or Related Fund shall have agreed to receive such information hereunder subject to the terms of this Section 16.7 , (c) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by Parent or Administrative Borrower or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (e) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders), (f) in connection with any assignment, prospective assignment, sale, prospective sale, participation or prospective participation, or pledge or prospective pledge of any Lender’s interest under this Agreement, provided that any such assignee, prospective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to receive such information hereunder subject to the terms of this Section, and (g) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents. The provisions of this Section 16.7 shall survive for 2 years after the payment in full of the Obligations.

16.8 Integration . This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

16.9 Monotype as Agent for Loan Parties . Parent and each Borrower hereby irrevocably appoints Monotype as the borrowing agent and attorney-in-fact for all Loan Parties (the “ Administrative Borrower ”) which appointment shall remain in full force and effect unless and until Agent shall have received prior written notice signed by Parent and each Borrower that such appointment has been revoked and that another Loan Party has been appointed Administrative Borrower. Parent and each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (a) to provide Agent with all notices with respect to Advances obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (b) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Advances and to exercise such other powers as are reasonably necessary to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Parent and Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to Parent or any Borrower as a result hereof. Parent and

 

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each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of Parent and Borrowers is dependent on the continued successful performance of the integrated group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by Parent or any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and Collateral as herein provided, (b) the Lender Group’s relying on any instructions of the Administrative Borrower, or (c) any other action taken by the Lender Group hereunder or under the other Loan Documents, except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section 16.9 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.

16.10 Public Disclosure . Parent and each Borrower agree that neither they nor any of their respective Affiliates will issue any press release or other public disclosure using the name of Agent, any Lender or any of their respective Affiliates or Related Funds or referring to this Agreement or any other Loan Document without the prior written consent of Agent or such Lender, except to the extent that Parent, such Borrower or such Affiliate is required to do so under applicable law (in which event, Parent, such Borrower or such Affiliate will consult with Agent or such Lender before issuing such press release or other public disclosure). Parent and each Borrower hereby authorize Agent and each Lender, after consultation with Administrative Borrower, to advertise the closing of the transactions contemplated by this Agreement, and to make appropriate announcements of the financial arrangements entered into among the parties hereto, as Agent or such Lender shall deem appropriate, including announcements commonly known as tombstones, in such trade publications, business journals, newspapers of general circulation and to such selected parties as Agent or such Lender shall deem appropriate.

[Signature pages to follow]

 

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IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

 

MONOTYPE IMAGING HOLDINGS CORP.,
a Delaware corporation
By:   /s/ A. Bruce Johnston
Name:   A. Bruce Johnston
Title:   Vice President
IMAGING ACQUISITION CORPORATION,
a Delaware corporation
By:   /s/ A. Bruce Johnston
Name:   A. Bruce Johnston
Title:   Vice President
AGFA MONOTYPE CORPORATION,
a Delaware corporation
By:   /s/ A. Bruce Johnston
Name:   A. Bruce Johnston
Title:   Vice President
INTERNATIONAL TYPEFACE CORPORATION ,
a New York corporation
By:   /s/ A. Bruce Johnston
Name:   A. Bruce Johnston
Title:   Vice President
WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent and as a Lender
By:   /s/ Garrick Tan
Name:   Garrick Tan
Title:   Vice President

[SIGNATURE PAGE OF WFF CREDIT AGREEMENT]


BERNARD NATIONAL LOAN INVESTORS, LTD, a Cayman Islands company, as a Lender
By:   Bernard Capital Funding, LLC., its Investment Advisor
By:   /s/ Daniel B. Zwirn
Name:   Daniel B. Zwirn
Title:   Director
D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P., a Delaware limited partnership, as a Lender
By:   D. B. Zwirn Partners, LLC, its general partner
  By:   Zwirn Holdings, LLC, its managing member
By:   /s/ Daniel B. Zwirn
Name:   Daniel B. Zwirn
Title:   Managing Partner

[SIGNATURE PAGE OF WFF CREDIT AGREEMENT]

 

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F INAL V ERSION

Schedule 1.1

As used in the Agreement, the following terms shall have the following definitions:

Account ” means an account (as that term is defined in the Code).

Account Debtor ” means any Person who is obligated on an Account, chattel paper, or a general intangible.

ACH Transactions ” means any cash management or related services (including the Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve Fedline system) provided by a Bank Product Provider for the account of Parent, Borrowers or any of their respective Subsidiaries.

Acquisition Documents ” means the Stock Purchase Agreement, the Merger Agreement, the Japan Type License Amendment, and the other documents, instruments and agreements executed and delivered in connection with the Acquisition Transaction, or otherwise relating thereto.

Acquisition Effectiveness Time ” has the meaning specified therefor in the recitals of the Agreement.

Acquisition Transaction ” has the meaning specified therefor in the recitals of the Agreement.

Administrative Borrower ” has the meaning specified therefor in Section 16.9 .

Advances ” has the meaning specified therefor in Section 2.1(a) .

Affiliate ” means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise; provided, however , that, for purposes of Section 6.13 : (a) any Person which owns directly or indirectly 10% or more of the Stock having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed an Affiliate of such Person.

Agent ” has the meaning specified therefor in the preamble to the Agreement.

Agent-Related Persons ” means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.

Agent’s Account ” means the Deposit Account of Agent identified on Schedule A-1 .

Agent’s Liens ” means the Liens granted by Parent, Borrowers and their respective Subsidiaries to Agent under the Loan Documents.


Agreement ” means the Credit Agreement to which this Schedule 1.1 is attached.

Applicable Prepayment Premium ” has the meaning specified therefor in the Fee Letter.

Assignee ” has the meaning specified therefor in Section 13.1(a) .

Assignment and Acceptance ” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1 .

Authorized Person ” means any officer or employee of Administrative Borrower.

Availability ” means, as of any date of determination, the amount that Borrowers are entitled to borrow as Advances hereunder (after giving effect to all then outstanding Obligations (other than Bank Product Obligations) and all sublimits and reserves then applicable hereunder).

Bank Product ” means any financial accommodation extended to Parent, any Borrower or any of their respective Subsidiaries by a Bank Product Provider (other than pursuant to the Agreement) including: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) transactions under Hedge Agreements.

Bank Product Agreements ” means those agreements entered into from time to time by Parent, any Borrower or any of their respective Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products.

Bank Product Obligations ” means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by Parent, any Borrower or any of their respective Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that Parent, any Borrower or any of their respective Subsidiaries are obligated to reimburse to Agent or any member of the Lender Group as a result of Agent or such member of the Lender Group purchasing participations from, or executing indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to Parent, any Borrower or any of their respective Subsidiaries.

Bank Product Provider ” means Wells Fargo or any of its Affiliates.

Bank Product Reserve ” means, as of any date of determination, the lesser of (a) $2,000,000, and (b) the amount of reserves that Agent has established (based upon the Bank Product Providers’ reasonable determination of the credit exposure of Parent, Borrowers and their respective Subsidiaries and its Subsidiaries in respect of Bank Products) in respect of Bank Products then provided or outstanding; provided that in order to qualify as Bank Product Reserves, such reserves must be established on or prior to the date that the Bank Product Provider provides the applicable Bank Products.

Bankruptcy Code ” means Title 11 of the United States Code as in effect from time to time or any similar legislation in a relevant jurisdiction.

Base LIBOR Rate ” means the rate per annum, determined by Agent in accordance with its customary procedures, and utilizing such electronic or other quotation sources as it considers appropriate (rounded upwards, if necessary, to the next 1/100%), to be the rate at which Dollar

 

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deposits (for delivery on the first day of the requested Interest Period) are offered to major banks in the London interbank market 2 Business Days prior to the commencement of the requested Interest Period, for a term and in an amount comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Administrative Borrower in accordance with the Agreement, which determination shall be conclusive in the absence of manifest error.

Base Rate ” means, the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate.

Base Rate Loan ” means the portion of the Advances or the Term Loan that bears interest at a rate determined by reference to the Base Rate.

Base Rate Margin ” means, as of any date of determination:

(a) For the period from and including the Closing Date to but excluding the effective date of any determination of the Base Rate Margin pursuant to clause (b) below, 2.00 percentage points per annum (the “ Initial Base Rate Margin ”).

(b) Thereafter, the relevant Base Rate Margin set forth in the table below that corresponds to the applicable Senior Leverage Ratio of Parent and its Subsidiaries set forth opposite thereto (as determined in accordance with clause (c) below).

 

Senior Leverage Ratio

   Base Rate Margin:

Greater than 2.00:1.00

   2.00 percentage points

Less than or equal to 2.00:1.00 but greater than 1.50:1.00

   1.50 percentage points

Less than or equal to 1.50:1.00

   1.00 percentage points

(c) The Base Rate Margin shall be determined from time to time pursuant to clause (b) above on the first day of the month following the date on which Parent and Borrowers deliver to Agent a quarterly Compliance Certificate in accordance with Section 5.3 , commencing with the delivery by Parent and Borrowers of the quarterly Compliance Certificate for the fiscal quarter of Parent ended March 31, 2005. In the event that a quarterly Compliance Certificate is not provided to Agent in accordance with Section 5.3 , the Base Rate Margin shall be set at the Initial Base Rate Margin as of the first day of the month following the date on which such quarterly Compliance Certificate was required to be delivered until the date on which such quarterly Compliance Certificate is delivered (on which date (but not retroactively), without constituting a waiver of any Default or Event of Default arising as a result of Parent’s and Borrowers’ failure to timely deliver such quarterly Compliance Certificate, the Base Rate Margin shall be set at the relevant Base Rate Margin set forth in the table above based upon the calculation of the Senior Leverage Ratio of Parent and its Subsidiaries set forth in such quarterly Compliance Certificate).

 

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Board of Directors ” means the board of directors (or comparable managers) of Parent, any Borrower or any of their respective Subsidiaries or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).

Borrowers ” means (a) until the Acquisition Effectiveness Time, Newco and (b) from and after the Acquisition Effectiveness Time, individually and collectively, jointly and severally, Monotype and Typeface, and “ Borrower ” means any one of them.

Borrowing ” means a borrowing hereunder consisting of Advances made on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the case of a Protective Advance, in each case, to Administrative Borrower.

Business Day ” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of New York, except that, if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market.

Capital Expenditures ” means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed.

Capital Lease ” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

Capitalized Lease Obligation ” means that portion of the obligations under a Capital Lease that is required to be capitalized in accordance with GAAP.

Cash Equivalents ” means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Rating Group (“ S&P ”) or Moody’s Investors Service, Inc. (“ Moody’s ”), (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit or bankers’ acceptances maturing within 1 year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof so long as the amount maintained with any such other bank is less than or equal to $100,000 and is insured by the Federal Deposit Insurance Corporation, and (f) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (e) above.

Cash Management Account ” has the meaning specified therefor in Section 2.7(a) .

Cash Management Agreements ” means those certain cash management agreements, in form and substance satisfactory to Agent, each of which is among (a) Parent, a Borrower or one of their respective Subsidiaries, (b) Agent, (c) D.B. Zwirn, and (d) one of the Cash Management Banks.

 

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Cash Management Bank ” has the meaning specified therefor in Section 2.7(a) .

Change of Control ” means that (a) Permitted Holders fail to own and control, directly or indirectly, 51% or more of the Stock of Parent having the right to vote for the election of members of the Board of Directors thereof, (b) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 10% or more of the Stock of Parent having the right to vote for the election of members of the Board of Directors thereof, (c) a majority of the members of the Board of Directors of Parent or any Borrower do not constitute Continuing Directors, (d) Parent fails to own or control, directly or indirectly, 100% of the Stock of each Borrower (after giving effect to the Acquisition Transaction) having the right to vote for the election of members of the Board of Directors thereof, (e) any Borrower fails to own or control, directly or indirectly, 100% of the Stock of each of its Subsidiaries (after giving effect to the Acquisition Transaction) having the right to vote for the election of members of the Board of Directors thereof, or (f) a “Change of Control” (or other comparable term) shall occur under any Subordinated Note Document or any document evidencing any other Subordinated Indebtedness of Parent or any of its Subsidiaries.

Closing Date ” means the date of the making of the initial Advance (or other extension of credit) hereunder or the date on which Agent sends Administrative Borrower a written notice that each of the conditions precedent set forth in Section 3.1 either have been satisfied or have been waived.

Code ” means the New York Uniform Commercial Code, as in effect from time to time.

Collateral ” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by Parent, Borrowers or any of their respective Subsidiaries in or upon which a Lien is granted under any of the Loan Documents.

Collateral Access Agreement ” means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in Parent’s, Borrowers’ or any of their respective Subsidiaries’ books and records, Equipment or Inventory, in each case, in form and substance satisfactory to Agent.

Collections ” means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds).

Commitment ” means, with respect to each Lender, its Revolver Commitment, its Term Loan Commitment, or its Total Commitment, as the context requires, and, with respect to all Lenders, their Revolver Commitments, their Term Loan Commitments, or their Total Commitments, as the context requires, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 .

Compliance Certificate ” means a certificate substantially in the form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.

Continuing Director ” means (a) any member of the Board of Directors who was a director (or comparable manager) of Parent on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or

 

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nominated for election to the Board of Directors by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Parent and whose initial assumption of office resulted from such contest or the settlement thereof.

Control Agreement ” means a control agreement, in form and substance satisfactory to Agent, executed and delivered by (a) Parent, Borrowers or one of their respective Subsidiaries, (b) Agent, (c) D.B. Zwirn, and (d) the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account).

Controlled Foreign Corporation ” means “controlled foreign corporation” as defined in the IRC.

Controlled Group ERISA Affiliates ” has the meaning specified therefor in Section 7.23 .

Copyright Security Agreement ” has the meaning specified therefor in the Security Agreement.

Daily Balance ” means, as of any date of determination and with respect to any Obligation, the amount of such Obligation owed at the end of such day.

D.B. Zwirn ” means D.B. Zwirn Special Opportunities Fund, L.P., a Delaware limited partnership.

D.B. Zwirn Cash Management Agreements ” means those certain cash management agreements, in form and substance satisfactory to D.B. Zwirn, each of which is among Parent, Borrowers or one of their respective Subsidiaries, Agent, D.B. Zwirn, and one of the Cash Management Banks, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Control Agreements ” means a Control Agreement as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Copyright Security Agreement ” means the Copyright Security Agreement as such term is defined in the D.B. Zwirn Security Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Credit Agreement ” means that certain Credit Agreement dated as of even date herewith by and among Parent, Borrowers, D.B. Zwirn, for itself and as agent for the lenders party thereto, and the lenders from time to time party thereto, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Fee Letter ” means the Fee Letter as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Guaranty ” means the Guaranty as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

 

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D.B. Zwirn Intercompany Subordination Agreement ” means the Intercompany Subordination Agreement as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Investor Intercreditor Agreement ” means the Intercreditor Agreement dated as of the date hereof among D.B. Zwirn, on the one hand, and TA Subordinated Debt Fund, L.P., TA Investors II, L.P. and D.B. Zwirn, on the other hand, as amended modified, supplemented or restated from time to time

D.B. Zwirn Loan Documents ” means the D.B. Zwirn Cash Management Agreements, the D.B. Zwirn Control Agreements, the D.B. Zwirn Copyright Security Agreement, the D.B. Zwirn Credit Agreement, the D.B. Zwirn Fee Letter, the D.B. Zwirn Guaranty, D.B. Zwirn Intercompany Subordination Agreement, the D.B. Zwirn Mortgages, the D.B. Zwirn Patent Security Agreement, the D.B. Zwirn Registered Notes, the D.B. Zwirn Security Agreement, the D.B. Zwirn Source Code Escrow Agreements, the D.B. Zwirn Trademark Security Agreement, and any other agreement entered into, now or in the future, by any Loan Party and any member of the D.B. Zwirn Lender Group in connection with the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof (including any agreements entered into pursuant to Section 5.16 of the D.B. Zwirn Credit Agreement).

D.B. Zwirn Mortgages ” means the Mortgages as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Obligations ” means the Obligations as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Patent Security Agreement ” means the Patent Security Agreement as such term is defined in the D.B. Zwirn Security Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Registered Notes ” means the Registered Notes as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Security Agreement ” means the Security Agreement as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Source Code Escrow Agreement ” means the Source Code Escrow Agreement as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Term Loan ” means the Term Loan as such term is defined in the D.B. Zwirn Credit Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

D.B. Zwirn Trademark Security Agreement ” means the Trademark Security Agreement as such term is defined in the D.B. Zwirn Security Agreement, as such is amended, modified, supplemented or restated from time to time in accordance with the terms thereof and hereof.

 

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Default ” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

Defaulting Lender ” means any Lender that fails to make any Advance (or other extension of credit) that it is required to make hereunder on the date that it is required to do so hereunder.

Defaulting Lender Rate ” means (a) for the first 3 days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).

Deposit Account ” means any deposit account (as that term is defined in the Code).

Designated Account ” means the Deposit Account of Administrative Borrower identified on Schedule D-1 .

Designated Account Bank ” has the meaning specified therefor in Schedule D-1 .

Distributions ” has the meaning specified therefor in Section 6.10 .

Dollars ” or “ $ ” means United States dollars.

EBITDA ” means, with respect to any fiscal period, (a) Parent’s and its Subsidiaries’ consolidated net earnings (or loss), minus (b) without duplication, the sum of the following amounts of Parent and its Subsidiaries for such period, to the extent included in determining consolidated net earnings (or loss) of Parent and its Subsidiaries for such period, (i) extraordinary gains (including gains realized on the sale of assets), (ii) non-cash income and (iii) interest income, in the case of each of clauses (b)(i) through (b)(iii), as determined in accordance with GAAP, plus (c) without duplication, the sum of the following amounts of Parent and its Subsidiaries for such period, to the extent deducted in determining consolidated net earnings (or loss) of Parent and its Subsidiaries, (i) income taxes and franchise taxes accrued, (ii) Interest Expense, (iii) non-cash extraordinary losses (including non-cash losses realized on the sale of assets), (iv) depreciation and amortization, (v) amortized debt discount for such period, (vi) the amount of any non-cash deduction as the result of any grant to any board members, management or employees of Parent of any equity interests in Parent, (vii) non-recurring cash restructuring charges and independent company start-up costs incurred during the first 12 months after the Closing Date in an aggregate amount not to exceed $2,000,000, (viii) non-cash purchase accounting effects related to the Acquisition Transaction, including loss of deferred revenue, (ix) the amount of any expenses or damages actually paid by Parent or its Subsidiaries in respect of the Adobe Litigation (as such term is defined in the Stock Purchase Agreement) to the extent that such expenses or damages are reimbursed to Parent or its Subsidiaries pursuant to the Stock Purchase Agreement; (x) the amount of any expense attributable to payments under the Agfa Monotype Corporation Incentive Compensation Plan made as of April 26, 2000, as amended or modified from time to time through the Closing Date; and (xi) subject to compliance with Section 3.6(g) , the amount of the TBP Payment (as defined in the Stock Purchase Agreement) made in accordance with the terms of Section 8.05 of the Stock Purchase Agreement, in the case of each of clauses (c)(i) through (c)(xi), as determined in accordance with GAAP; provided , however , that EBITDA for the quarters ending September 30, 2003, December 31, 2003, March 31, 2004, June 30, 2004, and September 30, 2004 shall be deemed to be $3,909,000, $7,307,000, $6,605,000, $9,713,000 and $8,136,000, respectively.

Eligible Transferee ” means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $250,000,000, (b) a commercial bank organized under the laws of any other country which is a member of the Organization for

 

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Economic Cooperation and Development or a political subdivision of any such country and which has total assets in excess of $250,000,000, provided that such bank is acting through a branch or agency located in the United States, (c) a finance company, insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans having (together with its Affiliates and Related Funds) total assets (including assets under management) in excess of $250,000,000, (d) any Lender or any Affiliate (other than individuals) of any Lender, including a fund or account managed by any Lender or any Affiliate of any Lender or its investment manager (a “ Related Fund ”), (e) so long as no Event of Default has occurred and is continuing, any other Person approved by Agent and Administrative Borrower (which approval of Administrative Borrower shall not be unreasonably withheld, delayed, or conditioned), and (f) during the continuation of an Event of Default, any other Person approved by Agent.

Environmental Actions ” means any written complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses of Parent, any Borrower, any of their respective Subsidiaries, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by Parent, any Borrower, any of their respective Subsidiaries, or any of their predecessors in interest.

Environmental Law ” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on Parent, any Borrower, or any of their respective Subsidiaries, relating to the environment, the effect of the environment on employee health, or Hazardous Materials, in each case as amended from time to time.

Environmental Liabilities ” means all liabilities, monetary obligations, losses, damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action.

Environmental Lien ” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

Equipment ” means equipment (as that term is defined in the Code).

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

ERISA Affiliate ” means each business or entity which is, or within the last six years was, a member of a “controlled group of corporations”, under “common control” or an “affiliated service group” with Parent, any Borrower or any of their respective Subsidiaries within the meaning of Section 414(b), (c) or (m) of the IRC, required to be aggregated with Parent, any Borrower or any of their respective Subsidiaries under Section 414(o) of the IRC, or is, or within the last six years was, under “common control” with Parent, any Borrower or any of their respective Subsidiaries, within the meaning of Section 4001(a)(14) of ERISA.

 

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ERISA Event ” means (a) a reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section with respect to a Pension Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; (b) the applicability of the requirements of Section 4043(b) of ERISA with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, to any Pension Plan where an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such plan within the following 30 days; (c) a withdrawal by a Parent, any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate from a Pension Plan or the termination of any Pension Plan resulting in liability under Sections 4063 or 4064 of ERISA; (d) the withdrawal of Parent, any Borrower, any of their respective Subsidiaries, or ERISA Affiliate in a complete or partial withdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by Parent, any Borrower, any of their respective Subsidiaries, or ERISA Affiliate of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA; (e) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) the imposition of liability on Parent, any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate pursuant to Sections 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the failure by Parent, any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate to make any required contribution to a Pension Plan (or the failure to make a required contribution in any material respect with respect to any Plan that is not a Pension Plan or a Multiemployer Plan), or the failure to meet the minimum funding standard of Section 412 of the IRC with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the IRC) or the failure to make by its due date a required installment under Section 412(m) of the IRC with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (h) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (i) the imposition of any material liability under Title I or Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliate; (j) an application for a funding waiver under Section 303 of ERISA or an extension of any amortization period pursuant to Section 412 of the IRC with respect to any Pension Plan; (k) the occurrence of a non-exempt prohibited transaction under Sections 406 or 407 of ERISA for which Parent, any Borrower, or any of their respective Subsidiaries, may be directly or indirectly liable and which is reasonably expected to result in a material liability to Parent, any Borrower, or any of their respective Subsidiaries; (l) a material violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the IRC by any fiduciary or disqualified person for which Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliate may be directly or indirectly liable; (m) the occurrence of an act or omission which could give rise to the imposition on Parent, any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate of material fines, material penalties, material taxes or material related charges under Chapter 43 of the IRC or under Sections 409, 502(c), (i) or (1) or 4071 of ERISA; (n) the assertion of a material claim (other than routine claims for benefits) against any Plan or the assets thereof, or against Parent, any Borrower, or any of their respective Subsidiaries in connection with any such Plan; (o) receipt from the Internal Revenue Service of notice of the failure of any Qualified Plan to qualify under Section 401(a) of the IRC, or the failure of any trust forming part of any Qualified Plan to fail to qualify for exemption from taxation under Section 501(a) of the IRC; (p) the imposition of any lien on any of the rights, properties or assets of Parent, any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate, in either case pursuant to Section 302(f) of ERISA or Title IV of ERISA or to the penalty or excise tax provisions of the IRC or to Section 401(a)(29) or 412(n) of the IRC; or (q) the establishment or amendment by Parent, any Borrower, or any of their respective Subsidiaries, of any “welfare plan”, as such term is defined in Section 3(1) of ERISA, that provides post-employment health benefits in a manner that would materially increase the liability of Parent, any Borrower, or any of their respective Subsidiaries.

 

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Event of Default ” has the meaning specified therefor in Section 7 .

Excess Availability ” means, as of any date of determination, the amount equal to Availability minus the aggregate amount, if any, of all trade payables of Parent, Borrowers and their respective Subsidiaries aged in excess of their historical levels with respect thereto and all book overdrafts of Parent, Borrowers and their respective Subsidiaries in excess of their historical practices with respect thereto, in each case as determined by Agent in its Permitted Discretion.

Excess Cash Flow ” means, as of the date any determination thereof is to be made, the result of (a) EBITDA for the immediately preceding fiscal year (provided, that, for the period from the Closing Date through December 31, 2004, such amount shall be EBITDA for such period), less (b) the sum of (i) total interest payments (to the extent paid in cash) on any Indebtedness of Borrowers permitted under the Agreement (to the extent that such payments are permitted to be made under the Agreement) during such period, (ii) principal payments (to the extent paid in cash) on any Indebtedness of Borrowers permitted under the Agreement (to the extent that such payments are permitted to be made under the Agreement) during such period (but, in the case of revolving loans, only to the extent that the revolving credit commitment with respect thereto is permanently reduced by the amount of such payments), (iii) all Capital Expenditures made in cash during such period (to the extent that such Capital Expenditures are permitted to be made under the Agreement), and (iv) payments of Taxes made in cash during such period.

Exchange Act ” means the Securities Exchange Act of 1934, as in effect from time to time.

Extraordinary Receipts ” means any cash received by any Loan Party or any of its Subsidiaries not in the ordinary course of business, including (a) foreign, United States, state or local tax refunds, (b) pension plan reversions, (c) proceeds of insurance, (d) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (e) condemnation awards (and payments in lieu thereof), (f) indemnity payments and (g) any purchase price adjustment received in connection with any purchase agreement (including the Stock Purchase Agreement); provided , however , that Extraordinary Receipts shall not include any cash received by any Loan Party in respect of (i) the issuance of Convertible Preferred Stock and Common Stock pursuant to the Stock Purchase Agreement dated as of November 5, 2004 by and among Parent, the investors listed on Schedule A thereto and the lenders listed on Schedule B thereto as in effect on the Closing Date, (ii) the issuance of Common Stock pursuant to the Subordinated Note Purchase Agreement, (iii) the reimbursement of any Adobe Litigation Costs or Adobe Damages pursuant to and as defined in the Stock Purchase Agreement and (iv) any amounts received from Seller under the terms of the Stock Purchase Agreement with respect to a Working Capital Shortfall (as defined in the Stock Purchase Agreement).

Facility Limiter Amount ” means, as of any date of determination, the product of 4.25 times the TTM EBITDA as determined based on the most recent quarterly financial statements delivered to Agent pursuant to Section 5.3 .

Facility Limiter Report ” means a report in the form of Exhibit B-1 .

Fee Letter ” means that certain fee letter dated as of even date herewith among Parent, Borrowers and Agent, in form and substance satisfactory to Agent.

Fixed Charge Coverage Ratio ” means, with respect to Parent and its Subsidiaries for any period, the ratio of (a) EBITDA for such period minus Capital Expenditures made (to the extent not already incurred in a prior period) or incurred during such period, to (b) Fixed Charges for such period.

 

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Fixed Charges ” means with respect to Parent and its Subsidiaries for any period, the sum, without duplication, of (a) Interest Expense (excluding PIK Interest), (b) principal payments required to be paid during such period in respect of Indebtedness, and (c) all federal, state, and local income taxes paid in cash during such period.

Funding Date ” means the date on which a Borrowing occurs.

Funding Losses ” has the meaning specified therefor in Section 2.13(b)(ii) .

GAAP ” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

Governing Documents ” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.

Governmental Authority ” means any federal, state, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar governmental dispute-resolving panel or body.

Guarantors ” means Parent and each other Subsidiary of Parent that executes a joinder to the Guaranty after the Closing Date in accordance with Section 5.16 , and “ Guarantor ” means any one of them.

Guaranty ” means that certain general continuing guaranty executed and delivered by each Guarantor in favor of Agent for the benefit of the Lender Group and the Bank Product Providers, in form and substance satisfactory to Agent.

Hazardous Materials ” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any Environmental Law as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million.

Hedge Agreement ” means any and all agreements, or documents now existing or hereafter entered into by Parent, a Borrower or any of their respective Subsidiaries that provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging Parent’s, a Borrower’s or any of their respective Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices.

Holdout Lender ” has the meaning specified therefor in Section 14.2(a) .

Indebtedness ” means, without duplication, (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, hedges, derivatives, or other financial products, (c) all obligations as a lessee under Capital

 

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Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and not outstanding for more than 90 days after the date created), (f) all net termination obligations, calculated on any date, on a basis satisfactory to Agent and in accordance with accepted practice as if the Hedging Agreement was terminated on such date, of a Person under Hedging Agreements, and (g) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (f) above.

Indemnified Liabilities ” has the meaning specified therefor in Section 10.3 .

Indemnified Person ” has the meaning specified therefor in Section 10.3 .

Insolvency Proceeding ” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief and including the appointment of a trustee, receiver, administrative receiver, administrator or similar officer.

Intellectual Property ” has the meaning specified therefor in the Security Agreement.

Intercompany Subordination Agreement ” means a subordination agreement executed and delivered by Parent, Borrowers, each of their respective Subsidiaries and Agent, the form and substance of which is satisfactory to Agent.

Interest Expense ” means, for any period, the aggregate of the interest expense of Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

Interest Period ” means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided , however , that (a) if any Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next succeeding Business Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (c) any Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2, or 3 months after the date on which the Interest Period began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf thereof) may not elect an Interest Period which will end after the Maturity Date.

Inventory ” means inventory (as that term is defined in the Code).

Investment ” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, (b) bona fide Accounts arising in the ordinary

 

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course of business and consistent with standard practice among companies in the same industry as such Person and (c) Investments arising out of negotiated terms with an Account Debtor in the ordinary course of business and consistent with standard practice among companies in the same industry as such Person), purchases or other acquisitions of Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.

Investors ” means TA IX, L.P., a Delaware limited partnership, TA/Atlantic and Pacific IV, L.P., a Delaware limited partnership, TA Strategic Partners Fund A, L.P., a Delaware limited partnership, TA Strategic Partners Fund B, L.P., a Delaware limited partnership, and TA Investors II, L.P., a Delaware limited partnership.

Investor Intercreditor Agreement ” means the Intercreditor Agreement dated as of the date hereof among Agent, on the one hand, and TA Subordinated Debt Fund, L.P., TA Investors II, L.P. and D.B. Zwirn, on the other hand, as amended modified, supplemented or restated from time to time.

IRC ” means the Internal Revenue Code of 1986, as in effect from time to time, and the regulations promulgated thereunder.

Japanese Documents ” means (a) an Assignment and Assumption, in form and substance satisfactory to Agent, to be entered into between Agfa-Gevaert Japan, Limited and the Japanese Subsidiary, pursuant to which all or substantially all of the Japan Agreements (as defined on Schedule 3.02 of the Disclosure Schedule to the Stock Purchase Agreement) are to be assigned to the Japanese Subsidiary, and (b) the Japan Type License Agreement.

Japanese Subsidiary ” means a Subsidiary of Monotype that will formed under the laws of Japan after the Closing Date in connection with entering into the Japanese Documents.

Japan Type License Agreement ” means a Type License Agreement, in form and substance satisfactory to Agent, to be entered into between the Japanese Subsidiary and Monotype.

Japan Type License Amendment ” means an amendment to that certain Type License Agreement by and between Agfa-Gevaert Japan, Limited and Agfa Monotype Corporation dated as of November 1, 1995 and substantially in the form attached as an Exhibit to the Stock Purchase Agreement.

Lender ” and “ Lenders ” have the respective meanings specified therefor in the preamble to the Agreement, and shall include any other Person made a party to the Agreement in accordance with the provisions of Section 13.1 .

Lender Group ” means, individually and collectively, each of the Lenders and Agent.

Lender Group Expenses ” means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by Parent, any Borrower or any of their respective Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in connection with the Lender Group’s transactions with Parent, any Borrower or any of their respective Subsidiaries, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication, appraisal (including periodic collateral appraisals or business valuations to the extent of

 

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the fees and charges (and up to the amount of any limitation) contained in the Fee Letter and in the Agreement), real estate surveys, real estate title policies and endorsements, and environmental audits, (c) costs and expenses incurred by Agent in the disbursement of funds to Borrowers or other members of the Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses of Agent related to any inspections or audits to the extent of the fees and charges (and up to the amount of any limitation) contained in the Fee Letter and in the Agreement, (g) reasonable costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group’s relationship with Parent, any Borrower or any of their respective Subsidiaries, (h) Agent’s reasonable costs and expenses (including reasonable attorneys fees but not including internal allocation of overhead) incurred in advising, structuring, drafting, reviewing, administering, syndicating (but not including fees paid to syndicate members), or amending the Loan Documents and rating the Term Loan, and (i) Agent’s and each Lender’s reasonable costs and expenses (including attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning Parent, any Borrower or any of their respective Subsidiaries or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral.

Lender-Related Person ” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

Leverage Ratio ” means, with respect to Parent and its Subsidiaries for any period, the ratio of (a) the aggregate outstanding Indebtedness (excluding Subordinated Indebtedness) of Parent and its Subsidiaries as of the last day of the applicable period to (b) TTM EBITDA.

LIBOR Deadline ” has the meaning specified therefor in Section 2.13(b)(i) .

LIBOR Notice ” means a written notice in the form of Exhibit L-1 .

LIBOR Option ” has the meaning specified therefor in Section 2.13(a) .

LIBOR Rate ” means, for each Interest Period for each LIBOR Rate Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to the next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.

LIBOR Rate Loan ” means each portion of an Advance or the Term Loan that bears interest at a rate determined by reference to the LIBOR Rate.

LIBOR Rate Margin ” means, as of any date of determination:

(a) For the period from and including the Closing Date to but excluding the effective date of any determination of the LIBOR Rate Margin pursuant to clause (b) below, 3.50 percentage points per annum (the “ Initial LIBOR Rate Margin ”).

 

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(b) Thereafter, the relevant LIBOR Rate Margin set forth in the table below that corresponds to the applicable Senior Leverage Ratio of Parent and its Subsidiaries set forth opposite thereto (as determined in accordance with clause (c) below).

 

Senior Leverage Ratio

  

LIBOR Rate Margin:

Greater than 2.00:1.00

   3.50 percentage points

Less than or equal to 2.00:1.00 but greater than 1.50:1.00

   3.00 percentage points

Less than or equal to 1.50:1.00

   2.50 percentage points

(c) The LIBOR Rate Margin shall be determined from time to time pursuant to clause (b) above on the first day of the month following the date on which Parent and Borrowers deliver to Agent a quarterly Compliance Certificate in accordance with Section 5.3 , commencing with the delivery by Parent and Borrowers of the quarterly Compliance Certificate for the fiscal quarter of Parent ended March 31, 2005. In the event that a quarterly Compliance Certificate is not provided to Agent in accordance with Section 5.3 , the LIBOR Rate Margin shall be set at the Initial LIBOR Rate Margin as of the first day of the month following the date on which such quarterly Compliance Certificate was required to be delivered until the date on which such quarterly Compliance Certificate is delivered (on which date (but not retroactively), without constituting a waiver of any Default or Event of Default arising as a result of Parent’s and Borrowers’ failure to timely deliver such quarterly Compliance Certificate, the LIBOR Rate Margin shall be set at the relevant LIBOR Rate Margin set forth in the table above based upon the calculation of the Senior Leverage Ratio of Parent and its Subsidiaries set forth in such quarterly Compliance Certificate).

Lien ” means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, irrespective of whether (a) such interest is based on the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term “Lien” includes the lien or security interest arising from a mortgage, deed of trust, encumbrance, notice of Lien, levy or assessment, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also includes reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property.

Loan Account ” has the meaning specified therefor in Section 2.10 .

Loan Documents ” means the Agreement, the Bank Product Agreements, the Cash Management Agreements, the Control Agreements, the Copyright Security Agreement, the Fee Letter, the Guaranty, the Intercompany Subordination Agreement, the Mortgages, the Patent Security Agreement, the Perfection Certificate, any Registered Note or Registered Notes executed by any Loan Party in connection with the Agreement and payable to a member of the Lender Group, the Security Agreement, the Source Code Escrow Agreement, the Trademark Security Agreement, and any other agreement entered into, now or in the future, by any Loan Party and any member of the Lender Group in connection with the Agreement (including any agreements entered into pursuant to Section 5.16 ).

Loan Parties ” means, collectively, Borrowers and Guarantors, and “ Loan Party ” means any one of them.

 

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Material Adverse Change ” means (a) a material adverse change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Parent, Borrowers and their respective Subsidiaries, taken as a whole, (b) a material impairment of Parent’s, any Borrower’s or any of their respective Subsidiaries’ ability to perform its obligations under the Loan Documents to which it is a party or of the Lender Group’s ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the Agent’s Liens with respect to the Collateral as a result of an action or failure to act on the part of Parent, any Borrower or any of their respective Subsidiaries.

Material Contract ” means, with respect to any Person, (a) each contract or agreement listed on Schedule M-1 , (b) the Type License Agreement by and between Agfa-Gevaert Japan, Limited and Agfa Monotype Corporation dated as of November 1, 1995, as amended by the Japan Type License Amendment, (c) after execution and delivery thereof, the Japanese Documents, (d) each contract or agreement entered into after the Closing Date to which such Person or any of its Subsidiaries is a party involving aggregate consideration payable to or by such Person or such Subsidiary of $5,000,000 or more in any fiscal year of such Person (other than purchase orders in the ordinary course of the business of such Person or such Subsidiary and other than contracts that by their terms may be terminated by such Person or Subsidiary in the ordinary course of its business upon less than 60 days notice without penalty or premium), and (e) any other contract or agreement, whether entered into as of the Closing Date or after the Closing Date, if the breach of any such contract or agreement or the failure of any such contract or agreement to be in full force and effect could be reasonably expected to result in a Material Adverse Change.

Maturity Date ” has the meaning specified therefor in Section 3.3 .

Maximum Revolver Amount ” means $5,000,000.

Merger ” has the meaning specified therefor in the recitals of the Agreement.

Merger Agreement ” has the meaning specified therefor in the recitals of the Agreement.

Microsoft Agreements ” means (a) the Typeface License Agreement between Microsoft Corporation and Monotype, dated as of February 16, 1993, as amended by Agreement and Amendment to Agreement dated November 22, 1995 and Agreement and Amendment to Agreement dated June 30, 1998, and amendment to License Agreement dated July 13, 2004, (b) the Typeface Development Agreement (Japanese Clear Type) between Microsoft Corporation and Monotype, dated as of February 11, 2003, (c) the Typeface Development Agreement (Latin Clear Type) between and Microsoft Corporation and Monotype, dated as of February 11, 2003, and (d) the Confidential Patent License Agreement between Microsoft Corporation and Monotype, dated as of May 7, 2003.

Monotype ” has the meaning specified therefor in the recitals of the Agreement.

Monotype Stock ” has the meaning specified therefor in the recitals of the Agreement.

Moody’s ” has the meaning specified therefor in the definition of Cash Equivalents.

Mortgages ” means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt, executed and delivered by Parent, any Borrower or any of their respective Subsidiaries in favor of Agent, in form and substance satisfactory to Agent, that encumber the Real Property Collateral.

 

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Multiemployer Plan ” means a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) to which Parent, any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate makes, is making, is obligated, or within the last six years has been obligated, to make contributions.

Net Cash Proceeds ” means (a) with respect to the issuance or incurrence of any Indebtedness by any Person or any of its Subsidiaries, or the sale or issuance by any Person or any of its Subsidiaries of any shares of its Stock, the aggregate amount of cash or Cash Equivalents received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of such Person or such Subsidiary in connection therewith, after deducting therefrom only (i) costs and expenses related thereto incurred by such Person or such Subsidiary in connection therewith (including, without limitation, legal, accounting and investment banking fees, and underwriting discounts and commissions), (ii) sales, transfer and other similar taxes paid or payable by such Person or such Subsidiary in connection therewith and (iii) net income taxes to be paid in connection therewith (after taking into account any tax credits or deductions and any tax sharing arrangements), and (b) with respect to any Extraordinary Receipts received by any Person or any of its Subsidiaries, the aggregate amount of cash or Cash Equivalents received (directly or indirectly) from time to time by or on behalf of such Person or such Subsidiary in connection therewith, after deducting therefrom only (i) reasonable costs and expenses related to the collection thereof incurred by such Person or such Subsidiary, (ii) sales, transfer and other similar taxes paid or payable by such Person or such Subsidiary in connection therewith, and (iii) net income taxes to be paid in connection therewith (after taking into account any tax credits or deductions and any tax sharing arrangements); in the case of each of clauses (a) and (b), to the extent, but only to the extent, that the amounts so deducted are (x) actually paid to a Person that, except in the case of reasonable out-of-pocket expenses, is not an Affiliate of such Person or any of its Subsidiaries and (y) properly attributable to such transaction.

Newco ” has the meaning specified therefor in the preamble to the Agreement.

Obligations ” means (a) all loans (including the Term Loan), Advances, debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), premiums, liabilities (including all amounts charged to the Loan Account pursuant to the Agreement), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), lease payments, guaranties, covenants, and duties of any kind and description owing by Borrowers to the Lender Group pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all Lender Group Expenses and other amounts that Borrowers are required to pay or reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations. Any reference in the Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

Originating Lender ” has the meaning specified therefor in Section 13.1(e) .

Overadvance ” has the meaning specified therefor in Section 2.5 .

Parent ” has the meaning specified therefor in the preamble to the Agreement.

 

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Participant ” has the meaning specified therefor in Section 13.1(e) .

Participant Register ” has the meaning specified therefor in Section 13.1(i) .

Patent Security Agreement ” has the meaning specified therefor in the Security Agreement.

PBGC ” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

Pension Plan ” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (a) that is or has within the last six years maintained or sponsored by Parent, any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate or to which Parent, any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate has within the last six years made, or was obligated to make, contributions, and (b) that is or was subject to Section 412 of the IRC, Section 302 of ERISA or Title IV of ERISA.

Perfection Certificate ” means the representations and warranties of officers form submitted by Agent to Administrative Borrower, together with Borrowers’ and Guarantors’ completed responses to the inquiries set forth therein, the form and substance of such responses to be satisfactory to Agent.

Permitted Acquisition ” means an acquisition by any Borrower of all or substantially all of the assets or all of the Stock of any Person which satisfies each of the following conditions:

(1) any Indebtedness or Liens assumed or issued in connection with such acquisition are otherwise permitted under Section 6.1 or 6.2 , as the case may be;

(2) at the time of such acquisition, no Default and no Event of Default exists, or would exist upon the consummation thereof, both on an actual and a pro forma basis;

(3) Parent or Administrative Borrower shall have provided Agent and the Lenders with written confirmation, supported by reasonably detailed calculations, that on a pro forma basis, created by adding the historical combined financial statements of Parent and its Subsidiaries, on a consolidated basis (including the combined financial statements of any other Person or assets that were the subject of a prior Permitted Acquisition during the relevant period), to the historical consolidated financial statements of the Person to be acquired (or the historical financial statements related to the assets to be acquired) pursuant to the proposed acquisition (adjusted to eliminate expense items that would not have been incurred and to include income items that would have been recognized, in each case, if the combination had been accomplished at the beginning of the relevant period; such eliminations and inclusions to be mutually agreed upon by Parent and Agent), Parent and its Subsidiaries, on a consolidated basis, would have been in compliance with all financial covenants set forth in Section 6.16 for the 12 months ending as of the fiscal quarter ended immediately prior to the proposed date of consummation of such proposed acquisition, together with copies of all such historical financial statements of the Person or Person whose assets are being acquired;

(4) such acquisition shall be consensual and shall have been approved by the board of directors of the Person whose Stock or assets are proposed to be acquired;

(5) Parent and Administrative Borrower shall have updated the schedules hereto and to each of the other Loan Documents (to the extent permitted by the terms hereof and thereof), as applicable; provided , that in no event may any schedule be updated in a manner that would reflect or evidence a Default or Event of Default;

 

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(6) Administrative Borrower shall have delivered (a) projections for the Person whose Stock or assets are proposed to be acquired and (b) updated pro forma Projections for Parent and its Subsidiaries (A) evidencing compliance on a pro forma basis (in the manner contemplated by clause (3) above) with Section 6.16 for the 12 months following the date of such acquisition (on a month-by-month basis) and (B) demonstrating on a pro forma basis (in the manner contemplated by clause (3) above) that Borrowers shall have an amount of (x) Excess Availability, plus (y) Qualified Cash that equals or exceeds $2,000,000 for the 12 months following the date of such acquisition (on a month-by-month basis), in each case in form and content reasonably acceptable to Agent;

(7) the acquisition shall be related to the businesses of Borrowers as currently conducted;

(8) there shall not be more than 3 such acquisitions during any fiscal year;

(9) there shall not be more than 6 such acquisitions during the term of this Agreement;

(10) with respect to any fiscal year, the purchase price of such acquisition, together with all other acquisitions that were Permitted Acquisitions and consummated in such fiscal year, shall not exceed an aggregate amount of $5,000,000 during such fiscal year;

(11) Borrowers shall have an amount of (x) Excess Availability, plus (y) Qualified Cash that equals or exceeds $2,000,000, both immediately prior to and immediately after giving effect to such acquisition;

(12) the assets or Stock of the Person acquired shall be located or organized, as applicable, within the United States;

(13) the Person so acquired shall have TTM EBITDA of no less than $0.01 measured as of the date of such acquisition; and

(14) Agent shall be satisfied that all acts necessary to perfect the Agent’s Liens in the assets or Stock being purchased in connection with such acquisition have been taken.

Permitted Discretion ” means a determination made in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.

Permitted Dispositions ” means (a) sales or other dispositions of Equipment that is substantially worn, damaged, or obsolete in the ordinary course of business, (b) sales of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents, (d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business, and (e) the sale without recourse and in the ordinary course of business of overdue Accounts in connection with the collection thereof in an aggregate amount not to exceed $1,000,000 in any fiscal year of Parent.

Permitted Holder ” means the Persons identified on Schedule P-1 .

Permitted Indebtedness ” means Indebtedness permitted to be incurred or to exist under Section 6.1 .

 

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Permitted Investments ” means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) Hedge Agreements entered into as bona fide hedges against fluctuations in interest rates applicable to Indebtedness of Parent and Borrowers and not for speculative purposes, (e) Investments received in settlement of amounts due to any Borrower or any Subsidiary of any Borrower effected in the ordinary course of business or owing to any Borrower or any Subsidiary of any Borrower as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of a Borrower or any Subsidiary of a Borrower or collection of overdue Accounts, and (f) Permitted Acquisitions to the extent, but only to the extent, that the cash portion of such acquisitions is funded solely with either an equity issuance by Parent or the proceeds of an additional equity investment made by the Investors or any of their Affiliates (other than Parent and its Subsidiaries).

Permitted Liens ” means (a) Liens held by Agent to secure the Obligations, (b) Liens held by D.B. Zwirn, as agent for the lenders party to the D.B. Zwirn Credit Agreement, to secure the D.B. Zwirn Obligations, (c) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent, or (ii) do not constitute an Event of Default and for which the underlying taxes, assessments or other governmental charges or levies are the subject of Permitted Protests, (d) judgment Liens that do not constitute an Event of Default under Section 7.7 , (e) Liens set forth on Schedule P-2 , (f) the interests of lessors under operating leases, (g) purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired and the proceeds thereof, (h) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of Borrowers’ business and not in connection with the borrowing of money, and which Liens either (A) are for sums not yet delinquent, or (B) are the subject of Permitted Protests, (i) Liens on amounts deposited in connection with obtaining worker’s compensation or other unemployment insurance, (j) Liens on amounts deposited in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money, (k) Liens on amounts deposited as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of business, (l) with respect to any Real Property, easements, rights of way, and zoning restrictions that (i) do not materially interfere with or impair the use or operation thereof and (ii) are not Environmental Liens, (m) setoff rights or banker’s liens for account charges and fees against funds on deposit in Cash Management Banks to the extent permitted by the Cash Management Agreements, and (n) non-exclusive licenses or sublicenses granted to other Persons for fair market value consideration in the ordinary course of business and not materially interfering with the conduct of the business of Parent, any Borrower or any of their respective Subsidiaries.

Permitted Protest ” means the right of Parent, any Borrower or any of their respective Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or unless prior written notice of the intent to protest is delivered to Agent, taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on Parent’s, any Borrower’s or any of their respective Subsidiaries’ books and records in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by Parent, any Borrower or any of their respective Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Agent’s Liens.

Permitted Purchase Money Indebtedness ” means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing Date in an aggregate principal amount outstanding at any one time not in excess of $1,000,000.

Person ” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

 

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PIK Interest ” means, with respect to any Indebtedness, the amount of all interest accrued thereon that has been paid-in-kind by being added to the balance thereof.

Plan ” means (a) an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan which is or was within the last six years maintained or sponsored by Parent, any Borrower or any of their respective Subsidiaries or to which Parent, any Borrower or any of their respective Subsidiaries has within the last six years made, or was obligated to make, contributions, (b) a Pension Plan, or (c) a Qualified Plan.

Projections ” means Parent’s and Borrowers’ forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, all prepared on a basis consistent with Borrowers’ historical financial statements, together with appropriate supporting details and a statement of underlying assumptions.

Pro Rata Share ” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make Advances and right to receive payments of principal, interest, fees, costs, and expenses with respect thereto, (i) prior to the Revolver Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and after the time that the Revolver Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the aggregate outstanding principal amount of such Lender’s Advances by (z) the aggregate outstanding principal amount of all Advances,

(b) with respect to a Lender’s obligation to make the Term Loan and right to receive payments of interest, fees, and principal with respect thereto, (i) prior to the making of the Term Loan, the percentage obtained by dividing (y) such Lender’s Term Loan Commitment, by (z) the aggregate amount of all Lenders’ Term Loan Commitments, and (ii) from and after the making of the Term Loan, the percentage obtained by dividing (y) the principal amount of such Lender’s portion of the Term Loan by (z) the principal amount of the Term Loan, and

(c) with respect to all other matters as to a particular Lender (including the indemnification obligations arising under Section 15.7 ), the percentage obtained by dividing (i) such Lender’s Revolver Commitment plus the outstanding principal amount of such Lender’s portion of the Term Loan, by (ii) the aggregate amount of Revolver Commitments of all Lenders plus the outstanding principal amount of the Term Loan; provided , however , that in the event the Revolver Commitments have been terminated or reduced to zero, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the outstanding principal amount of such Lender’s Advances plus the outstanding principal amount of such Lender’s portion of the Term Loan, by (B) the outstanding principal amount of all Advances plus the outstanding principal amount of the Term Loan.

Protective Advances ” has the meaning specified therefor in Section 2.3(d)(i) .

Purchase Money Indebtedness ” means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

 

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Qualified Cash ” means, as of any date of determination, the amount of unrestricted cash and Cash Equivalents of Parent, Borrowers and their respective Subsidiaries that is in Deposit Accounts or in Securities Accounts, or any combination thereof, and which such Deposit Accounts or Securities Accounts are the subject of Control Agreements and are maintained by branch offices of banks or securities intermediaries located within the United States.

Qualified Plan ” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (a) that is or was within the last six years maintained or sponsored by Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliate or to which Parent, any Borrower, any of their respective Subsidiaries or any ERISA Affiliate has within the last six years made or was obligated to make, contributions, and (b) that is intended to be tax-qualified under Section 401(a) of the IRC.

Rating Agencies ” has the meaning specified therefor in Section 2.17 .

Real Property ” means any fee estates in real property now owned or hereafter acquired by Parent, any Borrower or any of their respective Subsidiaries and the improvements thereto.

Real Property Collateral ” means the Real Property identified on Schedule R-1 and any Real Property hereafter acquired by Parent, any Borrower or any of their respective Subsidiaries.

Record ” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

Register ” has the meaning specified therefor in Section 13.1(h) .

Registered Loan ” means any loan recorded on the Register pursuant to Section 13.1(h) .

Registered Note ” has the meaning specified therefor in Section 2.16 .

Related Fund ” has the meaning set forth in the definition of Eligible Transferee.

Remedial Action ” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials required to comply with Environmental Laws.

Replacement Lender ” has the meaning specified therefor in Section 14.2(a) .

Report ” has the meaning specified therefor in Section 15.17 .

Required Availability ” means that the sum of (a) Excess Availability, plus (b) Qualified Cash exceeds $4,000,000.

Required Lenders ” means, at any time, Lenders whose aggregate Pro Rata Shares (calculated under clause (c) of the definition of Pro Rata Shares) equal or exceed 50.1%, provided , that at least two Lenders shall constitute “Required Lenders” at any time.

Required Library ” has the meaning specified therefor in the Security Agreement.

 

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Reserve Percentage ” means, on any day, for any Lender, the maximum percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not required or directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be zero.

Revolver Commitment ” means, with respect to each Lender, its Revolver Commitment, and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 .

Revolver Usage ” means, as of any date of determination, the amount of outstanding Advances.

S&P ” has the meaning specified therefor in the definition of Cash Equivalents.

SEC ” means the United States Securities and Exchange Commission and any successor thereto.

Securities Account ” means a “securities account” (as that term is defined in the Code).

Securitization ” has the meaning specified therefor in Section 2.17 .

Securitization Liabilities ” has the meaning specified therefor in Section 2.17 .

Securitization Parties ” has the meaning specified therefor in Section 2.17 .

Security Agreement ” means a security agreement, in form and substance satisfactory to Agent, executed and delivered by Borrowers and Guarantors to Agent.

Seller ” has the meaning specified therefor in the recitals of the Agreement.

Senior Leverage Ratio ” means, with respect to Parent and its Subsidiaries for any period, the ratio of (a) the aggregate outstanding Indebtedness in respect of the Term Loan and the Advances as of the last day of the applicable period to (b) TTM EBITDA.

Settlement ” has the meaning specified therefor in Section 2.3(e)(i) .

Settlement Date ” has the meaning specified therefor in Section 2.3(e)(i) .

Solvent ” means, with respect to any Person on a particular date, that, such Person is not insolvent (as such term is defined in the Uniform Fraudulent Transfer Act).

Source Code Escrow Agreement ” means that certain Source Code Escrow Agreement, in form and substance satisfactory to Agent, among Agent, D.B. Zwirn, Loan Parties and an escrow agent satisfactory to Agent.

 

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Stock ” means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

Stock Purchase Agreement ” has the meaning specified therefor in the recitals of the Agreement.

Subordinated Indebtedness ” means (a) the Subordinated Notes and (b) any other Indebtedness of Parent, any Borrower or any of their respective Subsidiaries the terms of which are satisfactory to Agent and which has been expressly subordinated in right of payment to all Indebtedness of Parent, any Borrower or any such Subsidiary under the Loan Documents (i) by the execution and delivery of a subordination agreement, in form and substance satisfactory to Agent, or (ii) otherwise on terms and conditions (including subordination provisions, payment terms, interest rates, covenants, remedies, defaults and other material terms) satisfactory to Agent.

Subordinated Note Documents ” means, collectively, the Subordinated Note Purchase Agreement, the Subordinated Notes, and all agreements, instruments and other documents executed and delivered pursuant thereto or otherwise securing the Subordinated Notes.

Subordinated Note Purchase Agreement ” means the Subordinated Note Purchase Agreement, dated as of the date hereof, by and among Borrowers and the purchasers named therein.

Subordinated Notes ” means the Subordinated Notes, dated as of the date hereof, issued by Borrowers to the purchasers named thereon pursuant to the Subordinated Note Purchase Agreement.

Subsidiary ” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.

Swing Lender ” means WFF or any other Lender that, at the request of Administrative Borrower and with the consent of Agent agrees, in such Lender’s sole discretion, to become the Swing Lender under Section 2.3(d) .

Swing Loan ” has the meaning specified therefor in Section 2.3(b) .

Taxes ” has the meaning specified therefor in Section 15.11 .

Term Loan ” has the meaning specified therefor in Section 2.2 .

Term Loan Amount ” means an amount equal to $75,000,000.

Term Loan Cash Collateral Account ” has the meaning specified therefor in Section 2.4(b)(i)(K) .

Term Loan Commitment ” means, with respect to each Lender, its Term Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 .

 

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Total Commitment ” means, with respect to each Lender, its Total Commitment, and, with respect to all Lenders, their Total Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 attached hereto or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 .

Trademark Security Agreement ” has the meaning specified therefor in the Security Agreement.

TTM EBITDA ” means, as of any date of determination, EBITDA, as calculated on the last day of the most recently completed calendar month (which may be such date of determination) on a trailing twelve (12) month basis.

Typeface ” has the meaning specified therefor in the recitals of the Agreement.

United States ” means the United States of America.

Voidable Transfer ” has the meaning specified therefor in Section 16.6 .

Wells Fargo ” means Wells Fargo Bank, National Association, a national banking association.

WFF ” means Wells Fargo Foothill, Inc., a California corporation.

WFF and D.B. Zwirn Intercreditor Agreement ” means the Intercreditor Agreement dated as of the date hereof by and between Agent and D.B. Zwirn, as agent for the lenders party to the D.B. Zwirn Credit Agreement, as amended, modified, supplemented or restated from time to time.

 

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F INAL V ERSION

Schedule 3.1

The obligation of each Lender to make its initial extension of credit provided for in the Agreement is subject to the fulfillment, to the satisfaction of Agent and each Lender (the making of such initial extension of credit by any Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent:

(a) the Closing Date shall occur on or before November 5, 2004;

(b) Agent shall have received a letter duly executed by each Borrower and each Guarantor authorizing Agent to file appropriate financing statements in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the security interests to be created by the Loan Documents;

(c) Agent shall have received evidence that appropriate financing statements and other evidences of the Agent’s Liens have been duly filed in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the Agent’s Liens in and to the Collateral, and Agent shall have received satisfactory evidence of such filings;

(d) Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force and effect:

(i) the Copyright Security Agreement,

(ii) a disbursement letter executed and delivered by Borrowers to Agent regarding the extensions of credit to be made on the Closing Date, the form and substance of which is satisfactory to Agent,

(iii) the Fee Letter,

(iv) the Guaranty,

(v) the D.B. Zwirn Loan Documents,

(vi) the Intercompany Subordination Agreement,

(vii) the Investor Intercreditor Agreement,

(viii) the Merger Agreement,

(ix) the Patent Security Agreement,

(x) the Perfection Certificate,

(xi) any Registered Note requested by a Lender,

(xii) the Security Agreement, together with all certificates representing the shares of Stock pledged thereunder, as well as Stock powers with respect thereto endorsed in blank,

(xiii) the Stock Purchase Agreement,


(xiv) the Trademark Security Agreement, and

(xv) the WFF-D.B. Zwirn Intercreditor Agreement.

(e) Substantially simultaneously with the extensions of credit by the Lenders to the Borrowers on the Closing Date, Parent and Borrowers shall have consummated all transactions contemplated by the Acquisition Documents and the D.B. Zwirn Loan Documents and furnished evidence thereof to Agent. Parent and Borrowers shall have delivered a certificate (dated as of the Closing Date) of an Authorized Person attaching true and correct copies of the Acquisition Documents and the D.B. Zwirn Loan Documents. Such certificate of the Authorized Person shall certify that the attached documents are true and correct copies of the Acquisition Documents and the D.B. Zwirn Loan Documents and that such documents have been entered into by the Loan Parties in compliance with all applicable laws and all necessary approvals and are in full force and effect;

(f) Agent shall have received a certificate from the Secretary of Administrative Borrower attesting that there exists no (i) litigation, investigation or proceeding (judicial or administrative) pending or, to the best knowledge of Administrative Borrower, threatened, against any Loan Party, or any of its Subsidiaries by any Governmental Authority arising out of the transactions contemplated by or effected in connection with the Acquisition Documents, the Loan Documents or the D.B. Zwirn Loan Documents, (ii) injunction, writ or restraining order restraining or prohibiting the transactions contemplated by the Acquisition Documents or the consummation of the financing arrangements contemplated under the Loan Documents, or (iii) suit, action, investigation, proceeding (judicial or administrative) or ERISA Event pending or, to the best knowledge of Administrative Borrower, threatened against any Loan Party or any of its respective Subsidiaries which could reasonably be expected to result in a Material Adverse Change;

(g) All director, stockholder, and material governmental and third party consents (including third party consents in respect of the Microsoft Agreements) and approvals necessary in connection with each aspect of the Acquisition, and the transactions contemplated by the Loan Documents shall have been obtained or waived by Agent (without the imposition of any conditions that are not acceptable to Agent) and shall remain in effect; all applicable waiting periods shall have expired without any adverse action being taken by any competent authority; and no law or regulation shall be applicable in the judgment of Agent that restrains, prevents or imposes material adverse conditions upon any aspect of the Acquisition or transactions contemplated by the Loan Documents;

(h) Agent shall have received a certificate from the Secretary of each Borrower (i) attesting to the resolutions of such Borrower’s Board of Directors authorizing its execution, delivery, and performance of the Agreement and the other Loan Documents to which such Borrower is a party, (ii) authorizing specific officers of such Borrower to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of such Borrower;

(i) Agent shall have received copies of each Borrower’s Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of such Borrower;

(j) Agent shall have received a certificate of status with respect to each Borrower, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Borrower, which certificate shall indicate that such Borrower is in good standing in such jurisdiction;

(k) Agent shall have received certificates of status with respect to each Borrower, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Borrower) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such Borrower is in good standing in such jurisdictions;

 

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(l) Agent shall have received a certificate from the Secretary of each Guarantor (i) attesting to the resolutions of such Guarantor’s Board of Directors authorizing its execution, delivery, and performance of the Loan Documents to which such Guarantor is a party, (ii) authorizing specific officers of such Guarantor to execute the same and (iii) attesting to the incumbency and signatures of such specific officers of such Guarantor;

(m) Agent shall have received copies of each Guarantor’s Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of such Guarantor;

(n) Agent shall have received a certificate of status with respect to each Guarantor, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Guarantor, which certificate shall indicate that such Guarantor is in good standing in such jurisdiction;

(o) Agent shall have received certificates of status with respect to each Guarantor, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Guarantor) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such Guarantor is in good standing in such jurisdictions;

(p) Agent shall have received a certificate of insurance, together with the endorsements thereto, as are required by Section 5.8 , the form and substance of which shall be satisfactory to Agent;

(q) Agent shall have received an opinion of Borrowers’ counsel in form and substance satisfactory to Agent;

(r) Borrowers shall have the Required Availability after giving effect to the initial extensions of credit hereunder and under the D.B. Zwirn Credit Agreement and the payment of all fees and expenses required to be paid by Borrowers on the Closing Date under this Agreement, the other Loan Documents, the D.B. Zwirn Loan Documents and the Acquisition Documents, and Agent shall have received satisfactory evidence thereof;

(s) Agent shall have completed its business, legal, and collateral due diligence, including (i) a collateral audit and review of Parent’s, Borrowers’ and their Subsidiaries’ books and records and verification of Parent’s and Borrowers’ representations and warranties to the Lender Group, the results of which shall be satisfactory to Agent, (ii) a review of Parent’s, Borrowers’ and their respective Subsidiaries’ material agreements, the results of which shall be satisfactory to Agent, and (iii) a review of the accounting practices and procedures of the Parent, Borrowers and their respective Subsidiaries, the results of which shall be satisfactory to Agent;

(t) Agent shall have completed a pre-funding audit of Borrowers and their Subsidiaries, the results of which shall be satisfactory to Agent;

(u) Agent shall have received completed reference checks with respect to Borrowers’ senior management, and any required Patriot Act compliance, the results of which shall be satisfactory to Agent in its sole discretion;

(v) Agent shall have received a set of Projections of Parent and Borrowers for the 3 year period following the Closing Date (on a year by year basis, and for the 1 year period following the Closing Date, on a month by month basis), in form and substance (including as to scope and underlying assumptions) satisfactory to Agent;

 

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(w) Borrowers shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by the Agreement and requested to be paid by Agent;

(x) Agent shall have received Uniform Commercial Code, tax lien and litigation searches, the results of which shall be satisfactory to Agent;

(y) Parent shall have received Net Cash Proceeds from the issuance of the Subordinated Notes and the equity investment by Investors, D.B. Zwirn and their respective affiliates consisting of cash in an aggregate amount not less than $73,000,000, and Agent shall have received satisfactory evidence thereof;

(z) Agent shall have received copies of each of the Subordinated Note Documents and each of the Material Contracts set forth on Schedule M-1 , together with a certificate of the Secretary of Administrative Borrower certifying each such document as being a true, correct, and complete copy thereof and in full force and effect;

(aa) Agent and its counsel shall be satisfied with the corporate structure of Parent and its Subsidiaries following the Acquisition;

(bb) Borrowers shall have remitted by wire transfer to Agent all cash (and delivered all Cash Equivalents in such manner as directed by Agent) of Borrowers utilized to calculate the Required Availability and such cash shall be deposited in the Agent’s Account;

(cc) Parent, Borrowers and each of their respective Subsidiaries shall have received all material licenses, approvals or evidence of other actions required by any Governmental Authority in connection with the execution and delivery by Parent, Borrowers or their respective Subsidiaries of the Loan Documents and Acquisition Documents or with the consummation of the transactions contemplated thereby that are required by law to be held or received;

(dd) Agent shall have received financial statements of Monotype and its Subsidiaries for the quarter ended September 30, 2004, each materially consistent with the Borrowers’ business plan and financial projections delivered to Agent prior to the Closing Date and otherwise in form and substance satisfactory to Agent;

(ee) Agent shall have determined, in its sole judgment, that no event or development shall have occurred since December 31, 2003, which could result in a Material Adverse Change; and

(ff) Agent shall have received evidence satisfactory to it that, as of the Closing Date, the result of (i) 2.80 times TTM EBITDA less (ii) $5,000,000, shall equal or exceed $75,000,000.

(gg) all other documents and legal matters in connection with the transactions contemplated by the Agreement shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to Agent.

 

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F INAL V ERSION

Schedule 5.2

Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the documents set forth below at the following times in form satisfactory to Agent:

 

Monthly (not later than 10 days after the end of each month)   

(a) a detailed aging, by total, of Parent’s and Borrowers’ Accounts, together with a reconciliation and supporting documentation for any reconciling items noted (delivered electronically in an acceptable format, if Parent and Borrowers have implemented electronic reporting),

 

(b) a summary aging, by vendor, of Parent’s, Borrowers’ and their respective Subsidiaries’ accounts payable and any book overdrafts (delivered electronically in an acceptable format, if Borrowers have implemented electronic reporting) and an aging, by vendor, of any held checks, and

 

(c) a detailed report regarding Parent’s, Borrowers’ and their respective Subsidiaries’ cash and Cash Equivalents, including an indication of which amounts constitute Qualified Cash.

Quarterly (not later than 45 days after the end of each fiscal quarter during each of Parent’s fiscal years)   

(d) a Facility Limiter Report, and

 

(e) (i) a complete inventory of the Copyrights comprising the Required Library, as well as all other Copyrights, Patents and Trademarks that are registered or the subject of pending applications for registration, which were acquired, generated or filed by Parent, any Borrower or any of their respective Subsidiaries during the prior period, and (ii) a report setting forth all new versions or material modifications to intellectual property related to the Copyrights comprising the Required Library.

Upon request by Agent   

(f) proof of payment of Parent’s, Borrowers’ and their respective Subsidiaries’ applicable taxes,

 

(g) a report regarding Parent’s, Borrowers’ and their respective Subsidiaries’ accrued, but unpaid, ad valorem taxes, and

 

(h) such other reports as to the Collateral or the financial condition of Parent, Borrowers and their respective Subsidiaries, as Agent may reasonably request.

 

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F INAL V ERSION

Schedule 5.3

Deliver to Agent, with copies to each Lender, each of the financial statements, reports, or other items set forth set forth below at the following times in form satisfactory to Agent:

 

As soon as available, but in any event not later than (i) 30 days after the end of each month that is not the end of a fiscal quarter of Parent and (ii) 45 days after the end of each month that is the end of a fiscal quarter of Parent   

(a) an unaudited consolidated and consolidating balance sheet, income statement, and statement of cash flow covering Parent’s and its Subsidiaries’ operations during such month and during the period commencing on the first day of the applicable fiscal year and ending on the last day of such month,

 

(b) a Compliance Certificate, and

 

(c) copies of Material Contracts entered into since the delivery of the previous Compliance Certificate, together with any amendments to any existing Material Contracts entered into since the delivery of the previous Compliance Certificate.

Quarterly (not later than 45 days after the end of each fiscal quarter during each of Parent’s fiscal years)   

(d) an unaudited consolidated and consolidating balance sheet, income statement, and statement of cash flow covering Parent’s and its Subsidiaries operations during such quarter and during the period commencing on the first day of the applicable fiscal year and ending on the last day of such quarter,

 

(e) a Compliance Certificate, and

 

(f) a detailed report regarding royalty payables for Parent, Borrowers and their respective Subsidiaries by top 12 printer OEMs.

As soon as available, but in any event within 90 days after the end of each of Parent’s fiscal years   

(g) consolidated and consolidating financial statements of Parent and its Subsidiaries for each such fiscal year, audited, in the case of the consolidated financial statements, by independent certified public accountants reasonably acceptable to Agent and certified, without any qualifications (including any (A) “going concern” or like qualification or exception, (B) qualification or exception as to the scope of such audit, or (C) qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item, the effect of which would be to cause any noncompliance with the provisions of Section 6.16 ), by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, and statement of cash flow and, if prepared, such accountants’ letter to management), and

 

(h) a Compliance Certificate.

 

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As soon as available, but in any event within 30 days prior to the start of each of Parent’s fiscal years,    (i) copies of Parent’s and Borrowers’ Projections, in form and substance (including as to scope and underlying assumptions) satisfactory to Agent, in its Permitted Discretion, for the forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by month, certified by the chief financial officer of Parent or Administrative Borrower, as applicable, as being such officer’s good faith estimate of the financial performance of Parent or Borrowers, as applicable, during the period covered thereby.
If and when filed or delivered by Parent or any Borrower,   

(j) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports,

 

(k) any other filings made by Parent or any Borrower with the SEC, and

 

(l) any monthly board reports (or other similar reports) provided by Parent or any Borrower to its Board of Directors and any other information that is provided by Parent or any Borrower to its shareholders generally.

Promptly, but in any event within 5 Business Days after Parent, any Borrower or any of their respective Subsidiaries has knowledge of any event or condition that constitutes a Default or an Event of Default,    (m) notice of such event or condition and a statement of the curative action that Borrowers propose to take with respect thereto.
Promptly, but in any event within 5 days after execution, receipt or delivery thereof,   

(n) a copy of any notice that any Loan Party executes or receives in connection with (i) any Subordinated Note Document or (ii) any Material Contract regarding the occurrence of any event or development with respect to such Material Contract that could reasonably be expected to result in a Material Adverse Change,

 

(o) copies of any notices of default or non-compliance delivered by or to any Loan Party in connection with the Acquisition Documents (to the extent not previously delivered pursuant to Section 5.17(b) ), and

 

(p) copies of any notices of default or non-compliance delivered by or to any Loan Party in connection with the D.B. Zwirn Loan Documents (to the extent not previously delivered pursuant to Section 5.18 ).

Promptly after the commencement thereof, but in any event within 5 days after the service of process with respect thereto on Parent, any Borrower or any of their respective Subsidiaries,    (q) notice of all actions, suits, or proceedings brought by or against Parent, any Borrower or any of their respective Subsidiaries before any Governmental Authority which reasonably could be expected to result in a Material Adverse Change.
Upon the request of Agent,    (r) any other information reasonably requested relating to the financial condition of Parent, Borrowers or their respective Subsidiaries.

 

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Exhibit 10.37

FIRST AMENDMENT

TO, AND WAIVER AND CONSENT UNDER,

CREDIT AGREEMENT,

INVESTOR INTERCREDITOR AGREEMENT AND

SECURITY AGREEMENT

THIS FIRST AMENDMENT TO, AND WAIVER AND CONSENT UNDER, CREDIT AGREEMENT, INVESTOR INTERCREDITOR AGREEMENT AND SECURITY AGREEMENT (this “ First Amendment ”) is made and entered into as of August 24, 2005, by and among Monotype Imaging, Inc., a Delaware corporation (“ Administrative Borrower ”), the lenders listed on the signatory pages hereof (the “ Lenders ”), and Wells Fargo Foothill, Inc., a California corporation, in its capacity as administrative agent (“ Agent ”).

WITNESSETH :

WHEREAS, Monotype Imaging Holdings Corp. (“ Parent ”), Administrative Borrower, International Typeface Corporation (“ Typeface ” and, together with Administrative Borrower, the “ Borrowers ”), the Lenders, and Agent are parties to that certain Credit Agreement, dated as of November 5, 2004 (as it may be amended, modified, supplemented or amended and restated from time to time, the “ Credit Agreement ”);

WHEREAS, TA Subordinated Debt Fund, L.P., a Delaware limited partnership, TA Investors II, L.P., a Delaware limited partnership, D.B. Zwirn Special Opportunities Fund, L.P., a Delaware limited partnership, and agent are parties to that certain subordination agreement, dated as of November 5, 2004 (as it may be amended, modified, supplemented or amended and restated from time to time, the “ Investor Intercreditor Agreement ”);

WHEREAS, Parent, Borrowers, and Agent are parties to that certain Security Agreement, dated as of November 5, 2004 (as it may be amended, modified, supplemented or amended and restated from time to time, the “ Security Agreement ”);

WHEREAS, the shareholders of Parent have effected a restructuring transaction pursuant to which (a) the shareholders of Parent formed Monotype Holdings Inc., a wholly-owned Subsidiary organized under the laws of Delaware (“ New Holdco ”), (b) New Holdco immediately thereafter formed MIHC Merger Sub Inc., a wholly-owned Subsidiary organized under the laws of Delaware (“ Merger Sub ”), and (c) Merger Sub merged with and into Parent, following which Parent survived as a wholly-owned Subsidiary of New Holdco (the “ Parent Merger ”);

WHEREAS, absent a waiver from Agent and the Required Lenders, the Parent Merger would violate Section 6.3(a) of the Credit Agreement (the “ Section 6.3(a) Default ”);

WHEREAS, Borrowers desire to (a) prepay outstanding Indebtedness evidenced by the Subordinated Notes in an aggregate amount not to exceed $21,640,394.64 (the “ Subordinated Notes Prepayment ”), and (b) make a Distribution to Parent to enable Parent to redeem certain preferred Stock of Parent in an aggregate amount not to exceed $48,289,240.30 (the “ Distribution and Redemption ”);


WHEREAS, in order to finance the Subordinated Notes Prepayment and the Distribution and Redemption, (a) Borrowers desire to increase the Term Loan Amount under the Credit Agreement from $64,516,818.70 (the aggregate outstanding principal amount of the Term Loan as of the date hereof immediately prior to the effectiveness of this First Amendment) to $100,000,000, and (b) Borrowers desire to increase the Term Loan Amount under the D.B. Zwirn Credit Agreement from $40,000,000 to $65,000,000 (the “ D.B. Zwirn Term Loan Increase ”);

WHEREAS, absent a waiver from Agent and the Required Lenders, the D.B. Zwirn Term Loan Increase would violate Section 6.7(c) of the Credit Agreement;

WHEREAS, absent a waiver from Agent and the Required Lenders, (a) the Subordinated Notes Prepayment would violate Sections 6.7(a) and (b)  of the Credit Agreement, and (b) the Distribution and Redemption would violate Section 6.10 of the Credit Agreement;

WHEREAS, (a) Parent has issued, in aggregate, (i) $54,540,000 of Convertible Preferred Stock pursuant to the Stock Purchase Agreement dated as of November 5, 2004 by and among Parent, the investors listed on Schedule A thereto and the lenders listed on Schedule B thereto, as in effect on the date hereof, and (ii) $3,727,100 of Convertible Preferred Stock and $1,485.26 of Common Stock pursuant to the Employee Investment Agreements by and among Parent, Administrative Borrower, and the individuals named therein and attached as Schedule E-1 hereto (collectively, the “ Employee Investment Agreements ”), and (b) Administrative Borrower has issued, in aggregate, (i) $18,848,000 of Subordinated Notes and $3,414.97 of Common Stock pursuant to the Subordinated Note Purchase Agreement (as defined in the Credit Agreement), and (ii) $1,239,000 of Subordinated Notes pursuant to the Employee Investment Agreements (the equity issuances described in clauses (a)(i), (a)(ii), and (b)(i) above are collectively referred to herein as the “ Equity Issuances ”, and the issuance of $87,000 of the $1,239,000 of Subordinated Notes described in clause (b)(ii) above is referred to herein as the “ Oversubscription Issuance ”, and together with the Equity Issuances, the “ Prepayment Issuances ”);

WHEREAS, in connection with the Prepayment Issuances, Borrowers have not made prepayments of the Term Loan as required pursuant to Section 2.4(c)(iii)(C) of the Credit Agreement, nor paid the Applicable Prepayment Premium corresponding to such prepayments required pursuant to Section 2.4(e) of the Credit Agreement (collectively, the “ Prepayment Default ”);

WHEREAS, absent a waiver from Agent and the Required Lenders, the Oversubscription Issuance would violate Section 6.1 of the Credit Agreement because the issuance of Indebtedness evidenced by Subordinated Notes is not permitted to exceed an aggregate original principal amount outstanding at any time of $20,000,000 (the “ Section 6.1 Default ”);

WHEREAS, Administrative Borrower has formed the Japanese Subsidiary, and in connection therewith, has made a contribution to the Japanese Subsidiary in an aggregate amount of $97,780 (the “ Contribution ”);

 

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WHEREAS, absent a waiver from Agent and the Required Lenders, the Contribution would violate Section 6.12 and Section 6.13 of the Credit Agreement (collectively, the “ Contribution Default ”);

WHEREAS, in contemplation of receiving proceeds of funds from the Borrowers in connection with the Distribution and Redemption, Parent has established a Deposit Account (the “ Parent Account ”) with Wells Fargo Brokerage Services, LLC without delivering a Control Agreement in respect of such Account to Agent (the “ Parent Account Establishment ”);

WHEREAS, absent a waiver from Agent and the Required Lenders, the Parent Account Establishment would violate Section 6.12 of the Credit Agreement (the “ Section 6.12 Default ”);

WHEREAS, pursuant to Section 5.16 of the Credit Agreement, at the time that Parent, any Borrower or any Guarantor forms a direct or indirect Subsidiary that is a Controlled Foreign Corporation after the Closing Date, Parent, such Borrower or such Guarantor is required to (a) provide to Agent a pledge agreement and appropriate certificates and powers or financing statements, hypothecating 65% of the voting power of all classes of capital Stock of such Subsidiary entitled to vote, in form and substance satisfactory to Agent, and (b) provide to Agent all other documentation, including updates to Schedules 4.5 , 4.7(a) , 4.7(b) , 4.7(c) , 4.8(b) , 4.8(c) , 4.15 and 4.17 of the Credit Agreement and one or more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (collectively, the “ Section 5.16 Obligations ”);

WHEREAS, Parent and the Borrowers have not yet satisfied the Section 5.16 Obligations with respect to the formation of the Japanese Subsidiary and, accordingly, a default currently exists with respect to the provisions of Section 5.16 of the Credit Agreement (the “ Section 5.16 Default ”);

WHEREAS, (a) pursuant to Section 3.6(a) of the Credit Agreement, on or prior to the date that is 90 days after the Closing Date, Parent and Borrowers were required to deliver to Agent (i) a collateral assignment of each key man life insurance policy required by Section 5.8 of the Credit Agreement and (ii) proof of acceptance of each such collateral assignment by the issuer of such key man life insurance policy, in form and substance reasonably satisfactory to Agent, (b) pursuant to Section 3.6(b) of the Credit Agreement, on or prior to the date that is 60 days after the Closing Date, Parent and Borrowers were required to deliver to Agent satisfactory evidence that not less than the Required Library of all existing copyrights of Parent, Borrowers and their respective Subsidiaries have been registered with the United States Copyright Office, (c) pursuant to Section 3.6(c) of the Credit Agreement, Parent and Borrowers were required to deliver to Agent, on or prior to the date that is 60 days after the Closing Date, a Source Code Escrow Agreement, duly executed by the Loan Parties, Agent, D.B. Zwirn and an escrow agent reasonably satisfactory to Agent, with respect to the source and object code for each version or versions of each item of computer software programs or other technology of Parent, Borrowers and their respective Subsidiaries constituting the Required Library, (d) pursuant to Section 3.6(d) of the Credit Agreement, on or prior to the date that is 10 days after the effective date of the Source Code Escrow Agreement, Parent and Borrowers were required to deliver to Agent evidence reasonably satisfactory to it that the source and object code for each version or versions of each item of computer software programs or other technology of Parent, Borrowers and their

 

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respective Subsidiaries constituting the Required Library has been deposited with the escrow agent in accordance with the terms and conditions of the Source Code Escrow Agreement, as provided in Section 6(g)(viii) of the Security Agreement, (e) pursuant to Section 3.6(e) of the Credit Agreement, on or prior to the date that is 60 days after the Closing Date, Parent and Borrowers were required to deliver to Agent duly executed Cash Management Agreements and Control Agreements, in form and substance reasonably satisfactory to Agent, (f) pursuant to Section 3.6(f) of the Credit Agreement, Parent and Borrowers were required to deliver to Agent, on or prior to the date that is 60 days after the Closing Date, a duly executed Collateral Access Agreement, in form and substance reasonably satisfactory to Agent, with respect to 985 Busse Road, Elk Grove Village, IL 60007, and (g) pursuant to Section 3.6(h) of the Credit Agreement, on or prior to the date that is 75 days after the Closing Date, Borrowers were required to prepare and deliver, or cause to be delivered, to the U.S. Patent and Trademark Office or the U.S. Copyright Office, as applicable, in good faith in accordance with the procedures and regulations of such office all documents, instruments or other information necessary, in the reasonable judgment of Agent, for the (i) accurate and proper recordation of the assignments and releases described on Schedule 3.6(h) of the Credit Agreement (but only to the extent that the applicable Intellectual Property is material to the conduct of the business of Parent, any Borrower or any of their respective Subsidiaries) and (ii) accurate and proper documentation of the ownership and chain of title of the Intellectual Property described on Schedule 3.6(h) of the Credit Agreement (but only to the extent that the applicable Intellectual Property is material to the conduct of the business of Parent, any Borrower or any of their respective Subsidiaries) (clauses (a), (b), (c), (d), (e), (f) and (g) collectively, the “ First Category of Section 3.6 Obligations ”);

WHEREAS, Parent and Borrowers have satisfied the First Category of Section 3.6 Obligations but failed to do so on a timely basis (the “ First Category Defaults ”);

WHEREAS, pursuant to Section 3.6(f) of the Credit Agreement, on or prior to the date that is 60 days after the Closing Date, Parent and Borrowers were required to deliver to Agent a duly executed Collateral Access Agreement, in form and substance reasonably satisfactory to Agent, with respect to 200 Ballardvale Street, Wilmington, Massachusetts 01887 (the “ Ballardvale Location ”) (the “ Second Category of Section 3.6 Obligations ”);

WHEREAS, the Borrowers have not yet satisfied the Second Category of Section 3.6 Obligations and, accordingly, a default currently exists with respect to the provisions of clause (f) of Section 3.6 of the Credit Agreement (the “ Second Category Default ”), but Parent and Borrowers no longer have any assets located at the Ballardvale Location;

WHEREAS, pursuant to Section 5.3 of the Credit Agreement, on or prior to March 31, 2005, Parent and Borrowers were required to deliver to Agent copies of the audited financial statements described in clause (g) of Schedule 5.3 to the Credit Agreement for the fiscal year ended December 31, 2004 (the “ Section 5.3 Obligation ”);

WHEREAS, the Borrowers have not yet satisfied the Section 5.3 Obligation and, accordingly, a default currently exists with respect to the provisions of Section 5.3 of the Credit Agreement (the “ Section 5.3 Default ”);

 

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WHEREAS, Parent and Borrowers have relocated their chief executive offices from the Ballardvale Location to 500 Unicorn Park Drive, Unicorn Park, Woburn, MA 01801, and, pursuant to Section 5.9 of the Credit Agreement, were required to deliver to Agent, on or prior to the date that is 30 days prior to such relocation (a) written notice of such relocation (the “ Section 5.9 Notice Obligation ”), and (b) a Collateral Access Agreement with respect to such new location (the “ Section 5.9 Collateral Access Agreement Obligation ” and, collectively with the Section 5.9 Notice Obligation, the “ Section 5.9 Obligations ”);

WHEREAS, Parent and Borrowers have satisfied the Section 5.9 Obligations but failed to do so on a timely basis (the “ Section 5.9 Default ”); and

WHEREAS, subject to the terms and conditions set forth herein, Agent and each of the requisite Lenders have agreed to (a) waive the Prepayment Default, the Contribution Default, the First Category Defaults, the Second Category Default, the Section 5.9 Default, the Section 6.1 Default, and the Section 6.3(a) Default, (b) the Section 6.12 Default; provided that Administrative Borrower shall deliver evidence reasonably satisfactory to Agent within 3 Business Days after the First Amendment Effective Date that (i) the Parent Account has been closed or (ii) a satisfactory Control Agreement in respect of the Parent Account has been delivered to Agent, (c) waive the Section 5.3 Default but only until August 31, 2005, (d) consent to the Subordinated Notes Prepayment, (e) consent to the Distribution and Redemption, (f) consent to the D.B. Zwirn Term Loan Increase, and (g) amend the Credit Agreement, the Investor Intercreditor Agreement, and the Security Agreement as herein provided;

NOW, THEREFORE, in consideration of the agreements and provisions herein contained, the parties hereto do hereby agree as follows:

Section 1. Definitions . Any capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

Section 2. Waivers . Subject to the satisfaction of the terms and conditions set forth herein, Agent and each of the Required Lenders hereby agree to waive (a) the Prepayment Default solely with respect to the Prepayment Issuances, (b) the Contribution Default solely with respect to the Contribution, (c) the First Category Defaults solely with respect to the First Category of Section 3.6 Obligations, (d) the Second Category Default solely with respect to the Ballardvale Location, (e) the Section 5.3 Default solely with respect to the annual financial statements for the fiscal year ended December 31, 2004 (but such waiver under this clause (e) shall only be effective until August 31, 2005), (f) the Section 5.9 Default solely with respect to the Section 5.9 Obligations, (g) the Section 6.12 Default; provided that Administrative Borrower shall deliver evidence reasonably satisfactory to Agent within 3 Business Days after the First Amendment Effective Date that (i) the Parent Account has been closed or (ii) a satisfactory Control Agreement in respect of the Parent Account has been delivered to Agent, (h) the Section 5.16 Default solely with respect to the Section 5.16 Obligations, (i) the Section 6.1 Default solely with respect to the Oversubscription Issuance, and (j) the Section 6.3(a) Default solely with respect to the Parent Merger.

 

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Section 3. Consents . Subject to the satisfaction of the terms and conditions set forth herein, Agent and each of the Required Lenders hereby (a) consent to, and waive the application of Section 6.7(a) and (b)  of the Credit Agreement solely with respect to, the Subordinated Notes Prepayment to the extent the aggregate amount of such prepayment does not exceed $21,640,394.64, (b) consent to, and waive the application of Section 6.10 of the Credit Agreement solely with respect to, the Distribution and Redemption to the extent the aggregate amount of such Distribution and Redemption does not exceed $48,289,240.30, and (c) consent to, and waive the application of Section 6.7(c) of the Credit Agreement solely with respect to, the D.B. Zwirn Term Loan Increase to the extent the Term Loan Amount under the D.B. Zwirn Credit Agreement does not exceed $65,000,000.

Section 4. Amendments to Credit Agreement . The Credit Agreement is hereby amended, effective as of the date this First Amendment becomes effective in accordance with Section 8 hereof, as follows:

4.01. Amendments to Section 2.2 . Section 2.2 of the Credit Agreement is hereby amended and restated in its entirety by inserting the following in replacement thereof:

“2.2 Term Loan . Subject to the terms and conditions of this Agreement, on the Closing Date each Lender with a Term Loan Commitment agreed (severally, not jointly or jointly and severally) to make term loans (collectively, the “ Original Term Loan ”) to Borrowers in an amount equal to such Lender’s Pro Rata Share of the Original Term Loan Amount. Prior to the First Amendment Effective Date, the principal amount of the Original Term Loan shall be repaid in monthly installments, beginning on the first day of the first month following the Closing Date, as follows: during the period of time from the Closing Date through the First Amendment Effective Date, $750,000 per month. On the First Amendment Effective Date, subject to the terms and conditions of this Agreement, each Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and severally) to make term loans (collectively, the “ Additional Term Loan ”) to Borrowers in an amount equal to such Lender’s Pro Rata Share of the Additional Term Loan Amount. From and after the First Amendment Effective Date, the principal amount of the Term Loan shall be repaid in monthly installments, beginning on the first day of the first month following the First Amendment Effective Date, as follows: (a) during the period of time from the First Amendment Effective Date through the first anniversary of the First Amendment Effective Date, $750,000 per month; (b) during the period of time from the first anniversary of the First Amendment Effective Date through the second anniversary of the First Amendment Effective Date, $791,666 per month; (c) during the period of time from the second anniversary of the First Amendment Effective Date through the third anniversary of the First Amendment Effective Date, $1,041,666 per month; (d) during the period of time from the third anniversary of the First Amendment Effective Date through the fourth anniversary of the First Amendment Effective Date, $1,083,333 per month; and (e) $1,166,666 per month thereafter, such installments to be due and payable on the first day of each month, continuing until and including the Maturity Date, on which date the unpaid balance of the Term Loan would be due and payable in full. The outstanding unpaid principal balance and all accrued and unpaid interest under the Term Loan shall be due and payable on the date of termination of this Agreement, whether by its terms, by prepayment, or by acceleration. All amounts outstanding under the Term Loan shall constitute Obligations. Once any portion of the Term Loan has been paid or prepaid, it may not be reborrowed.”

 

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4.02. Amendments to Section 2.4(c)(iii)(C) . Section 2.4(c)(iii)(C) of the Credit Agreement is hereby amended and restated in its entirety by inserting the following in replacement thereof:

(C) Upon the sale or issuance by any Loan Party or any of its Subsidiaries of any shares of Stock, or the issuance or incurrence by any Loan Party or any of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness), Borrowers shall prepay the outstanding principal amount of the Term Loan, the D.B. Zwirn Term Loan and the Advances in accordance with Section 2.4(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith; provided , however , that, notwithstanding the foregoing, Borrowers shall not be required to make a prepayment under this Section 2.4(c)(iii)(C) with any of the Net Cash Proceeds received in connection with (1) the issuance of Convertible Preferred Stock and Common Stock pursuant to the Convertible Stock Purchase Agreement or any Employee Investment Agreement, (2) the issuance of Common Stock pursuant to the Subordinated Note Purchase Agreement, or (3) the issuance of Subordinated Notes. The provisions of this subsection (C) shall not be deemed to be implied consent to any issuance, incurrence or sale otherwise prohibited by the terms and conditions of this Agreement.

4.03. Amendments to Section 3.3 . Section 3.3 of the Credit Agreement is hereby amended by deleting the words “Closing Date” therefrom and inserting “First Amendment Effective Date” in replacement thereof.

4.04. Amendments to Section 6.1 .

(a) Section 6.1(e) of the Credit Agreement is hereby amended by replacing the amount “20,000,000” therefrom and inserting “20,087,000” in lieu thereof.

(b) Section 6.1 of the Credit Agreement is hereby amended by (i) renumbering existing clause (h) as new clause (i) and (ii) inserting the following as new clause (h):

“(h) unsecured Indebtedness in an aggregate amount not to exceed $3,000,000 arising from the loan made by UK Subsidiary to Monotype on October 22, 1999, and”

4.05. Amendments to Section 6.13(b) . Section 6.13(b) of the Credit Agreement is hereby amended and restated in its entirety by inserting the following in replacement thereof:

“(b) Except as set forth in subsection (a) above, make any payment to an Affiliate other than (i) payments for directors’ fees and expenses in an aggregate amount not to exceed $500,000 in any fiscal year, (ii) payments of Accounts incurred in the ordinary course of business and that are upon fair and reasonable terms, and (iii) Permitted Investments.”

 

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4.06. Amendments to Section 6.16(a)(i) . Section 6.16(a)(i) of the Credit Agreement is hereby amended and restated in its entirety by inserting the following in replacement thereof:

(i) Minimum TTM EBITDA. TTM EBITDA, measured on a quarter-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

 

Applicable
Amount
  

Applicable Period

$ 31,000,000   

For the 12 month period ending September 30, 2005

$ 31,000,000   

For the 12 month period ending December 31, 2005

$ 31,000,000   

For the 12 month period ending March 31, 2006

$ 31,000,000   

For the 12 month period ending June 30, 2006

$ 31,000,000   

For the 12 month period ending September 30, 2006

$ 31,000,000   

For the 12 month period ending December 31, 2006

$ 31,000,000   

For the 12 month period ending March 31, 2007

$ 31,500,000   

For the 12 month period ending June 30, 2007

$ 32,500,000   

For the 12 month period ending September 30, 2007

$ 33,500,000   

For the 12 month period ending December 31, 2007

$ 34,500,000   

For the 12 month period ending March 31, 2008

$ 35,000,000   

For the 12 month period ending June 30, 2008

 

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Applicable
Amount
  

Applicable Period

$ 35,500,000   

For the 12 month period ending September 30, 2008

$ 36,000,000   

For the 12 month period ending December 31, 2008

$ 36,500,000   

For the 12 month period ending March 31, 2009

$ 37,000,000   

For the 12 month period ending June 30, 2009

$ 37,500,000   

For the 12 month period ending September 30, 2009

$ 38,000,000   

For the 12 month period ending December 31, 2009

$ 38,000,000   

For the 12 month period ending each quarter thereafter

4.07. Amendments to Section 6.16(b) . Section 6.16(b) of the Credit Agreement is hereby amended and restated in its entirety by inserting the following in replacement thereof:

(b) Leverage Ratio. Permit the Leverage Ratio, as at the end of each period set forth below, to exceed the required ratio set forth in the following table for the applicable period:

 

Applicable
Ratio
  

Applicable Period

4.75:1.00   

For the 12 month period ending September 30, 2005

4.75:1.00   

For the 12 month period ending December 31, 2005

4.50:1.00   

For the 12 month period ending March 31, 2006

4.50:1.00   

For the 12 month period ending June 30, 2006

 

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Applicable
Ratio
  

Applicable Period

4.38:1.00   

For the 12 month period ending September 30, 2006

4.38:1.00   

For the 12 month period ending December 31, 2006

4.13:1.00   

For the 12 month period ending March 31, 2007

4.13:1.00   

For the 12 month period ending June 30, 2007

3.88:1.00   

For the 12 month period ending September 30, 2007

3.88:1.00   

For the 12 month period ending December 31, 2007

3.63:1.00   

For the 12 month period ending March 31, 2008

3.63:1.00   

For the 12 month period ending June 30, 2008

3.38:1.00   

For the 12 month period ending September 30, 2008

3.38:1.00   

For the 12 month period ending December 31, 2008

3.13:1.00   

For the 12 month period ending March 31, 2009

3.13:1.00   

For the 12 month period ending June 30, 2009

2.63:1.00   

For the 12 month period ending September 30, 2009

2.63:1.00   

For the 12 month period ending December 31, 2009

2.63:1.00   

For the 12 month period ending each quarter thereafter

 

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4.08. Amendments to Section 14.1(j) . Section 14.1(j) of the Credit Agreement is hereby amended and restated in its entirety by inserting the following in replacement thereof:

“(j) change the definition of Maximum Revolver Amount, Original Term Loan Amount or Additional Term Loan Amount, or”

4.09. Amendment to Schedule C-1 . Schedule C-1 of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the Schedule attached as Appendix A hereto in lieu thereof.

4.10. New Schedule E-1 . New Schedule E-1 is hereby added to the Credit Agreement in the form of Appendix B hereto.

4.11. Amendments to Schedule 1.1 .

(a) The following additional definitions shall be inserted in Schedule 1.1 to the Credit Agreement in proper alphabetical order:

Additional Term Loan ” has the meaning specified therefor in Section 2.2 .

Additional Term Loan Amount ” means an amount equal to $35,483,181.30.

Convertible Stock Purchase Agreement ” means the Stock Purchase Agreement dated as of November 5, 2004 by and among Parent, the investors listed on Schedule A thereto and the lenders listed on Schedule B thereto, as in effect on the date hereof without modification or amendment thereto.

Employee Investment Agreements ” means, collectively, the agreements identified on Schedule E-1 hereto, in each case as in effect on the date hereof without modification or amendment thereto.

First Amendment Effective Date ” means August 24, 2005.

Original Term Loan ” has the meaning specified therefor in Section 2.2 .

Original Term Loan Amount ” means an amount equal to $75,000,000.

Oversubscription Employee Investment Agreements ” means, collectively, (a) the Employee Investment Agreement dated as of November 24, 2004 by and among Parent, Administrative Borrower and Vladimir Levantovsky, (b) the Employee Investment Agreement dated as of November 15, 2004 by and among Parent, Administrative Borrower and Christopher Roberts, and (c) the Employee Investment Agreements dated as of November 15, 2004 by and among Parent, Administrative Borrower and Geoffrey Greve.

 

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UK Subsidiary ” means Monotype Imaging Limited, a company organized under the laws of the United Kingdom.

(b) The definition of “EBITDA” is hereby amended and restated in its entirety by inserting the following in replacement thereof:

EBITDA ” means, with respect to any fiscal period, (a) Parent’s and its Subsidiaries’ consolidated net earnings (or loss), minus (b) without duplication, the sum of the following amounts of Parent and its Subsidiaries for such period, to the extent included in determining consolidated net earnings (or loss) of Parent and its Subsidiaries for such period, (i) extraordinary gains (including gains realized on the sale of assets), (ii) non-cash income and (iii) interest income, in the case of each of clauses (b)(i) through (b)(iii), as determined in accordance with GAAP, plus (c) without duplication, the sum of the following amounts of Parent and its Subsidiaries for such period, to the extent deducted in determining consolidated net earnings (or loss) of Parent and its Subsidiaries, (i) income taxes and franchise taxes accrued, (ii) Interest Expense, (iii) non-cash extraordinary losses (including non-cash losses realized on the sale of assets), (iv) depreciation and amortization, (v) amortized debt discount for such period, (vi) the amount of any non-cash deduction as the result of any grant to any board members, management or employees of Parent of any equity interests in Parent, (vii) non-recurring cash restructuring charges and independent company start-up costs incurred during the first 12 months after the Closing Date in an aggregate amount not to exceed $2,000,000, (viii) non-cash purchase accounting effects related to the Acquisition Transaction, including loss of deferred revenue, (ix) the amount of any expenses or damages actually paid by Parent or its Subsidiaries in respect of the Adobe Litigation (as such term is defined in the Stock Purchase Agreement) to the extent that such expenses or damages are reimbursed to Parent or its Subsidiaries pursuant to the Stock Purchase Agreement; (x) the amount of any expense attributable to payments under the Agfa Monotype Corporation Incentive Compensation Plan made as of April 26, 2000, as amended or modified from time to time through the Closing Date; (xi) subject to compliance with Section 3.6(g) , the amount of the TBP Payment (as defined in the Stock Purchase Agreement) made in accordance with the terms of Section 8.05 of the Stock Purchase Agreement, (xii) the amount of any expenses or damages actually paid by Parent or its Subsidiaries in respect of the Bitstream litigation in an aggregate amount not to exceed $630,000, (xiii) non-cash net losses attributable to foreign exchange transactions expensed during the fiscal quarter ending June 30, 2005 in an aggregate amount not to exceed $700,000, (xiv) the amount of (A) any audit costs actually incurred by Parent or its Subsidiaries in connection with the annual financial statements delivered for the fiscal year ended December 31, 2004 in an aggregate amount not to exceed $250,000 and (B) any out-of-pocket costs or expenses actually incurred by Parent or its Subsidiaries attributable to any upgrades to their accounting systems, the implementation of quarterly fiscal audit reviews and assuring compliance with all applicable effective provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, in an aggregate amount for clauses (A) and (B) not to exceed

 

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$1,000,000, and (xv) the amount of any costs or expenses actually incurred by Parent or its Subsidiaries in connection with an underwritten public offering of common Stock of Parent pursuant to a registration statement filed with the SEC, in an aggregate amount not to exceed $1,000,000, in the case of each of clauses (c)(i) through (c)(xv), as determined in accordance with GAAP; provided , however , that EBITDA for the quarters ending September 30, 2003, December 31, 2003, March 31, 2004, June 30, 2004, September 30, 2004, December 31, 2004, March 31, 2005, and June 30, 2005 shall be deemed to be $3,909,000, $7,307,000, $6,605,000, $9,713,000, $8,136,000, $9,207,000, $9,988,000, and $9,074,000, respectively. 1

(c) The proviso to the definition of “Extraordinary Receipts” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety by inserting the following in replacement thereof:

provided , however , that Extraordinary Receipts shall not include any cash received by any Loan Party in respect of (i) the issuance of Convertible Preferred Stock and Common Stock pursuant to the Convertible Stock Purchase Agreement or any Employee Investment Agreement, (ii) the issuance of Common Stock pursuant to the Subordinated Note Purchase Agreement, (iii) the issuance of Subordinated Notes, (iv) the reimbursement of any Adobe Litigation Costs or Adobe Damages pursuant to and as defined in the Stock Purchase Agreement, and (v) any amounts received from Seller under the terms of the Stock Purchase Agreement with respect to a Working Capital Shortfall (as defined in the Stock Purchase Agreement).”

(d) The definition of “Facility Limiter Amount” is hereby amended and restated in its entirety by inserting the following in replacement thereof:

Facility Limiter Amount ” means, as of any date of determination, (a) during the period from and after the First Amendment Effective Date up to and including December 31, 2006, the product of 4.75 times the TTM EBITDA and (b) thereafter, the product of 4.50 times the TTM EBITDA, in each case as determined based on the most recent quarterly financial statements delivered to Agent pursuant to Section 5.3 .

(e) The definition of “Permitted Investments” is hereby amended by (i) renumbering existing clause (f) as new clause (g) and (ii) inserting the following as new clause (f):

“(f) Investments by any Loan Party in UK Subsidiary in an aggregate amount during any fiscal quarter period not in excess of $150,000; provided that (i) no Default or Event of Default shall have occurred and be continuing, both before and immediately after giving effect to any such Investment, and (ii) the sum of Excess Availability plus Qualified Cash equals or exceeds $2,000,000, both before and immediately after giving effect to any such Investment, and”


1 Note the only changes to EBITDA definition are with respect to the addition of clauses (xii) through (xv), and the addition of EBITDA amounts for Q4 2004, Q1 2005, and Q2 2005 in the last proviso of the definition.

 

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(f) The definition of “Subordinated Notes” is hereby amended and restated in its entirety by inserting the following in replacement thereof:

Subordinated Notes ” means, collectively, (a) the Subordinated Notes, dated as of the date hereof, issued by Borrowers to the purchasers named thereon pursuant to the Subordinated Note Purchase Agreement, as in effect on the date hereof without modification or amendment thereto, and (b) the Subordinated Notes issued by Monotype Imaging, Inc. to the purchasers named thereon pursuant to, and dated the date of, the applicable Employee Investment Agreements, as in effect on the date hereof without modification or amendment thereto.

(g) The definition of “Term Loan” is hereby amended and restated in its entirety by inserting the following in replacement thereof:

Term Loan ” means, (a) from and after the Closing Date up to (but not including) the First Amendment Effective Date, the Original Term Loan, and (b) thereafter, collectively, the Original Term Loan and the Additional Term Loan.

(h) The definition of “Term Loan Amount” is hereby deleted in its entirety.

4.12. Amendments to Schedule 5.3 . The time period referenced in the third row of the first column of Schedule 5.3 to the Credit Agreement is hereby amended and restated in its entirety by inserting the following in replacement thereof:

“As soon as available, but in any event (i) on or before August 31, 2005 with respect to Parent’s fiscal year ending December 31, 2004 (but solely with respect to the financial statements and Compliance Certificate relating to such fiscal year then ended), and (ii) within 90 days after the end of each of Parent’s fiscal years thereafter.”

Section 5. Amendment to Investor Intercreditor Agreement . The Investor Intercreditor Agreement is hereby amended and restated as of the date this First Amendment becomes effective in accordance with Section 8 hereof by deleting the first recital of the Investor Intercreditor Agreement and inserting the following in replacement thereof:

“WHEREAS, Borrowers (collectively, the “ Applicable Debtors ”) will issue the Subordinated Notes (collectively, the “ Subordinated Notes ”) to the Subordinating Creditors, in an aggregate principal amount of $20,087,000, pursuant to (a) the Subordinated Note Purchase Agreement, dated as of the date hereof, by and among Borrowers and the purchasers named therein, and (b) the Employee Investment Agreements;”

 

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Section 6. Amendment to Security Agreement . Schedules 1 , 2 , 3 , 4 , 5 , 6 , 7 , and 8 of the Security Agreement are hereby amended and restated as of the date this First Amendment becomes effective in accordance with Section 8 hereof by deleting them in their entirety and inserting in lieu thereof Schedules 1 , 2 , 3 , 4 , 5 , 6 , 7 , and 8 of the Security Agreement attached as Appendix C hereto.

Section 7. Representations and Warranties . In order to induce Agent and each of the Lenders to enter into this First Amendment, Administrative Borrower (on behalf of the Borrowers) hereby represents and warrants that:

7.01. No Default . At and as of the date of this First Amendment and at and as of the Effective Date, and both prior to (except with respect to the Prepayment Default, the Contribution Default, the First Category Defaults, the Second Category Default, the Section 5.3 Default, the Section 5.9 Default, the Section 5.16 Default, the Section 6.1 Default, the Section 6.3(a) Default, and the Section 6.12 Default) and after giving effect to this First Amendment, no Default or Event of Default exists.

7.02. Representations and Warranties True and Correct . At and as of the date of this First Amendment and at and as of the Effective Date and both prior to (except with respect to the Prepayment Default, the Contribution Default, the First Category Defaults, the Second Category Default, the Section 5.3 Default, the Section 5.9 Default, the Section 5.16 Default, the Section 6.1 Default, the Section 6.3(a) Default, and the Section 6.12 Default) and after giving effect to this First Amendment, each of the representations and warranties contained in the Credit Agreement and the other Loan Documents is true and correct in all material respects (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties are true and correct in all material respects as of such earlier date).

7.03. Corporate Power, Etc . Administrative Borrower (a) has all requisite corporate power and authority to execute and deliver this First Amendment and to consummate the transactions contemplated hereby (on behalf of the Borrowers) and (b) has taken all action, corporate or otherwise, necessary to authorize the execution and delivery of this First Amendment and the consummation of the transactions contemplated hereby (on behalf of the Borrowers). Administrative Borrower is entering into this First Amendment (on behalf of the Borrowers) in accordance with Section 14.1 of the Credit Agreement.

7.04. No Conflict . The execution, delivery and performance by Administrative Borrower (on behalf of the Borrowers) of this First Amendment will not (a) violate any provision of federal, state, or local law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on any Borrower, (b) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of any Borrower, (c) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of any Borrower, other than Permitted Liens, or (d) require any unobtained approval of any Borrower’s interestholders or any unobtained approval or consent of any Person under any material contractual obligation of any Borrower.

 

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7.05. Binding Effect . This First Amendment has been duly executed and delivered by Administrative Borrower (on behalf of the Borrowers) and constitutes the legal, valid and binding obligation of Administrative Borrower (on behalf of the Borrowers), enforceable against Administrative Borrower (on behalf of the Borrowers) in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors’ rights generally, and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 8. Conditions . This First Amendment shall be effective as of August 24, 2005 (the “Effective Date”) upon the fulfillment by Administrative Borrower, in a manner satisfactory to Agent and the Lenders, of all of the following conditions precedent set forth in this Section 8 :

8.01. Execution of the First Amendment . Each of the required parties hereto shall have duly executed an original counterpart of this First Amendment and shall have delivered (including by way of facsimile or other electronic transmission) the same to Agent.

8.02. Fees . Borrowers shall have paid to Agent and the Lenders all fees then due and owing to Agent and the Lenders pursuant to one or more fee letters dated as of the date hereof.

8.03. Delivery of Employee Investment Agreements and Subordinated Notes . Agent shall have received fully executed copies of (a) each Employee Investment Agreement, and (b) the Subordinated Notes issued pursuant to the Employee Investment Agreements.

8.04. Evidence of Contribution . Agent shall have received satisfactory evidence of the Contribution.

8.05. Pledged Stock . Administrative Borrower shall have delivered to Agent the certificates representing 65% of the outstanding shares of the Stock of the Japanese Subsidiary owned by Administrative Borrower, together with an undated stock power covering each such certificate, duly executed in blank, each in form and substance satisfactory to Agent.

8.06. Schedules . Administrative Borrower shall have delivered to Agent updates, as applicable, to (a)  Schedules M-1 , 4.5 , 4.7(a) , 4.7(b) , 4.7(c) , 4.8(b) , 4.8(c) , and 4.17 of the Credit Agreement, and (b)  Schedules 1 , 2 , 3 , 4 , 5 , 6 , 7 , and 8 of the Security Agreement, each in form and substance satisfactory to Agent.

8.07. Opinion of Counsel . Agent shall have received an opinion of Parent’s and Borrowers’ counsel, in form and substance satisfactory to Agent.

8.08. Delivery of Other Documents . Agent shall have received all such instruments, documents and agreements as Agent may reasonably request, in form and substance reasonably satisfactory to Agent.

8.09. Representations and Warranties . As of the Effective Date, the representations and warranties set forth in Section 7 hereof shall be true and correct.

 

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8.10. Compliance with Terms . Administrative Borrower shall have complied in all respects with the terms hereof and of any other agreement, document, instrument or other writing to be delivered by Administrative Borrower (on behalf of the Borrowers) in connection herewith.

8.11. D.B. Zwirn Term Loan . Substantially simultaneously with the making of the Additional Term Loan by the Lenders to the Borrowers on the Effective Date, Parent and Borrowers shall have consummated the D.B. Zwirn Term Loan Increase and all other transactions contemplated by the First Amendment to, and Waiver and Consent Under, the D.B. Zwirn Credit Agreement, and furnished evidence thereof to Agent.

8.12. Excess Availability . Borrowers shall have no Advances outstanding and Cash and Cash Equivalents subject to the dominion and control of Agent of not less than $1,000,000 after giving effect to the Additional Term Loan hereunder and under the D.B. Zwirn Credit Agreement and the payment of all fees and expenses required to be paid by Borrowers on the Effective Date.

Section 9. Funding of Additional Term Loan . Each Lender with a Term Loan Commitment shall fund its Pro Rata Share of the Additional Term Loan on the Effective Date.

Section 10. Miscellaneous .

10.01. Continuing Effect . Except as specifically provided herein, the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are hereby ratified and confirmed in all respects.

10.02. No Waiver; Reservation of Rights . This First Amendment is limited as specified and the execution, delivery and effectiveness of this First Amendment shall not operate as a modification, acceptance or waiver of any provision of the Credit Agreement or any other Loan Document, except as specifically set forth herein. Notwithstanding anything contained in this First Amendment to the contrary, Agent and the Lenders expressly reserve the right to exercise any and all of their rights and remedies under the Credit Agreement, any other Loan Document and applicable law in respect of any Default or Event of Default.

10.03. References .

(a) From and after the Effective Date, the Credit Agreement, the Investor Intercreditor Agreement, and the other Loan Documents and all agreements, instruments and documents executed and delivered in connection with any of the foregoing shall each be deemed amended hereby to the extent necessary, if any, to give effect to the provisions of this First Amendment.

(b) From and after the Effective Date, (i) all references in the Credit Agreement to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended hereby and (ii) all references in the Credit Agreement, the other Loan Documents or any other agreement, instrument or document executed and delivered in connection therewith to “Credit Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended hereby.

 

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(c) From and after the Effective Date, (i) all references in the Investor Intercreditor Agreement to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring to the Investor Intercreditor Agreement shall mean the Investor Intercreditor Agreement as amended hereby and (ii) all references in the Investor Intercreditor Agreement, the other Loan Documents or any other agreement, instrument or document executed and delivered in connection therewith to “Investor Intercreditor Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Investor Intercreditor Agreement shall mean the Investor Intercreditor Agreement as amended hereby.

10.04. Governing Law . THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

10.05. Severability . The provisions of this First Amendment are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this First Amendment in any jurisdiction.

10.06. Counterparts . This First Amendment may be executed in any number of counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart of this First Amendment by telefacsimile or other electronic transmission shall be equally effective as delivery of a manually executed counterpart. A complete set of counterparts shall be lodged with the Administrative Borrower, Agent and each Lender.

10.07. Headings . Section headings in this First Amendment are included herein for convenience of reference only and shall not constitute a part of this First Amendment for any other purpose.

10.08. Binding Effect; Assignment . This First Amendment shall be binding upon and inure to the benefit of Borrowers, the Lenders and Agent and their respective successors and assigns; provided , however , that the rights and obligations of Borrowers under this First Amendment shall not be assigned or delegated without the prior written consent of Agent.

10.09. Expenses . Borrowers agree to pay Agent upon demand for all reasonable expenses, including reasonable fees of attorneys and paralegals for Agent (who may be employees of Agent), incurred by Agent in connection with the preparation, negotiation and execution of this First Amendment and any document required to be furnished herewith.

10.10. Integration . This First Amendment, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

MONOTYPE IMAGING, INC. , as Administrative Borrower, on behalf of the Borrowers
By:   /s/ Douglas J. Shaw
  Name: Douglas J. Shaw
  Title:  Senior Vice President
WELLS FARGO FOOTHILL, INC. , as Agent and a Lender
By:   /s/ M.E. Stearns
  Name: M.E. Stearns
  Title:  Executive Vice President
D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P., as a Lender
By:   D.B. Zwirn Partners, LLC, its General Partner
By:   Zwirn Holdings, LLC, its Managing Member
By:   /s/ Perry A. Gruss
  Name: Perry A. Gruss
  Title:  Authorized Signatory
BERNARD NATIONAL LOAN INVESTORS, LTD, as a Lender
By:   Bernard Capital Funding, LLC, its Investment Advisor
By:   /s/ Perry A. Gruss
  Name: Perry A. Gruss
  Title:  Authorized Signatory

 

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GOLDMAN SACHS SPECIALTY LENDING HOLDINGS, INC., AS A LENDER
By:   /s/ Michael W. Adler
  Name: Michael W. Adler
  Title:   Vice President
BANK OF AMERICA, N.A. (f/k/a Fleet National Bank), as a Lender
By:   /s/ William S. Rowe
  Name: William S. Rowe
  Title:   Principal
CANPARTNERS INVESTMENTS IV, LLC, as a Lender
By:   /s/ Joshua Friedman
  Name: Joshua Friedman
  Title:   Managing Partner
GSC PARTNERS CDO FUND V, LIMITED,
By:   GSCP (NJ), L.P., as Collateral Manager as a Lender
By:   /s/ Harvey E. Siegel
  Name: Harvey E. Siegel
  Title:   Authorized Signatory
GSC PARTNERS GEMINI FUND LIMITED,
By:   GSCP (NJ), L.P., as Collateral Monitor
By:   GSCP (NJ), INC., its General Partner as a Lender
By:   /s/ Harvey E. Siegel
  Name: Harvey E. Siegel
  Title:   Authorized Signatory

 

20


MCG CAPITAL CORPORATION , as a Lender
By:   /s/ Thomas McLaughlin III
  Name: Thomas McLaughlin III
  Title:   Vice President
CASTLE HILL I – INGOTS, LTD., as a Lender
By:   /s/ James F. Kellogg III
  Name: James F. Kellogg III
  Title:   Managing Director
CASTLE HILL II – INGOTS, LTD., as a Lender
By:   /s/ James F. Kellogg III
  Name: James F. Kellogg III
  Title:   Managing Director
CASTLE HILL III CLO, LTD., as a Lender
By:   /s/ James F. Kellogg III
  Name: James F. Kellogg III
  Title:   Managing Director

 

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Appendix A

Schedule C-1 of the Credit Agreement

Commitments

 

Lender

   Revolver
Commitment
   Term Loan
Commitment
   Total
Commitment

Wells Fargo Foothill, Inc.

   $ 2,500,000.00    $ 32,900,719.86    $ 35,400,719.86

D.B. Zwirn Special Opportunities Fund, L.P.

     N/A    $ 4,000,000.13    $ 4,000,000.13

Bernard National Loan Investors, LTD

     N/A    $ 6,666,666.87    $ 6,666,666.87

Fleet National Bank

   $ 2,500,000.00    $ 13,333,333.00    $ 15,833,333.00

Canyon Capital CDO 2001-1 LTD.

     N/A    $ 1,750,000.00    $ 1,750,000.00

Canyon Capital CDO 2002-1 LTD.

     N/A    $ 1,750,000.00    $ 1,750,000.00

Canyon Capital CDO 2004-1 LTD.

     N/A    $ 5,000,000.00    $ 5,000,000.00

Canpartners Investments IV, LLC

     N/A    $ 1,500,000.00    $ 1,500,000.00

Goldman Sachs Specialty Lending Holdings, Inc.

     N/A    $ 16,000,000.00    $ 16,000,000.00

GSC Partners CDO Fund V, Limited

     N/A    $ 3,871,009.12    $ 3,871,009.12

GSC Partners Gemini Fund Limited

     N/A    $ 3,784,937.52    $ 3,784,937.52

MCG Capital Corporation

     N/A    $ 5,000,000.00    $ 5,000,000.00

Castle Hill I – Ingots, LTD.

     N/A    $ 1,333,000.00    $ 1,333,000.00

Castle Hill II – Ingots, LTD.

     N/A    $ 1,777,333.50    $ 1,777,333.50

Castle Hill III CLO, LTD.

     N/A    $ 1,333,000.00    $ 1,333,000.00

All Lenders

   $ 5,000,000    $ 100,000,000    $ 105,000,000

 

Appendix A-1

Exhibit 10.38

Execution Version

SECOND AMENDMENT TO, AND

CONSENT AND WAIVER UNDER, CREDIT AGREEMENT AND SECURITY

AGREEMENT

THIS SECOND AMENDMENT TO, AND CONSENT AND WAIVER UNDER, CREDIT AGREEMENT AND SECURITY AGREEMENT (this “ Second Amendment ”) is made and entered into as of July 28, 2006, by and among Monotype Imaging Holdings Corp., a Delaware corporation (“ Parent ”), Monotype Imaging, Inc., a Delaware corporation (“ Administrative Borrower ”), International Typeface Corporation, a New York corporation (“ Typeface ” and together with Administrative Borrower, the “ Borrowers ”), the lenders listed on the signatory pages hereof (the “ Lenders ”), and Wells Fargo Foothill, Inc., a California corporation, in its capacity as administrative agent (“ Agent ”).

W I T N E S S E T H :

WHEREAS, Parent, Borrowers, the Lenders and Agent are parties to that certain Credit Agreement, dated as of November 5, 2004 (as amended, modified, supplemented or amended and restated from time to time, the “ Credit Agreement ”);

WHEREAS, Parent, Borrower and Agent are parties to that certain Security Agreement, dated as of November 5, 2004 (as it may be amended, modified, supplemented or amended and restated from time to time, the “ Security Agreement ”);

WHEREAS, Administrative Borrower desires to enter into a Stock Purchase Agreement in the form of Exhibit A hereto (the “ China Type Stock Purchase Agreement ”), among Administrative Borrower and the other shareholders (the “ China Type Shareholders ”) of China Type Design Limited, a limited liability company incorporated under the laws of Hong Kong (“ China Type ”), pursuant to which Administrative Borrower shall acquire all of the shares in China Type held by the China Type Shareholders for a cash purchase price not to exceed $4,293,000, of which $2,593,000 shall be paid to the China Type Shareholders on the closing date of the China Type Stock Purchase Agreement and $1,700,000 of which will be funded to an escrow account to be released as follows: $566,667 on the first anniversary of the closing date of the China Type Stock Purchase Agreement and $1,133,333 on the second anniversary of the closing date of the China Type Stock Purchase Agreement, in each case, subject to the terms of such escrow agreement and the China Type Purchase Agreement (collectively, the “ China Type Acquisition ”);

WHEREAS, upon the consummation of the China Type Acquisition, Administrative Borrower shall own 100% of the outstanding capital stock of China Type;

WHEREAS, absent a waiver from Agent and the Lenders, Administrative Borrower’s consummation of the China Type Acquisition in accordance with the terms of the China Type Stock Purchase Agreement would violate Section 6.12 of the Credit Agreement;

WHEREAS, Parent and German Holdings (as defined below) desire to enter into a Share Purchase Agreement in the form of Exhibit B hereto (the “ Linotype Purchase Agreement ”), among Parent, Blitz 06-683 GmbH, a German limited liability company (“ German Holdings ”),


and Heidelberger Druckmaschinen Aktiengesellschaft, Kurfürsten-Anlage 52-60, 69115 Heidelberg (the “ Linotype Seller ”), pursuant to which (i) Parent shall acquire certain assets of the Linotype Seller as set forth on Exhibit F (the “ US Linotype Assets ”) and (ii) German Holdings shall acquire all of the shares in Linotype GmbH, a limited liability company incorporated under the laws of Germany (“ Linotype ”) for an aggregate cash purchase price not to exceed 45,500,000 Euros (collectively, the “ Linotype Acquisition ”);

WHEREAS, upon the consummation of the Linotype Acquisition, German Holdings shall own 100% of the outstanding capital stock of Linotype;

WHEREAS, absent a waiver from Agent and the Lenders, Parent’s and German Holdings’ consummation of the Linotype Acquisition in accordance with the terms of the Linotype Purchase Agreement would violate Section 6.12 of the Credit Agreement;

WHEREAS, in order to finance the Linotype Acquisition, Borrowers desire to (a) increase the Term Loan Amount under the Credit Agreement from $88,882,824 (the aggregate outstanding principal amount of the Term Loan under the Credit Agreement immediately prior to the effectiveness of the Second Amendment) to $140,000,000, (b) increase the Maximum Revolver Amount under the Credit Agreement from $5,000,000 to $10,000,000, and (c) increase the Term Loan Amount under the D.B. Zwirn Credit Agreement from $65,000,000 to $70,000,000 (the “ D.B. Zwirn Term Loan Increase ”);

WHEREAS, increasing the Term Loan Amount and the Maximum Revolver Amount under the Credit Agreement requires the approval of all the Lenders;

WHEREAS, absent a waiver from Agent and the Lenders, the D.B. Zwirn Term Loan Increase would violate Section 6.7(c) of the Credit Agreement;

WHEREAS, Parent and Borrowers request the amendment of certain provisions of the Credit Agreement in connection with the China Type Acquisition, the Linotype Acquisition and the D.B. Zwirn Term Loan Increase; and

WHEREAS, Parent, Borrowers, Agent and the Lenders have agreed to amend the Credit Agreement and to consent to the China Type Acquisition, the Linotype Acquisition and the D.B. Zwirn Term Loan Increase, all as herein provided, subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the agreements and provisions herein contained, the parties hereto do hereby agree as follows:

Section 1. Definitions . Any capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

Section 2. Consent and Waiver Under Credit Agreement . Subject to the satisfaction of the terms and conditions set forth herein, Agent and each of the Lenders hereby (a) consents to, and waives the application of Section 6.12 of the Credit Agreement solely with respect to, Administrative Borrower’s consummation of the China Type Acquisition in accordance with the terms of the China Type Stock Purchase Agreement in the form of Exhibit A


hereto, (b) consents to, and waives the application of Section 6.12 of the Credit Agreement solely with respect to, Parent’s and German Holdings’ consummation of the Linotype Acquisition in accordance with the terms of the Linotype Purchase Agreement in the form of Exhibit B hereto, and (c) consents to, and waives the application of Section 6.7(c) of the Credit Agreement solely with respect to, the D.B. Zwirn Term Loan Increase to the extent that the Term Loan Amount under the D.B. Zwirn Credit Agreement does not exceed $70,000,000.

Section 3. Amendments to Credit Agreement . The Credit Agreement is hereby amended, effective as of the date this Second Amendment becomes effective in accordance with Section 6 hereof, as follows:

3.01 Amendments to Section 2.2 . Section 2.2 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

2.2 Term Loan . Subject to the terms and conditions of this Agreement, (i) on the Closing Date each Lender with a Term Loan Commitment agreed (severally, not jointly or jointly and severally) to make term loans (collectively, the “ Original Term Loan ”) to Borrowers in an amount equal to such Lender’s Pro Rata Share of the Original Term Loan Amount, and (ii) on the First Amendment Effective Date, subject to the terms and conditions of this Agreement, each Lender with a Term Loan Commitment agreed (severally, not jointly or jointly and severally) to make term loans (collectively, the “ Additional Term Loan ”) to Borrowers in an amount equal to such Lender’s Pro Rata Share of the Additional Term Loan Amount. Prior to the Second Amendment Effective Date, the principal amount of the sum of (i) the Original Term Loan and (ii) the Additional Term Loan shall have been repaid in monthly installments, beginning on the first day of the first month following the Closing Date, as follows: during the period of time from the Closing Date through the Second Amendment Effective Date, $750,000 per month. On the Second Amendment Effective Date, subject to the terms and conditions of this Agreement, each Lender with a Second Additional Term Loan Commitment agrees (severally, not jointly or jointly and severally) to make term loans (collectively, the “ Second Additional Term Loan ”) to Borrowers in an amount equal to its Second Additional Term Loan Commitment. From and after the Second Amendment Effective Date, the principal amount of the Term Loan shall be repaid in monthly installments, beginning on the first day of the first month following the Second Amendment Effective Date, as follows: (a) during the period of time from the Second Amendment Effective Date through the first anniversary of the Second Amendment Effective Date, $791,666 per month; (b) during the period of time from the first anniversary of the Second Amendment Effective Date through the second anniversary of the Second Amendment Effective Date, $1,041,666 per month; (c) during the period of time from the second anniversary of the Second Amendment Effective Date through the third anniversary of the Second Amendment Effective Date, $1,083,333 per month; and (d) $1,166,666 per month thereafter, such installments to be due and payable on the first day of each month, continuing until and including the Maturity Date, on which date the unpaid balance of the Term Loan would be due and payable in full. The outstanding unpaid principal balance and all accrued and unpaid interest under the Term Loan shall be due and payable on the date of termination of this Agreement, whether by its terms, by prepayment, or by acceleration. All amounts outstanding under the Term Loan shall constitute Obligations. Once any portion of the Term Loan has been paid or prepaid, it may not be reborrowed.”


3.02 Amendments to Section 3.2 . Section 3.2 of the Credit Agreement is hereby amended by inserting the following new sentence at the end of Section 3.2 :

“The obligation of each Lender to make its Second Additional Term Loan is subject to the fulfillment, to the satisfaction of Agent and each Lender, of each of the conditions precedent set forth on Schedule 3.2 (the making of such Second Additional Term Loan by a Lender being conclusively deemed to be its satisfaction or waiver of such conditions precedent).”

3.03 Amendments to Section 3.3 . Section 3.3 of the Credit Agreement is hereby amended by amending and restating the first sentence of Section 3.3 in its entirety to read as follows:

“This Agreement shall continue in full force and effect for a term ending on the fifth anniversary of the Second Amendment Effective Date (the “ Maturity Date ”).”

3.04 New Section 3.7 . A new Section 3.7 is hereby added to the Credit Agreement immediately after Section 3.6 to read as follows:

“3.7 Conditions Subsequent to the Second Amendment Effective Date. The obligation of the Lender Group (or any member thereof) to make Advances and maintain the Term Loans (or otherwise extend credit hereunder) after the Second Amendment Effective Date is subject to the fulfillment, on or before the date applicable thereto, of each of the conditions subsequent set forth below (the failure by Borrowers to so perform or cause to be performed constituting an Event of Default):

(a) promptly after execution thereof, true and complete copies of the China Type Acquisition Documents;

(b) on or prior to the date that is 10 Business Days after the closing of the China Type Acquisition Transaction, (i) Agent shall have received an executed Pledged Interest Addendum pursuant to Section 6 of the Security Agreement with respect to a pledge of 65% of the issued and outstanding capital Stock of the Hong Kong Subsidiary entitled to vote and 100% of the issued and outstanding capital Stock of the Hong Kong Subsidiary not entitled to vote, (ii) Agent (or its agent or designee) shall have received the stock certificates representing the same and stock powers duly executed in blank and (iii) Agent shall have received a joinder to the Intercompany Subordination Agreement, duly executed by China Type.

(c) on or prior to the date that is 2 Business Days after the Second Amendment Effective Date, Agent (or its agent or designee) shall have received a copy of the notarial deed according to which shares of Stock of German Holdings shall have been pledged to the Administrative Agent and the Lenders pursuant to the Security Agreement and the German Security Documents;


(d) on or prior to the date that is 15 Business Days after the Second Amendment Effective Date, Agent shall have received an updated Schedule 4.17 to the Credit Agreement, in form and substance reasonably satisfactory to Agent.

(e) on or prior to the date that is 15 Business Days after the Second Amendment Effective Date, Agent shall have received updated Schedules 1 , 2 , 3 , 4 , 5 , 6 , 7 and 8 to the Security Agreement, in form and substance reasonably satisfactory to Agent.

(f) on or prior to the date that is 2 Business Days after the Second Amendment Effective Date, Agent shall have received a joinder to the Intercompany Subordination Agreement, duly executed by each of German Holdings and Linotype.

(g) on or prior to the date that is 60 days after the Second Amendment Effective Date, Agent shall have received satisfactory evidence that not less than the Required Library of all existing copyrights of Parent and its Subsidiaries have been registered with the United States Copyright Office; and

(h) on or prior to the date that is 60 days after the Second Amendment Effective Date, Agent shall have received evidence reasonably satisfactory to it that the source and object code for each version or versions of each item of computer software programs or other technology of Parent and its Subsidiaries constituting the Required Library has been deposited with the escrow agent in accordance with the terms and conditions of the Source Code Escrow Agreement, as provided in Section 6(g)(viii) of the Security Agreement.”

3.05 Amendments to Section 4.9 .

(a) Clauses (a) through (d), (f) and (h)  of Section 4.9 of the Credit Agreement are hereby amended by deleting the phrase “the other Loan Documents and the Acquisition Documents” therein and substituting in lieu thereof the phrase “the other Loan Documents, the Acquisition Documents, the China Type Acquisition Documents and the Linotype Acquisition Documents”.

(b) Clause (i)  of Section 4.9 of the Credit Agreement is hereby amended by deleting the phrase “The Loan Documents and the Acquisition Documents” therein and substituting in lieu thereof the phrase “The Loan Documents, the Acquisition Documents, the China Type Acquisition Documents and the Linotype Acquisition Documents”.

3.06 Amendments to Section 4.18 . Section 4.18 of the Credit Agreement is hereby amended by deleting the phrase “the other Loan Documents, the Acquisition Documents” therein and substituting in lieu thereof the phrase “the other Loan Documents, the Acquisition Documents, the China Type Acquisition Documents, the Linotype Acquisition Documents”.


3.07 Amendments to Section 4.20 . Section 4.20 of the Credit Agreement is hereby amended by inserting the following clauses (c)  and (d)  following the end of clause (b)  thereof:

“(c) (i) As of the Second Amendment Effective Date, no party to any Linotype Acquisition Document or any China Type Acquisition Document is in default on any of its material obligations under such Linotype Acquisition Document or China Type Acquisition Document, and after the Second Amendment Effective Date, no party to any Linotype Acquisition Document or China Type Acquisition Document is in default on any of its material obligations under such Linotype Acquisition Document or such China Type Acquisition Document the default of which could reasonably be expected to adversely affect the Lender Group, (ii) all representations and warranties made by Parent, any Borrower, or German Holdings (in the case of the Linotype Acquisition Documents) in the Linotype Acquisition Documents or the China Type Acquisition Documents and in the certificates delivered in connection therewith are true and correct in all material respects as of the Second Amendment Effective Date and, to the best knowledge of Parent, each Borrower and German Holdings (in the case of the Linotype Acquisition Documents), all material representations and warranties made in the Linotype Acquisition Documents and the China Type Acquisition Documents by or on behalf of the Linotype Seller and the China Type Shareholders, as the case may be, or any other party thereto other than any Loan Party party thereto, are true and correct in all material respects as of the Second Amendment Effective Date, (iii) all written information (taken as a whole) with respect to the Linotype Acquisition Transaction and the China Type Acquisition Transaction furnished to Agent by or on behalf of any Loan Party was, at the time the same was so furnished, complete and correct in all material respects, or has been subsequently supplemented by other written information to become complete and correct in all material respects, (iv) no representation, warranty or statement made by any Loan Party party thereto, when taken as a whole, or, to the best knowledge of Parent, each Borrower, and German Holdings (in the case of the Linotype Acquisition), the Linotype Seller or the China Type Shareholders, as the case may be, or any other party thereto other than any Loan Party party thereto, at the time made in any Linotype Acquisition Document, or any China Type Acquisition Document or any agreement, certificate, statement or document required to be delivered pursuant to any Linotype Acquisition Document or any China Type Acquisition Document, when taken as a whole, contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances in which they were made, and (v) in connection with the Linotype Acquisition Transaction, German Holdings is acquiring the Linotype Stock, and, on the Second Amendment Effective Date, after giving effect to the transactions contemplated by the Linotype Acquisition Documents, will have good title to the Linotype Stock, free and clear of all Liens.

(d) (i) Parent, Borrowers and German Holdings (in the case of the Linotype Acquisition) have delivered to Agent a complete and correct copy of the Linotype Acquisition Documents and China Type Acquisition Documents, including all schedules and exhibits thereto, (ii) each Linotype Acquisition Document and each China Type Acquisition Document sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby, (iii) no Linotype Acquisition Document and no China Type Acquisition Document has been amended or otherwise modified without the prior written consent of Agent, (iv) the


execution, delivery and performance of each of the Linotype Acquisition Documents and each of the China Type Acquisition Documents has been duly authorized by all necessary action on the part of each Loan Party party thereto and, to the best knowledge of Parent, each Borrower and German Holdings (in the case of the Linotype Acquisition), each other Person party thereto, (v) the Linotype Acquisition Transaction and the China Type Acquisition Transaction has been effected in accordance with the terms of the Linotype Acquisition Documents and all applicable law, (vi) at the time of consummation of the Linotype Acquisition Transaction and the China Type Acquisition Transaction, there does not exist any judgment, order or injunction prohibiting or imposing any material adverse condition upon the consummation of the Linotype Acquisition Transaction or the China Type Acquisition Transaction, (vii) at the time of consummation thereof, all consents and approvals of, and filings and registrations with, and all other actions in respect of, all Government Authorities required in order to consummate the Linotype Acquisition Transaction and the China Type Acquisition Transaction shall have been obtained, given, filed or taken and shall be in full force and effect, (viii) all actions taken by the Loan Parties pursuant to or in furtherance of the Linotype Acquisition Transaction and the China Type Acquisition Transaction have been taken in compliance in all material respects with the Linotype Acquisition Documents or the China Type Acquisition Documents, as the case may be, and applicable law, and (ix) each Linotype Acquisition Document and each China Type Acquisition Document is the legal, valid and binding obligation of each Loan Party party thereto and, to the best knowledge of Parent, each Borrower and German Holdings (in the case of the Linotype Acquisition Transaction), the other parties thereto, enforceable against such parties in accordance with its terms.”

3.08 Amendments to Section 5.17 . Section 5.17 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“5.17 Acquisition Transaction; Linotype Acquisition Transaction .

(a) Contemporaneously with the making of the Original Term Loan: (i) cause all transactions contemplated by the Acquisition Documents to be consummated; (ii) cause the Acquisition Transaction and the Merger to become effective; and (iii) furnish evidence thereof to Agent, as well as certified (as of the Closing Date) true and complete copies of the Acquisition Documents, which shall be in compliance with all applicable laws and for which all necessary approvals shall have been obtained in connection therewith.

(b) Contemporaneously with making the Second Additional Term Loan: (i) cause all transactions contemplated by the Linotype Acquisition Documents to be consummated; (ii) cause the Linotype Acquisition Transaction to become effective; and (iii) furnish evidence thereof to Agent, as well as certified (as of the Second Amendment Effective Date) true and complete copies of the Linotype Acquisition Documents, which shall be in compliance with all applicable laws and for which all necessary approvals shall have been obtained in connection therewith.


(c) Promptly provide Agent with true and complete copies of any and all material documents delivered by or to any Loan Party pursuant to the terms of the Acquisition Documents, the China Type Acquisition Documents or the Linotype Acquisition Documents.”

3.09 New Section 5.23 . The Credit Agreement is hereby amended by adding the following new Section 5.23 :

“5.23 Foreign Subsidiaries . Within 30 days of the first date on which any Foreign Subsidiary that is not a Loan Party becomes a Material Foreign Subsidiary, Borrower shall cause all holders of Capital Stock issued by such Material Foreign Subsidiary that are Loan Parties to execute and deliver to Agent such share or stock pledge agreements with respect to the capital Stock issued by such Material Foreign Subsidiary as Agent shall require, which stock pledge agreements shall be governed by the laws of the jurisdiction of organization of the issuer of such capital Stock and be in form and substance satisfactory to Agent, together with (a) appropriate certificates and powers with respect to such Stock, and (b) all other documentation, including one or more opinions of counsel satisfactory to Agent, which in its opinion are appropriate with respect to the execution and delivery of such stock pledge agreements; provided, that only 65% of the total outstanding voting capital Stock issued by such Material Foreign Subsidiary shall be required to be pledged if hypothecating a greater amount would, based on the projections of the Loan Parties, result in material adverse tax consequences to Parent and its Subsidiaries, taken as a whole.”

3.10 Amendments to Section 6.3 . Section 6.3(a) Section 6.3(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:”(a) Except for the Merger and the Permitted Merger, enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock,”

3.11 Amendments to Section 6.5 . Section 6.5 is hereby amended by inserting the phrase “or within 30 days of the Second Amendment Effective Date, in connection with the Linotype Acquisition Transaction, change German Holdings’ name to Monotype Imaging Germany GmbH” immediately after the term “Merger” in such section.

3.12 Amendments to Section 6.7 . Clause (c)  of Section 6.7 of the Credit Agreement is hereby amended by deleting subclause (iii)  thereof and substituting in lieu thereof “(iii) any of the Acquisition Documents, the China Type Acquisition Documents or the Linotype Acquisition Documents,”

3.13 Amendments to Section 6.14 . Section 6.14(a) of the Credit Agreement is hereby amended by deleting the phrase “and (b) thereafter, consistent with the terms and conditions hereof, to finance ongoing working capital, capital expenditures, and general corporate needs of Parent and Borrowers following the Acquisition Transaction and the Merger and for its lawful and permitted purposes.” and substituting in lieu thereof the following:

“(b) on the Second Amendment Effective Date, to (i) finance the Linotype Acquisition Transaction and (ii) pay transactional fees, costs, and expenses incurred in connection with the Linotype Acquisition Documents, and the transactions contemplated thereby, and (c) thereafter, consistent with the terms and conditions hereof, to finance ongoing working capital, capital expenditures, and general corporate needs of Parent and Borrowers following the Acquisition Transaction, the Merger and the Linotype Acquisition Transaction, and for its lawful and permitted purposes.”


3.14 Amendments to Section 6.16 . Section 6.16 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“6.16 Financial Covenants .

(a) Fail to maintain or achieve:

(i) Minimum TTM EBITDA. TTM EBITDA, measured on a quarter-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

 

Applicable Amount   

Applicable Period

$ 31,000,000    For the 12 month period ending June 30, 2006
$ 39,500,000    For the 12 month period ending September 30, 2006
$ 39,500,000    For the 12 month period ending December 31, 2006
$ 40,000,000    For the 12 month period ending March 31, 2007
$ 40,000,000    For the 12 month period ending June 30, 2007
$ 41,000,000    For the 12 month period ending September 30, 2007
$ 41,000,000    For the 12 month period ending December 31, 2007
$ 42,000,000    For the 12 month period ending March 31, 2008
$ 42,000,000    For the 12 month period ending June 30, 2008
$ 42,000,000    For the 12 month period ending September 30, 2008
$ 42,000,000    For the 12 month period ending December 31, 2008
$ 43,000,000    For the 12 month period ending March 31, 2009
$ 43,000,000    For the 12 month period ending June 30, 2009
$ 43,000,000    For the 12 month period ending September 30, 2009
$ 43,000,000    For the 12 month period ending December 31, 2009
$ 43,000,000    For the 12 month period ending each quarter thereafter


(ii) Fixed Charge Coverage Ratio. A Fixed Charge Coverage Ratio, measured on a quarter-end basis, of at least the required ratio set forth in the following table for the applicable period set forth opposite thereto:

 

Applicable Ratio   

Applicable Period

1.0:1.0    For the 12 month period ending June 30, 2006
1.0:1.0    For the 12 month period ending each quarter thereafter

(b) Leverage Ratio. Permit the Leverage Ratio, as at the end of each period set forth below, to exceed the required ratio set forth in the following table for the applicable period:

 

Applicable Ratio

  

Applicable Period

4.50:1.00    For the 12 month period ending June 30, 2006
5.25:1.00    For the 12 month period ending September 30, 2006
5.20:1.00    For the 12 month period ending December 31, 2006
5.10:1.00    For the 12 month period ending March 31, 2007
5.00:1.00    For the 12 month period ending June 30, 2007
4.85:1.00    For the 12 month period ending September 30, 2007
4.65:1.00    For the 12 month period ending December 31, 2007
4.60:1.00    For the 12 month period ending March 31, 2008
4.50:1.00    For the 12 month period ending June 30, 2008
4.35:1.00    For the 12 month period ending September 30, 2008
4.15:1.00    For the 12 month period ending December 31, 2008
4.00:1.00    For the 12 month period ending March 31, 2009
3.85:1.00    For the 12 month period ending June 30, 2009
3.65:1.00    For the 12 month period ending September 30, 2009
3.40:1.00    For the 12 month period ending December 31, 2009
3.25:1.00    For the 12 month period ending each quarter thereafter


(c) Capital Expenditures. Make Capital Expenditures in any fiscal year in excess of the amount set forth in the following table for the applicable period:

 

Applicable Amount   

Applicable Period

$ 2,000,000    Fiscal Year 2006
$ 2,000,000    Fiscal Year 2007
$ 2,000,000    Fiscal Year 2008
$ 2,000,000    Fiscal Year 2009”


3.15 Amendments to Section 14.1(j) . Section 14.1(j) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“(j) change the definition of “Maximum Revolver Amount, “Original Term Loan Amount”, “Additional Term Loan Amount”, or “Second Additional Term Loan Amount”, or”

3.16 Amendments to Section 15.1 . Section 15.1 of the Credit Agreement is hereby amended by inserting the following new sentences at the end of Section 15.1 :

“Each Lender hereby authorizes the Agent to act on its behalf and in its name and to represent it in any way whatsoever in connection with the preparation, execution and delivery of each German Security Document and the perfection and monitoring of each security interest granted under any German Security Document (a “ German Security Interest ”), including but not limited to, any pledge agreement with respect to shares in a German company in notarial form, as well as any other pledge, mortgage, assignment or transfer of title for security purposes. This power of attorney includes the power to enter into and agree to the terms of, and any amendments to, any agreements which are necessary or desirable in this context, the power to make and receive any and all declarations and to perform any and all actions which are necessary or appropriate in this context, whether in private written form ( private Schriftform ) or in notarial form. Each Lender hereby approves ( genehmigt ) all declarations the Agent has made in connection with the preparation, execution and delivery of each German Security Document as well as the perfection and monitoring of each German Security Interest. The Agent shall have the sole power of attorney and shall be released from the restrictions of self-dealing according to Section 181 of the German Civil Code ( BGB ) and shall be authorized to delegate this power of attorney, including the release from the restrictions of Section 181 of the German Civil Code. The Agent shall (i) hold such German Security Interest, if any, which is transferred or assigned by way of security ( Sicherungsübereignung/ Sicherungsabtretung ) or otherwise granted under a non-accessory security right ( nicht akzessorische Sicherheit ) as trustee ( Treuhänder ) for the benefit of the Lenders; and (ii) administer in the name and on behalf of the Lenders such German Security Interest which is pledged ( Verpfändung ) or otherwise transferred under an accessory security right ( akzessorische Sicherheit ) to the Lenders.”

3.17 Amendments to Table of Contents . The table of Exhibits and Schedules is hereby amended by deleting the text “Schedule 3-1 Conditions Precedent” therein and inserting in lieu thereof the following:

 

“Schedule 3.1

   Conditions Precedent (Closing Date)

Schedule 3.2

   Conditions Precedent (Second Additional Term Loan)”.


3.18 Amendments to Schedule C-1 . Schedule C-1 to the Credit Agreement is hereby amended by deleting such Schedule in its entirety and inserting in lieu thereof the Schedule attached thereto as Exhibit C .

3.19 Amendments to Schedule 1.1 . Schedule 1.1 to the Credit Agreement is hereby amended as follows:

(a) The following additional definitions shall be inserted in Schedule 1.1 to the Credit Agreement in proper alphabetical order:

“‘ China Type Acquisition Documents ’ means the China Type Stock Purchase Agreement and the other documents, instruments and agreements executed and delivered in connection with the China Type Acquisition Transaction.”

“‘ China Type Acquisition Transaction ’ means the acquisition of the Stock of the Hong Kong Subsidiary pursuant to the terms of the China Type Stock Purchase Agreement.”

“‘ China Type Shareholders ’ means those certain shareholders of the Hong Kong Subsidiary.”

“‘ China Type Stock Purchase Agreement ’ means that certain Stock Purchase Agreement dated on or about July 31, 2006, by and between the Administrative Borrower and the shareholders of the Hong Kong Subsidiary party thereto.”

“‘ D.B. Zwirn Second Amendment ’ means that certain Second Amendment to, and Consent and Waiver Under, Credit Agreement, dated as of July 28, 2006, by and among the Loan Parties, D.B. Zwirn, for itself and as agent for the lenders party thereto, and the lenders from time to time party thereto.”

“‘ Foreign Subsidiary ’ means, individually and collectively, the German Subsidiaries, the Hong Kong Subsidiary, the Japanese Subsidiary, the UK Subsidiary, or any other Subsidiary of the Parent that is not organized under the laws of the United States or any State thereof.”

“‘ German Holdings ’ means Blitz 06-683 GmbH, a German limited liability company.”

“‘ German Security Documents ’ means the notarial share pledge agreement for all existing and future shares in German Holdings in favor of the Administrative Agent and the Lenders, as pledgees.”

“‘ German Security Interest ’ has the meaning specified therefore in Section 15.1 .

“‘ German Subsidiaries ’ means German Holdings and Linotype.”


“‘ Hong Kong Subsidiary ’ means China Type Design Limited, a limited liability company organized under the laws of Hong Kong.”

“‘ Linotype ’ means Linotype GmbH, a limited liability company organized under the laws of Germany.”

“‘ Linotype Acquisition Documents ’ means the Linotype Purchase Agreement and the other documents, instruments and agreements executed and delivered in connection with the Linotype Acquisition Transaction.”

“‘ Linotype Acquisition Transaction ’ means the acquisition of the US Linotype Assets and the Linotype Stock pursuant to the terms of the Linotype Purchase Agreement.”

“‘ Linotype Purchase Agreement ’ means that certain Share Purchase Agreement, dated August 1, 2006, by and between Parent, German Holdings and the Linotype Seller.”

“‘ Linotype Seller ’ means Heidelberger Druckmaschinen Aktiengesellschaft, Kurfürsten-Anlage 52-60, 69115 Heidelberg.”

“‘ Linotype Stock ’ means the Stock of Linotype, as further described in the Linotype Purchase Agreement.”

“‘ Material Foreign Subsidiary ’ means, as of any date of determination, any Foreign Subsidiary that (i) has generated revenues in excess of $4,000,000 during the immediately preceding 12 consecutive month period, or (ii) has assets having an aggregate book value in excess of $4,000,000.”

“‘ Permitted Merger ’” means the merger of Linotype with and into German Holdings with German Holdings as the surviving entity, provided that (a) no other provision of this Agreement would be violated thereby, (b) Borrowers give Agent at least 30 days’ prior written notice of such merger, (c) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, (d) Agent’s and Lenders’ rights in any Collateral, including, without limitation, the existence, perfection and priority of any Lien thereon, are not adversely affected by such merger, and (e) the capital Stock of the surviving entity of such merger continues to be the subject of the German Security Documents after giving effect to such merger.”

“‘ Second Additional Term Loan ’ has the meaning specified therefor in Section 2.2 .”

“‘ Second Additional Term Loan Amount ’ means an amount equal to $51,117,176.”

“‘ Second Additional Term Loan Commitment ’ means, with respect to each Lender, its Second Additional Term Loan Commitment, and with respect to all Lenders, their Second Additional Term Loan Commitments, in each case as such Dollar amounts


are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 .

“‘ Second Amendment ’ means that certain Second Amendment to, and Consent and Waiver Under, Credit Agreement and Security Agreement, dated as of July 28, 2006, by and among the Loan Parties, the Lenders and the Agent.”

“‘ Second Amendment Effective Date ’ means the date that Section 3 of the Second Amendment becomes effective in accordance with Section 6 thereof.”

“‘ US Linotype Assets ’ means the assets acquired from the Linotype Seller pursuant to the terms of the Linotype Purchase Agreement as set forth on Exhibit F hereto.”

(b) The definition of “ Base Rate Margin ” is hereby amended and restated in its entirety to read as follows:

“‘ Base Rate Margin ’ means 1.75 percentage points.”

(c) The definition of “ Commitment ” is hereby amended and restated in its entirety to read as follows:

“‘ Commitment ’ means, respect to each Lender, its Revolver Commitment, its Term Loan Commitment, or its Total Commitment, as the context requires, and, with respect to all Lenders, their Revolver Commitments, their Term Loan Commitments, or their Total Commitments, as the context requires, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 (as may be updated from time to time by the Agent) or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 .

(d) The definition of “ Facility Limiter Amount ” is hereby amended and restated in its entirety to read as follows:

“‘ Facility Limiter Amount ’ means, as of any date of determination, (a) during the period from and after the Second Amendment Effective Date up to and including December 31, 2006, the product of 5.25 times the TTM EBITDA and (b) thereafter, the product of 4.75 times the TTM EBITDA, in each case, as determined based on the most recent quarterly financial statements delivered to Agent pursuant to Section 5.3 .”

(e) The definition of “ LIBOR Rate Margin ” is hereby amended and restated in its entirety to read as follows:

“‘ LIBOR Rate Margin ’ means 3.25 percentage points.”


(f) The definition of “ Loan Documents ” is hereby amended by deleting the phrase “the Fee Letter, the Guaranty” therein and substituting in lieu thereof the phrase “the Fee Letter, the German Security Documents, the Guaranty”.

(g) The definition of “ Maximum Revolver Amount ” is hereby amended and restated in its entirety to read as follows:

“‘ Maximum Revolver Amount ’ means $10,000,000.”

(h) The definition of “ Permitted Investments ” is hereby amended as follows:

(i) Clause (f) is hereby amended and restated in its entirety to read as follows:

“(f) Investments by the Loan Parties in the Foreign Subsidiaries in an aggregate amount during any fiscal quarter period not in excess of $400,000; provided that (i) no Default or Event of Default shall have occurred and be continuing, both before and immediately after giving effect to any such Investment, and (ii) the sum of WFF Excess Availability plus Qualified Cash equals or exceeds $2,000,000, both before and immediately after giving effect to any such Investment,”

(ii) Existing clause (g) is hereby renumbered as new clause “(h)” and the new clause “(g)” in inserted as follows:

“(g) Investments by Parent in German Holdings and Linotype in the form of an intercompany loan to be made as of the date of the making of the Second Additional Term Loan, in an aggregate principal amount not to exceed $31,000,000, in connection with the Linotype Acquisition Transaction; and”

(i) The definition of “ Term Loan ” is hereby amended and restated in its entirety to read as follows:

“‘ Term Loan ’ means, (a) from and after the Closing Date up to (but not including) the First Amendment Effective Date, the Original Term Loan, (b) from and after the First Amendment Effective Date up to (but not including) the Second Amendment Effective Date, collectively, the Original Term Loan and the Additional Term Loan, and (c) thereafter, collectively, the Original Term Loan, the Additional Term Loan, and the Second Additional Term Loan.”

(j) The definition of “ Term Loan Commitment ” is hereby amended and restated in its entirety to read as follows:

“‘ Term Loan Commitment ’ means, with respect to each Lender, its Term Loan Commitment, and with respect to all Lenders, their Term Loan Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 ; provided , that as of the Second Amendment Effective Date, the term “Term Loan Commitment” shall include the Second Additional Term Loan Commitment.”


3.20 Amendments to Schedules to Credit Agreement . Each of Schedules M-1, 4.5, 4.7(A), 4.7(B), 4.7(C), 4.8(B) and 4.8(C) to the Credit Agreement is hereby amended by deleting such Schedule in its entirety and inserting in lieu thereof the Schedules attached hereto as Exhibit D .

3.21 Schedule 3.2 . Schedule 3.2 is hereby added to the Credit Agreement following Schedule 3.1 in the form attached hereto as Exhibit F .

3.22 Amendments to Schedule 5.3 . Clause (o)  of Schedule 5.3 to the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“(o) copies of any notices of default or non-compliance delivered by or to any Loan Party in connection with the Acquisition Documents, the China Type Acquisition Documents or the Linotype Acquisition Documents (in each case, to the extent not previously delivered pursuant to Section 5.17(c)) , and”

Section 4. Amendments to Security Agreement . Each of Schedules 1 , 2 , and 3 to the Security Agreement are hereby amended and restated as of the date this Second Amendment becomes effective in accordance with Section 6 hereof by deleting them in their entirety and inserting in lieu thereof Schedules 1 , 2 and 3 of the Security Agreement attached hereto as Exhibit E .

Section 5. Representations and Warranties . In order to induce Agent and the Lenders to enter into this Second Amendment, Parent and Borrowers hereby represent and warrant that:

5.01 No Default . At and as of the date of this Second Amendment, and both prior to and after giving effect to this Second Amendment, no Default or Event of Default exists.

5.02 Representations and Warranties True and Correct . At and as of the date of this Second Amendment and at and as of the Effective Date and after giving effect to this Second Amendment, each of the representations and warranties contained in the Credit Agreement and the other Loan Documents is true and correct in all material respects (except to the extent that such representations and warranties relate solely to an earlier date).

5.03 Corporate Power, Etc . Parent and each Borrower (a) has all requisite corporate power and authority to execute and deliver this Second Amendment and to consummate the transactions contemplated hereby and (b) has taken all action, corporate or otherwise, necessary to authorize the execution and delivery of this Second Amendment. Parent and each Borrower is entering into this Second Amendment in accordance with Section 14.1 of the Credit Agreement.

5.04 No Conflict . The execution, delivery and performance by Parent and each Borrower of this Second Amendment will not (a) violate any provision of federal, state, or local law or regulation applicable to Parent or any Borrower, the Governing Documents of Parent or


any Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on Parent or any Borrower, (b) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of Parent or any Borrower, (c) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Parent or any Borrower, other than Permitted Liens, or (d) require any unobtained approval of Parent’s or any Borrower’s interestholders or any unobtained approval or consent of any Person under any material contractual obligation of Parent or any Borrower.

5.05 Binding Effect . This Second Amendment has been duly executed and delivered by Parent and each Borrower and constitutes the legal, valid and binding obligation of Parent and each Borrower, enforceable against Parent and each Borrower in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors’ rights generally, and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 6. Conditions . This Second Amendment shall be effective as of July 28, 2006 (the “ Effective Date ”) upon the fulfillment by Parent and each Borrower, in a manner reasonably satisfactory to the Agent and the Lenders, of all of the following conditions precedent set forth in this Section 6 ( provided , that notwithstanding the foregoing, Section 3 and Section 4 of this Second Amendment shall not become effective until the Linotype Acquisition is consummated in accordance with the Linotype Purchase Agreement in the form of Exhibit B hereto).

6.01 Execution of the Second Amendment . Each of the required parties hereto shall have executed an original counterpart of this Second Amendment and shall have delivered (including by way of facsimile transmission or other electronic transmission) the same to Agent.

6.02 Representations and Warranties . As of the Effective Date, the representations and warranties set forth in Section 5 hereof shall be true and correct.

6.03 Compliance with Terms . Parent and each Borrower shall have complied in all respects with the terms hereof and of any other agreement, document, instrument or other writing to be delivered by Parent or any Borrower in connection herewith.

6.04 D.B. Zwirn Second Amendment . Substantially simultaneously with the execution hereof, Parent, each Borrower, D.B. Zwirn, as agent under the D.B. Zwirn Credit Agreement, and the Lenders (as defined in the D.B. Zwirn Credit Agreement) shall have executed a substantially similar amendment under the D.B. Zwirn Credit Agreement, and furnished evidence thereof to Agent.

6.05 Delivery of Other Documents . Agent shall have received all such instruments, documents, fee letters and agreements as the Agent may reasonably request, in form and substance reasonably satisfactory to the Agent.


Section 7. Miscellaneous .

7.01 Continuing Effect . Except as specifically provided herein, the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are hereby ratified and confirmed in all respects. It is understood and agreed by the parties hereto that this Second Amendment constitutes a Loan Document. Accordingly, it shall be an Event of Default under the Credit Agreement if (a) any representation or warranty made by Parent or any Borrower under or in connection with this Second Amendment shall have been untrue in any material respect when made, or (b) Parent or any Borrower shall fail to perform or observe any term, covenant or agreement contained in this Second Amendment, in each case, after giving effect to any applicable grace period under the Credit Agreement.

7.02 No Waiver; Reservation of Rights . This Second Amendment is limited as specified and the execution, delivery and effectiveness of this Second Amendment shall not operate as a modification, acceptance or waiver of any provision of the Credit Agreement or any other Loan Document, except as specifically set forth herein. Notwithstanding anything contained in this Second Amendment to the contrary, Agent and the Lenders expressly reserve the right to exercise any and all of their rights and remedies under the Credit Agreement, any other Loan Document and applicable law in respect of any Default or Event of Default.

7.03 Governing Law . THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

7.04 Severability . The provisions of this Second Amendment are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Second Amendment in any jurisdiction.

7.05 Counterparts . This Second Amendment may be executed in any number of counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart of this Second Amendment by telefacsimile or other electronic transmission shall be equally effective as delivery of a manually executed counterpart. A complete set of counterparts shall be lodged with each of Administrative Borrower and Agent.

7.06 Headings . Section headings in this Second Amendment are included herein for convenience of reference only and shall not constitute a part of this Second Amendment for any other purpose.

7.07 Binding Effect; Assignment . This Second Amendment shall be binding upon and inure to the benefit of Parent, Borrowers, the Lenders and Agent and their respective successors and assigns; provided , however , that the rights and obligations of Parent and Borrowers under this Second Amendment shall not be assigned or delegated without the prior written consent of Agent.


7.08 Expenses . Borrowers agree to pay Agent upon demand for all reasonable expenses, including reasonable fees of attorneys and paralegals for Agent (who may be employees of Agent), incurred by Agent in connection with the preparation, negotiation and execution of this Second Amendment and any document required to be furnished herewith.

7.09 Integration . This Second Amendment, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

[Signature pages follow]


IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

MONOTYPE IMAGING HOLDINGS CORP.,

as Parent

By:   /s/ Robert M. Givens
  Name:   Robert M. Givens
  Title:   President

MONOTYPE IMAGING, INC.,

as a Borrower

By:   /s/ Robert M. Givens
  Name:   Robert M. Givens
  Title:   President

INTERNATIONAL TYPEFACE CORPORATION,

as a Borrower

By:   /s/ Robert M. Givens
  Name:   Robert M. Givens
  Title:   President

WELLS FARGO FOOTHILL, INC. , as Agent

and a Lender

By:   /s/ David Sanchez
  Name:   David Sanchez
  Title:   Vice President

[SIGNATURE PAGE TO SECOND AMENDMENT]


D.B. ZWIRN SPECIAL OPPORTUNITIES

FUND, L.P. , as a Lender

By:   D.B. Zwirn Partners, LLC,
  its General Partner
By:   Zwirn Holdings, LLC,
  its Managing Member
By:   /s/ Perry A. Gruss
  Name:   Perry A. Gruss
  Title:   Authorized Signatory

BERNARD NATIONAL LOAN INVESTORS,

LTD , as a Lender

By:   Bernard Capital Funding, LLC, its Investment Advisor
By:   /s/ Perry A. Gruss
  Name:   Perry A. Gruss
  Title:   Authorized Signatory

[SIGNATURE PAGE TO SECOND AMENDMENT]


GOLDMAN SACHS SPECIALTY LENDING

HOLDINGS, INC., AS A LENDER

By:   /s/ Stephen W. Hipp
  Name:   Stephen W. Hipp
  Title:   Authorized Signatory

[SIGNATURE PAGE TO SECOND AMENDMENT]


EXHIBIT C

Schedule C-1

Commitments

Schedule C-1 of the Credit Agreement

Commitments

 

Lender

   Revolver
Commitment
   Term Loan
Commitment
   Second
Additional
Term Loan
Commitment
  

Total

Commitment

Wells Fargo Foothill, Inc.

   $10,000,000    $116,297,913.00    $51,117,176    $126,297,913.00

D.B. Zwirn Special Opportunities Fund, L.P.

   N/A    $3,555,313.00    N/A    $3,555,313.00

Bernard National Loan Investors, Ltd.

   N/A    $5,925,522.00    N/A    $5,925,522.00

Goldman Sachs Specialty Lending Holdings, Inc.

   N/A    $14,221,252.00    N/A    $14,221,252.00

All Lenders

   $10,000,000    $140,000,000    $51,117,176    $150,000,000


Exhibit F

Schedule 3.2

The obligation of each Lender to make its Second Additional Term Loan is subject to the fulfillment, to the satisfaction of Agent and each Lender (the making of such extension of credit by any Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent:

(a) the Second Amendment Effective Date shall occur on or before August 1, 2006;

(b) Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force and effect:

 

  (i) a Copyright Security Agreement, duly executed by Parent,

 

  (ii) a disbursement letter executed and delivered by Parent and Borrowers to Agent regarding the extensions of credit to be made on the Second Amendment Effective Date,

 

  (iii) the German Security Documents, duly executed by Parent, German Holdings and Linotype, as applicable,

 

  (iv) a Patent Security Agreement, duly executed by Parent,

 

  (v) a Pledge Addendum (as defined in the Security Agreement, duly executed by Parent and German Holdings,

 

  (vi) a Trademark Security Agreement, duly executed by Parent, and

 

  (vii) an amendment to the WFF and D.B. Zwirn Intercreditor Agreement.

(c) Substantially simultaneously with the extensions of credit by the Lenders to the Borrowers on the Second Amendment Effective Date, Parent and Borrowers shall have consummated all transactions contemplated by the Linotype Acquisition Documents and the D.B. Zwirn Second Amendment and furnished evidence thereof to Agent. Parent and Borrowers shall have delivered a certificate (dated as of the Second Amendment Effective Date) of an Authorized Person attaching true and correct copies of the Linotype Acquisition Documents and the D.B. Zwirn Second Amendment. Such certificate of the Authorized Person shall certify that the attached documents are true and correct copies of the Linotype Acquisition Documents and the D.B. Zwirn Second Amendment and that such documents have been entered into by the Loan Parties in compliance with all applicable laws and all necessary approvals and are in full force and effect;


(d) Agent shall have received a certificate from the Secretary of Administrative Borrower attesting that there exists no (i) litigation, investigation or proceeding (judicial or administrative) pending or, to the best knowledge of Administrative Borrower, threatened, against any Loan Party, or any of its Subsidiaries by any Governmental Authority arising out of the transactions contemplated by or effected in connection with the Linotype Acquisition Documents or the D.B. Zwirn Second Amendment, (ii) injunction, writ or restraining order restraining or prohibiting the transactions contemplated by the Linotype Acquisition Documents or the consummation of the financing arrangements contemplated under the Second Amendment, or (iii) suit, action, investigation, proceeding (judicial or administrative) or ERISA Event pending or, to the best knowledge of Administrative Borrower, threatened against any Loan Party or any of its Subsidiaries which could reasonably be expected to result in a Material Adverse Change;

(e) All director, stockholder, and material governmental and third party consents and approvals necessary in connection with each aspect of the Linotype Acquisition and the transactions contemplated by the Second Amendment shall have been obtained or waived by Agent (without the imposition of any conditions that are not acceptable to Agent) and shall remain in effect; all applicable waiting periods shall have expired without any adverse action being taken by any competent authority; and no law or regulation shall be applicable in the judgment of Agent that restrains, prevents or imposes material adverse conditions upon any aspect of the Linotype Acquisition or transactions contemplated by the Second Amendment;

(f) Agent shall have received a certificate from the Secretary of each Loan Party (i) attesting to the resolutions of such Loan Party’s Board of Directors authorizing its execution, delivery, and performance of the Second Amendment, and the Credit Agreement and the other Loan Documents as amended thereby, (ii) authorizing specific officers of such Loan Party to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of such Loan Party;

(g) Agent shall have received copies of each Loan Party’s Governing Documents, as amended, modified, or supplemented to the Second Amendment Effective Date, certified by the Secretary of such Loan Party;

(h) Agent shall have received a certificate of status with respect to each Loan Party, dated within 10 days of the Second Amendment Effective Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Loan Party, which certificate shall indicate that such Loan Party is in good standing in such jurisdiction;

(i) Agent shall have received opinions of Loan Parties’ U.S. and German counsel, and Agent’s German counsel, in each case, in form and substance reasonably satisfactory to Agent;

(j) Borrowers shall have Required Availability after giving effect to the initial extensions of credit hereunder and under the D.B. Zwirn Credit Agreement as contemplated by the Second Amendment and the payment of all fees and expenses required to be paid by Borrowers on the Second Amendment Effective Date under the Second Amendment, the other Loan Documents, the D.B. Zwirn Loan Documents the Linotype Acquisition Documents and the China Type Acquisition Documents, and Agent shall have received reasonably satisfactory evidence thereof;


(k) Borrowers shall have paid all Lender Group Expenses incurred in connection with the transactions contemplated by the Second Amendment and for which reasonably detailed invoices have been received prior to the Second Amendment Effective Date;

(l) Agent and its counsel shall be reasonably satisfied with the corporate structure of Parent and its Subsidiaries following the Linotype Acquisition and the China Type Acquisition;

(m) Parent, Borrowers and each of their respective Subsidiaries shall have received all material licenses, approvals or evidence of other actions required by any Governmental Authority in connection with the execution and delivery by Parent, Borrowers or their respective Subsidiaries of the Linotype Acquisition Documents or with the consummation of the transactions contemplated thereby that are required by law to be held or received;

(n) Administrative Borrower shall have delivered to Agent updates, as applicable, to (a) Schedules M-1, 4.5, 4.7(A), 2.7(B), 4.7(C), 4.8(B) and 4.8(C) of the Credit Agreement and (b)  Schedules 1 , 2 , and 3 of the Security Agreement, each in form and substance satisfactory to Agent; and

(o) all other documents and legal matters in connection with the transactions contemplated by the Agreement shall have been delivered, executed, or recorded and shall be in form and substance reasonably satisfactory to Agent.

Exhibit 10.48

E XECUTION C OPY

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “ Agreement ”) is made this 5 th day of November, 2004, among Grantors listed on the signature pages hereof and those additional entities that hereafter become parties hereto by executing the form of Supplement attached hereto as Annex 1 (collectively, jointly and severally, “ Grantors ” and each individually “ Grantor ”), and WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, “ Agent ”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the “ Credit Agreement ”) among Monotype Imaging Holdings Corp., a Delaware corporation (“ Parent ”), Imaging Acquisition Corporation, a Delaware corporation (“ Newco ”), Agfa Monotype Corporation, a Delaware corporation (“ Monotype ”), and International Typeface Corporation, a New York corporation (“ Typeface ”), the lenders party thereto as “Lenders” (“ Lenders ”), and Agent, the Lender Group is willing to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group and the Bank Product Providers in connection with the transactions contemplated by the Credit Agreement and the other Loan Documents; and

WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other Loan Documents and to induce the Lender Group to make and extend the financial accommodations to Borrowers as provided for in the Credit Agreement, Grantors have agreed to grant a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance and performance of, among other things, (a) the obligations of Grantors arising from this Agreement, the Credit Agreement, and the other Loan Documents, including, without limitation, the Guaranty, (b) all Bank Product Obligations, and (c) all Obligations of Borrowers (including, without limitation, any interest, fees or expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any Insolvency Proceeding), plus reasonable attorneys fees and expenses if the obligations represented thereunder are collected by law, through an attorney-at-law, or under advice therefrom (clauses (a), (b), and (c) being hereinafter referred to as the “ Secured Obligations ”), by the granting of the security interests contemplated by this Agreement.

NOW, THEREFORE, for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Defined Terms . All capitalized terms used herein (including, without limitation, in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit Agreement. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings:

(a) “ Agent ” has the meaning set forth in the preamble hereto.

 


(b) “ Agreement ” has the meaning set forth in the preamble hereto.

(c) “ Books ” has the meaning set forth in Section 2 .

(d) “ Chattel Paper ” has the meaning set forth in Section 2 .

(e) “ Code ” means the New York Uniform Commercial Code, as in effect from time to time; provided , however , that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.

(f) “ Collateral ” has the meaning set forth in Section 2 .

(g) “ Commercial Tort Claims ” has the meaning set forth in Section 2 .

(h) “ Copyrights ” means all of the following now owned or hereafter adopted or acquired by a Grantor: copyrights and copyright registrations, including, without limitation, the copyright registrations and recordings thereof and all applications in connection therewith listed on Schedule 1 attached hereto and made a part hereof, and (i) all restorations, reversions, renewals or extensions thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all of each Grantor’s rights corresponding thereto throughout the world.

(i) “ Copyright Security Agreement ” means each Copyright Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Providers, in substantially the form of Exhibit A attached hereto.

(j) “ Credit Agreement ” has the meaning set forth in the recitals hereto.

(k) “ General Intangibles ” has the meaning set forth in Section 2 .

(l) “ Grantor ” and “ Grantors ” have the meanings set forth in the preamble hereto.

(m) “ Grantor Trade Secrets ” has the meaning set forth in Section 5(j) .

(n) “ Intellectual Property ” means any and all Intellectual Property Licenses, Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks, trade secrets and customer lists.

(o) “ Intellectual Property Licenses ” means rights under any written agreement to which a Grantor is a party, granting any right or interest in any patent, trademark, copyright or other intellectual property, including software license agreements with any other party, whether the applicable Grantor is a licensee or licensor under any such license agreement, including, without limitation, the license agreements listed on Schedule 2 attached hereto and made a part hereof, and the right to use the foregoing in connection with the enforcement of the Lender Group’s rights under the Loan Documents, including, without limitation, the right to prepare for sale and sell any and all Inventory and Equipment now or hereafter owned by any Grantor and now or hereafter covered by such licenses.

(p) “ Investment Related Property ” means (i) investment property (as that term is defined in the Code), and (ii) all of the following regardless of whether classified as investment property under the Code: all Pledged Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

 

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(q) “ Lenders ” has the meaning set forth in the recitals hereto.

(r) “ Monotype ” has the meaning set forth in the recitals hereto.

(s) “ Negotiable Collateral ” has the meaning set forth in Section 2 .

(t) “ Newco ” has the meaning set forth in the recitals hereto.

(u) “ Parent ” has the meaning set forth in the recitals hereto.

(v) “ Patents ” means all of the following now owned or hereafter adopted or acquired by a Grantor: patents and patent applications, including, without limitation, the patents and patent applications listed on Schedule 3 attached hereto and made a part hereof, and (i) all reissues, continuations, continuations-in-part, substitutes, extensions or renewals thereof, and improvements thereon, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all of each Grantor’s rights corresponding thereto throughout the world.

(w) “ Patent Security Agreement ” means each Patent Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Providers, in substantially the form of Exhibit B attached hereto.

(x) “ Pledged Companies ” means each Person listed on Schedule 4 hereto as a “Pledged Company,” together with each other Person, all or a portion of whose Stock is acquired or otherwise owned by a Grantor after the Closing Date.

(y) “ Pledged Interests ” means all of each Grantor’s right, title and interest in and to all of the Stock now or hereafter owned by such Grantor, regardless of class or designation, including, without limitation, in each of the Pledged Companies, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including, without limitation, any certificates representing the Stock, the right to request after the occurrence and during the continuation of an Event of Default that such Stock be registered in the name of Agent or any of its nominees, the right to receive any certificates representing any of the Stock and the right to require that such certificates be delivered to Agent together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by such Grantor, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.

(z) “ Pledged Interests Addendum ” means a Pledged Interests Addendum substantially in the form of Exhibit C to this Agreement.

(aa) “ Pledged Notes ” has the meaning set forth in Section 5(g) .

(bb) “ Pledged Operating Agreements ” means all of each Grantor’s rights, powers, and remedies under the limited liability company operating agreements of the Pledged Companies that are limited liability companies, if any.

(cc) “ Pledged Partnership Agreements ” means all of each Grantor’s rights, powers, and remedies under the partnership agreements of each of the Pledged Companies that are partnerships, if any.

 

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(dd) “ Proceeds ” has the meaning set forth in Section 2 .

(ee) “ Records ” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

(ff) “ Required Library ” means, as of any date of determination, the Copyrights of the Loan Parties that are based on or derived from those computer software programs or other technology of the Loan Parties that at the time account for not less than (i) 65% of the total amount of the net product and subscription revenues of the Loan Parties and (ii) 90% of the total amount of revenues of the “printer imaging business” of the Loan Parties, in each case for the immediately preceding fiscal quarter.

(gg) “ Secured Obligations ” has the meaning set forth in the recitals hereto.

(hh) “ Security Interest ” has the meaning set forth in Section 2 .

(ii) “ Supporting Obligations ” has the meaning set forth in Section 2 .

(jj) “ Trademarks ” means all of the following now owned or hereafter adopted or acquired by a Grantor: trademarks, trade names, registered trademarks, trademark applications, service marks, registered service marks and service mark applications, including, without limitation, the trade names, registered trademarks, trademark applications, registered service marks and service mark applications listed on Schedule 5 attached hereto and made a part hereof, and (i) all extensions, modifications and renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of each Grantor’s business symbolized by the foregoing and connected therewith, and (v) all of each Grantor’s rights corresponding thereto throughout the world.

(kk) “ Trademark Security Agreement ” means each Trademark Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Providers, in substantially the form of Exhibit D attached hereto.

(ll) “ Typeface ” has the meaning set forth in the recitals hereto.

(mm) “ URL ” means “uniform resource locator,” an internet web address.

2. Grant of Security . Each Grantor hereby unconditionally grants, assigns and pledges to Agent (and its agents and designees), for the benefit of the Lender Group and the Bank Product Providers, a continuing security interest in all personal property of such Grantor whether now owned or hereafter acquired or arising and wherever located (hereinafter referred to as the “ Security Interest ”), including, without limitation, such Grantor’s right, title, and interest in and to the following, whether now owned or hereafter acquired or arising and wherever located (the “ Collateral ”):

(a) all of such Grantor’s Accounts;

(b) all of such Grantor’s books and records (including all of its Records indicating, summarizing, or evidencing its assets (including the Collateral) or liabilities, all of its Records relating to its business operations or financial condition, and all of its goods or General Intangibles related to such information) (“ Books ”);

(c) all of such Grantor’s chattel paper (as that term is defined in the Code) and, in any event, including, without limitation, tangible chattel paper and electronic chattel paper (“ Chattel Paper ”);

 

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(d) all of such Grantor’s interest with respect to any Deposit Account;

(e) all of such Grantor’s Equipment and fixtures;

(f) all of such Grantor’s general intangibles (as that term is defined in the Code) and, in any event, including, without limitation, payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill (including the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights, URLs and domain names, industrial designs, other industrial or Intellectual Property or rights therein or applications therefor, whether under license or otherwise, rights in programs, programming materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, including Intellectual Property Licenses, infringement claims, rights in computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, uncertificated securities, and any other personal property other than Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and oil, gas, or other minerals before extraction (“ General Intangibles ”);

(g) all of such Grantor’s Inventory;

(h) all of such Grantor’s Investment Related Property;

(i) all of such Grantor’s letters of credit, letter of credit rights, instruments, promissory notes, drafts, and documents (as such terms may be defined in the Code) (“ Negotiable Collateral ”);

(j) all of such Grantor’s rights in respect of supporting obligations (as such term is defined in the Code), including letters of credit and guaranties issued in support of Accounts, Chattel Paper, documents, General Intangibles, instruments, or Investment Related Property (“ Supporting Obligations ”);

(k) all of such Grantor’s interest with respect to any commercial tort claims (as that term is defined in the Code), including, without limitation those commercial tort claims listed on Schedule 6 attached hereto (“ Commercial Tort Claims ”);

(l) all of such Grantor’s money, Cash Equivalents, or other assets of such Grantor that now or hereafter come into the possession, custody, or control of Agent (or its agent or designee) or any other member of the Lender Group;

(m) all of the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance or commercial tort claims covering or relating to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations, Commercial Tort Claims, money, or other tangible or intangible property resulting from the sale, lease, license, exchange, collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation with respect to any of the property of Grantors, any rebates or refunds, whether for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent not otherwise included, any indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect to any of the foregoing Collateral (the “ Proceeds ”). Without limiting the generality of the foregoing, the term “Proceeds” includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to any Grantor or Agent from time to time with respect to any of the Investment Related Property.

 

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Notwithstanding the foregoing, “Collateral” shall not include (a) any rights or interests in any lease, license, contract, or agreement, as such, if under the terms of such lease, license, contract, or agreement, or applicable law with respect thereto, the valid grant of a security interest or lien therein to Agent is prohibited and such prohibition has not been or is not waived or the consent of the other party to such lease, license, contract, or agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided , that the foregoing exclusion shall in no way be (i) construed to apply if any such prohibition would be rendered ineffective under the Code or other applicable law (including the Bankruptcy Code) or principles of equity, (ii) construed so as to limit, impair or otherwise affect Agent’s unconditional continuing security interests in and liens upon any rights or interests of Grantors in or to the proceeds thereof, including monies due or to become due under any such lease, license, contract, or agreement (including any Accounts), or (iii) construed to apply at such time as the condition causing such prohibition shall be remedied and, to the extent severable, “Collateral” shall include any portion of such lease, license, contract, or agreement that does not result in such prohibition; and provided , further , that each Grantor shall use commercially reasonable efforts to obtain consents with respect to leases, licenses, contracts and agreements that are material to such Grantor’s business (other than the Microsoft Agreements) pursuant to commercially reasonable terms for the grant of a security interest or lien over such leases, licenses, contracts, or agreements; (b) any of the outstanding capital Stock of Agfa Monotype Ltd. in excess of 65% of the voting power of all classes of capital stock of Agfa Monotype Ltd. entitled to vote; provided , that immediately upon the amendment of the IRC to allow the pledge of a greater percentage of the voting power of capital Stock of Agfa Monotype Ltd. without adverse tax consequences, “Collateral” shall include such greater percentage of capital Stock of Agfa Monotype Ltd. from that time forward; and (c) subject to Section 5.16 of the Credit Agreement, any of the outstanding capital Stock of any other Controlled Foreign Corporation in excess of 65% of the voting power of all classes of capital stock of such Controlled Foreign Corporation entitled to vote; provided , that immediately upon the amendment of the IRC to allow the pledge of a greater percentage of the voting power of capital Stock of such Controlled Foreign Corporation without adverse tax consequences, “Collateral” shall include such greater percentage of capital Stock of such Controlled Foreign Corporation from that time forward.

3. Security for Obligations . This Agreement and the Security Interest created hereby secures the payment and performance of all the Secured Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product Providers or any of them, but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Grantor.

4. Grantors Remain Liable . Anything herein to the contrary notwithstanding, (a) each of the Grantors shall remain liable under the contracts and agreements included in the Collateral, including, without limitation, the Pledged Operating Agreements and the Pledged Partnership Agreements, to perform all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Agent or any other member of the Lender Group of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under such contracts and agreements included in the Collateral, and (c) none of the members of the Lender Group shall have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall any of the members of the Lender Group be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement, the Credit Agreement, or any other Loan Document, Grantors shall have the right to possession and enjoyment of the Collateral for the purpose of conducting the ordinary course of their respective businesses, subject to and upon the terms hereof and of the Credit Agreement and the other Loan Documents. Without limiting the generality of the foregoing, it is the intention of the parties hereto that record and beneficial ownership of the Pledged Interests, including, without limitation, all voting, consensual, and dividend rights, shall remain with the applicable Grantor until the occurrence of an Event of Default and until Agent shall notify the applicable Grantor of Agent’s exercise of voting, consensual, and/or dividend rights with respect to the Pledged Interests pursuant to Section 15 hereof.

 

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5. Representations and Warranties . Each Grantor hereby represents and warrants as follows:

(a) The exact legal name of each of the Grantors is set forth on the signature pages of this Agreement or a written notice provided to Agent pursuant to Section 6.5 of the Credit Agreement.

(b) Schedule 7 attached hereto sets forth all Real Property owned by Grantors as of the Closing Date.

(c) Such Grantor is the sole legal and beneficial owner, or a licensee, of all Intellectual Property Rights owned or purported to be owned by such Grantor or licensed to such Grantor that are material to the conduct of its business as currently conducted. As of the Closing Date, (i) such Grantor has no ownership interest in, or title to, any Copyrights, Patents or Trademarks that are registered or the subject of pending applications for registrations, except as set forth on Schedules 1(a), 3(a) and 5(a) , respectively, attached hereto; (ii) such Grantor has no ownership interest in, or title to, any Copyrights, Patents or Trademarks that are material to such Grantor’s business as currently conducted and that are not registered or the subject of pending applications for registrations, except as set forth in Schedules 1(b), 3(b) and 5(b) , respectively, attached hereto; and (iii) such Grantor is not a party to any Intellectual Property Licenses that are material to such Grantor’s business, except as set forth on Schedule 2 , attached hereto. This Agreement is effective to create a valid and continuing Lien on such Grantor’s Copyrights, Patents and Trademarks, and all of its rights and interests in and to any Intellectual Property Licenses. Upon the filing of the Copyright Security Agreement with the United States Copyright Office and filing of the Patent Security Agreement and the Trademark Security Agreement with the United States Patent and Trademark Office, and the filing of appropriate financing statements in the jurisdictions listed on Schedule 8 hereto, all action necessary to perfect the Security Interest in and to such Grantor’s Patents, Trademarks, and Copyrights, will have been taken and such perfected Security Interests will be enforceable as such as against any and all creditors of and purchasers from any Grantor.

(d) This Agreement creates a valid security interest in the Collateral of such Grantors, to the extent a security interest therein can be created under the Code, securing the payment and performance of the Secured Obligations. Except to the extent a security interest in the Collateral cannot be perfected by the filing of a financing statement under the Code, all filings and other actions necessary to perfect such security interest have been duly taken or will have been taken upon the filing of financing statements listing such Grantor, as a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on Schedule 8 attached hereto. Upon the making of such filings, Agent shall have a first priority perfected security interest in the Collateral of such Grantor to the extent such security interest can be perfected by the filing of a financing statement under the Code.

(e) Except for the Security Interest created hereby, (i) such Grantor is and will at all times be the sole holder of record and the legal and beneficial owner, free and clear of all Liens other than Permitted Liens, of the Pledged Interests indicated on Schedule 4 as being owned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the Closing Date; (ii) all of the Pledged Interests are duly authorized, validly issued, fully paid and nonassessable and the Pledged Interests constitute or will constitute the percentage of the issued and outstanding Equity Interests of the Pledged Companies of such Grantor identified on Schedule 4 hereto as supplemented or modified by any Pledged Interests Addendum or any Supplement to this Agreement; (iii) such Grantor has the right and requisite authority to pledge the Investment Related Property pledged by such Grantor to Agent as provided herein; (iv) all actions necessary to perfect, establish the first priority of, or otherwise protect, Agent’s Liens in the Investment Related Collateral, and the proceeds thereof, have been duly taken, (A) upon the execution and delivery of this Agreement, (B) upon the taking of possession by Agent (or its agent or designee) of any certificates constituting the Pledged Interests, to the extent such Pledged Interests are represented by certificates, together with undated powers endorsed in blank by such Grantor, (C) upon the filing of financing statements in the applicable jurisdiction set forth on Schedule 8 attached hereto for such Grantor with respect to the Pledged Interests of such Grantor that are not represented by certificates, and (D) with respect to any Securities Accounts, upon the delivery of

 

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Control Agreements with respect thereto; and (v) such Grantor has delivered to and deposited with Agent (or, with respect to any Pledged Interests created after the Closing Date, will deliver and deposit in accordance with Sections 6(a) and 8 hereof) all certificates representing the Pledged Interests owned by such Grantor to the extent such Pledged Interests are represented by certificates, and undated powers endorsed in blank with respect to such certificates.

(f) No consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required (i) for the grant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by Agent of the voting or other rights provided for in this Agreement with respect to the Investment Related Property or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally. No Intellectual Property License to which such Grantor is a party requires any consent for such Grantor to grant the Security Interest granted hereunder in such Grantor’s right, title or interest in or to any Copyrights, Patents, Trademarks or Intellectual Property Licenses.

(g) There is no default, breach, violation or event of acceleration existing under any promissory note (as defined in the Code) constituting Collateral and pledged hereunder (the “ Pledged Notes ”) and no event has occurred or circumstance exists which, with the passage of time or the giving of notice, or both, would constitute a default, breach, violation or event of acceleration under the Pledged Notes. Such Grantor, if it is an obligee under a Pledged Note, has not waived any default, breach, violation or event of acceleration under such Pledged Notes. The proceeds of the loans evidenced by the Pledged Notes have been fully disbursed and such Grantor has no obligation to make any future advances or other disbursements under or in respect of the Pledged Notes.

(h) Such Grantor has made in good faith and in accordance with the procedures and regulations of the United States Copyright Office and the United States Patent and Trademark Office, as applicable, all payments, filings and recordations necessary to protect and maintain its interest in the Intellectual Property Rights identified on Schedules 1(a), 3(a) and 5(a) in the United States in a manner sufficient to claim in the public record such Grantor’s ownership thereof, including (i) making all necessary registration, maintenance, and renewal fee payments; and (ii) filing all necessary documents, including all applications for registration of such Intellectual Property Rights.

(i) No past or present employee or contractor of Grantor owns any interest or other right in or to any Intellectual Property Rights that are material to the conduct of any such Grantor’s business.

(j) Such Grantor has taken actions reasonably necessary to protect the confidentiality of the Intellectual Property Rights that are material to the conduct of its business, the value of which to such Grantor is or would have been, at least in part, contingent upon maintenance of the confidentiality thereof (collectively, “ Grantor Trade Secrets ”), including (i) protecting the secrecy and confidentiality of its Grantor Trade Secrets by having and enforcing a policy requiring all current employees and consultants, and any licensees, vendors and contractors that have access to such Grantor Trade Secrets, to execute appropriate confidentiality agreements, and, to such Grantor’s knowledge, there has not been any breach by any such party of such confidentiality agreements; and (ii) protecting the secrecy and confidentiality of the source code of all computer software programs and applications of which it is the owner or licensee by having and enforcing a policy requiring any licensees (or sublicensees) of such source code to enter into license agreements with appropriate use and non-disclosure restrictions.

(k) No claim has been made in writing and is continuing or, to the best of such Grantor’s knowledge, threatened in any direct written communication that the use by such Grantor of any Intellectual Property Rights that are material to the conduct of its business does or may violate the Intellectual Property

 

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Rights of any Person. To the best of such Grantor’s knowledge, there is currently no infringement or unauthorized use of any item of Intellectual Property Rights contained on Schedules 1, 3 or 5 .

6. Covenants . Each Grantor, jointly and severally, covenants and agrees with Agent and the Lender Group that from and after the date of this Agreement and until the date of termination of this Agreement in accordance with Section 22 hereof:

(a) Possession or Control of Collateral . In the event that any Collateral, including Proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, Chattel Paper, or Deposit Accounts, and if and to the extent that perfection or priority of Agent’s Security Interest is dependent on or enhanced by possession or control, such Grantor, immediately upon the reasonable request of Agent and in accordance with Section 8 hereof, shall execute such other documents and instruments as shall be reasonably requested by Agent or endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property, or Chattel Paper, together with such undated powers endorsed in blank as shall be reasonably requested by Agent (or its agent or designee), or grant control of such Deposit Account, as applicable, to Agent (or its agent or designee). Such Grantor hereby acknowledges and agrees that any such agent or designee of Agent shall be deemed to be a “secured party” with respect to such Collateral for all purposes.

(b) Chattel Paper .

(i) Such Grantor shall take all steps reasonably necessary to grant Agent control of all electronic Chattel Paper in accordance with the Code and all “transferable records” as that term is defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in effect in any relevant jurisdiction;

(ii) If such Grantor retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly upon the request of Agent, such Chattel Paper and instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the Security Interest of Wells Fargo Foothill, Inc., as Agent for the benefit of the Lender Group and the Bank Product Providers, pursuant to the Security Agreement dated as of November 5, 2004”.

(c) Control Agreements .

(i) Except to the extent otherwise permitted by the Credit Agreement, such Grantor shall obtain an authenticated Control Agreement from each bank holding a Deposit Account for such Grantor.

(ii) Except to the extent otherwise permitted by the Credit Agreement, such Grantor shall obtain authenticated Control Agreements from each issuer of uncertificated securities, securities intermediary, or commodities intermediary issuing or holding any financial assets or commodities to or for any Grantor.

(d) Letter of Credit Rights . If such Grantor is or becomes the beneficiary of a letter of credit, such Grantor shall promptly (and in any event within 5 Business Days after becoming a beneficiary) notify Agent thereof and, upon the request by Agent, enter into a tri-party agreement with Agent and the issuer and/or confirmation bank with respect to letter-of-credit rights (as that term is defined in the Code) assigning such letter-of-credit rights to Agent and directing all payments thereunder to Agent’s Account, all in form and substance reasonably satisfactory to Agent.

(e) Commercial Tort Claims . Such Grantor shall promptly (and in any event within 5 Business Days of receipt thereof) notify Agent in writing upon incurring or otherwise obtaining a Commercial

 

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Tort Claim after the date hereof against any third party and, upon request of Agent, promptly amend Schedule 6 to this Agreement, authorize the filing of additional financing statements or amendments to existing financing statements and do such other acts or things deemed necessary by Agent to give Agent a first priority, perfected security interest in any such Commercial Tort Claim.

(f) Government Contracts . If any Account or Chattel Paper arises out of a contract or contracts with the United States of America or any department, agency, or instrumentality thereof, such Grantor shall promptly (and in any event within 10 Business Days of the creation thereof) notify Agent thereof in writing and execute any instruments or take any steps reasonably required by Agent in order that all moneys due or to become due under such contract or contracts shall be assigned to Agent, for the benefit of the Lender Group and the Bank Product Providers, and notice thereof given under the Assignment of Claims Act or other applicable law.

(g) Intellectual Property .

(i) Upon request of Agent, in order to facilitate filings with the United States Patent and Trademark Office and the United States Copyright Office, such Grantor shall execute and deliver to Agent one or more Copyright Security Agreements, Trademark Security Agreements, and/or Patent Security Agreements to evidence Agent’s Lien on such Grantor’s Patents, Trademarks, and/or Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby.

(ii) Such Grantor shall have the duty, to the extent material to the operation of such Grantor’s business, (A) to promptly sue for infringement, misappropriation, or dilution of any Intellectual Property and to recover any and all damages for such infringement, misappropriation, or dilution, (B) to prosecute diligently any trademark application or service mark application that is part of the Trademarks pending as of the date hereof or hereafter until the termination of this Agreement, (C) to prosecute diligently any patent application that is part of the Patents pending as of the date hereof or hereafter until the termination of this Agreement, and (D) to take all reasonable and necessary action to preserve and maintain all of such Grantor’s Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights therein, including the filing of applications for renewal, affidavits of use, and affidavits of incontestability. Any expenses incurred in connection with the foregoing shall be borne by the appropriate Grantor. Such Grantor further agrees not to abandon any Trademark, Patent, Copyright, or Intellectual Property License that is material to the operation of such Grantor’s business without the prior written consent of Agent. Notwithstanding any of the foregoing to the contrary, none of the obligations and/or restrictions set forth in this Section 6(g)(ii) shall apply to any Patent, Trademark, Copyright or Intellectual Property License that a Grantor determines, in its reasonable business judgment, is no longer necessary or material to the conduct of its business or operations.

(iii) Such Grantor acknowledges and agrees that the Lender Group shall have no duties with respect to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without limiting the generality of this Section 6(g) , such Grantor acknowledges and agrees that no member of the Lender Group shall be under any obligation to take any steps necessary to preserve rights in the Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person, but Agent may do so at its option from and after the occurrence of an Event of Default, and all expenses incurred in connection therewith (including, without limitation, reasonable fees and expenses of attorneys and other professionals) shall be for the sole account of Borrowers and shall be chargeable to the Loan Account.

(iv) With respect to the Intellectual Property Rights that a Grantor determines, in its reasonable business judgment, are material to the conduct of Grantor’s business, such Grantor agrees to take all necessary steps, including making all necessary payments and filings in connection with registration, maintenance, and renewal of Copyrights (at least with respect to the Required Library), Trademarks, and Patents in the United States Copyright Office, the United States Patent and Trademark Office, any other appropriate government agencies in foreign jurisdictions or in any court, to maintain each such Intellectual Property Right. Such Grantor hereby agrees to take corresponding steps with respect to each new or acquired

 

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Intellectual Property Right to which it or any of its Subsidiaries is now or later becomes entitled that such Grantor determines, in its reasonable judgment, are material to the conduct of their businesses. Any expenses incurred in connection with such activities shall be borne solely by such Grantor.

(v) On the date of the delivery of a Compliance Certificate in respect of a month pursuant to Section 5.3 of the Credit Agreement, such Grantor shall deliver to Agent documentation reasonably satisfactory to Agent identifying the Copyrights, whether created or acquired before or after the Closing Date, comprising the Required Library (including any supporting documentation relating to the determination of the composition of the Required Library), the percentage of the aggregate amount of revenues generated for the preceding month by and/or arising from each such Copyright and the registration number issued for each such Copyright by the U.S. Copyright Office. No more than 10 days following each such date of delivery, such Grantor shall (A) file applications and take any and all other actions necessary to register or record a transfer of ownership, as applicable, to such Grantor on an expedited basis (if expedited processing is available in accordance with the applicable regulations and procedures of the United States Copyright Office and any similar office of any other jurisdiction in which Copyrights are used) each such Copyright comprising the Required Library which on the applicable date of delivery is not already the subject of a valid registration or an application therefor diligently prosecuted with the United States Copyright Office (or any similar office of any other jurisdiction in which Copyrights are used) identifying such Grantor as the sole claimant thereof in a manner sufficient to claim in the public record such Grantor’s ownership thereof, and (B) cause to be prepared, executed, and delivered to Agent, with sufficient time to permit Agent to record no later than 10 days following the date of registration of or recordation of transfer of ownership, as applicable, to such Grantor of such Copyrights, (I) a Copyright Security Agreement or supplemental schedules to the Copyright Security Agreement reflecting the security interest of Agent in such Copyrights, which supplemental schedules shall be in form and content suitable for recordation with the United States Copyright Office (or any similar office of any other jurisdiction in which Copyrights are used) so as to give constructive notice, when so recorded, of the transfer by such Grantor to Agent of a security interest in such Copyrights and (II) any other documentation as Agent reasonably deems necessary in order to perfect and continue perfected Agent’s Liens on such Copyrights following such recordation.

(vi) In addition, on the date of delivery of a Compliance Certificate in respect of a month pursuant to Section 5.3 of the Credit Agreement, such Grantor shall provide Agent with a written report of all new Copyrights (to the extent not already covered in Section 6(g)(v) above), Patents and Trademarks that are registered or the subject of pending applications for registrations, which were acquired, generated or filed by such Grantor during the prior period. In the case of such registrations or applications therefor, which were acquired by such Grantor, such Grantor shall file the necessary documents with the appropriate filing office identifying such Grantor as the sole claimant thereto in a manner sufficient to claim in the public record such Grantor’s ownership thereof. In each of the foregoing cases, such Grantor shall cause to be prepared, executed, and delivered to Agent supplemental schedules to the applicable Loan Documents to identify such Copyright, Patent and Trademark registrations and applications therefor as being subject to the security interests created thereunder.

(vii) Upon receipt from the United States Copyright Office of notice of registration of any Copyright(s), such Grantor shall promptly (but in no event later than 10 days following such receipt) notify Agent of such registration by delivering, or causing to be delivered to Agent, via overnight courier, electronic mail or telefacsimile at the addresses designated in the Credit Agreement, documentation sufficient for Agent to perfect Agent’s Liens on such Copyright(s).

(viii) Subject to Section 3.6(d) of the Credit Agreement, such Grantor shall deposit with the escrow agent designated under the Source Code Escrow Agreement all materials required under the Source Code Escrow Agreement, including the source code for each version or versions of each item of computer software programs or other technology of such Grantor constituting the Required Library and any updates thereto, on a quarterly basis pursuant to the Source Code Escrow Agreement and in accordance with all other terms and conditions thereof.

 

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(ix) Such Grantor shall ensure that each of the representations and warranties contained in Sections 5(i) and 5(j) hereof shall remain true and correct at all times.

(h) Investment Related Property .

(i) If such Grantor shall receive or become entitled to receive any Pledged Interests after the Closing Date, it shall promptly (and in any event within 5 Business Days of receipt thereof) deliver to Agent a duly executed Pledged Interests Addendum identifying such Pledged Interests.

(ii) All sums of money and property paid or distributed in respect of the Investment Related Property which are received by such Grantor shall be held by such Grantor in trust for the benefit of Agent segregated from such Grantor’s other property, and such Grantor shall deliver such property forthwith to Agent in the exact form received.

(iii) Such Grantor shall promptly deliver to Agent a copy of each material notice or other material communication received by it in respect of any Pledged Interests.

(iv) Such Grantor shall not make or consent to any amendment or other modification or waiver with respect to any Pledged Interests, Pledged Operating Agreement, or Pledged Partnership Agreement, or enter into any agreement or permit to exist any restriction with respect to any Pledged Interests unless such Grantor is permitted to do so pursuant to the Loan Documents.

(v) Such Grantor agrees that it will cooperate with Agent in obtaining all necessary approvals and making all necessary filings under federal, state, local, or foreign law in connection with the Security Interest on the Investment Related Property or any sale or transfer thereof.

(vi) As to all limited liability company or partnership interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, such Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to any such agreement (A) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment company securities, and (C) are not and will not be held by such Pledgor in a securities account. In addition, none of the Pledged Operating Agreements, the Pledged Partnership Agreements, or any other agreements governing any of the Pledged Interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement provide or shall provide that such Pledged Interests are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction.

(i) Real Property; Fixtures. Such Grantor covenants and agrees that upon the acquisition of any fee interest in Real Property it will promptly (and in any event within 5 Business Days of acquisition) notify Agent of the acquisition of such Real Property and will grant to Agent, for the benefit of the Lender Group and the Bank Product Providers, a first priority Mortgage on each fee interest in Real Property now or hereafter owned by such Grantor and shall deliver such other documentation and opinions, in form and substance satisfactory to Agent, in connection with the grant of such Mortgage as Agent shall request in its Permitted Discretion, including, without limitation, title insurance policies, financing statements, fixture filings and environmental audits, and such Grantor shall pay all recording costs, intangible taxes and other fees and costs (including reasonable attorneys fees and expenses) incurred in connection therewith. Such Grantor acknowledges and agrees that, to the extent permitted by applicable law, all of its Collateral shall remain personal property regardless of the manner of its attachment or affixation to Real Property.

(j) Transfers and Other Liens . Such Grantor shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, except as expressly permitted by the Credit Agreement, or (ii) create or permit to exist any Lien upon or with respect to any of its Collateral, except for Permitted Liens. The inclusion of Proceeds in the Collateral shall not be

 

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deemed to constitute Agent’s consent to any sale or other disposition of any of the Collateral except as expressly permitted in this Agreement or the other Loan Documents.

(k) Other Actions as to Any and All Collateral . Such Grantor shall promptly (and in any event within 5 Business Days of acquiring or obtaining such Collateral) notify Agent in writing upon (i) acquiring or otherwise obtaining any Collateral (other than Intellectual Property Rights, which are governed by Sections 6(g)(v) and 6(g)(vi) ) after the date hereof consisting of Investment Related Property, Chattel Paper (electronic, tangible or otherwise), documents (as defined in the Code), promissory notes (as defined in the Code), or instruments (as defined in the Code) or (ii) any amount payable under or in connection with any of the Collateral being or becoming evidenced after the date hereof by any Chattel Paper, documents, promissory notes or instruments, and, upon the request of Agent and in accordance with Section 8 hereof, promptly execute such other documents and instruments, or if applicable, deliver such Chattel Paper, documents, promissory notes, instruments, or certificates evidencing any Investment Related Property in accordance with Section 6 hereof and do such other acts or things deemed necessary or desirable by Agent to protect Agent’s Security Interest therein.

(l) Pledged Notes .

(i) Such Grantor will not waive or release any obligation of any party to the Pledged Notes without the prior written consent of Agent.

(ii) Such Grantor will not take or omit to take any action or suffer or permit any action to be omitted or taken, the taking or omission of which would result in any right of offset against sums payable under the Pledged Notes.

(iii) Such Grantor shall give Agent copies of all material notices (including notices of default) given or received with respect to the Pledged Notes promptly after giving or receiving any such notice.

(iv) Without Agent’s prior written consent, such Grantor shall not, and shall not agree to, assign or surrender its rights and interests under the Pledged Notes nor terminate, cancel, modify, change, supplement or amend the Pledged Notes.

7. Relation to Other Security Documents . The provisions of this Agreement shall be read and construed with the other Loan Documents referred to below in the manner so indicated.

(a) Credit Agreement . In the event of any conflict between any provision in this Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall control.

(b) Patent, Trademark, Copyright Security Agreements . The provisions of the Copyright Security Agreements, Trademark Security Agreements, and Patent Security Agreements are supplemental to the provisions of this Agreement, and nothing contained in the Copyright Security Agreements, Trademark Security Agreements, or the Patent Security Agreements shall limit any of the rights or remedies of Agent hereunder.

 

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8. Further Assurances .

(a) Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that Agent may reasonably request, in order to perfect and protect any Security Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.

(b) Each Grantor hereby authorizes the filing of such financing or continuation statements, or amendments thereto, and such Grantor will execute and deliver to Agent such other instruments or notices, as may be necessary or as Agent may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby.

(c) Each Grantor hereby authorizes Agent to file, transmit, or communicate, as applicable, financing statements and amendments describing the Collateral as “all personal property of debtor” or “all assets of debtor” or words of similar effect, in order to perfect Agent’s security interest in the Collateral without such Grantor’s signature. Each Grantor also hereby ratifies its authorization for Agent to have filed in any jurisdiction any financing statements filed prior to the date hereof.

(d) Each Grantor acknowledges that, prior to the termination of this Agreement, it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in connection with this Agreement without the prior written consent of Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the Code.

9. Agent’s Right to Perform Contracts . Upon the occurrence of an Event of Default, Agent (or its designee) may proceed to perform any and all of the obligations of any Grantor contained in any contract, lease, or other agreement and exercise any and all rights of any Grantor therein contained as fully as such Grantor itself could.

10. Agent Appointed Attorney-in-Fact . Each Grantor hereby irrevocably appoints Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to take any action and to execute any instrument which Agent may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Accounts or any other Collateral of such Grantor;

(b) to receive and open all mail addressed to such Grantor and to notify postal authorities to change the address for the delivery of mail to such Grantor to that of Agent;

(c) to receive, indorse, and collect any drafts or other instruments, documents, Negotiable Collateral or Chattel Paper;

(d) to file any claims or take any action or institute any proceedings which Agent may deem necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to enforce the rights of Agent with respect to any of the Collateral;

(e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor;

 

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(f) to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, advertising matter or other industrial or intellectual property rights, in advertising for sale and selling Inventory and other Collateral and to collect any amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and

(g) Agent, on behalf of the Lender Group and the Bank Product Providers, shall have the right, but shall not be obligated, to bring suit in its own name to enforce the Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if Agent shall commence any such suit, the appropriate Grantor shall, at the request of Agent, do any and all lawful acts and execute any and all proper documents reasonably required by Agent in aid of such enforcement.

To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated.

11. Agent May Perform . If any Grantor fails to perform any agreement contained herein, Agent may itself perform, or cause performance of, such agreement, and the reasonable expenses of Agent incurred in connection therewith shall be payable, jointly and severally, by Grantors.

12. Agent’s Duties . The powers conferred on Agent hereunder are solely to protect Agent’s interest in the Collateral, for the benefit of the Lender Group and the Bank Product Providers, and shall not impose any duty upon Agent to exercise any such powers. Except for the safe custody of any Collateral in its actual possession and the accounting for moneys actually received by it hereunder, Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially equal to that which Agent accords its own property.

13. Collection of Accounts, General Intangibles and Negotiable Collateral . At any time upon the occurrence and during the continuation of an Event of Default, Agent or Agent’s designee may (a) notify Account Debtors of any Grantor that such Grantor’s Accounts, General Intangibles, Chattel Paper or Negotiable Collateral have been assigned to Agent, for the benefit of the Lender Group and the Bank Product Providers, or that Agent has a security interest therein, and (b) collect such Grantor’s Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and expenses shall constitute part of such Grantor’s Secured Obligations under the Loan Documents.

14. Disposition of Pledged Interests by Agent . None of the Pledged Interests existing as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the date of acquisition thereof will be, registered or qualified under the various federal or state securities laws of the United States and disposition thereof after an Event of Default may be restricted to one or more private (instead of public) sales in view of the lack of such registration. Each Grantor understands that in connection with such disposition, Agent may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to federal and state securities laws and sold on the open market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant to the terms of this Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, Agent shall have the right to rely upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to the best manner in which to offer the Pledged Interest for sale and as to the best price reasonably obtainable at the private sale thereof; and (b) such reliance shall be conclusive evidence that Agent has handled the disposition in a commercially reasonable manner.

15. Voting Rights .

 

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(a) Upon the occurrence and during the continuation of an Event of Default, (i) Agent may, at its option, and with prior notice (unless such Event of Default is an Event of Default specified in Section 7.4 or 7.5 of the Credit Agreement, in which case no such notice need be given) to each Grantor, and in addition to all rights and remedies available to Agent under any other agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership or consensual rights in respect of the Pledged Interests owned by such Grantor, but under no circumstances is Agent obligated by the terms of this Agreement to exercise such rights, and (ii) if Agent duly exercises its right to vote any of such Pledged Interests, each Grantor hereby appoints Agent such Grantor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems advisable for or against all matters submitted or which may be submitted to a vote of shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

(b) For so long as any Grantor shall have the right to vote the Pledged Interests owned by it, such Grantor covenants and agrees that it will not, without the prior written consent of Agent, vote or take any consensual action with respect to such Pledged Interests which would adversely affect the rights of Agent and the other members of the Lender Group or the value of the Pledged Interests or that would be inconsistent with or result in any violation of any provision of the Credit Agreement or any other Loan Document.

16. Remedies . Upon the occurrence and during the continuance of an Event of Default:

(a) Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the Code or any other applicable law. Without limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event, Agent, without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon any of Grantors or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code or any other applicable law), may take immediate possession of all or any portion of the Collateral and (i) require Grantors to, and each Grantor hereby agrees that it will at its own expense and upon request of Agent forthwith, assemble all or part of the Collateral as directed by Agent and make it available to Agent at one or more locations where such Grantor regularly maintains Inventory, and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Agent’s offices or elsewhere, for cash, on credit, and upon such other terms as Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least 10 days notice to any of Grantors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification and specifically such notice shall constitute a reasonable “authenticated notification of disposition” within the meaning of Section 9-611 of the Code. Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) Agent is hereby granted a license or other right to use, without liability for royalties or any other charge, each Grantor’s labels, Patents, Copyrights, rights of use of any name, trade secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain names, industrial designs, other industrial or intellectual property or any property of a similar nature, whether owned or licensable by any Grantor or with respect to which any Grantor has sublicensable rights under license, sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale, advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses and all franchise agreements shall inure to the benefit of Agent; provided, however, that Agent may exercise the foregoing only upon the occurrence and during the continuance of an Event of Default.

 

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(c) Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order set forth in the Credit Agreement. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full, each Grantor shall remain jointly and severally liable for any such deficiency.

(d) Each Grantor hereby acknowledges that the Secured Obligations arose out of a commercial transaction, and agrees that if an Event of Default shall occur Agent shall have the right to an immediate writ of possession without notice of a hearing. Agent shall have the right to the appointment of a receiver for the properties and assets of each Grantor, and each Grantor hereby consents to such rights and such appointment and hereby waives any objection such Grantor may have thereto or the right to have a bond or other security posted by Agent.

17. Remedies Cumulative . Each right, power, and remedy of Agent as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Agent, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by Agent of any or all such other rights, powers, or remedies.

18. Marshaling . Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

19. Indemnity and Expenses .

(a) Each Grantor agrees to indemnify, defend and hold harmless Agent and the other members of the Lender Group to the same extent and in the same manner as the indemnity made by the Borrowers pursuant to Section 10.3 of the Credit Agreement. This provision shall survive the termination of this Agreement and the Credit Agreement and the repayment of the Secured Obligations.

(b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge to the Loan Account) all the Lender Group Expenses which Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of any of the rights of Agent hereunder or (iv) the failure by any of Grantors to perform or observe any of the provisions hereof.

20. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to any departure by any of Grantors herefrom, shall in any event be effective unless the same shall be in

 

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writing and signed by Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any provision of this Agreement shall be effective unless the same shall be in writing and signed by Agent and each of Grantors to which such amendment applies.

21. Addresses for Notices . All notices and other communications provided for hereunder shall be given in the form and manner and delivered to Agent at its address specified in the Credit Agreement, and to any of the Grantors at their respective addresses specified in the Credit Agreement or Guaranty, as applicable, or, as to any party, at such other address as shall be designated by such party in a written notice to the other party.

22. Continuing Security Interest; Assignments under Credit Agreement. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Obligations have been paid in full in cash in accordance with the provisions of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding upon each Grantor, and their respective successors and assigns, and (c) inure to the benefit of, and be enforceable by, Agent, and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender may, in accordance with the provisions of the Credit Agreement, assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of the Credit Agreement and the expiration or termination of the Commitments, the Security Interest granted hereby shall terminate and this Agreement and all rights to the Collateral shall revert to Grantors or any other Person entitled thereto. At such time, Agent will file, or authorize the filing of, appropriate termination statements to terminate such Security Interests. No transfer or renewal, extension, assignment, or termination of this Agreement or of the Credit Agreement, any other Loan Document, or any other instrument or document executed and delivered by any Grantor to Agent nor any additional Advances or other loans made by any Lender to Borrowers, nor the taking of further security, nor the retaking or re-delivery of the Collateral to Grantors, or any of them, by Agent, nor any other act of the Lender Group or the Bank Product Providers, or any of them, shall release any Grantor from any obligation, except a release or discharge executed in writing by Agent in accordance with the provisions of the Credit Agreement. Agent shall not by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless such waiver is in writing and signed by Agent and then only to the extent therein set forth. A waiver by Agent of any right or remedy on any occasion shall not be construed as a bar to the exercise of any such right or remedy which Agent would otherwise have had on any other occasion.

23. Governing Law .

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED , HOWEVER , THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS

 

18


OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b) .

(c) EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

24. New Subsidiaries . To the extent required by Section 5.16 of the Credit Agreement, any new direct or indirect Subsidiary (whether by acquisition or creation) of Parent, Borrowers or any other Grantor is required to enter into this Agreement by executing and delivering in favor of Agent a supplement to this Security Agreement in the form of Annex 1 attached hereto. Upon the execution and delivery of such supplement by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Agreement shall not require the consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

25. Agent . Each reference herein to any right granted to, benefit conferred upon or power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Lender Group and the Bank Product Providers.

26. Miscellaneous .

(a) This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis .

(b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

(c) Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.

(d) The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.

 

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[SIGNATURE PAGES TO FOLLOW]

 

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IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through their duly authorized officers, as of the day and year first above written.

GRANTORS:

MONOTYPE IMAGING HOLDINGS CORP.,

a Delaware corporation, as a Grantor

By:   /s/    A. B RUCE J OHNSTON        

Name:

Title:

 

A. Bruce Johnston

Vice President

 

IMAGING ACQUISITION CORPORATION,

a Delaware corporation, as a Grantor

By:   /s/    A. B RUCE J OHNSTON        

Name:

Title:

 

A. Bruce Johnston

Vice President

 

AGFA MONOTYPE CORPORATION,

a Delaware corporation, as a Grantor

By:   /s/    A. B RUCE J OHNSTON        

Name:

Title:

 

A. Bruce Johnston

Vice President

 

INTERNATIONAL TYPEFACE CORPORATION,

a New York corporation, as a Grantor

By:   /s/    A. B RUCE J OHNSTON        

Name:

Title:

 

A. Bruce Johnston

Vice President

[SIGNATURE PAGE OF WFF SECURITY AGREEMENT]


AGENT:

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

By:   /s/    G ARRICK T AN        

Name:

Title:

 

Garrick Tan

Vice President

[SIGNATURE PAGE OF WFF SECURITY AGREEMENT]

 

Exhibit 10.49

E XECUTION V ERSION

SUPPLEMENT TO SECURITY AGREEMENT

Supplement No. 1 (this “ Supplement ”) dated as of December 28, 2006, to the Security Agreement dated as of November 5, 2004 (as amended, restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”) by each of the parties listed as “ Grantors ” on the signature pages thereto and those additional entities that thereafter become grantors thereunder (collectively, jointly and severally, “ Grantors ” and each individually, a “ Grantor ”) and WELLS FARGO FOOTHILL, INC., in its capacity as Agent for the Lender Group and the Bank Product Providers (together with its successors and assigns, in such capacity, the “ Agent ”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated of November 5, 2004 (as amended, restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the “ Credit Agreement ”) among Imaging Holdings Corp., a Delaware corporation (f/k/a Monotype Imaging Holdings Corp.) (“ Parent ”), Monotype Imaging Inc., a Delaware corporation (f/k/a Monotype Imaging, Inc.) (“ Administrative Borrower ”), International Typeface Corporation, a New York corporation (“ Typeface ” and together with Administrative Borrower, the “ Borrowers ”), the lenders party thereto (the “ Lenders ”) and Agent, the Lender Group agreed to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and/or the Credit Agreement;

WHEREAS, Grantors have entered into the Security Agreement in order to induce the Lender Group to make certain financial accommodations to Borrowers; and

WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or indirect Subsidiaries of Parent, Borrowers and the other Grantors, must execute and deliver to Agent certain Loan Documents, including the Security Agreement, and the execution of the Security Agreement by the undersigned new Grantor or Grantors (collectively, the “ New Grantors ”) may be accomplished by the execution of this Supplement in favor of Agent, for the benefit of the Lender Group and the Bank Product Providers.

NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor hereby agrees as follows:

1. In accordance with Section 24 of the Security Agreement, each New Grantor, by its signature below, becomes a “ Grantor ” under the Security Agreement with the same force and effect as if originally named therein as a “ Grantor ” and each New Grantor hereby (a) agrees to all of the terms and provisions of the Security Agreement applicable to it as a “ Grantor ” thereunder and (b) represents and warrants that the representations and warranties made by it as a “ Grantor ” thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, each New Grantor, as security for the payment and performance in full of the Secured Obligations, does hereby grant, assign, and pledge to Agent, for the benefit of the Lender Group and the Bank


Product Providers, a security interest in and security title to all assets of such New Grantor including, without limitation, all property of the type described in Section 2 of the Security Agreement to secure the full and prompt payment of the Secured Obligations, including, without limitation, any interest thereon, plus reasonable attorneys’ fees and expenses if the Secured Obligations represented by the Security Agreement are collected by law, through an attorney-at-law, or under advice therefrom. Schedule 1 , “Copyrights,” Schedule 2 , “Intellectual Property Licenses,” Schedule 3 , “Patents,” Schedule 4 , “Pledged Companies,” Schedule 5 , “Trademarks,” Schedule 6 , “Commercial Tort Claims,” Schedule 7 , “Owned Real Property,” and Schedule 8 , “List of Uniform Commercial Code Filing Jurisdictions,” attached hereto supplement Schedule 1 , Schedule 2 , Schedule 3 , Schedule 4 , Schedule 5 , Schedule 6 , Schedule 7 , and Schedule 8 , respectively, to the Security Agreement and shall be deemed a part thereof for all purposes of the Security Agreement. Each reference to a “ Grantor ” in the Security Agreement shall be deemed to include each New Grantor. The Security Agreement is incorporated herein by reference.

2. Each New Grantor represents and warrants to Agent, the Lender Group and the Bank Product Providers that this Supplement has been duly executed and delivered by such New Grantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

3. This Supplement may be executed in multiple counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission shall be as effective as delivery of a manually executed counterpart hereof.

4. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

5. This Supplement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflict of laws principles thereof.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

 

NEW GRANTORS:     LINOTYPE CORP.
      By:   / S / D OUGLAS J. S HAW
     

Name:

Title:

 

Douglas J. Shaw

 

AGENT:    

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

      By:   / S / D AVID S ANCHEZ
     

Name:

Title:

 

David Sanchez

Vice President

Exhibit 10.50

E XECUTION C OPY

GENERAL CONTINUING GUARANTY

This GENERAL CONTINUING GUARANTY (this “ Guaranty ”), dated as of November 5, 2004, is executed and delivered by the Persons listed on the signature page(s) hereof under the caption “Guarantor” and any additional entities acceding hereto (collectively, jointly and severally, the “ Guarantors ” and each a “ Guarantor ”), in favor of WELLS FARGO FOOTHILL, INC., a California corporation, as arranger and administrative agent for the below defined Lenders (in such capacity, together with its successors and assigns, if any, “ Agent ”), in light of the following:

WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the “ Credit Agreement ”) among Monotype Imaging Holdings Corp., a Delaware corporation (“ Parent ”), Imaging Acquisition Corporation, a Delaware corporation (“ Newco ”), Agfa Monotype Corporation, a Delaware corporation (“ Monotype ”), International Typeface Corporation, a New York corporation (“ Typeface ” and, together with Newco and Monotype, the “ Borrowers ”), the lenders party thereto as “Lenders”, and Agent, the Lender Group is willing to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS , Guarantors are Affiliates of Borrowers and, as such, will benefit by virtue of the financial accommodations extended to Borrowers by the Lender Group; and

WHEREAS , in order to induce the Lender Group to enter into the Credit Agreement and the other Loan Documents and to extend the financial accommodations to Borrowers pursuant to the Credit Agreement, and in consideration thereof, and in consideration of any loans or other financial accommodations heretofore or hereafter extended by the Lender Group to Borrowers, whether pursuant to the Credit Agreement or the other Loan Documents, Guarantors have agreed to jointly and severally guaranty the Guarantied Obligations.

NOW, THEREFORE , in consideration of the foregoing, each of the Guarantors hereby agrees with Agent as follows:

1. Definitions and Construction .

(a) Definitions . Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement. The following terms, as used in this Guaranty, shall have the following meanings:

Agent ” has the meaning set forth in the preamble hereto.

Borrowers ” has the meaning set forth in the recitals hereto.

Credit Agreement ” has the meaning set forth in the recitals hereto.

Guarantied Obligations ” means (a) the due and punctual payment of the principal of, and interest (including any interest that, but for the commencement of an Insolvency Proceeding, would have accrued) on, any and all premium on, and any Lender Group Expenses incurred in connection with, the Obligations owed by Borrowers to any member of the Lender Group or any Bank Product Provider pursuant to the terms of the Credit Agreement or any other Loan Document and (b) the due and punctual payment of all

 

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other present or future Obligations owing by Borrowers to any member of the Lender Group or any Bank Product Provider.

Guarantor ” and “ Guarantors ” has the meaning set forth in the preamble hereto.

Guaranty ” has the meaning set forth in the preamble hereto.

Monotype ” has the meaning set forth in the recitals hereto.

Newco ” has the meaning set forth in the recitals hereto.

Parent ” has the meaning set forth in the recitals hereto.

Typeface ” has the meaning set forth in the recitals hereto.

Voidable Transfer ” has the meaning set forth in Section 9 of this Guaranty.

(b) Construction . Unless the context of this Guaranty clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Guaranty refer to this Guaranty as a whole and not to any particular provision of this Guaranty. Section, subsection, clause, schedule, and exhibit references herein are to this Guaranty unless otherwise specified. Any reference in this Guaranty to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Neither this Guaranty nor any uncertainty or ambiguity herein shall be construed against the Lender Group, any Bank Product Provider, any Guarantor or any Borrower, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto. Any reference herein to the satisfaction or payment in full of the Guarantied Obligations shall mean the payment in full in cash (or cash collateralization in accordance with the terms of the Credit Agreement) of all Guarantied Obligations other than contingent indemnification Guarantied Obligations and other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding and are not required to be repaid or cash collateralized pursuant to the provisions of the Credit Agreement. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein shall be satisfied by the transmission of a Record and any Record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein.

2. Guarantied Obligations . Each Guarantor hereby irrevocably and unconditionally, jointly and severally, guaranties to Agent, for the benefit of the Lender Group and the Bank Product Providers, as and for its own debt, until final payment in full thereof has been made, (a) the prompt payment of the Guarantied Obligations, when and as the same shall become due and payable, whether at maturity, pursuant to a mandatory prepayment requirement, by acceleration, or otherwise; it being the intent of each Guarantor that the guaranty set forth herein shall be a guaranty of payment and not a guaranty of collection; and (b) the punctual and faithful performance, keeping, observance, and fulfillment by Borrowers of all of the agreements, conditions, covenants, and obligations of Borrowers contained in the Credit Agreement and under each of the other Loan Documents.

3. Continuing Guaranty . This Guaranty includes Guarantied Obligations arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing

 

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the Guarantied Obligations, changing the interest rate, payment terms, or other terms and conditions thereof, or creating new or additional Guarantied Obligations after prior Guarantied Obligations have been satisfied in whole or in part. To the maximum extent permitted by law, each Guarantor hereby waives any right to revoke this Guaranty as to future Guarantied Obligations. If such a revocation is effective notwithstanding the foregoing waiver, each Guarantor acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Agent, (b) no such revocation shall apply to any Guarantied Obligations in existence on such date (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof), (c) no such revocation shall apply to any Guarantied Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Agent in existence on the date of such revocation, (d) no payment by any Guarantor, any Borrower, or from any other source, prior to the date of such revocation shall reduce the maximum obligation of such Guarantor hereunder, and (e) any payment by Borrowers or from any source other than the Guarantors subsequent to the date of such revocation shall first be applied to that portion of the Guarantied Obligations as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligation of the Guarantors hereunder.

4. Performance Under this Guaranty . In the event that Borrowers fail to make any payment of any Guarantied Obligations, on or prior to the due date thereof, or if any Borrower shall fail to perform, keep, observe, or fulfill any other obligation referred to in clause (b)  of Section 2 of this Guaranty in the manner provided in the Credit Agreement or any other Loan Document, each of the Guarantors immediately shall cause, as applicable, such payment to be made or such obligation to be performed, kept, observed, or fulfilled.

5. Primary Obligations . This Guaranty is a primary and original obligation of each Guarantor, is not merely the creation of a surety relationship, and is an absolute, unconditional, and continuing guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions. Each Guarantor hereby agrees that it is directly, jointly and severally with each other Guarantor, and any other guarantor of the Guarantied Obligations, liable to Agent, for the benefit of the Lender Group and the Bank Product Providers, that the obligations of each Guarantor hereunder are independent of the obligations of any Borrower, each other Guarantor, or any other guarantor, and that a separate action may be brought against each Guarantor, whether such action is brought against any Borrower, any other Guarantor, or any other guarantor or whether any Borrower, any other Guarantor, or any other guarantor is joined in such action. Each Guarantor hereby agrees that its liability hereunder shall be immediate and shall not be contingent upon the exercise or enforcement by any member of the Lender Group or any Bank Product Provider of whatever remedies they may have against any Borrower, any other Guarantor, or any other guarantor, or the enforcement of any lien or realization upon any security by any member of the Lender Group or any Bank Product Provider. Each Guarantor consents and agrees that no member of the Lender Group nor any Bank Product Provider shall be under any obligation to marshal any property or assets of any Borrower, any other Guarantor, or any other guarantor in favor of such Guarantor, or against or in payment of any or all of the Guarantied Obligations.

6. Waivers .

(a) To the fullest extent permitted by applicable law, each Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or other financial accommodations made or extended under the Credit Agreement, or the creation or existence of any Guarantied Obligations; (iii) notice of the amount of the Guarantied Obligations, subject, however, to such Guarantors’ rights to make inquiry of Agent to ascertain the amount of the Guarantied Obligations at any reasonable time; (iv) notice of any adverse change in the financial condition of any Borrower or of any other fact that might increase such Guarantors’ risk hereunder; (v) notice of presentment for payment, demand, protest, and notice thereof as to any instrument among the Loan Documents; (vi) notice of any Default or Event of Default under the Credit Agreement; and (vii) all other notices (except if such notice is specifically required to be given to any Guarantor under this

 

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Guaranty or any other Loan Documents to which any Guarantor is a party) and demands to which any Guarantor might otherwise be entitled.

(b) To the fullest extent permitted by applicable law, each Guarantor hereby waives the right by statute or otherwise to require any member of the Lender Group or any Bank Product Provider, to institute suit against Borrowers or to exhaust any rights and remedies which any member of the Lender Group or any Bank Product Provider, has or may have against Borrowers. In this regard, each Guarantor agrees that it is bound to the payment of each and all Guarantied Obligations, whether now existing or hereafter arising, as fully as if the Guarantied Obligations were directly owing to Agent, the Lender Group, or the Bank Product Providers, as applicable, by each Guarantor. Each Guarantor further waives any defense arising by reason of any disability or other defense (other than the defense that the Guarantied Obligations shall have been performed and paid in the manner provided for by the applicable Loan Documents, to the extent of any such payment) of any Borrower or by reason of the cessation from any cause whatsoever of the liability of such Borrower in respect thereof.

(c) To the fullest extent permitted by applicable law, each Guarantor hereby waives: (i) any right to assert against any member of the Lender Group or any Bank Product Provider, any defense (legal or equitable), set-off, counterclaim, or claim which such Guarantor may now or at any time hereafter have against any Borrower or any other party liable to any member of the Lender Group or any Bank Product Provider; (ii) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guarantied Obligations or any security therefor; (iii) any right or defense arising by reason of any claim or defense based upon an election of remedies by any member of the Lender Group or any Bank Product Provider; (iv) the benefit of any statute of limitations affecting such Guarantors’ liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Guarantied Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to any Guarantor’s liability hereunder.

(d) Until such time as all of the Guarantied Obligations have been finally paid in full: (i) each Guarantor hereby waives and postpones any right of subrogation such Guarantor has or may have as against any Borrower with respect to the Guarantied Obligations; (ii) each Guarantor hereby waives and postpones any right to proceed against such Borrower or any other Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims (irrespective of whether direct or indirect, liquidated or contingent), with respect to the Guarantied Obligations; and (iii) each Guarantor also hereby waives and postpones any right to proceed or to seek recourse against or with respect to any property or asset of such Borrower.

(e) If any of the Guarantied Obligations or the obligations of any Guarantor under this Guaranty at any time are secured by a mortgage or deed of trust upon real property, any member of the Lender Group or any Bank Product Provider may elect, in its sole discretion, upon a default with respect to the Guarantied Obligations or the obligations of the Guarantors under this Guaranty, to foreclose such mortgage or deed of trust judicially or nonjudicially in any manner permitted by law, before or after enforcing this Guaranty, without diminishing or affecting the liability of such Guarantor hereunder. Each Guarantor understands that (a) by virtue of the operation of antideficiency law applicable to nonjudicial foreclosures, an election by any member of the Lender Group or any Bank Product Provider to nonjudicially foreclose on such a mortgage or deed of trust probably would have the effect of impairing or destroying rights of subrogation, reimbursement, contribution, or indemnity of the Guarantors against Borrowers or other guarantors or sureties, and (b) absent the waiver given by such Guarantor herein, such an election would estop the Lender Group and the Bank Product Providers from enforcing this Guaranty against such Guarantor. Understanding the foregoing, and understanding that each Guarantor hereby is relinquishing a defense to the enforceability of this Guaranty, each Guarantor hereby waives any right to assert against any member of the Lender Group or any Bank Product Provider any defense to the enforcement of this Guaranty, whether denominated “estoppel” or otherwise, based on or arising from an election by any member of the Lender Group or any Bank Product

 

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Provider to nonjudicially foreclose on any such mortgage or deed of trust. Each Guarantor understands that the effect of the foregoing waiver may be that such Guarantor may have liability hereunder for amounts with respect to which such Guarantor may be left without rights of subrogation, reimbursement, contribution, or indemnity against Borrowers, the other Guarantors, or other guarantors or sureties.

(f) Without limiting the generality of any other waiver or other provision set forth in this Guaranty, each Guarantor waives all rights and defenses that such Guarantor may have if all or part of the Guarantied Obligations are secured by real property. This means, among other things:

(i) Any member of the Lender Group or any Bank Product Provider may collect from such Guarantor without first foreclosing on any real or personal property collateral that may be pledged by such Guarantor, Borrowers, the other Guarantors, or any other guarantor.

(ii) If any member of the Lender Group or any Bank Product Provider forecloses on any real property collateral that may be pledged by such Guarantor, Borrowers, the other Guarantors, or any other guarantor:

 

  (A) The amount of the Guarantied Obligations or any obligations of such Guarantor in respect thereof may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.

 

  (B) Agent may collect from such Guarantor even if any member of the Lender Group or any Bank Product Provider, by foreclosing on the real property collateral, has destroyed any right such Guarantor may have to collect from Borrowers, the other Guarantors, or any other guarantor.

This is an unconditional and irrevocable waiver of any rights and defenses each Guarantor may have if all or part of the Guarantied Obligations are secured by real property.

(G) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY ANY MEMBER OF THE LENDER GROUP OR ANY BANK PRODUCT PROVIDER, EVEN THOUGH SUCH ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THE GUARANTIED OBLIGATIONS, HAS DESTROYED SUCH GUARANTOR’S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST BORROWERS BY THE OPERATION OF APPLICABLE LAW.

(h) Without limiting the generality of any other waiver or other provision set forth in this Guaranty, each Guarantor hereby agrees as follows:

(i) Agent’s right to enforce this Guaranty is absolute and is not contingent upon the genuineness, validity or enforceability of any of the Loan Documents. Each Guarantor agrees that Agent’s rights under this Guaranty shall be enforceable even if Borrowers had no liability at the time of execution of the Loan Documents or later ceases to be liable.

(ii) Each Guarantor agrees that Agent’s rights under the Loan Documents will remain enforceable even if the amount secured by the Loan Documents is larger in amount and more burdensome than that for which Borrowers are responsible. The enforceability of this Guaranty against each Guarantor shall continue until all sums due under the Loan Documents have been paid in full and shall not be limited or affected in any way by any impairment or any diminution or loss of value of any security or collateral for Borrowers’ obligations under the Loan Documents, from whatever cause, the failure of any security interest in any such security or

 

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collateral or any disability or other defense of any Borrower, any other Guarantor, or any other guarantor of Borrowers’ obligations under any other Loan Document, any pledgor of collateral for any person’s obligations to Agent or any other person in connection with the Loan Documents.

(iii) Each Guarantor waives the right to require Agent to (A) proceed against Borrowers, any other Guarantor, or any other guarantor of Borrowers’ obligations under any Loan Document, any other pledgor of collateral for any person’s obligations to Agent or any other person in connection with the Guarantied Obligations, (B) proceed against or exhaust any other security or collateral Agent may hold, or (C) pursue any other right or remedy for such Guarantor’s benefit, and agrees that Agent may exercise its right under this Guaranty without taking any action against Borrowers, any other Guarantor, or any other guarantor of Borrowers’ obligations under the Loan Documents, any pledgor of collateral for any person’s obligations to Agent or any other person in connection with the Guarantied Obligations, and without proceeding against or exhausting any security or collateral Agent holds.

7. Releases . Each Guarantor consents and agrees that, without notice to or by any Guarantor and without affecting or impairing the obligations of any Guarantor hereunder, any member of the Lender Group or any Bank Product Provider may, by action or inaction, compromise or settle, extend the period of duration or the time for the payment, or discharge the performance of, or may refuse to, or otherwise not enforce, or may, by action or inaction, release all or any one or more parties to, any one or more of the terms and provisions of the Credit Agreement or any other Loan Document or may grant other indulgences to Borrowers in respect thereof, or may amend or modify in any manner and at any time (or from time to time) any one or more of the Credit Agreement or any other Loan Document, or may, by action or inaction, release or substitute any Guarantor or any other guarantor, if any, of the Guarantied Obligations, or may enforce, exchange, release, or waive, by action or inaction, any security for the Guarantied Obligations or any other guaranty of the Guarantied Obligations, or any portion thereof.

8. No Election . The Lender Group and the Bank Product Providers shall have the right to seek recourse against each Guarantor to the fullest extent provided for herein and no election by any member of the Lender Group or any Bank Product Provider to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of the Lender Group’s or any Bank Product Provider’s right to proceed in any other form of action or proceeding or against other parties unless Agent, on behalf of the Lender Group or the Bank Product Providers, has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by the Lender Group or the Bank Product Providers under any document or instrument evidencing the Guarantied Obligations shall serve to diminish the liability of any Guarantor under this Guaranty except to the extent that the Lender Group and the Bank Product Providers finally and unconditionally shall have realized payment in full of the Guarantied Obligations by such action or proceeding.

9. Revival and Reinstatement . If the incurrence or payment of the Guarantied Obligations or the obligations of any Guarantor under this Guaranty by such Guarantor or the transfer by such Guarantor to Agent of any property of such Guarantor should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a “ Voidable Transfer ”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of each Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

10. Financial Condition of Borrowers . Each Guarantor represents and warrants to the Lender Group and the Bank Product Providers that it is currently informed of the financial condition of Borrowers and

 

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of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guarantied Obligations. Each Guarantor further represents and warrants to the Lender Group and the Bank Product Providers that it has read and understands the terms and conditions of the Credit Agreement and each other Loan Document. Each Guarantor hereby covenants that it will continue to keep itself informed of Borrowers’ financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Guarantied Obligations.

11. Payments; Application . All payments to be made hereunder by any Guarantor shall be made in Dollars, in immediately available funds, and without deduction (whether for taxes or otherwise) or offset and shall be applied to the Guarantied Obligations in accordance with the terms of the Credit Agreement.

12. Attorneys Fees and Costs . Each Guarantor jointly and severally agrees to pay, on demand, all reasonable attorneys fees and all other costs and expenses constituting Lender Group Expenses which may be incurred by Agent or the Lender Group in connection with, arising out of, or consequential to, the protection, assertion, or enforcement of this Guaranty or the Guarantied Obligations (or any security therefor), irrespective of whether suit is brought.

13. Notices . All notices and other communications hereunder to Agent shall be in writing and shall be mailed, sent, or delivered in accordance Section 11 of the Credit Agreement. All notices and other communications hereunder to the Guarantors shall be in writing and shall be mailed, sent, or delivered in care of Administrative Borrower in accordance with Section 11 of the Credit Agreement.

14. Cumulative Remedies . No remedy under this Guaranty, under the Credit Agreement, or any other Loan Document is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every other remedy given under this Guaranty, under the Credit Agreement, or any other Loan Document, and those provided by law. No failure on the part of the Lender Group or Agent on behalf thereof to exercise, and no delay in exercising, any right under this Guaranty shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Guaranty preclude any other or further exercise thereof or the exercise of any other right.

15. Severability of Provisions . If any provision of this Guaranty is held to be illegal, invalid or unenforceable under present or future laws, the legality, validity and enforceability of the remaining provisions of this Guaranty shall not be affected thereby.

16. Entire Agreement; Amendments . This Guaranty constitutes the entire agreement among the Guarantors and the Lender Group pertaining to the subject matter contained herein. This Guaranty may not be altered, amended, or modified, nor may any provision hereof be waived or noncompliance therewith consented to, except by means of a writing executed by each Guarantor and Agent, on behalf of the Lender Group. Any such alteration, amendment, modification, waiver, or consent shall be effective only to the extent specified therein and for the specific purpose for which given. No course of dealing and no delay or waiver of any right or default under this Guaranty shall be deemed a waiver of any other, similar or dissimilar, right or default or otherwise prejudice the rights and remedies hereunder.

17. Successors and Assigns . This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Lender Group and the Bank Product Providers; provided , however , no Guarantor may assign this Guaranty or delegate any of its duties hereunder without Agent’s prior written consent and any unconsented to assignment shall be absolutely void. In the event of any assignment or other transfer of rights by the Lender Group or the Bank Product Providers, the rights and benefits herein conferred upon the Lender Group and the Bank Product Providers shall automatically extend to and be vested in such permitted assignee or other permitted transferee.

 

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18. No Third Party Beneficiary . This Guaranty is solely for the benefit of each member of the Lender Group, each Bank Product Provider, and each of their successors and assigns and may not be relied on by any other Person.

19. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER .

THE VALIDITY OF THIS GUARANTY, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GUARANTOR AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THE PROVISIONS THIS SECTION 19 .

EACH GUARANTOR AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH GUARANTOR AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

20. Counterparts; Telefacsimile Execution . This Guaranty may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Guaranty. Delivery of an executed counterpart of this Guaranty by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Guaranty. Any party delivering an executed counterpart of this Guaranty by telefacsimile also shall deliver an original executed counterpart of this Guaranty but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Guaranty.

21. Agreement to be Bound . Each Guarantor hereby agrees to be bound by each and all of the terms and provisions of the Credit Agreement. Without limiting the generality of the foregoing, by its execution and delivery of this Guaranty, each Guarantor hereby: (a) makes to the Lender Group each of the representations and warranties set forth in the Credit Agreement applicable to such Guarantor fully as though such Guarantor were a party thereto, and such representations and warranties are incorporated herein by this reference, mutatis mutandis ; and (b) agrees and covenants (i) to do each of the things set forth in the Credit Agreement that Parent and Borrowers agree and covenant to cause their respective Subsidiaries to do, and (ii) to not do each of the things set forth in the Credit Agreement that Parent and Borrowers agree and covenant to cause their respective Subsidiaries not to do, in each case, fully as though such Guarantor was a party thereto, and such agreements and covenants are incorporated herein by this reference, mutatis mutandis .

[Signature page to follow]

 

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IN WITNESS WHEREOF , the undersigned has executed and delivered this Guaranty as of the date first written above.

 

GUARANTOR:    

MONOTYPE IMAGING HOLDINGS CORP.,

a Delaware corporation

      By:   /s/ A. B RUCE J OHNSTON
     

Name:

Title:

 

A. Bruce Johnston

Vice President

[S IGNATURE P AGE TO G UARANTY ]

 

S-1


ACCEPTED THIS          DAY OF NOVEMBER, 2004

 

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

   
By:   /s/    G ARRICK T AN      

Name:

Title:

 

Garrick Tan

Vice President

     

[S IGNATURE P AGE TO G UARANTY ]

 

S-1

Exhibit 10.54

E XECUTION C OPY

INTERCOMPANY SUBORDINATION AGREEMENT

THIS INTERCOMPANY SUBORDINATION AGREEMENT, made and entered into as of November 5, 2004 (this “ Subordination Agreement ”), by and among, Imaging Acquisition Corporation, a Delaware corporation (“ Newco ”), Agfa Monotype Corporation, a Delaware corporation (“ Monotype ”), International Typeface Corporation, a New York corporation (“ Typeface ”, and together with Newco and Monotype, the “ Borrowers ”), Monotype Imaging Holdings Corp., a Delaware corporation (“ Parent ”, and together with the Borrowers, each a “ Subordinating Creditor ,” and collectively, the “ Subordinating Creditors ”), and Wells Fargo Foothill, Inc., a California corporation, as the arranger and administrative agent (together with any successor(s) thereto in such capacity, the “ Agent ”) under the Credit Agreement referenced below. Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings assigned to such terms in the Credit Agreement, dated as of November 5, 2004 (as amended, modified, supplemented or restated from time to time, the “ Credit Agreement ”), by and among Borrowers, Parent, the lenders signatory thereto (the “ Lenders ”) and Agent.

W I T N E S S E T H:

WHEREAS, Borrowers or Guarantors or any of their respective Subsidiaries may have borrowed, or may desire to borrow, certain sums from a Subordinating Creditor as permitted by the Credit Agreement;

WHEREAS, Borrowers desire to borrow certain sums from the Secured Parties (as defined herein) pursuant to the Credit Agreement; and

WHEREAS, as a condition to entering into the Credit Agreement, each of the Subordinating Creditors agrees that any loan extended to Borrowers, Guarantors, or any of their respective Subsidiaries (each, an “ Applicable Debtor ” and, collectively, the “ Applicable Debtors ”) will be subordinated to the Senior Debt (as defined herein), as more fully provided in this Subordination Agreement;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Subordinating Creditors hereby agrees with the Secured Parties as follows:

1. Subordination . Subject to the terms hereof, each of the Subordinating Creditors hereby subordinates and defers, to the extent and in the manner set forth herein, the payment (including, without limitation, in any Insolvency Proceeding (as defined herein)) of any and all Indebtedness which may be now or hereafter owing by any Applicable Debtor to any such Subordinating Creditor (whether by reason of subrogation rights of such Subordinating Creditor or otherwise) as may be evidenced by any promissory notes and/or any other documents, instruments or agreements now or hereafter executed and delivered by any Applicable Debtor to any Subordinating Creditor (all such amounts, notes, documents, instruments, and agreements being hereinafter referred to as the “ Subordinated Debt ”) to the prior Discharge of Senior Debt (as defined below).

 

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Bankruptcy Code ” means the United States Bankruptcy Code, as in effect from time to time.

Discharge of Senior Debt ” means payment and satisfaction in full in cash of any and all Senior Debt (as defined below) which may be now or hereafter owing to any Secured Party (as defined below) by any Applicable Debtor, in each case, after or concurrently with the termination of the Credit Agreement and the termination of all obligations and commitments to make loans, advances or otherwise extend credit thereunder.

Insolvency Proceeding ” means any proceeding commenced by or against any Applicable Debtor under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief and including the appointment of a trustee, receiver, administrative receiver, administrator or similar officer.

Secured Party ” means Agent, any member of the Lender Group or any Bank Product Provider.

Senior Debt ”, as used herein, shall mean any and all Obligations, including, without limitation, any and all now existing and future indebtedness, obligations or liabilities of the Applicable Debtors under the Credit Agreement to the Secured Parties, whether direct or indirect, absolute or contingent, secured or unsecured, arising under, or in connection with, the Credit Agreement or any other Loan Documents (including, without limitation, any guaranty executed in connection therewith) in favor of the Secured Parties, as each of the foregoing may be from time to time amended, modified, waived, supplemented, extended, renewed, deferred, refinanced, replaced, refunded or restated, in whole or in part, in accordance with the terms and conditions thereof, by operation of law or otherwise, including any and all expenses (including, without limitation, reasonable attorneys’ fees and disbursements), premiums, fees and charges incurred in connection therewith and any interest thereon, including, without limitation, any post-petition interest accruing on such Senior Debt after any Applicable Debtor becomes subject to an Insolvency Proceeding (whether or not such interest is allowable or enforceable against such Applicable Debtor or recoverable against such Applicable Debtor or its bankruptcy estate), whether by means of an adequate protection payment or otherwise. For all purposes hereunder, Senior Debt shall also include all indebtedness, obligations and liabilities of the Applicable Debtors to repay any amounts previously paid by the Applicable Debtors pursuant to the Credit Agreement, which amounts have been returned to the Applicable Debtors or to a trustee by any Secured Party pursuant to Sections 547 or 548 of the Bankruptcy Code or otherwise under other applicable legislation.

2. Covenants . Without limiting any other provision of this Subordination Agreement, each of the Subordinating Creditors hereby covenants and agrees that, until such time as this Subordination Agreement is terminated as provided herein, such Subordinating Creditor will not, except to the extent expressly permitted by Sections 8 , 9 , and 10 hereof, assert any right which it may have to setoff against the Subordinated Debt any amounts which are or may be owing by such Subordinating Creditor to any Applicable Debtor, and that until such time as this Subordination Agreement is terminated as provided herein, and except to the extent

 

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expressly permitted by Sections 8 , 9 , and 10 hereof, such Subordinating Creditor will not directly or indirectly: (a) demand or receive payment of; exchange, forgive, or modify; request or obtain collateral or security or guarantees for; or Commence Legal Action (as defined in Section 11 hereof) in respect of the Subordinated Debt, or (b) sell, assign, transfer, endorse, pledge, encumber or otherwise dispose of (whether by means of participation or otherwise) any portion of the Subordinated Debt or any interest therein to any Person without the prior written consent of the Agent, it being understood that each such assignee and transferee shall be bound in all respects by the terms and conditions of this Subordination Agreement.

3. Inducement . This Subordination Agreement is executed as an inducement to the Secured Parties to make loans or advances to Borrowers or otherwise to extend credit or financing accommodations to Borrowers, and to enter into the Loan Documents and to continue a financing arrangement with Borrowers and is executed in consideration of the Agent and Lenders entering into the Loan Documents and continuing such financing arrangement.

4. Continuing Agreement . This Subordination Agreement (a) may be terminated only upon the occurrence of the Discharge of Senior Debt, (b) is a continuing agreement of subordination, (c) shall be binding upon the Subordinating Creditors, the Applicable Debtors and their respective successors, transferees and assigns, and (d) shall inure to the benefit of the Secured Parties and be enforceable by the Agent, for the benefit of the Secured Parties, and each their respective successors, transferees and assigns. Without limiting the generality of the foregoing, the Secured Parties may assign or otherwise transfer the Senior Debt to any other Person, and such other Person shall thereupon become vested with all the rights and benefits in respect thereof granted to the Secured Parties herein or otherwise, subject to Section 13.1 of the Credit Agreement. This Subordination Agreement shall continue to be effective (or, if previously terminated, reinstated), if at any time any payment of any of the Senior Debt is rescinded or must otherwise be returned by any Secured Party in connection with any Insolvency Proceeding or otherwise, all as though such payment had not been made.

5. Rights in Insolvency Proceedings . Each of the Subordinating Creditors hereby authorizes and empowers the Agent, for the benefit of the Lenders, in any Insolvency Proceeding to file a proof of claim on behalf of such Subordinating Creditor with respect to the Subordinated Debt (a) if such Subordinating Creditor fails to file such proof of claim prior to thirty (30) days before the expiration of the time period during which such claims must be submitted, or (b) if the Agent, in its Permitted Discretion, believes that any statements or assertions in a proof of claim filed by such Subordinating Creditor are not consistent with the terms and conditions hereof; provided , however , that any failure of the Agent to file such proof of claim shall not be deemed to be a waiver by the Agent or any Secured Party of any of the rights and benefits granted herein by such Subordinating Creditor. Each Subordinating Creditor shall provide the Agent with a copy of any proof of claim filed by such Subordinating Creditor in any Insolvency Proceeding. Each Subordinating Creditor hereby irrevocably grants the Agent the sole and exclusive authority and power in any Insolvency Proceeding, unless and until this Subordination Agreement is terminated in accordance with its terms: (a) to accept and receive any payment or distribution which may be payable or deliverable at any time upon or in respect of the Subordinated Debt; and (b) to take such other action as may be necessary or advisable to effectuate the foregoing. Each Subordinating Creditor shall provide to the Agent all information and documents necessary to present claims or seek enforcement as described in the immediately

 

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preceding sentence. Each of the Subordinating Creditors hereby agrees that, while it shall retain the right to vote its claims and, except as otherwise provided in this Subordination Agreement, otherwise act in any Insolvency Proceeding relative to the related Applicable Debtor (including, without limitation, the right to vote to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition, or extension), such Subordinating Creditor shall not: (i) take any action or vote in any way so as to directly or indirectly challenge or contest (A) the validity or the enforceability of the Credit Agreement, the other Loan Documents, or the liens and security interests granted to the Secured Parties with respect to the Senior Debt, (B) the rights and duties of the Secured Parties established in the Credit Agreement or any other Loan Documents, or (C) the validity or enforceability of this Subordination Agreement; (ii) seek, or acquiesce in any request, to dismiss any Insolvency Proceeding or to convert an Insolvency Proceeding under chapter 11 of the Bankruptcy Code to a case under chapter 7 of the Bankruptcy Code; (iii) seek, or acquiesce in any request for, the appointment of a trustee or examiner with expanded powers for the related Applicable Debtor; (iv) propose, vote in favor of or otherwise approve a plan of reorganization, arrangement or liquidation, or file any motion or pleading in support of any plan of reorganization, arrangement or liquidation, unless it provides for the Discharge of Senior Debt or unless the Secured Parties have approved of the treatment of their claims with respect to the Senior Debt under such plan; (v) object to the treatment under a plan of reorganization or arrangement of the Secured Parties’ claims with respect to the Senior Debt; (vi) seek relief from the automatic stay of Section 362 of the Bankruptcy Code or any other stay in any Insolvency Proceeding in respect of any portion of the Collateral; or (vii) directly or indirectly oppose any relief requested or supported by the Secured Parties, including any sale or other disposition of property free and clear of the liens and security interests of the Subordinating Creditors under Section 363(f) of Title 11 of the United States Code or any other similar provision of applicable law.

6. No Liability . None of the Secured Parties shall in any event be liable for: (a) any failure to prove the Subordinated Debt; (b) any failure to exercise any rights with respect thereto; (c) any failure to collect any sums payable thereon; or (d) any impairment or nonpayment of the Subordinated Debt that results, directly or indirectly, from the exercise by the Secured Parties of any of their rights or remedies under this Subordination Agreement, the Credit Agreement, the other Loan Documents or under applicable law.

7. Subordination Rights Not Impaired by Acts or Omissions of the Applicable Debtors or Secured Parties . No right of the Secured Parties to enforce subordination as provided in this Subordination Agreement will at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Applicable Debtor or by any act or failure to act by any Secured Party, or by any noncompliance by the Subordinating Creditors or any agent thereof with the terms of this Subordination Agreement, regardless of any knowledge thereof with which any such Person may have or otherwise be charged. The Secured Parties may extend, renew, modify or amend any terms of the Senior Debt or any security therefor or guaranty thereof and grant any waiver, release or consent in respect of, or release, sell or exchange such security and otherwise deal freely with the Applicable Debtors and their respective Affiliates, all without notice to or consent from the Subordinating Creditors and without in any way impairing or affecting this Subordination Agreement.

 

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8. Payments to the Subordinating Creditors . Subject to Sections 9 and 10 of this Subordination Agreement, the Applicable Debtors may make payment on, on account of or in respect of the Subordinated Debt.

9. No Payment to Subordinating Creditors When Senior Debt in Default .

(a) No Applicable Debtor may pay the principal of, premium, if any, or interest on, or make any other payment in respect of, the Subordinated Debt (collectively, “ Intercompany Payments ”) if a Default or Event of Default on the Senior Debt shall have occurred and be continuing unless and until such Default or Event of Default shall have been cured or waived or shall have ceased to exist or a Discharge of Senior Debt shall have occurred; provided , however , that a Borrower may continue to make Intercompany Payments to another Borrower in the ordinary course of business consistent with past practices unless and until Agent shall have delivered notice to the Administrative Borrower that a Default or Event of Default shall have occurred and be continuing, at which time such Intercompany Payments shall not be permitted unless and until such Default or Event of Default shall have been cured or waived or shall have ceased to exist or a Discharge of Senior Debt shall have occurred.

(b) If any payment or distribution of assets of any Applicable Debtor of any kind or character, whether in cash, property or securities (including, without limitation, any issuance of securities by such Applicable Debtor), is received by any Subordinating Creditor as a payment in respect of the Subordinated Debt at a time when such payment or distribution should not have been made in accordance with subsection (a) of this Section 9 , such payment or distribution shall be received and held in trust for and shall be paid over immediately to the Agent or its representative (for the benefit of the Secured Parties) for application to the payment of the Senior Debt until the Discharge of Senior Debt shall have occurred.

(c) The provisions of this Section 9 shall not apply to any payments with respect to which Section 10 would be applicable.

10. Subordinated Debt Subordinated to Prior Payment of All Senior Debt in Insolvency Proceeding . Upon any payment or distribution of assets of any Applicable Debtor of any kind, whether in cash, property or securities (including, without limitation, any issuance of securities by an Applicable Debtor), in connection with any Insolvency Proceeding:

(a) the Secured Parties shall first be entitled to receive payment in full in cash of all Senior Debt before the Subordinating Creditors shall be entitled to receive any payment or other distribution of assets in respect of the Subordinated Debt;

(b) any payment or distribution of assets of any Applicable Debtor of any kind or character, whether in cash, property or securities (including, without limitation, any issuance of securities by such Applicable Debtor) to which the Subordinating Creditors would be entitled except for the provisions of this Subordination Agreement will be paid by such Applicable Debtor, the liquidating trustee or agent or such other Person making such a payment or distribution directly to the Agent (for the benefit of the Secured Parties) to the extent necessary to effect the Discharge of Senior Debt; and

 

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(c) if, notwithstanding the foregoing, any payment or distribution of assets of any Applicable Debtor of any kind or character, whether in cash, property or securities (including, without limitation, any issuance of securities by such Applicable Debtor), is received by a Subordinating Creditor as payment in respect of the Subordinated Debt before the occurrence of the Discharge of Senior Debt, such payment or distribution shall be received and held in trust for and shall be paid over immediately to the Agent or its representative (for the benefit of the Secured Parties) for application to the payment of the Senior Debt until the Discharge of Senior Debt has occurred.

For the purposes of this Section 10 , the words “cash, property or securities” shall not be deemed to include shares of stock of Borrowers or Guarantors as reorganized or readjusted or securities of any other corporation paid or distributed to a Subordinating Creditor by a plan of reorganization, arrangement or readjustment; provided that pursuant to such plan of reorganization, arrangement or readjustment the legal, equitable and contractual rights of the Secured Parties under the Loan Documents are not, without the consent of the Secured Parties, altered by any such plan of reorganization, arrangement or readjustment (including, without limitation, such legal, equitable and contractual rights being impaired within the meaning of Section 1124 of the Bankruptcy Code or under other applicable legislation, or any impairment of the right to receive interest accruing during the pendency of an Insolvency Proceeding).

Each of the Applicable Debtors and Subordinating Creditors will give prompt written notice to the Agent of any Insolvency Proceeding.

11. No Enforcement or Commencement of Any Proceedings . Each of the Subordinating Creditors hereby agrees that, so long as any Senior Debt shall remain unpaid, or the Credit Agreement shall be in effect, such Subordinating Creditor will not (a) except to the extent expressly permitted by Sections 8 , 9 and 10 of this Subordination Agreement, take, demand, receive or accept any payment of the Subordinated Debt, and the Applicable Debtors shall not give, make or permit any such payment, or (b) commence, prosecute, assert, participate in or bring, or join with any other creditor of the Applicable Debtors (other than the Agent) in commencing, prosecuting, asserting, participating in or bringing, any sort of action, suit or proceeding (including, without limitation, any Insolvency Proceeding) either at law or in equity for the enforcement, collection or realization on the whole, or any part of the Subordinated Debt or any collateral, security or guarantees (if any) which is security for the Subordinated Debt, or accelerate, demand or otherwise make due and payable prior to the original due date thereof any payment of the Subordinated Debt (except pursuant to a modification or amendment of the terms of such Subordinated Debt that is permitted under the Credit Agreement), (c) possess any assets of any Applicable Debtor pursuant to a legal action or other legal proceeding, or (d) send any notice to or otherwise seek to obtain payment directly from any account debtor of any Applicable Debtor (clauses (a) through (d) inclusive, collectively, “ Commence Legal Action ”).

12. Action Against . If the Subordinating Creditors, in violation of this Subordination Agreement, shall Commence Legal Action against an Applicable Debtor, such Applicable Debtor may interpose as a defense or dilatory plea the making of this Subordination Agreement, and the Secured Parties are hereby irrevocably authorized to intervene and to interpose such defense or plea in their names or in the name of the related Applicable Debtor. If the Subordinating Creditors shall attempt to enforce, collect or realize upon any Subordinated

 

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Debt or any collateral, security or guarantees (if any) securing the Subordinated Debt in violation of this Subordination Agreement, the Applicable Debtors may, by virtue of this Subordination Agreement, restrain any such enforcement, collection or realization, or upon failure to do so, the Secured Parties may restrain such enforcement, collection or realization, either in their own names or in the name of the Applicable Debtors.

13. Lien Subordination . Each Subordinating Creditor hereby confirms that, regardless of (a) the relative date, time, method, manner or order of grant, attachment or the perfection of any security interest or lien granted to any Secured Party or any Subordinating Creditor in respect of all or any portion of any collateral, (b) the order of filing or recordation of financing statements, mortgages or other security documents, (c) any provision of the Uniform Commercial Code, any other applicable law or anything in the Subordinated Loan Documents (as hereinafter defined) to the contrary, (d) whether the liens securing the Senior Debt are valid, enforceable, void, avoidable, subordinated, disputed, or allowed, or (e) any other circumstance whatsoever, the security interests and liens upon the Collateral granted or to be granted from time to time pursuant to the Credit Agreement and the other Loan Documents or any other agreements or instruments covering Senior Debt shall in all respects be first priority and senior security interests and liens and any security interests and liens upon the Collateral granted or to be granted from time to time pursuant to the Subordinated Loan Documents or any other agreements or instruments covering the Subordinated Debt shall in all respects be junior and subordinate to such security interests and liens upon the Collateral granted pursuant to the terms of the Credit Agreement and the other Loan Documents.

14. Release of Liens . In the event of any private or public sale or other disposition of all or any portion of the Collateral by or with the consent of the Agent, on behalf of the Secured Parties, or as otherwise permitted by the Credit Agreement, at any time prior to the date upon which the Discharge of Senior Debt shall have occurred, each Subordinating Creditor agrees that such sale or disposition will be free and clear of the liens and security interests securing the Subordinated Debt (if any) of such Subordinating Creditor and, if the sale or other disposition includes Equity Interests (as defined below) in any Applicable Debtor, such Subordinating Creditor agrees to release the entities whose Equity Interests are sold from all Subordinated Debt so long as the Agent also releases the entities whose Equity Interests are sold or disposed of from all Senior Debt. In furtherance thereof, each Subordinating Creditor agrees that (a) the Agent is authorized to file any and all Uniform Commercial Code lien releases and/or terminations of the liens and security interests in respect of property of the Applicable Debtor held by such Subordinating Creditor in connection with such a sale or other disposition, and (b) it will execute any and all lien and security interest releases or other documents necessary to release liens on property of the Applicable Debtor reasonably requested by the Agent in connection therewith. For purposes hereof, “ Equity Interests ” means Capital Stock (as defined below) and all warrants, options, or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock), and “ Capital Stock ” means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited), and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, the issuing Person.

 

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15. Endorsement of Note; Other Documents . Each of the Subordinating Creditors agrees to mark all agreements, bonds, debentures, notes or other similar instruments relating to the Subordinated Debt (the “ Subordinated Loan Documents ”) and all other evidences of, or instruments relating to, Subordinated Debt with a notation in substantially the following form:

“This Note is subject to the terms and provisions of the

Subordination Agreement executed by the Payee and the other

parties thereto in favor of Wells Fargo Foothill, Inc. dated as of

November 5, 2004,”

and to deliver proof of such notation to the Agent. If, upon the occurrence and during the continuation of an Event of Default, the Agent requires the possession of any of the Subordinated Loan Documents in order to present claims or seek enforcement against the Applicable Debtors for payment under the Subordinated Loan Documents in accordance with the provisions of this Subordination Agreement, the Subordinating Creditors agree, subject to the terms hereof, to endorse and deliver such Subordinated Loan Documents to the Agent. The Subordinating Creditors and the Applicable Debtors will at their expense and at any time and from time to time promptly execute and deliver all further instruments and documents and take all further action that may be reasonably necessary to protect any right or interest of the Secured Parties granted hereunder or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder.

16. Modifications to the Subordinated Loan Documents . Except as otherwise expressly permitted under the Credit Agreement or any other applicable Loan Document, none of the Subordinated Loan Documents shall be amended or otherwise modified without obtaining the prior written consent of the Agent, or as otherwise permitted under the Credit Agreement, so as to provide for (a) any increase in the rate of interest charged thereunder as in effect on the date hereof, (b) any increase in the principal amount or any installment due thereunder, (c) any reduction of the maturity date of any payment of principal or interest, (d) the granting or obtaining of any collateral security or obtaining any lien on any collateral or (e) any other amendment or modification which would have a material adverse effect on the operations of the Applicable Debtors, the Agent’s security interests in the Collateral or the claims of the Secured Parties.

17. No Impairment of Applicable Debtors’ Obligations . Subject to all of the Secured Parties’ rights as provided in this Subordination Agreement, nothing contained in this Subordination Agreement shall impair, as between the Applicable Debtors, on the one hand, and the Subordinating Creditors, on the other hand, the obligation of the Applicable Debtors, which is unconditional and absolute, to pay the Subordinated Debt to the Subordinating Creditors as and when all or any portion thereof shall become due and payable in accordance with its terms or prevent the Subordinating Creditors, upon any default under the Subordinated Debt, from exercising all rights, powers and remedies otherwise provided therein or by applicable law.

18. Subrogation . Until the Discharge of Senior Debt shall have occurred and this Subordination Agreement is terminated as provided herein, the Subordinating Creditors shall not assert or be entitled to any subrogation rights. Subject to the immediately preceding

 

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sentence, if any payment or distribution to which any of the Subordinating Creditors would otherwise have been entitled (but for the provisions of this Subordination Agreement) shall have been turned over to the Agent or otherwise applied to the payment of the Senior Debt pursuant to the provisions of this Subordination Agreement, then such Subordinating Creditor shall be entitled to receive from the Agent any payments or distributions received by the Secured Parties in excess of the amount sufficient to effect the Discharge of Senior Debt, and upon such Discharge of Senior Debt shall be subrogated (without any representation by, or any recourse whatsoever to, the Secured Parties) to all rights of the Secured Parties to receive all further payments or distributions applicable to the Senior Debt or the Subordinated Debt until the Subordinated Debt shall have been paid in full. For purposes of the Subordinating Creditors’ subrogation rights hereunder, payments to the Secured Parties with respect to the Senior Debt which the Subordinating Creditors would have been entitled to receive with respect to the Subordinated Debt but for the provisions of this Subordination Agreement shall not, as between the Applicable Debtors, their respective creditors (other than the Secured Parties) and the Subordinating Creditors, be deemed payments with respect to the Senior Debt.

19. Entire Agreement, etc . This Subordination Agreement embodies the whole agreement of the parties with respect to the subject matter hereof and may not be modified except in writing executed and delivered by the parties hereto. The failure of the Secured Parties, or any one of them, to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other rights at any other time and from time to time thereafter, and such rights shall be considered as cumulative rather than alternative. No knowledge of any breach or other non-observance by the Subordinating Creditors of the terms and provisions of this Subordination Agreement shall constitute a waiver, nor a waiver of any obligations to be performed by the Subordinating Creditors hereunder.

20. Notices . All notices and other communications hereunder shall be sent in accordance with the provisions of, and to the addresses set forth in, Section 11 of the Credit Agreement, and if to any Subordinating Creditor that is not a party to the Credit Agreement, to the address set forth for the Administrative Borrower in the Credit Agreement.

21. Construction . Except as otherwise expressly provided herein, the rules of interpretation set forth in Section 1.4 of the Credit Agreement shall apply mutatis mutandis to this Subordination Agreement.

22. CHOICE OF LAW; JURISDICTION; JURY TRIAL WAIVER; ETC . THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AGREES THAT ANY FEDERAL DISTRICT COURT IN THE STATE OF NEW YORK AND COUNTY OF NEW YORK OR ANY STATE COURT LOCATED IN NEW YORK COUNTY, NEW YORK SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE PARTIES HERETO PERTAINING DIRECTLY OR INDIRECTLY TO THIS SUBORDINATION AGREEMENT OR TO ANY MATTER ARISING HEREFROM. EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURT. EACH OF THE PARTIES HERETO WAIVES ANY OBJECTION THAT IT MAY NOW OR

 

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HEREAFTER HAVE TO THE VENUE OF ANY PROCEEDING IN ANY SUCH COURT OR THAT SUCH PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO A JURY TRIAL AS TO ANY DISPUTE UNDER THIS SUBORDINATION AGREEMENT.

23. Counterparts; Effectiveness . This Subordination Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts (and by facsimile or other electronic transmission) and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

24. Severability . Any provision of this Subordination Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

25. Section Headings . The section headings used in this Subordination Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

[Signature Pages to follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Subordination Agreement effective as of the date first above written.

 

MONOTYPE IMAGING HOLDINGS CORP.,

a Delaware corporation, as a Subordinating Creditor

By:   / S / A. B RUCE J OHNSTON

Name:

Title:

 

A. Bruce Johnston

Vice President

IMAGING ACQUISITION CORPORATION,

a Delaware corporation, as a Subordinating Creditor

By:   / S / A. B RUCE J OHNSTON

Name:

Title:

 

A. Bruce Johnston

Vice President

AGFA MONOTYPE CORPORATION,

a Delaware corporation, as a Subordinating Creditor

By:   / S / A. B RUCE J OHNSTON

Name:

Title:

 

A. Bruce Johnston

Vice President

INTERNATIONAL TYPEFACE CORPORATION, a New York corporation, as a Subordinating Creditor
By:   / S / A. B RUCE J OHNSTON

Name:

Title:

 

A. Bruce Johnston

Vice President

 

 

 

 

[ SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT]


ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN:

 

 

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

By:   / S / G ARRICK T AN

Name:

Title:

 

Garrick Tan

Vice President

 

Exhibit 10.55

Deed Roll No: 1828 / B /2006

Done this 31st day of July 2006 at Munich

Before the undersigned notary

Alexander Benesch

with his offices at Leopoldstraße 18, 80802 Munich,

appeared today

1. Ms. Sabine Heinrich , born 2 nd of March 1978, with her business address c/o SJ Berwin LLP, Maria-Theresia-Straße 5, 81625 Munich, who is not acting in his own name, but on the basis of purported powers of attorney (auf Grund behaupteter Vollmachten ), excluding any personal liability, in the name of each of

a) Monotype Imaging Holdings Corp. , a Delaware corporation with business address 500 Unicorn Park Drive, 2nd floor, Woburn, MA 01801, U.S.A.,

b) Blitz 06-683 GmbH (in the future, after change of company name becomes effective, Monotype Imaging Germany GmbH), a German limited liability company with its seat in Munich; the relocation of the seat to Bad Homburg has been resolved but not yet entered in the commercial register

The contracting parties will provide evidence of the respective power of representation ( Vertretungsnachweise ) amongst one another. Each of them hereby waives to have any evidence of power of representation attached to this deed.

2. Dr. Wolfgang Kircher , born 10 th of December 1970, with his business address c/o Hogan & Hartson Raue LLP, Schackstraße 1, 80539 München, who is not acting in his own name, but on the basis of a purported power of attorney, excluding any personal liability, in the name of

DB Zwirn Special Opportunities Fund, L.P., a Delaware limited partnership, with business address 745 Fifth Avenue, 18 th Floor, New York, New York 10151, U.S.A., which, in turn, is acting in its own name and, on the basis of purported powers of attorney, in the name of each of the lenders listed in Exhibit 1

(hereinafter these institutions and DB Zwirn Special Opportunities Fund, L.P. each referred to as the “ Lender ”, collectively as the “ Lenders ”).


The contracting parties will provide evidence of the respective power of representation ( Vertretungsnachweise ) amongst one another. Each of them hereby waives to have any evidence of power of representation attached to this deed.

The person appearing under No. 1 established his identity by her identity card No. ( Personalausweis ) No. 802331576.

The person appearing under No. 2 established his identity by his identity card ( Per s onalausweis ) no 5184043939.

The persons appearing requested (i) the notarisation of the following Share Pledge Agreement in order to create a pledge over a part in the amount of EUR 16,250 of a share of EUR 24,750 in Blitz 06-683 GmbH and (ii) that their declarations be made in the English language. The officiating notary, who has a good command of the English language, confirmed that the persons appearing also have a good command of the English language. The parties waived their right to a translation after having been informed thereof by the officiating notary.

On enquiry it was concluded by all parties that no prior involvement of the officiating notary exists within the meaning of Section 3 sub-section 1 no. 7 of the German Act on Public Recordings - BeurkG .

The persons appearing declared and accepted each for the parties represented by them that they do not assume any personal liability in connection with their acting as attorneys in fact, in particular with respect to the validity of the powers of attorney.

Requesting notarisation thereof, the persons appearing then declared the following:

THIS SHARE PLEDGE AGREEMENT (this “ Agreement ”) is entered into as of July 31, 2006 by and among Monotype Imaging Holdings Corp. , a Delaware corporation (“ Pledgor ”), Blitz 06-683 GmbH, a German limited liability company (“ German Holdings ”), DB Zwirn Special Opportunities Fund, L.P. a Delaware limited partnership, as agent (“ Agent ”) and the Lenders (hereinafter together with the Agent referred to each as an “ Original Pledgee ” and collectively as the “ Original Pledgees ” and together with any Future Pledgee (as defined below), each as a “ Pledgee ” and collectively as the “ Pledgees ”).

WHEREAS:

(A) German Holdings was acquired as shelf company by the Pledgor to acquire certain shares in Linotype GmbH with its seat in Bad Homburg v.d.Höhe from Heidelberger Druckmaschinen Aktiengesellschaft (“ Linotype Seller ”), and the Pledgor intends to acquire certain assets from the Linotype Seller, all pursuant to a share purchase agreement dated as of or about the date hereof by and among Linotype Seller and the Pledgor and German Holdings (collectively, the “ Linotype Acquisition ”).

(B) In connection with the Linotype Acquisition, the Pledgor (as Parent), the Agent, the Original Pledgees, Monotype Imaging, Inc and International Typeface Corporation have entered into that certain Second Amendment To, and Consent and Waiver Under, Credit Agreement dated July 28, 2006. The credit agreement by and among Monotype Imaging

 

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Holdings Corp., Imaging Acquisition Corporation, Agfa Monotype Corporation and International Typeface Corporation, the lenders that are signatories thereto and DB Zwirn Special Opportunities Fund, L.P., dated November 5, 2004, as amended by (i) that certain First Amendment to, and Waiver and Consent under, Credit Agreement, Investor Intercreditor Agreement and Security Agreement dated August 24, 2005 and (ii) the aforementioned Second Amendment is hereinafter referred to as the “ Amended Credit Agreement ”. After restructuring, the parties to the Amended Credit Agreement are: Monotype Imaging Holdings Corp., a Delaware corporation, Monotype Imaging, Inc., a Delaware corporation, International Typeface Corporation, a New York corporation, the lenders that are signatories thereto and Wells Fargo Foothill, Inc., a California corporation.

(C) The Pledgor has granted first ranking pledges in a partial share of 65% of Linotype GmbH according to a notarial share pledge agreement to Wells Fargo Foothill, Inc. and certain other pledgees as of the date hereof (Roll of Deeds no. 1827/8/2006 of the notary Alexander Benesch, Munich; the “ First Ranking Pledges ”).

(D) It is a condition precedent under the Amended Credit Agreement that the Pledgor enters into this Agreement.

NOW, IT IS HEREBY AGREED as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION

1.1. In this Agreement:

Collateral Documents ” means any document providing for a security interest in favor of the Secured Parties (or any of them) in respect of the Secured Obligations.

Enforcement Event ” means that an Event of Default has occurred and notice of the intention to enforce all or any of the security interests granted under this Agreement has been given to the Pledgor by the Agent.

Event of Default ” means an event which would, inter alia, entitle the Secured Parties to cancel their commitments under the Amended Credit Agreement and/or to declare any amounts outstanding under any Loan Document due and payable.

Fee Letter ” means that certain amended fee letter dated as of or about the date hereof between, inter alia, the Pledgor as Parent and the Agent, as the same may be amended.

Future Pledgee ” means any person, which by way of transfer, assignment, novation, succession or otherwise becomes a pledgee hereunder, other than an Original Pledgee.

Future Shares ” means all additional shares in the capital of German Holdings in whatever nominal value which the Pledgor may acquire in the future in the event of an increase of share capital of German Holdings or otherwise.

 

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Loan Documents ” means the Amended Credit Agreement, each Collateral Document, the Fee Letter and any certificate, letter or other document executed in connection with, or pursuant to, the Amended Credit Agreement.

Loan Parties ” means the borrowers and the guarantors under the Amended Credit Agreement and each entity that shall have become a borrower or guarantor under the Amended Credit Agreement and “ Loan Party ” means any of them.

Secured Obligations ” means any and all obligations (present and future, actual and contingent, matured or not matured, liquidated or unliquidated, whether incurred solely or jointly with any other person and whether as principal or surety, in any currency or currencies, together with all interest accruing thereon (calculated in accordance with the Amended Credit Agreement), whether before or after judgment, and all costs, charges and expenses incurred in connection therewith) which are or become due, owing or payable by any Loan Party to the Pledgees (or any of them) (including any Future Pledgee by way of transfer or assignment ( Einzel- and/oder Gesamtrechtsnachfolge including Vertragsübernahme ) or novation ( Novation ) of any right or obligation as provided under the relevant Loan Document) under the Loan Documents (as each may be amended, varied, novated, supplemented or extended from time to time), and including, but without limitation to, any guarantee provided for in the Loan Documents) and any claims of the Pledgees (or any of them) arising under any abstract acknowledgement of indebtedness ( abstraktes Schuldanerkenntnis ) granted in relation to the Loan Documents and any claims of the Agent in its capacity as the joint and several creditor ( Gesamtgläubiger ) of each and every obligation of any Loan Party towards each of the Pledgees under the Loan Documents, and including obligations arising in connection with advances made under the Amended Credit Agreement during any extension period or by any transferee thereunder. The Secured Obligations shall, for the avoidance of doubt, also include obligations incurred by any Loan Party on or after the opening of insolvency proceedings, shall apply to, any Loan Party irrespective of its corporate structure and, if applicable, any corporate restructuring or transformation of any Loan Party and shall also apply to any contingent obligations of any Loan Party towards any of the Pledgees on the grounds of any invalidity or unenforceability of any Loan Document, in particular claims on the grounds of unjustified enrichment ( ungerechtfertigte Bereicherung ).

Secured Parties ” means the Agent and the Pledgees.

1.2. A reference to any person in this Agreement includes such person’s successors, transferees and assignees.

Words importing the singular shall include the plural and vice versa unless the context requires otherwise.

SECTION 2. PLEDGED SHARES

The Pledgor holds all shares of German Holdings, consisting of two shares - one with a nominal value of EUR 24,750 (“ Share 1 ”) and one with a nominal value of EUR 250 (“ Share 2 ”) - with the aggregate stated share capital ( Stammkapital ) of EUR 25,000 (collectively, the “ Existing Share ”).

 

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SECTION 3. PLEDGE

3.1. The Pledgor hereby grants second ranking pledges to each of the Pledgees over such part of Share 1 that has a nominal value of EUR 16,250 (i.e. 65 % of the aggregate share capital of EUR 25,000) and 65% of the Future Shares in German Holdings (such part of Share 1 that has a nominal value of EUR 16,250 and 65% of the Future Shares are hereinafter referred to as the “ Shares ”) together with all ancillary rights and claims associated with the Shares referred to in Clause 5 hereof (together the “ Pledges ” and each a “ Pledge ”). The Pledges are subordinated to the First Ranking Pledges.

3.2. The Pledges shall be separate and shall rank equally with each other. The Pledges shall rank ahead of any other security interest or third party right now in existence or created in future in or over any of the Shares save for the First Ranking Pledges. The validity and effect of each of the Pledges shall be independent from the validity and the effect of the other Pledges created hereunder.

3.3. Each Pledgee hereby accepts its Pledge for itself. The Agent, as representative without power of attorney ( Vertreter ohne Vertretungsmacht ), accepts the respective Pledge for and on behalf of each Future Pledgee in relation to the Loan Documents. Each Future Pledgee to whom any claim or part of a claim arising under any Loan Document will have been transferred (including, for the avoidance of doubt, a transfer by way of novation ( Novation )) in accordance with the relevant provisions of the relevant Loan Document ratifies such acceptance ( Genehmigung der Erklärung des Vertreters ohne Vertretungsmacht ) for itself by accepting such transfer, thereby becoming a Pledgee, it being understood that any future or conditional claim ( zukünftiger oder bedingter Anspruch ) of such Future Pledgee arising under any Loan Document (in each case, for the avoidance of doubt, as amended, varied, novated, supplemented or extended from time to time) shall be secured by the Pledges constituted hereunder. All parties hereby confirm that the validity of the Pledges granted hereunder shall not be affected by the Agent acting as representative without power of attorney for each Future Pledgee.

3.4. German Holdings hereby declares its consent (i) to the Pledges and (ii) pursuant to Section 17 of the German Act Pertaining to Limited Liability Companies ( GmbHG ) to the splitting of its Existing Share, as described in Clause 3.1, in the event of a sale in the course of the enforcement of the pledge. The Pledgor as sole shareholder of German Holdings approves of such consent. The Pledgor undertakes to procure German Holdings’ consent to the splitting of any Future Shares in accordance with Clause 3.1 without delay after the creation of such Future Shares.

3.5. The pledge over a part of Share 1 as agreed in the preceding paragraphs is hereby notified to German Holdings in accordance with section 16 paragraph 1 GmbHG. German Holdings hereby confirms that it has taken notice of such notification.

SECTION 4. PURPOSE OF THE PLEDGES

The Pledges are constituted in order to secure the prompt and complete satisfaction of any and all Secured Obligations.

 

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SECTION 5. SCOPE OF THE PLEDGES

5.1. The Pledges constituted by this Agreement include the present and future rights to receive

5.1.1 dividends payable in relation to the Shares, if any;

5.1.2 liquidation proceeds ( Liquidationserlöse ), consideration for redemption ( Einziehungsentgelt ), repaid capital in case of a capital decrease ( Kapitalherabsetzung ) or repaid capital surplus or paid-in surplus, any compensation in case of termination ( Kündigung ) and/or withdrawal ( Austritt ) of a shareholder of German Holdings, the surplus in case of surrender ( Preisgabe );

5.1.3 all other pecuniary claims associated with the Shares, including without limitation any proceeds or other consideration generated as a result of any transfer of the Shares; and

5.1.4 newly issued or other additional shares in German Holdings.

5.2. Notwithstanding that the dividends are pledged hereunder, the Pledgor shall be entitled to receive and retain all dividend payments whether in cash, by the issue of any loan note or debt instrument or in specie in respect of the Shares until such time as an Event of Default has occurred.

5.3. Notwithstanding Clause 5.2 above, (i) distributions as set forth in Clauses 5.1.2 and 5.1.3, (ii) distributions paid or payable (a) other than in cash ( Sachdividenden ) or (b) in respect of an instrument or other asset received in respect of, or in exchange for, the Shares and (iii) cash or other asset or instrument paid, payable or otherwise distributed in respect of principal of the Shares shall, with effect from the creation of the Pledges, forthwith be delivered to the Agent, acting for and on behalf of the Pledgees, to be held as security and shall, if received by the Pledgor, be received as holder for the Pledgees and segregated from the other property or funds of the Pledgor and be forthwith delivered to the Agent, acting for and on behalf of the Pledgees as security in the same form as so received (with any necessary endorsement), unless, in the case of (ii) or (iii) above, such distribution is in the ordinary course of business. Any further reaching obligations of German Holdings and/or the Pledgor in respect of the use of profits and/or dividends shall not be affected by this Clause 5.3.

SECTION 6. EXERCISE OF VOTING RIGHTS

6.1. The voting rights relating to the Shares remain with the Pledgor. The Pledgor, however, shall at all times until the full satisfaction of all Secured Obligations or the release of the Pledges be required, in exercising its voting rights, to act in good faith to ensure that the Pledges are not in any way adversely affected. The Pledgor undertakes to exercise its voting rights from time to time in such a way that, without the prior consent of the Pledgees (which consent may not unreasonably be withheld or delayed) no resolutions are passed which adversely affect the value of the Shares (other than by way of dividend distributions in the ordinary course of business), in particular, but not limited to, the reduction or increase of the share capital of German Holdings, any merger of German Holdings or its liquidation, dissolution or the termination of its existence or the cessation of its business or part of its business.

 

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6.2. The Pledgor shall not take, or participate in, any action which results or might result in the Pledgor’s loss of ownership of the Shares, and any other transaction which would have the same result as a sale, transfer, encumbrance or other disposal of the relevant Shares or which would for any other reason be inconsistent with the security interest of the Pledgees or the security purpose (as described in Clause 4 hereof) or defeat, impair or circumvent the rights of the Pledgees without the prior written consent of the Pledgees.

6.3. The Pledgor shall inform the Pledgees by notification to the Agent without undue delay of all matters concerning German Holdings of which it is aware and which could materially adversely affect the security interest of the Pledgees. In particular, the Pledgor shall (i) notify the Pledgees by notification to the Agent forthwith of any shareholders’ meeting at which a shareholders’ resolution is intended to be adopted which could have a material adverse effect upon any of the Pledges and (ii) send to the Agent without undue delay a copy of the minutes of any such shareholders’ meeting. The Pledgor shall allow, following an Event of Default, the Agent (acting on behalf of the Pledgees) or, as the case may be, its proxy or any other person designated by the Pledgees to participate in all such shareholders’ meetings of German Holdings. Subject to the provision contained in Clause 15.1 hereof, the Pledgees’ right to attend the shareholders’ meetings shall lapse immediately upon complete satisfaction and discharge of the Secured Obligations. Without prejudice to the aforesaid, as long as any of the Pledges remain in effect, the Pledgor shall send to the Agent a copy of the minutes of any ordinary or extraordinary shareholders’ meeting relating to German Holdings.

SECTION 7. THE PLEDGEES’ RIGHT OF ENFORCEMENT

7.1. If the requirements set forth in Sections 1273, 1204 et seq. of the German Civil Code ( BGB ) and Section 368 of the German Commercial Code ( HGB ) with regard to the enforcement of the Pledges are satisfied ( Pfandreife ), in particular, if

7.1.1 any Loan Party has failed to pay any sum due and payable under the Secured Obligations and the Secured Obligations have been declared immediately due and payable by the Pledgees acting through the Agent by serving a written notice on the relevant Loan Party, or

7.1.2 any Loan Party has failed to pay any sum due and payable under the Secured Obligations and the Secured Obligations have been declared to be due and payable by written notice to the relevant Loan Party by the Agent at a certain date or within a certain period of time specified in such notice,

and an Enforcement Event has occurred then, in order to enforce the Pledges, the Pledgees acting through the Agent may at any time thereafter avail themselves of all rights and remedies that a pledgee has upon the default of a pledgor under the laws of the Federal Republic of Germany. The Pledgees shall be entitled to have all the Shares sold at public auction or any other permitted proceeding without a prior court ruling or court proceeding ( vollstreckbarer Titel ) notwithstanding Section 1277 of the German Civil Code ( BGB ). In the event of an

 

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enforcement by way of public auction, the Pledgor hereby expressly agrees that five (5) business days prior written notice to the Pledgor of the place and time of any such public auction shall be sufficient. The public auction may take place at any place in the Federal Republic of Germany.

7.2. The Pledgor shall bear all costs and fees (including costs for court proceedings and legal fees) and turnover tax, if any, in connection with the realisation of the Pledges. The Pledgor shall, at its own expense, render forthwith all assistance reasonably necessary in order to facilitate the prompt exercise by the Pledgees (or any of them) acting through the Agent of any right the Pledgees may have under German law.

7.3. Until the Secured Obligations have been satisfied and discharged in full, the Agent, acting for and on behalf of the Pledgees, shall be entitled to treat all enforcement proceeds which have not been applied or must not be applied in satisfaction of the Secured Obligations as additional collateral for the Secured Obligations for the benefit of the Pledgees.

7.4. Provided that the requirements for enforcement referred to under Clause 7.1 above are satisfied, and with effect from the creation of the Pledges, all subsequent dividend payments, if any, which will be made to the Pledgor and, as the case may be, all payments based on similar ancillary rights attributed to the Shares may be applied by the Pledgees acting through the Agent in satisfaction in whole or in part of the Secured Obligations or treated as additional collateral.

7.5. Even if the requirements for enforcement referred to under Clause 7.1 above are satisfied, the Pledgees shall not, whether as proxy or otherwise, be entitled to exercise the voting rights attached to the Shares. However, the Pledgor shall, upon the occurrence of an Event of Default, have the obligations and the Pledgees shall have the rights set forth in Clause 6.3 above regardless of which resolutions are intended to be adopted.

7.6. The proceeds from the enforcement of the Pledges shall, after deduction of enforcement costs which are to be borne by the Pledgor in accordance with Clause 7.2, be paid to the Agent.

7.7. The Agent acting for and on behalf of the Pledgees may, in its sole discretion, determine which of several security interests, if applicable, shall be used to satisfy the Secured Obligations.

7.8. After the complete, unconditional, irrevocable and full payment and discharge of all Secured Obligations any remaining proceeds resulting from the enforcement of the Pledges (or part thereof) shall be transferred to the Pledgor at its own cost and expense.

SECTION 8. RELEASE OF PLEDGES (PFANDFREIGABE)

8.1. Upon complete and irrevocable satisfaction of the Secured Obligations, the Pledgees’ rights hereunder shall lapse and the Pledgees (represented by the Agent) will as soon as reasonably practical confirm in writing the release of the Pledges ( Pfandfreigabe ) to the Pledgor. For the avoidance of doubt, the parties are aware that upon full and complete satisfaction of the Secured Obligations, the Pledges, due to their accessory nature ( Akzessorietät ) cease to exist by operation of mandatory German law.

 

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8.2. At any time when the total value of the aggregate security granted by the Pledgor and the other Loan Parties to secure the Secured Obligations (the “ Security ”) which can be expected to be realised in the event of an enforcement of the Security (realisierbarer Wert) exceeds 110% of the Secured Obligations (the “ Limit ”) not only temporarily, the Pledgees shall upon the demand of the Pledgor release such part of the Security ( Sicherheitenfreigabe ) as the Pledgees may in their reasonable discretion determine so as to reduce the realisable value of the Security to the Limit.

8.3. In addition to those valuation procedures stated in any other document constituting security interests in respect of the Secured Obligations, the Pledgor and the Pledgees agree that for the purposes of Clause 8.2, the realisable value of the Shares shall be equal to the value of the Shares as calculated on the basis of the Tax Valuation Act ( Bewertungsgesetz ) and the General Valuation Rules ( Stuttgarter Verfahren ) with regard to the valuation of GmbH-Shares, taking into account the low fungibility of the Shares and possible deficiencies in enforcement proceeds, provided, however, that the Pledgor or the Pledgees may demand a reassessment of the realisable value of all or part of the Security if, in their reasonable opinion, there have been material changes (which are not temporary changes) with respect to the value of all or part of the Security which justify such reassessment.

8.4. If the Pledgor will not have consummated the acquisition of certain shares of Linotype GmbH as contemplated in Preamble (A) within four weeks of the date of this deed, the Pledgees (represented by the Agent) will at the written request of the Pledgor as soon as reasonably practical after the lapse of such four week period release the Pledges ( Pfandfreigabe ) to the Pledgor.

SECTION 9. UNDERTAKINGS OF THE PLEDGOR

9.1. During the term of this Agreement, the Pledgor undertakes to each of the Pledgees:

9.1.1 to take all actions or make all declarations the Agent may reasonably require for perfecting, protecting or enforcing the Pledges intended to be created by this Agreement at its own cost and expense;

9.1.2 except for the First Ranking Pledges: not to create or permit to subsist any encumbrance over all or any of the Shares or any interest therein or otherwise sell, transfer or dispose of the whole or any part of such Shares or any interest therein (including, for the avoidance of doubt, any transfer by means of universal or partial succession ( Gesamtrechtsnachfolge, partielle Gesamtrechtsnachfolge )) or knowingly do or permit to be done, anything out of the ordinary course of business which might reasonably be expected to depreciate, jeopardise or otherwise directly or indirectly prejudice the value of such Shares or any interest therein without the prior written consent of the Agent, acting for and on behalf of the Pledgees;

 

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9.1.3 to obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all authorisations, approvals, licences and consents required in or by the laws and regulations applicable to enable the Pledgor lawfully to enter into and perform its obligations under this Agreement and to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement;

9.1.4 to effect promptly any payments to be made in respect of the Shares;

9.1.5 to notify the Agent promptly of any event or circumstance which might reasonably be expected to have a material adverse effect on the security interest granted hereunder;

9.1.6 in the event of any increase of the capital of German Holdings or in the event of or in connection with any redemption ( Einziehung ) or any other similar event (including without limitation any subsequent new issuance of shares ( Neubildung , Revalorisierung )) relating to any Shares, not to permit, without the prior written consent of the Pledgees acting through the Agent (which consent shall not unreasonably be withheld or delayed), any other party (other than in the proportion of its current shareholding) to subscribe to any shares resulting from any of the aforesaid in respect of German Holdings, and not to defeat, impair or circumvent in any way the rights of the Pledgees created hereunder;

9.1.7 to refrain from any acts or omissions, the purpose or effect of which is the dilution of the value of the Shares (other than dividend distributions in the ordinary course of business) or such Shares ceasing to exist;

9.1.8 to notify the Agent without undue delay of any change in the shareholding in, or the capital contributions to, German Holdings or of any change in the articles of association or the registration of German Holdings in the commercial register and to supply the Agent with a copy of the extract from the commercial register without undue delay after registration of such change has been effected;

9.1.9 at the Agent’s request and upon notice being given to the Pledgor, to furnish to the Agent such information concerning the relevant Shares as is available to the Pledgor, to permit the Agent and its designees to inspect, audit and make copies of and extracts from all records and all other papers in the possession of the Pledgor which pertain to the relevant Shares at all reasonable times during normal business hours, and, upon the request of the Agent, to deliver to the Agent copies of all such records and papers;

9.1.10 to notify the Agent without undue delay of any attachment ( Pfändung ) and/or any third parties bringing claims with respect to the relevant Shares and rights set out in Clause 5.1 which could jeopardise the Pledges or impair their value; and

9.1.11 not to amend the articles of association of German Holdings in a manner which forbids the split of the shares in German Holdings.

 

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9.2. A consent required from the Agent under this Clause 9 may in any event be withheld if the Pledgor cannot provide evidence to the satisfaction of the Agent that the contemplated action for which such consent is required would maintain the full legal and economic quality and effectiveness of the security granted to the Pledgees under this Agreement; in particular the Pledgees may at all times request to hold a pledge over the Shares (and in the case of a merger an equivalent security interest over the shares and/or interests in the surviving entity) of German Holdings in accordance with the terms of this Agreement.

SECTION 10. REPRESENTATIONS AND WARRANTIES

The Pledgor represents and warrants by way of an independent declaration of gurantee ( unabhängiges Garantieversprechen ) to each of the Pledgees that:

10.1. it holds the Existing Share in German Holdings;

10.2. German Holdings and the Pledgor itself are validly existing and German Holdings is neither unable to pay its debts as and when they fall due ( zahlungsunfähig ), over-indebted ( überschuldet ) nor subject to imminent illiquidity ( drohende Zahlungsunfähigkeit ) (all within the meaning of Sections 17 to 19, inclusive, of the German Insolvency Act ( InsO )) or subject to any insolvency proceedings ( Insolvenzverfahren ) and the Pledgor is not subject to any similar events pursuant to the law of the relevant jurisdiction relating to the Pledgor;

10.3. except for any consent to the splitting of any Future Shares as described in Clause 3.4, the validity and enforceability of this Agreement is not subject to any consent or other (legal or non-legal) requirement or condition which has not been obtained, and a shareholders’ resolution approving this Agreement has been obtained, where necessary;

10.4. it is and will be the sole legal and beneficial ( wirtschaftlicher ) owner of all Shares and it is not subject to any restriction, of any kind (other than the restrictions provided for in the Loan Documents) and has the corporate power and the authority to enter into this Agreement;

10.5. the Shares are free from any encumbrances (including pre-emption rights), save for the Pledges granted hereunder and the First Ranking Pledges; for the avoidance of doubt, the representation and warranty under this Clause 10.5 excludes the First Ranking Pledges;

10.6. the Existing Share is fully paid in and has not been repaid and any Future Share will be fully paid in, and as of the date hereof there is no nor will there be any obligation for a shareholder to make additional contributions ( Einlagen, Agio, Nachschüsse or the like);

10.7. all facts capable of being entered into the commercial register of German Holdings have been entered into the commercial register;

10.8. the place from which German Holdings is in fact administered and where all material managerial decisions are taken ( tatsächlicher Verwaltungssitz ) is situated in the Federal Republic of Germany; and

10.9. the Existing Share is the only share(s) in German Holdings in existence at the date hereof and there are no silent partnership agreements or similar arrangements by which a third party is entitled to a participation in the profits or revenue of German Holdings.

 

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SECTION 11. WAIVER OF RIGHTS

11.1. The Pledgor hereby waives the rights it may have pursuant to Sections 1211 and 770 of the German Civil Code of revocation ( Anfechtbarkeit ) and set-off ( Aufrechenbarkeit ). In the case of enforcement Section 1225 of the German Civil Code shall not apply.

11.2. The parties agree that -in the event of enforcement of the Pledges (or any of them) or in the event that the Pledgor repays any debt of any Loan Party under any of the Loan Documents (i) none of the Secured Obligations shall pass to the Pledgor (whether by subrogation or otherwise) and (ii) the Pledgor shall not be entitled to any right or claim (including any recourse claim ( Rückgriffsanspruch ) against any Loan Party) resulting therefrom in each case (i) and (ii) until complete satisfaction of the Secured Obligations.

SECTION 12. INDEMNITY

12.1. Neither the Agent nor the other Pledgees shall be liable for any loss or damage suffered by the Pledgor save in respect of such loss or damage which is suffered as a result of the wilful misconduct or gross negligence of the Agent or the other Pledgees.

12.2. The Pledgor will indemnify the Agent and each Pledgee and keep the Agent and each Pledgee, or attorney, manager, agent or other person appointed by the Agent, indemnified against any losses, actions, claims, expenses, demands and liabilities which may be incurred by or made against any of the Agent or the other Pledgees for anything done or omitted in the exercise or purported exercise of the powers contained herein and occasioned by any breach of the Pledgor of any of its obligations or undertakings herein contained other than to the extent that such losses, actions, claims, expenses, demands and liabilities are incurred or made against the Pledgees as a result of the wilful misconduct or gross negligence of the Pledgees or, as the case may be, the Agent.

SECTION 13. RELEASE FROM RESTRICTIONS ON SELF-DEALING

The Pledgees hereby release the Agent from the restrictions on self-dealing under Section 181 of the German Civil Code ( BGB ).

SECTION 14. ASSIGNEES AND TRANSFEREES

This Agreement shall be binding upon the parties hereto and their respective successors in law. The Agent and the Pledgees shall be entitled to assign or otherwise transfer any and all of their rights and duties under this Agreement to third parties. The Pledgor shall not be entitled to such transfer. The parties hereto hereby agree that any person who is an assignee and transferee of a Secured Party pursuant to the Loan Documents, upon such assignment and transfer being effected, becomes a Pledgee for the purposes of this Agreement.

 

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SECTION 15. DURATION AND INDEPENDENCE

15.1. This Agreement shall remain in full force and effect until complete satisfaction of the Secured Obligations. In a case where the Pledges cease to exist as a consequence of (i) the Secured Obligations having been discharged only temporarily or (ii) the Amended Credit Agreement or any other Loan Document being novated, the Pledgor shall without delay grant to the Pledgees new pledges at such economic terms as come as close as possible to the Pledges.

15.2. This Agreement shall create a continuing security and no change, amendment, supplement or (where legally possible) novation whatsoever in the Amended Credit Agreement or in any other Loan Document shall affect the validity or the scope of this Agreement nor the obligations which are imposed on the Pledgor hereunder.

15.3. This Agreement is independent from any other security or guarantee which may have been or will be given to the Pledgees with respect to any obligation of the Pledgor. None of such other security interests shall prejudice, or shall be prejudiced by, or shall be merged in any way with, this Agreement.

SECTION 16. COSTS AND EXPENSES, COPIES

All costs, charges, fees and expenses together with any applicable value added tax arising from this Agreement or reasonably incurred in connection with its preparation, execution, notarial recording, amendments, restatements, novation, waivers, consents or suspension of rights or any proposal for any of the same (in each case-including fees for legal advisers) relating to this Agreement shall be borne by the Pledgor.

Certified copies shall be received:

each party

the Tax Authority for Corporations

SECTION 17. NOTICES AND LANGUAGE

17.1. Any notice or other communication under or in connection with this Agreement shall be in writing and shall be delivered personally, or sent by mail, fax transmission or cable (the latter two to be affirmed in writing) to the following addresses:

 

to the Pledgor:    Monotype Imaging Holdings Corp.
Address:    500 Unicorn Park Drive, 2nd floor, Woburn, MA 01801, U.S.A.
Fax:    +1 (781) 970-6001
Attention:    Jackie Arthur

 

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with copies to:   
   Goodwin Procter LLP
Address:    Exchange Place, 53 State Street, Boston MA 02109, U.S.A.
Fax:    +1 (617) 523 1231
Attention:    Edward Matson Sibble, Jr., Esq
to the Pledgees:    D.B. Zwirn Special Oppourtunities Fund, L.P., in its capacity as Agent for and on behalf of the Pledgees
Address:    745 Fifth Avenue, 180’ Floor, New York, New York 10151, U.S.A.
Fax:    +1 (646) 720-9105
Attention:    Vasan Kesavan, Esq.
with copies to:   
   Schulte Roth & Zabel LLP
Address:    919 Third Avenue, New York, NY 10022, U.S.A
Fax:    +1 (212) 593-5955
Attention:    Frederic Ragucci, Esq.

or to such address as the recipient may have notified in writing. Proof of posting or dispatch of any notice or communication to the Pledgor shall be deemed ( widerlegbare Vermutung ) to be proof of receipt in the case of a letter, on the second business day (but in the case of a letter being shipped from one country to another: on the third business day) in the country of receipt after posting and in the case of a fax transmission or cable on the business day in the country of receipt immediately following the date of its dispatch.

17.2. Save for the notice pursuant to Section 16 of the German Act Pertaining to Limited Liability Companies ( GmbHG ), any notice or other communication under or in connection with this Agreement shall be in the English language or, if in any other language, accompanied by a translation into English. In the event of any conflict between the English text and the text in any other language, the English text shall prevail, except that where a German translation of a legal term appears in such text, the German translation shall prevail.

 

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SECTION 18. PARTIAL INVALIDITY; NO IMPLIED WAIVER

18.1. Without prejudice to any other provision hereof, if at any time any one (or more) provision(s) hereof is or becomes invalid, illegal or unenforceable in any respect in any jurisdiction or with respect to any party, or if the parties become aware of any omission ( Vertragslücke ) hereto of any terms which were intended to be included in this Agreement, such invalidity, illegality, unenforceability in such jurisdiction or with respect to such party or parties or such omission shall not, to the fullest extent permitted by applicable law, render invalid, illegal or unenforceable such provision or provisions in any other jurisdiction or with respect to any other party or parties hereto and shall not affect or impair the validity, legality and enforceability of the remaining provisions hereof. Such invalid, illegal or unenforceable provision or such omission shall be deemed to be replaced by the parties with a provision which comes as close as reasonably possible to the commercial intentions of the invalid, illegal, unenforceable or omitted provision.

18.2. No failure to exercise, nor any delay in exercising, on the part of the Agent or the other Pledgees (or any of them), any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies provided hereunder are cumulative and not exclusive of any rights or remedies provided by law.

18.3. In particular, the Pledges shall not be affected and shall in any event extend to any and all Shares in German Holdings even if the number or nominal value of the Existing Share or the aggregate share capital of German Holdings as stated in Clause 2 are inaccurate or deviate from the actual facts.

SECTION 19. AMENDMENTS

Any amendments, changes or variations to this Agreement, including this Clause 19, shall be made in writing, unless notarial form by operation of law is required.

SECTION 20. COMPANY’S CONFIRMATION

German Holdings confirms that it has taken notice of this Agreement and of the pledges of rights pursuant to this Agreement.

SECTION 21. CHOICE OF LAW; PLACE OF JURISDICTION

21.1. This Agreement is governed by, and shall be construed in accordance with, the laws of the Federal Republic of Germany.

21.2. Each of the parties hereto irrevocably agrees that the District Court ( Landgericht ) Munich I ( München I ), Federal Republic of Germany, shall, subject to Clause 21.3 below, have exclusive jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Agreement and, for such purposes, irrevocably submits to the jurisdiction of such court.

 

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21.3. The submission to the jurisdiction of the court referred to in Clause 21.2 shall not (and shall not be construed so as to) limit the right of the Pledgees to take proceedings against the Pledgor in any other court of competent jurisdiction, nor shall the taking of proceedings against the Pledgor in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction (whether concurrently or not) if and to the extent permitted by applicable law.

The officiating notary advised the parties hereto:

that a pledge is a security instrument of strictly accessory nature, that a pledge will not become effective prior to the valid creation and existence of the respective right or claim to be pledged and only if, to the extent that, and as long as, the underlying secured claims do in fact exist and the nexus ( Verknüfpfung ) between the secured claims and the pledge is not dissolved, that the creditors of the secured claims and the pledgees must be identical, and that a person not being a party to this Notarial Deed may only become a pledgee if mandatory provisions of German law are respected;

that there is no bona fide creation, acquisition nor ranking of a pledge of shares of German limited liability companies (which means that the pledgee is not protected if the shares purported to be pledged do not exist, have not been legally acquired, have been previously transferred to a third party, or have been previously encumbered for the benefit of a third party), and that the notary has not examined whether the Pledgor is the owner of the Existing Share and whether the Existing Share has been transferred or encumbered previously;

that second priority pledge interests will not be created unless each person appearing is duly authorized to represent the respective parties hereto for purposes of executing the agreement or the respective parties have subsequently ratified the declarations of the respective person appearing;

that the parties hereto are, by operation of law, jointly and severally liable with respect to the payment of all notarial fees, irrespective of any internal agreement passed in that respect.

The present deed with exhibit 1 were read aloud in the presence of the notary to the persons appearing, approved by them and signed by the notary and the persons appearing in their own hands as follows:

 

/s/ Sabine Heinrich     /s/ Alexander Benesch
Sabine Heinrich     Alexander Benesch

 

/s/ Wolfgang Kircher
Wolfgang Kircher

 

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Exhibit 1

Lenders

D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P., New York, NY, United States of America

BERNARD NATIONAL LOAN INVESTORS, LTD., New York, NY, United States of America

BERNARD GLOBAL LOAN INVESTORS, LTD., New York, NY, United States of America

ACM, LLC, New York, NY, United States of America

HBK MASTER FUND L.P., Dallas, TX, United States of America

 

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I hereby certify that this is a true copy of the original.

Munich, 1. August 2006

 

/s/ Alexander Benesch

Alexander Benesch

Notary Public

 

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Exhibit 10.56

Roll No: 1827/ B / 2006

Done this 31st day of July 2006 at Munich

Before the undersigned notary

Alexander Benesch

with his offices at Leopoldstraße 18, 80802 Munich,

appeared today

1. Ms. Sabine Heinrich , born 2 nd of March 1978, with her business address c/o SJ Berwin LLP, Maria-Theresia-Straße 5, 81625 Munich, who is not acting in his own name, but on the basis of purported powers of attorney ( auf Grund behaupteter Vollmachten ), excluding any personal liability, in the name of each of

(a) Monotype Imaging Holdings Corp ., a Delaware corporation with business address 500 Unicorn Park Drive, 2nd floor, Woburn, MA 01801, U.S.A.,

(b) Blitz 06-683 GmbH (in the future, after change of company name becomes effective, Monotype Imaging Germany GmbH), a German limited liability company with its seat in Munich; the relocation of the seat to Bad Homburg has been resolved but not yet entered in the commercial register

The contracting parties will provide evidence of the respective power of representation ( Vertretungsnachweise ) amongst one another. Each of them hereby waives to have any evidence of power of representation attached to this deed.

2. Dr. Wolfgang Kircher , born 10`h of December 1970, with his business address c/o Hogan & Hartson Raue LLP, Schackstraße 1, 80539 Munchen, who is not acting in his own name, but on the basis of a purported power of attorney, excluding any personal liability, in the name of

Wells Fargo Foothill, Inc., a California corporation with business address One Boston Place, Boston, MA 02108, U.S.A., which, in turn, is acting in its own name and, on the basis of purported powers of attorney, in the name of each of the lenders listed in Exhibit I

(hereinafter these institutions and Wells Fargo Foothill, Inc. each referred to as the “ Lender ”, collectively as the “ Lenders ”).

The contracting parties will provide evidence of the respective power of representation ( Verfretungsnachweise ) amongst one another. Each of them hereby waives to have any evidence of power of representation attached to this deed.


The person appearing under No. 1 established his identity by her identity card ( Personalausweis ) No. 802331576.

The person appearing under No. 2 established his identity by his identity card ( Personalausweis ) no 5184043939.

The persons appearing requested (i) the notarisation of the following Share Pledge Agreement in order to create a pledge over a part in the amount of EUR 16,250 of a share of EUR 24,750 in Blitz 06-683 GmbH and (ii) that their declarations be made in the English language. The officiating notary, who has a good command of the English language, confirmed that the persons appearing also have a good command of the English language. The parties waived their right to a translation after having been informed thereof by the officiating notary.

On enquiry it was concluded by all parties that no prior involvement of the officiating notary exists within the meaning of Section 3 sub-section 1 no. 7 of the German Act on Public Recordings -BeurkG .

The persons appearing declared and accepted each for the parties represented by them that they do not assume any personal liability in connection with their acting as attorneys in fact, in particular with respect to the validity of the powers of attorney.

 

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Requesting notarisation thereof, the persons appearing then declared the following:

THIS SHARE PLEDGE AGREEMENT (this “ Agreement ”) is entered into as of July 31, 2006 by and among Monotype Imaging Holdings Corp ., a Delaware corporation 1 “ Pledgor ”), Blitz 06-683 GmbH, a German limited liability company (“ German Holdings ”), Wells Fargo Foothill, Inc ., a California corporation, as agent (“ Agent ”) and the Lenders (hereinafter together with the Agent referred to each as an “ Original Pledgee ” and collectively as the “ Original Pledgees ” and together with any Future Pledgee (as defined below), each as a “ Pledgee ” and collectively as the “ Pledgees ”).

WHEREAS:

(A) German Holdings was acquired as shelf company by the Pledgor to acquire certain shares in Linotype GmbH with its seat in Bad Homburg v.d.Höhe from Heidelberger Druckmaschinen Aktiengesellschaft (“ Linotype Seller ”), and the Pledgor intends to acquire certain assets from the Linotype Seller, all pursuant to a share purchase agreement dated as of or about the date hereof by and among Linotype Seller and the Pledgor and German Holdings (collectively, the “ Linotype Acquisition ”).

(B) In connection with the Linotype Acquisition, the Pledgor (as Parent), the Agent, the Original Pledgees, Monotype Imaging, Inc and International Typeface Corporation have entered into that certain Second Amendment To, and Consent and Waiver Under, Credit Agreement dated July 28, 2006. The credit agreement by and among Monotype Imaging Holdings Corp., Imaging Acquisition Corporation, Agfa Monotype Corporation and International Typeface Corporation, the lenders that are signatories thereto and Wells Fargo Foothill, Inc., dated November 5, 2004, as amended by (i) that certain First Amendment to, and Waiver and Consent under, Credit Agreement, Investor Intercreditor Agreement and Security Agreement dated August 24, 2005 and (ii) the aforementioned Second Amendment is hereinafter referred to as the “ Amended Credit Agreement ”. After restructuring, the parties to the Amended Credit Agreement are: Monotype Imaging Holdings Corp., a Delaware corporation, Monotype Imaging, Inc., a Delaware corporation, International Typeface Corporation, a New York corporation, the lenders that are signatories thereto and Wells Fargo Foothill, Inc., a California corporation.

(C) It is a condition precedent under the Amended Credit Agreement that the Pledgor enters into this Agreement.

NOW, IT IS HEREBY AGREED as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION

1.1. In this Agreement:

Collateral Documents ” means any document providing for a security interest in favor of the Secured Parties (or any of them) in respect of the Secured Obligations.

Enforcement Event ” means that an Event of Default has occurred and notice of the intention to enforce all or any of the security interests granted under this Agreement has been given to the Pledgor by the Agent.

 

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Event of Default ” means an event which would, inter alia, entitle the Secured Parties to cancel their commitments under the Amended Credit Agreement and/or to declare any amounts outstanding under any Loan Document due and payable.

Fee Letter ” means that certain amended fee letter dated as of or about the date hereof between, inter alia, the Pledgor as Parent and the Agent, as the same may be amended.

Future Pledgee ” means any person, which by way of transfer, assignment, novation, succession or otherwise becomes a pledgee hereunder, other than an Original Pledgee.

Future Shares ” means all additional shares in the capital of German Holdings in whatever nominal value which the Pledgor may acquire in the future in the event of an increase of share capital of German Holdings or otherwise.

Loan Documents ” means the Amended Credit Agreement, each Collateral Document, the Fee Letter and any certificate, letter or other document executed in connection with, or pursuant to, the Amended Credit Agreement.

Loan Parties ” means the borrowers and the guarantors under the Amended Credit Agreement and each entity that shall have become a borrower or guarantor under the Amended Credit Agreement and “ Loan Party ” means any of them.

Secured Obligations ” means any and all obligations (present and future, actual and contingent, matured or not matured, liquidated or unliquidated, whether incurred solely or jointly with any other person and whether as principal or surety, in any currency or currencies, together with all interest accruing thereon (calculated in accordance with the Amended Credit Agreement), whether before or after judgment, and all costs, charges and expenses incurred in connection therewith) which are or become due, owing or payable by any Loan Party to the Pledgees (or any of them) (including any Future Pledgee by way of transfer or assignment ( Einzel- und/oder Gesamtrechtsnachfolge including Vertragsübernahme ) or novation ( Novation ) of any right or obligation as provided under the relevant Loan Document) under the Loan Documents (as each may be amended, varied, novated, supplemented or extended from time to time), and including, but without limitation to, any guarantee provided for in the Loan Documents) and any claims of the Pledgees (or any of them) arising under any abstract acknowledgement of indebtedness ( abstraktes Schuldanerkenntnis ) granted in relation to the Loan Documents and any claims of the Agent in its capacity as the joint and several creditor ( Gesamtgläubiger ) of each and every obligation of any Loan Party towards each of the Pledgees under the Loan Documents, and including obligations arising in connection with advances made under the Amended Credit Agreement during any extension period or by any transferee thereunder. The Secured Obligations shall, for the avoidance of doubt, also include obligations incurred by any Loan Party on or after the opening of insolvency proceedings, shall apply to any Loan Party irrespective of its corporate structure and, if applicable, any corporate restructuring or transformation of any Loan Party and shall also apply to any contingent obligations of any Loan Party towards any of the Pledgees on the grounds of any invalidity or unenforceability of any Loan Document, in particular claims on the grounds of unjustified enrichment ( ungerechtfertigte Bereicherung ).

 

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Secured Parties ” means the Agent and the Pledgees.

1.2. A reference to any person in this Agreement includes such person’s successors, transferees and assignees.

Words importing the singular shall include the plural and vice versa unless the context requires otherwise.

SECTION 2. PLEDGED SHARES

The Pledgor holds all shares of German Holdings, consisting of two shares-one with a nominal value of EUR 24,750 (“ Share 1 ”) and one with a nominal value of EUR 250 (“ Share 2 ”) - with the aggregate stated share capital ( Stammkapital ) of EUR 25,000 (collectively, the “ Existing Share ”).

SECTION 3. PLEDGE

3.1. The Pledgor hereby grants first ranking pledges to each of the Pledgees over such part of Share 1 that has a nominal value of EUR 16,250 (i.e. 65% of the aggregate share capital of EUR 25,000) and 65% of the Future Shares in German Holdings (such part of Share 1 that has a nominal value of EUR 16,250 and 65% of the Future Shares are hereinafter referred to as the “ Shares ”) together with all ancillary rights and claims associated with the Shares referred to in Clause 5 hereof (together the “ Pledges ” and each a “ Pledge ”).

3.2. The Pledges shall be separate and shall rank equally with each other. The Pledges shall rank ahead of any other security interest or third party right now in existence or created in future in or over any of the Shares. The validity and effect of each of the Pledges shall be independent from the validity and the effect of the other Pledges created hereunder.

3.3. Each Pledgee hereby accepts its Pledge for itself. The Agent, as representative without power of attorney ( Vertreter ohne Vertretungsmacht ), accepts the respective Pledge for and on behalf of each Future Pledgee in relation to the Loan Documents. Each Future Pledgee to whom any claim or part of a claim arising under any Loan Document will have been transferred (including, for the avoidance of doubt, a transfer by way of novation ( Novation )) in accordance with the relevant provisions of the relevant Loan Document ratifies such acceptance ( Genehmigung der Erklärung des Vertreters ohne Vertretungsmacht ) for itself by accepting such transfer, thereby becoming a Pledgee, it being understood that any future or conditional claim ( zukünftiger oder bedingter Anspruch ) of such Future Pledgee arising under any Loan Document (in each case, for the avoidance of doubt, as amended, varied, novated, supplemented or extended from time to time) shall be secured by the Pledges constituted hereunder. All parties hereby confirm that the validity of the Pledges granted hereunder shall not be affected by the Agent acting as representative without power of attorney for each Future Pledgee.

3.4. German Holdings hereby declares its consent (i) to the Pledges and (ii) pursuant to Section 17 of the German Act Pertaining to Limited Liability Companies ( GmbHG ) to the splitting of its Existing Share, as described in Clause 3.1, in the event of a sale in the course of

 

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the enforcement of the pledge. The Pledgor as sole shareholder of German Holdings approves of such consent. The Pledgor undertakes to procure German Holdings’ consent to the splitting of any Future Shares in accordance with Clause 3.1 without delay after the creation of such Future Shares.

3.5. The pledge over a part of Share 1 as agreed in the preceding paragraphs is hereby notified to German Holdings in accordance with section 16 paragraph 1 GmbHG. German Holdings hereby confirms that it has taken notice of such notification.

SECTION 4. PURPOSE OF THE PLEDGES

The Pledges are constituted in order to secure the prompt and complete satisfaction of any and all Secured Obligations.

SECTION 5. SCOPE OF THE PLEDGES

5.1. The Pledges constituted by this Agreement include the present and future rights to receive

5.1.1 dividends payable in relation to the Shares, if any;

5.1.2 liquidation proceeds ( Liquidationserlöse ), consideration for redemption ( Einziehungsentgelt ), repaid capital in case of a capital decrease ( Kapitalherabsetzung ) or repaid capital surplus or paid-in surplus, any compensation in case of termination ( Kündigung ) and/or withdrawal ( Austritt ) of a shareholder of German Holdings, the surplus in case of surrender ( Preisgabe );

5.1.3 all other pecuniary claims associated with the Shares, including without limitation any proceeds or other consideration generated as a result of any transfer of the Shares; and

5.1.4 newly issued or other additional shares in German Holdings.

5.2. Notwithstanding that the dividends are pledged hereunder, the Pledgor shall be entitled to receive and retain all dividend payments whether in cash, by the issue of any loan note or debt instrument or in specie in respect of the Shares until such time as an Event of Default has occurred.

5.3. Notwithstanding Clause 5.2 above, (i) distributions as set forth in Clauses 5.1.2 and 5.1.3, (ii) distributions paid or payable (a) other than in cash ( Sachdividenden ) or (b) in respect of an instrument or other asset received in respect of, or in exchange for, the Shares and (iii) cash or other asset or instrument paid, payable or otherwise distributed in respect of principal of the Shares shall, with effect from the creation of the Pledges, forthwith be delivered to the Agent, acting for and on behalf of the Pledgees, to be held as security and shall, if received by the Pledgor, be received as holder for the Pledgees and segregated from the other property or funds of the Pledgor and be forthwith delivered to the Agent, acting for and on behalf of the

 

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Pledgees as security in the same form as so received (with any necessary endorsement), unless, in the case of (ii) or (iii) above, such distribution is in the ordinary course of business. Any further reaching obligations of German Holdings and/or the Pledgor in respect of the use of profits and/or dividends shall not be affected by this Clause 5.3.

SECTION 6. EXERCISE OF VOTING RIGHTS

6.1. The voting rights relating to the Shares remain with the Pledgor. The Pledgor, however, shall at all times until the full satisfaction of all Secured Obligations or the release of the Pledges be required, in exercising its voting rights, to act in good faith to ensure that the Pledges are not in any way adversely affected. The Pledgor undertakes to exercise its voting rights from time to time in such a way that, without the prior consent of the Pledgees (which consent may not unreasonably be withheld or delayed) no resolutions are passed which adversely affect the value of the Shares (other than by way of dividend distributions in the ordinary course of business), in particular, but not limited to, the reduction or increase of the share capital of German Holdings, any merger of German Holdings or its liquidation, dissolution or the termination of its existence or the cessation of its business or part of its business.

6.2. The Pledgor shall not take, or participate in, any action which results or might result in the Pledgor’s loss of ownership of the Shares, and any other transaction which would have the same result as a sale, transfer, encumbrance or other disposal of the relevant Shares or which would for any other reason be inconsistent with the security interest of the Pledgees or the security purpose (as described in Clause 4 hereof) or defeat, impair or circumvent the rights of the Pledgees without the prior written consent of the Pledgees.

6.3. The Pledgor shall inform the Pledgees by notification to the Agent without undue delay of all matters concerning German Holdings of which it is aware and which could materially adversely affect the security interest of the Pledgees. In particular, the Pledgor shall (i) notify the Pledgees by notification to the Agent forthwith of any shareholders’ meeting at which a shareholders’ resolution is intended to be adopted which could have a material adverse effect upon any of the Pledges and (ii) send to the Agent without undue delay a copy of the minutes of any such shareholders’ meeting. The Pledgor shall allow, following an Event of Default, the Agent (acting on behalf of the Pledgees) or, as the case may be, its proxy or any other person designated by the Pledgees to participate in all such shareholders’ meetings of German Holdings. Subject to the provision contained in Clause 15.1 hereof, the Pledgees’ right to attend the shareholders’ meetings shall lapse immediately upon complete satisfaction and discharge of the Secured Obligations. Without prejudice to the aforesaid, as long as any of the Pledges remain in effect, the Pledgor shall send to the Agent a copy of the minutes of any ordinary or extraordinary shareholders’ meeting relating to German Holdings.

SECTION 7. THE PLEDGEES’ RIGHT OF ENFORCEMENT

7.1. If the requirements set forth in Sections 1273, 1204 et seq. of the German Civil Code ( HGB ) and Section 368 of the German Commercial Code ( HGB ) with regard to the enforcement of the Pledges are satisfied ( Pfandreife ), in particular, if

7.1.1 any Loan Party has failed to pay any sum due and payable under the Secured Obligations and the Secured Obligations have been declared immediately due and payable by the Pledgees acting through the Agent by serving a written notice on the relevant Loan Party, or

 

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7.1.2 any Loan Party has failed to pay any sum due and payable under the Secured Obligations and the Secured Obligations have been declared to be due and payable by written notice to the relevant Loan Party by the Agent at a certain date or within a certain period of time specified in such notice,

and an Enforcement Event has occurred then, in order to enforce the Pledges, the Pledgees acting through the Agent may at any time thereafter avail themselves of all rights and remedies that a pledgee has upon the default of a pledgor under the laws of the Federal Republic of Germany. The Pledgees shall be entitled to have all the Shares sold at public auction or any other permitted proceeding without a prior court ruling or court proceeding ( vollstreckbarer Titel ) notwithstanding Section 1277 of the German Civil Code ( BGB ). In the event of an enforcement by way of public auction, the Pledgor hereby expressly agrees that five (5) business days prior written notice to the Pledgor of the place and time of any such public auction shall be sufficient. The public auction may take place at any place in the Federal Republic of Germany.

7.2. The Pledgor shall bear all costs and fees (including costs for court proceedings and legal fees) and turnover tax, if any, in connection with the realisation of the Pledges. The Pledgor shall, at its own expense, render forthwith all assistance reasonably necessary in order to facilitate the prompt exercise by the Pledgees (or any of them) acting through the Agent of any right the Pledgees may have under German law.

7.3. Until the Secured Obligations have been satisfied and discharged in full, the Agent, acting for and on behalf of the Pledgees, shall be entitled to treat all enforcement proceeds which have not been applied or must not be applied in satisfaction of the Secured Obligations as additional collateral for the Secured Obligations for the benefit of the Pledgees.

7.4. Provided that the requirements for enforcement referred to under Clause 7.1 above are satisfied, and with effect from the creation of the Pledges, all subsequent dividend payments, if any, which will be made to the Pledgor and, as the case may be, all payments based on similar ancillary rights attributed to the Shares may be applied by the Pledgees acting through the Agent in satisfaction in whole or in part of the Secured Obligations or treated as additional collateral.

7.5. Even if the requirements for enforcement referred to under Clause 7.1 above are satisfied, the Pledgees shall not, whether as proxy or otherwise, be entitled to exercise the voting rights attached to the Shares. However, the Pledgor shall, upon the occurrence of an Event of Default, have the obligations and the Pled gees shall have the rights set forth in Clause 6.3 above regardless of which resolutions are intended to be adopted.

7.6. The proceeds from the enforcement of the Pledges shall, after deduction of enforcement costs which are to be borne by the Pledgor in accordance with Clause 7.2, be paid to the Agent.

 

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7.7. The Agent acting for and on behalf of the Pledgees may, in its sole discretion, determine which of several security interests, if applicable, shall be used to satisfy the Secured Obligations.

7.8. After the complete, unconditional, irrevocable and full payment and discharge of all Secured Obligations any remaining proceeds resulting from the enforcement of the Pledges (or part thereof) shall be transferred to the Pledgor at its own cost and expense.

SECTION 8. RELEASE OF PLEDGES (PFANDFREIGABE)

8.1. Upon complete and irrevocable satisfaction of the Secured Obligations, the Pledgees’ rights hereunder shall lapse and the Pledgees (represented by the Agent) will as soon as reasonably practical confirm in writing the release of the Pledges ( Pfandfreigabe ) to the Pledgor. For the avoidance of doubt, the parties are aware that upon full and complete satisfaction of the Secured Obligations, the Pledges, due to their accessory nature ( Akzessorietät ) cease to exist by operation of mandatory German law.

8.2. At any time when the total value of the aggregate security granted by the Pledgor and the other Loan Parties to secure the Secured Obligations (the “ Security ”) which can be expected to be realised in the event of an enforcement of the Security ( realisierbarer Wert ) exceeds 110% of the Secured Obligations (the “ Limit ”) not only temporarily, the Pledgees shall upon the demand of the Pledgor release such part of the Security ( Sicherheitenfreigabe ) as the Pledgees may in their reasonable discretion determine so as to reduce the realisable value of the Security to the Limit.

8.3. In addition to those valuation procedures stated in any other document constituting security interests in respect of the Secured Obligations, the Pledgor and the Pledgees agree that for the purposes of Clause 8.2, the realisable value of the Shares shall be equal to the value of the Shares as calculated on the basis of the Tax Valuation Act ( Bewertungsgesetz ) and the General Valuation Rules ( Stuttgarter Verfahren ) with regard to the valuation of GmbH-Shares, taking into account the low fungibility of the Shares and possible deficiencies in enforcement proceeds, provided, however, that the Pledgor or the Pledgees may demand a reassessment of the realisable value of all or part of the Security if, in their reasonable opinion, there have been material changes (which are not temporary changes) with respect to the value of all or part of the Security which justify such reassessment.

8.4. If the Pledgor will not have consummated the acquisition of certain shares of Linotype GmbH as contemplated in Preamble (A) within four weeks of the date of this deed, the Pledgees (represented by the Agent) will at the written request of the Pledgor as soon as reasonably practical after the lapse of such four week period release the Pledges ( Pfandfreigabe ) to the Pledgor.

 

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SECTION 9. UNDERTAKINGS OF THE PLEDGOR

9.1. During the term of this Agreement, the Pledgor undertakes to each of the Pledgees:

9.1.1 to take all actions or make all declarations the Agent may reasonably require for perfecting, protecting or enforcing the Pledges intended to be created by this Agreement at its own cost and expense;

9.1.2 except for pledges over the Shares for the benefit of D.B. Zwirn Special Opportunities Fund, L.P. and certain other pledgees as listed on Exhibit 9.1.2 that rank behind the pledges created hereby (the “ Second Ranking Pledges ”): not to create or permit to subsist any encumbrance over all or any of the Shares or any interest therein or otherwise sell, transfer or dispose of the whole or any part of such Shares or any interest therein (including, for the avoidance of doubt, any transfer by means of universal or partial succession ( Gesamtrechtsnachfolge, partielle Gesamtrechtsnachfolge )) or knowingly do or permit to be done, anything out of the ordinary course of business which might reasonably be expected to depreciate, jeopardise or otherwise directly or indirectly prejudice the value of such Shares or any interest therein without the prior written consent of the Agent, acting for and on behalf of the Pledgees;

9.1.3 to obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all authorisations, approvals, licences and consents required in or by the laws and regulations applicable to enable the Pledgor lawfully to enter into and perform its obligations under this Agreement and to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement;

9.1.4 to effect promptly any payments to be made in respect of the Shares;

9.1.5 to notify the Agent promptly of any event or circumstance which might reasonably be expected to have a material adverse effect on the security interest granted hereunder;

9.1.6 in the event of any increase of the capital of German Holdings or in the event of or in connection with any redemption ( Einziehung ) or any other similar event (including without limitation any subsequent new issuance of shares ( Neubildung, Revalorisierung )) relating to any Shares, not to permit, without the prior written consent of the Pledgees acting through the Agent (which consent shall not unreasonably be withheld or delayed), any other party (other than in the proportion of its current shareholding) to subscribe to any shares resulting from any of the aforesaid in respect of German Holdings, and not to defeat, impair or circumvent in any way the rights of the Pledgees created hereunder;

9.1.7 to refrain from any acts or omissions, the purpose or effect of which is the dilution of the value of the Shares (other than dividend distributions in the ordinary course of business) or such Shares ceasing to exist;

9.1.8 to notify the Agent without undue delay of any change in the shareholding in, or the capital contributions to, German Holdings or of any change in the articles of association or the registration of German Holdings in the commercial register and to supply the Agent with a copy of the extract from the commercial register without undue delay after registration of such change has been effected;

 

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9.1.9 at the Agent’s request and upon notice being given to the Pledgor, to furnish to the Agent such information concerning the relevant Shares as is available to the Pledgor, to permit the Agent and its designees to inspect, audit and make copies of and extracts from all records and all other papers in the possession of the Pledgor which pertain to the relevant Shares at all reasonable times during normal business hours, and, upon the request of the Agent, to deliver to the Agent copies of all such records and papers;

9.1.10 to notify the Agent without undue delay of any attachment ( Pfändung ) and/or any third parties bringing claims with respect to the relevant Shares and rights set out in Clause 5.1 which could jeopardise the Pledges or impair their value; and

9.1.11 not to amend the articles of association of German Holdings in a manner which forbids the split of the shares in German Holdings.

9.2. A consent required from the Agent under this Clause 9 may in any event be withheld if the Pledgor cannot provide evidence to the satisfaction of the Agent that the contemplated action for which such consent is required would maintain the full legal and economic quality and effectiveness of the security granted to the Pledgees under this Agreement; in particular the Pledgees may at all times request to hold a pledge over the Shares (and in the case of a merger an equivalent security interest over the shares and/or interests in the surviving entity) of German Holdings in accordance with the terms of this Agreement.

SECTION 10. REPRESENTATIONS AND WARRANTIES

The Pledgor represents and warrants by way of an independent declaration of gurantee ( unabhängiges Garantieversprechen ) to each of the Pledgees that:

10.1. it holds the Existing Share in German Holdings;

10.2. German Holdings and the Pledgor itself are validly existing and German Holdings is neither unable to pay its debts as and when they fall due ( zahlungsunfähig ), over-indebted ( überschuldet ) nor subject to imminent illiquidity ( drohende Zahlungsunfähigkeit ) (all within the meaning of Sections 17 to 19, inclusive, of the German Insolvency Act ( InsO )) or subject to any insolvency proceedings ( lnsolvenzverfahren ) and the Pledgor is not subject to any similar events pursuant to the law of the relevant jurisdiction relating to the Pledgor;

10.3. except for any consent to the splitting of any Future Shares as described in Clause 3.4, the validity and enforceability of this Agreement is not subject to any consent or other (legal or non-legal) requirement or condition which has not been obtained, and a shareholders’ resolution approving this Agreement has been obtained, where necessary;

10.4. it is and will be the sole legal and beneficial ( wirtschaftlicher ) owner of all Shares and it is not subject to any restriction of any kind (other than the restrictions provided for in the Loan Documents) and has the corporate power and the authority to enter into this Agreement;

 

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10.5. the Shares are free from any encumbrances (including pre-emption rights), save for the Pledges granted hereunder; for the avoidance of doubt, the representation and warranty under this Clause 10.5 excludes the Second Ranking Pledges;

10.6. the Existing Share is fully paid in and has not been repaid and any Future Share will be fully paid in, and as of the date hereof there is no nor will there be any obligation for a shareholder to make additional contributions ( Einlagen, Agio, Nachschüsse or the like);

10.7. all facts capable of being entered into the commercial register of German Holdings have been entered into the commercial register;

10.8. the place from which German Holdings is in fact administered and where all material managerial decisions are taken ( tatsächlicher Verwaltungssitz ) is situated in the Federal Republic of Germany; and

10.9. the Existing Share is the only share(s) in German Holdings in existence at the date hereof and there are no silent partnership agreements or similar arrangements by which a third party is entitled to a participation in the profits or revenue of German Holdings.

SECTION 11. WAIVER OF RIGHTS

11.1. The Pledgor hereby waives the rights it may have pursuant to Sections 1211 and 770 of the German Civil Code of revocation ( Anfechtbarkeit ) and set-off ( Aufrechenbarkeit ). In the case of enforcement Section 1225 of the German Civil Code shall not apply.

11.2. The parties agree that in the event of enforcement of the Pledges (or any of them) or in the event that the Pledgor repays any debt of any Loan Party under any of the Loan Documents (i) none of the Secured Obligations shall pass to the Pledgor (whether by subrogation or otherwise) and (ii) the Pledgor shall not be entitled to any right or claim (including any recourse claim ( Rückgriffsanspruch ) against any Loan Party) resulting therefrom in each case (i) and (ii) until complete satisfaction of the Secured Obligations.

SECTION 12. INDEMNITY

12.1. Neither the Agent nor the other Pledgees shall be liable for any loss or damage suffered by the Pledgor save in respect of such loss or damage which is suffered as a result of the wilful misconduct or gross negligence of the Agent or the other Pledgees.

12.2. The Pledgor will indemnify the Agent and each Pledgee and keep the Agent and each Pledgee, or attorney, manager, agent or other person appointed by the Agent, indemnified against any losses, actions, claims, expenses, demands and liabilities which may be incurred by or made against any of the Agent or the other Pledgees for anything done or omitted in the exercise or purported exercise of the powers contained herein and occasioned by any breach of the Pledgor of any of its obligations or undertakings herein contained other than to the extent that such losses, actions, claims, expenses, demands and liabilities are incurred or made against the Pledgees as a result of the wilful misconduct or gross negligence of the Pledgees or, as the case may be, the Agent.

 

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SECTION 13. RELEASE FROM RESTRICTIONS ON SELF-DEALING

The Pledgees hereby release the Agent from the restrictions on self-dealing under Section 181 of the German Civil Code ( BGB ).

SECTION 14. ASSIGNEES AND TRANSFEREES

This Agreement shall be binding upon the parties hereto and their respective successors in law. The Agent and the Pledgees shall be entitled to assign or otherwise transfer any and all of their rights and duties under this Agreement to third parties. The Pledgor shall not be entitled to such transfer. The parties hereto hereby agree that any person who is an assignee and transferee of a Secured Party pursuant to the Loan Documents, upon such assignment and transfer being effected, becomes a Pledgee for the purposes of this Agreement.

SECTION 15. DURATION AND INDEPENDENCE

15.1. This Agreement shall remain in full force and effect until complete satisfaction of the Secured Obligations. In a case where the Pledges cease to exist as a consequence of (i) the Secured Obligations having been discharged only temporarily or (ii) the Amended Credit Agreement or any other Loan Document being novated, the Pledgor shall without delay grant to the Pledgees new pledges at such economic terms as come as close as possible to the Pledges.

15.2. This Agreement shall create a continuing security and no change, amendment, supplement or (where legally possible) novation whatsoever in the Amended Credit Agreement or in any other Loan Document shall affect the validity or the scope of this Agreement nor the obligations which are imposed on the Pledgor hereunder.

15.3. This Agreement is independent from any other security or guarantee which may have been or will be given to the Pledgees with respect to any obligation of the Pledgor. None of such other security interests shall prejudice, or shall be prejudiced by, or shall be merged in any way with, this Agreement.

SECTION 16. COSTS AND EXPENSES, COPIES

All costs, charges, fees and expenses together with any applicable value added tax arising from this Agreement or reasonably incurred in connection with its preparation, execution, notarial recording, amendments, restatements, novation, waivers, consents or suspension of rights or any proposal for any of the same (in each case including fees for legal advisers) relating to this Agreement shall be borne by the Pledgor.

Certified copies shall be received:

each party

the Tax Authority for Corporations

 

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SECTION 17. NOTICES AND LANGUAGE

17.1. Any notice or other communication under or in connection with this Agreement shall be in writing and shall be delivered personally, or sent by mail, fax transmission or cable (the latter two to be affirmed in writing) to the following addresses:

 

to the Pledgor:    Monotype Imaging Holdings Corp.
Address:    500 Unicorn Park Drive, 2nd floor, Woburn, MA 01801, U.S.A.
Fax:    +1 (781) 970-6001
Attention:    Jackie Arthur
with copies to:   
   Goodwin Procter LLP
Address:    Exchange Place, 53 State Street, Boston MA 02109, U.S.A.
Fax:    +1 (617) 523 1231
Attention:    Edward Matson Sibble, Jr., Esq
  
to the Pledgees:    Wells Fargo Foothill, Inc. in its capacity as Agent for and on behalf of the Pledgees
Address:    One Boston Place, Boston, MA 02108, U.S.A.
Fax:    +1 (617) 523-5839
Attention:    Business Finance Manager
with copies to:   
   Bingham McCutchen LLP
Address:    399 Park Avenue, New York, NY 10022, U.S.A.
Fax:    +1 (212) 702-3608
Attention:    Mark Joachim, Esq.

 

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or to such address as the recipient may have notified in writing. Proof of posting or dispatch of any notice or communication to the Pledgor shall be deemed ( widerlegbare Vermutung ) to be proof of receipt in the case of a letter, on the second business day (but in the case of a letter being shipped from one country to another: on the third business day) in the country of receipt after posting and in the case of a fax transmission or cable on the business day in the country of receipt immediately following the date of its dispatch.

17.2. Save for the notice pursuant to Section 16 of the German Act Pertaining to Limited Liability Companies ( GmbHG ), any notice or other communication under or in connection with this Agreement shall be in the English language or, if in any other language, accompanied by a translation into English. In the event of any conflict between the English text and the text in any other language, the English text shall prevail, except that where a German translation of a legal term appears in such text, the German translation shall prevail.

SECTION 18. PARTIAL INVALIDITY; NO IMPLIED WAIVER

18.1. Without prejudice to any other provision hereof, if at any time any one (or more) provision(s) hereof is or becomes invalid, illegal or unenforceable in any respect in any jurisdiction or with respect to any party, or if the parties become aware of any omission ( Vertragslücke ) hereto of any terms which were intended to be included in this Agreement, such invalidity, illegality, unenforceability in such jurisdiction or with respect to such party or parties or such omission shall not, to the fullest extent permitted by applicable law, render invalid, illegal or unenforceable such provision or provisions in any other jurisdiction or with respect to any other party or parties hereto and shall not affect or impair the validity, legality and enforceability of the remaining provisions hereof. Such invalid, illegal or unenforceable provision or such omission shall be deemed to be replaced by the parties with a provision which comes as close as reasonably possible to the commercial intentions of the invalid, illegal, unenforceable or omitted provision.

18.2. No failure to exercise, nor any delay in exercising, on the part of the Agent or the other Pledgees (or any of them), any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies provided hereunder are cumulative and not exclusive of any rights or remedies provided by law.

18.3. In particular, the Pledges shall not be affected and shall in any event extend to any and all Shares in German Holdings even if the number or nominal value of the Existing Share or the aggregate share capital of German Holdings as stated in Clause 2 are inaccurate or deviate from the actual facts.

SECTION 19. AMENDMENTS

Any amendments, changes or variations to this Agreement, including this Clause 19, shall be made in writing, unless notarial form by operation of law is required.

 

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SECTION 20. COMPANY’S CONFIRMATION

German Holdings confirms that it has taken notice of this Agreement and of the pledges of rights pursuant to this Agreement.

SECTION 21. CHOICE OF LAW; PLACE OF JURISDICTION

21.1. This Agreement is governed by, and shall be construed in accordance with, the laws of the Federal Republic of Germany.

21.2. Each of the parties hereto irrevocably agrees that the District Court ( Landgericht ) Munich I ( Munchen I ), Federal Republic of Germany, shall, subject to Clause 21.3 below, have exclusive jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Agreement and, for such purposes, irrevocably submits to the jurisdiction of such court.

21.3. The submission to the jurisdiction of the court referred to in Clause 21.2 shall not (and shall not be construed so as to) limit the right of the Pledgees to take proceedings against the Pledgor in any other court of competent jurisdiction, nor shall the taking of proceedings against the Pledgor in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction (whether concurrently or not) if and to the extent permitted by applicable law.

The officiating notary advised the parties hereto:

that a pledge is a security instrument of strictly accessory nature, that a pledge will not become effective prior to the valid creation and existence of the respective right or claim to be pledged and only if, to the extent that, and as long as, the underlying secured claims do in fact exist and the nexus ( Verknüpfung ) between the secured claims and the pledge is not dissolved, that the creditors of the secured claims and the pledgees must be identical, and that a person not being a party to this Notarial Deed may only become a pledgee if mandatory provisions of German law are respected;

that there is no bona fide creation, acquisition nor ranking of a pledge of shares of German limited liability companies (which means that the pledgee is not protected if the shares purported to be pledged do not exist, have not been legally acquired, have been previously transferred to a third party, or have been previously encumbered for the benefit of a third party), and that the notary has not examined whether the Pledgor is the owner of the Existing Share and whether the Existing Share has been transferred or encumbered previously;

that first priority pledge interests. will not be created unless each person appearing is duly authorized to represent the respective parties hereto for purposes of executing the agreement or the respective parties have subsequently ratified the declarations of the respective person appearing;

 

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that the parties hereto are, by operation of law, jointly and severally liable with respect to the payment of all notarial fees, irrespective of any internal agreement passed in that respect.

The present deed with exhibits were read aloud in the presence of the notary to the persons appearing, approved by them and signed by the notary and the persons appearing in their own hands as follows:

 

/s/ Sabine Heinrich     /s/ Alexander Benesch
Sabine Heinrich     Alexander Benesch
/s/ Wolfgang Kircher      
Wolfgang Kircher    

 

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Exhibit 1

Lenders

Wells Fargo Foothill, Inc., Boston, MA, United. States of America

D.B. Zwirn Special Opportunities Fund, L.P., New York, NY, United States of America

BERNARD NATIONAL LOAN INVESTORS, LTD., New York, NY, United States of America

Goldman Sachs Specialty Lending Holdings, Inc., New York, NY, United States of America

GSC Partners COO Fund IV, Limited, Florham, NJ, United States of America

GSC Partners COO Fund V, Limited, Florham, NJ, United States of America

GSC Partners COO Fund VI, Limited, Florham, NJ, United States of America

GSC Partners COO Fund VII, Limited, Florham, NJ, United States of America

GSC Partners Gemini Fund Limited, Florham, NJ, United States of America

GSC Capital Corp Loan Funding 2005-1, Florham, NJ, United States of America

 

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Exhibit 9.1.2

Pledgees under Second Ranking Pledge

D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P., New York, NY, United States of America

BERNARD NATIONAL LOAN INVESTORS, LTD., New York, NY, United States of America

BERNARD GLOBAL LOAN INVESTORS, LTD., New York, NY, United States of America

ACM, LLC, New York, NY, United States of America

HBK MASTER FUND L.P., Dallas, TX, United States of America

 

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I hereby certify that this is a true copy of the original.

Munich, 1, August 2006

 

/s/ Alexander Benesch
Alexander Benesch
Notary Public

 

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Exhibit 10.59

Execution Version

JOINDER AND CONSENT AGREEMENT TO AND CONSENT AND WAIVER UNDER,

CREDIT AGREEMENT

JOINDER AND CONSENT AGREEMENT TO AND CONSENT AND WAIVER UNDER, CREDIT AGREEMENT, dated as of December 13, 2006 (this “ Joinder and Consent Agreement ”), by and among Linotype Corp., a corporation organized under the laws of Delaware (“ New Loan Party ”), Monotype Imaging Holdings Corp., a Delaware corporation (“ Parent ”), Monotype Imaging, Inc., a Delaware corporation (“ Administrative Borrower ”), International Typeface Corporation, a New York corporation (“ Typeface ” and together with Administrative Borrower, the “ Borrowers ”), the lenders listed on the signatory pages hereof (the “ Required Lenders ”), and WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and administrative agent (together with any successor(s) thereto in such capacity, “ Agent ”).

W I T N E S S E T H

WHEREAS, Parent, the Borrowers, the lenders party thereto (the “ Lenders ”), and Agent are parties to that certain Credit Agreement, dated as of November 5, 2004 (as amended as of the date hereof, and as it may be further amended, modified, supplemented or amended and restated from time to time, the “ Credit Agreement ”);

WHEREAS, on November 30, 2006, Parent formed a new wholly-owned subsidiary, New Loan Party;

WHEREAS, the parties desire that, subject to the terms and conditions hereof, New Loan Party become a Guarantor and a party to certain of the Loan Documents;

WHEREAS, Parent desires to transfer certain of its Intellectual Property as set forth on Schedule 1 hereto to New Loan Party (the “ Intellectual Property Transfer ”);

WHEREAS, absent a waiver from Agent and the Required Lenders, such Intellectual Property Transfer would violate Section 6.4 of the Credit Agreement;

WHEREAS, Administrative Borrower desires to change its name from “Monotype Imaging, Inc.” to “Monotype Imaging Inc.” and Parent desires to change its name from “Monotype Imaging Holdings Corp.” to “Imaging Holdings Corp.” (collectively, the “ Name Changes ”);

WHEREAS, absent a waiver from Agent and the Required Lenders, the Name Changes would violate Section 6.5 of the Credit Agreement since Administrative Borrower and Parent failed to provide Agent with the requisite 30 days prior written notice of such change;

WHEREAS, (a) pursuant to Section 3.7(b)(i) and Section 3.7(b)(ii) of the Credit Agreement, on or prior to the date that was 10 Business Days after the closing of the China Type Acquisition, Parent and Borrowers were required to deliver to Agent an executed Pledged Interest Addendum pursuant to Section 6 of the Security Agreement with respect to a pledge of 65% of the issued and outstanding capital Stock of the Hong Kong Subsidiary entitled to vote and 100% of the issued and outstanding capital Stock of the Hong Kong Subsidiary not entitled to vote, along with the stock certificates representing the same and stock powers duly executed in blank, (b) pursuant to Section 3.7(b)(iii) of the Credit Agreement, on or prior to the date that was 10 Business Days after the closing of the China Type Acquisition Transaction, the Parent and Borrowers were required to deliver to Agent a joinder to the Intercompany Subordination Agreement, duly executed by China Type, and (c) pursuant to Section 3.7(d) of the Credit Agreement, on

 


or prior to the date that was 15 Business Days after the Second Amendment Effective Date, the Parent and Borrowers were required to deliver to Agent an updated Schedule 4.17 to the Credit Agreement, in form and substance reasonably satisfactory to Agent (clauses (a), (b) and (c), collectively, the “ First Category of Section 3.7 Obligations” );

WHEREAS, the Borrowers have satisfied the First Category of Section 3.7 Obligations but failed to do so on a timely basis (the “ First Category Defaults ”);

WHEREAS, pursuant to Section 3.7(e) of the Credit Agreement, on or prior to the date that was 15 Business Days after the Second Amendment Effective Date, Parent and the Borrowers were required to deliver to Agent updated Schedules 1 , 2 , 3 , 4 , 5 , 6 , 7 and 8 to the Security Agreement, in form and substance reasonably satisfactory to Agent (the “ Second Category of Section 3.7 Obligations ”);

WHEREAS, the Parent and the Borrowers have not yet satisfied the Second Category of Section 3.7 Obligations and, accordingly, a default currently exists with respect to each of the Second Category of Second 3.7 Obligations (the “ Second Category Defaults ”);

WHEREAS, the Loan Parties, Agent and the Required Lenders have agreed to consent to the Intellectual Property Transfer and the Name Changes, all as herein provided, subject to the terms and conditions set forth herein; and

WHEREAS, subject to the terms and conditions set forth herein, Agent and each of the Required Lenders have agreed to (a) waive the First Category Defaults, and (b) waive the Second Category Defaults; provided , that the Parent and Borrowers shall have completed the Second Category of Section 3.7 Obligations, in form and substance reasonably satisfactory to Agent, on or before the Effective Date (as defined below);

NOW, THEREFORE, in consideration of the agreements and provisions herein contained, the parties hereto do hereby agree as follows:

Section 1. Definitions . Any capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement. To the extent such terms are not defined in the Credit Agreement, they shall have the meanings ascribed to such terms in the other Loan Documents, as applicable.

Section 2. Waivers . Subject to the satisfaction of the terms and conditions set forth herein, Agent and each of the Required Lenders hereby agrees to waive (a) the First Category Defaults solely with respect to the First Category of Section 3.7 Obligations, and (b) the Second Category Defaults solely with respect to the Second Category of Section 3.7 Obligations; provided , that the Parent and Borrowers shall have completed each of the Second Category of Section 3.7 Obligations, in form and substance reasonably satisfactory to Agent, on or before the Effective Date.

Section 3. Consents . Subject to the satisfaction of the terms and conditions set forth herein, Agent and the Required Lenders hereby (a) consent to, and waive the application of Section 6.4 of the Credit Agreement solely with respect to the Intellectual Property Transfer, and (b) consent to, and waive the application of Section 6.5 of the Credit Agreement solely with respect to the Name Changes.

Section 4. Joinders . Subject to the satisfaction of the conditions set forth in Section 6 herein, the parties agree that New Loan Party shall become a party to the following documents (the “ Joined Loan Documents ”) as follows:

 

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4.01 Security Agreement .

A. By execution of this Joinder and Consent Agreement and a Supplement to the Security Agreement in the form of Annex 1 thereto, New Loan Party will become a party to the Security Agreement (as amended by this Joinder and Consent Agreement), and New Loan Party will be deemed to be a “Grantor” for all purposes under the Security Agreement as of the Effective Date.

B. New Loan Party assumes all the rights and obligations of a Grantor under and as defined in the Security Agreement in the same manner as if New Loan Party were an original signatory to the Security Agreement.

C. As a Grantor, New Loan Party is bound by the provisions of the Security Agreement and shall perform in accordance with its terms all the obligations which by the terms of the Security Agreement are required to be performed by it as a Grantor to the same extent as if originally a party thereto.

4.02 Guaranty .

A. By execution of this Joinder and Consent Agreement, New Loan Party will become a party to the Guaranty as a “Guarantor” for all purposes thereunder, as of the Effective Date.

B. New Loan Party assumes all the rights and obligations of a Guarantor under the Guaranty in the same manner as if New Loan Party were an original signatory to the Guaranty.

C. As a party to the Guaranty, New Loan Party is bound by the provisions of the Guaranty and shall perform in accordance with its terms all the obligations which by the terms of the Guaranty are required to be performed by it as a Guarantor to the same extent as if originally a party thereto.

4.03 Intercompany Subordination Agreement .

A. By execution of this Joinder and Consent Agreement, New Loan Party will become a party to the Intercompany Subordination Agreement, and New Loan Party will be deemed to be a “Subordinating Creditor” for all purposes under the Intercompany Subordination Agreement as of the Effective Date.

B. New Loan Party assumes all the rights and obligations of a Subordinating Creditor under and as defined in the Intercompany Subordination Agreement and shall perform in accordance with its terms all the obligations which by the terms of the Intercompany Subordination Agreement are required to be performed by it as a Subordinating Creditor to the same extent as if originally a party thereto.

C. As a Subordinating Creditor, New Loan Party is bound by the provisions of the Intercompany Subordination Agreement and shall perform in accordance with its terms all the obligations which by the terms of the Intercompany Subordination Agreement are required to be performed by it as a Subordinating Creditor to the same extent as if originally a party thereto.

 

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4.04 WFF and D.B Zwirn Intercreditor Agreement . By execution of this Joinder and Consent Agreement, New Loan Party hereby agrees to recognize all rights granted to Agent, Lenders, the Junior Agent (as defined in the WFF and D.B. Zwirn Intercreditor Agreement) and the Junior Lenders (as defined in the WFF and D.B. Zwirn Intercreditor Agreement) and will not do any act or perform any obligation which is not in accordance with the agreements set forth therein.

Section 5. Representations and Warranties . In order to induce Agent and Required Lenders to execute this Joinder and Consent Agreement, each Loan Party hereby represents and warrants that:

5.01 No Default . At and as of the date of this Joinder and Consent Agreement, and both prior to and after giving effect to this Joinder and Consent Agreement, no Default or Event of Default exists.

5.02 Representations and Warranties True and Correct . At and as of the date of this Joinder and Consent Agreement and at and as of the Effective Date and after giving effect to this Joinder and Consent Agreement, including without limitation, delivery of updates of certain Schedules to the Credit Agreement as provided in Section 6.06 below, each of the representations and warranties contained in the Credit Agreement and the other Loan Documents is true and correct in all material respects (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).

5.03 Corporate Power, Etc . Each Loan Party (a) has all requisite corporate power and authority to execute and deliver this Joinder and Consent Agreement and to consummate the transactions contemplated hereby and (b) has taken all action, corporate or otherwise, necessary to authorize the execution and delivery of this Joinder and Consent Agreement. Each Loan Party is entering into this Joinder and Consent Agreement in accordance with Section 14.1 of the Credit Agreement. New Loan Party is duly organized and existing under the laws of the jurisdiction of its organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change.

5.04 No Conflict . The execution, delivery and performance by each Loan Party of this Joinder and Consent Agreement will not (a) violate any provision of federal, state, or local law or regulation applicable to each Loan Party, the Governing Documents of any Loan Party, or any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party, (b) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of any Loan Party, (c) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of any Loan Party, other than Permitted Liens, or (d) require any unobtained approval of any Loan Party’s interestholders or any unobtained approval or consent of any Person under any material contractual obligation of any Loan Party.

5.05 Binding Effect . This Joinder and Consent Agreement has been duly executed and delivered by each Loan Party and constitutes the legal, valid and binding obligation of each Loan Party, enforceable against each Loan Party in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors’ rights generally, and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 6. Conditions to Effectiveness . This Joinder and Consent Agreement shall be effective as of December 28, 2006 (the “ Effective Date ”), only upon the fulfillment in a manner satisfactory to Agent, of all of the following conditions in this Section 6 :

 

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6.01 Execution of Joinder and Consent Agreement . Each of the parties hereto shall have executed an original counterpart of this Joinder and Consent Agreement and shall have delivered (including by way of facsimile or other electronic transmission) the same to Agent.

6.02 Execution of Security Agreement . New Loan Party and Agent shall have executed an original counterpart of a Supplement to the Security Agreement in the form of Annex 1 to the Security Agreement, pursuant to which New Loan Party shall grant, assign and pledge to Agent, for the benefit of the Lender Group and the Bank Product Providers, a continuing security interest in all of New Loan Party’s assets.

6.03 Execution of Pledged Interests Addendum to Security Agreement . Parent shall have executed a Pledged Interests Addendum in the form of Exhibit C to the Security Agreement, pursuant to which 100% of the Stock of New Loan Party shall become part of the Pledged Interests (as defined in the Security Agreement).

6.04 Governing Documents . Agent shall have received copies of New Loan Party’s Governing Documents, as amended, modified, or supplemented to the Closing Date, in the case of the charter documents, certified by the Secretary of State of the State of Delaware, and in the case of the by-laws, certified by the Secretary of New Loan Party.

6.05 Pledged Stock . Parent shall have delivered to Agent, for the benefit of the Lenders, the certificates representing all of the outstanding shares of New Loan Party owned by Parent, together with an undated stock power covering each such certificate, duly executed in blank, each in form and substance satisfactory to Agent.

6.06 Schedules . Loan Parties shall have delivered to Agent updates, as applicable, to (a) any and all Schedules to the Credit Agreement (including Schedules 4.5 , 4.7(a) , 4.7(b) , 4.7(c) , 4.7(d) , 4.8(b) and 4.8(c) ), and (b) any and all Schedules to the Security Agreement (including Schedules 1 , 2 , 3 , 4 , 5 , 6 , 7 and 8 ), each in form and substance satisfactory to Agent.

6.07 Incumbency Certificate . Agent shall have received a certificate of an officer of New Loan Party as to (a) the incumbency and signatures of the officers of New Loan Party authorized to execute any document in connection with the transactions contemplated by this Joinder and Consent Agreement; and (b) the executed resolutions of the Board of Directors evidencing the adoption and subsistence of resolutions (i) approving the terms of, and the transactions contemplated by, the Loan Documents to which it is a party and resolving that it execute the Loan Documents to which it is a party, (ii) authorizing a specified person or persons to execute the Loan Documents to which it is a party on its behalf, and (iii) authorizing a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices (including any document, notice or other agreement to be delivered thereunder or in connection therewith) to be signed and/or dispatched by it under or in connection with the Loan Documents to which it is a party. Such certificate shall state that the statements set forth therein have not been amended, modified, revoked or rescinded as of the date of such certificate.

6.08 Opinions of Counsel . Agent shall have received an opinion of New Loan Party’s counsel in form and substance satisfactory to Agent.

6.09 Intellectual Property Security Agreements . New Loan Party and Agent shall have executed an original counterpart of a Copyright Security Agreement, Patent Security Agreement and Trademark Security Agreement (as each term is defined in the Security Agreement) in the form of Exhibit A, Exhibit B and Exhibit D, respectively, to the Security Agreement.

6.10 D.B. Zwirn Joinder and Consent . Substantially simultaneously with the execution hereof, each Loan Party, D.B. Zwirn, as agent under the D.B. Zwirn Credit Agreement and the

 

5


Required Lenders (as defined in the D.B. Zwirn Credit Agreement) shall have executed a substantially similar joinder and consent under the D.B. Zwirn Credit Agreement, and furnished evidence thereof to Agent.

6.11 Name Changes . Agent shall have received evidence of the Name Changes (including copies of any related public filings) on or before the Effective Date.

6.12 Representations and Warranties . As of the Effective Date, the representations and warranties set forth in Section 5 hereof shall be true and correct.

6.13 Authorizations . Agent shall have received a copy of any other authorization, consent, approval or other document, opinion or assurance which is necessary or desirable in connection with the entry into and performance of the transactions contemplated by any Loan Document or for the validity and enforceability of any Loan Document.

6.14 Joinder to Source Code Escrow Agreement . Each of New Loan Party, Parent, Agent, D.B. Zwirn, as agent under the D.B. Zwirn Credit Agreement, and Iron Mountain Intellectual Property Management, Inc., as escrow agent shall have executed an original counterpart of a joinder to the Source Code Escrow Agreement in form and substance satisfactory to Agent and shall have delivered (including by way of facsimile or other electronic transmission) the same to Agent.

6.15 Compliance with Terms . New Loan Party and the other Loan Parties shall have complied in all respects with the terms hereof and of any other agreement, document, instrument or other writing to be delivered by New Loan Party and the other Loan Parties in connection herewith.

Section 7. Covenants .

7.01 Loan Document Obligations . New Loan Party covenants that it will perform all covenants required to be performed by it as party to each of the Joined Loan Documents.

7.02 Further Assurances .

(A) On or prior to the date that is 30 days after the Effective Date, Agent shall have received satisfactory evidence that the Intellectual Property Transfer shall have occurred.

(B) New Loan Party and the other Loan Parties shall execute and deliver, or cause to be executed and delivered, to Agent such documents and agreements, and shall take or cause to be taken such actions, as Agent may, from time to time, reasonably request to carry out the terms and conditions of this Joinder and Consent Agreement and the transactions contemplated hereby. Each Loan Party hereby authorizes Agent to file, as agent for the Lenders, initial Uniform Commercial Code financing statements that Agent deems necessary to reflect the terms of this Joinder and Consent Agreement.

Section 8. Miscellaneous .

8.01 Continuing Effect . Except as specifically provided herein, the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are hereby ratified and confirmed in all respects. The Name Changes shall not affect any of the obligations of the Loan Parties under and pursuant to any of the Loan Documents.

8.02 No Waiver . This Joinder and Consent Agreement is limited as specified and shall not operate as a modification, acceptance or waiver of any provision of the Credit Agreement or any

 

6


other Loan Document, except to the extent specifically set forth herein. Agent, on behalf of the Lenders, hereby reserves all of the rights and remedies of the Lenders arising as a result of any Default or Event of Default under the Loan Documents.

8.03 References .

A. From and after the Effective Date, the Credit Agreement and the other Loan Documents and all agreements, instruments and documents executed and delivered in connection with any of the foregoing shall each be deemed amended hereby to the extent necessary, if any, to give effect to the provisions of this Joinder and Consent Agreement.

B. From and after the Effective Date, (i) all references in the Credit Agreement to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended hereby and (ii) all references in the Credit Agreement, the other Loan Documents or any other agreement, instrument or document executed and delivered in connection therewith to “Credit Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended hereby.

8.04 Governing Law . THIS JOINDER AND CONSENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

8.05 Counterparts . This Joinder and Consent Agreement may be executed in any number of counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with the Loan Parties and Agent.

8.06 Headings . Section headings in this Joinder and Consent Agreement are included herein for convenience of reference only and shall not constitute a part of this Joinder and Consent Agreement for any other purpose.

8.07 Binding Effect; Assignment . This Joinder and Consent Agreement shall be binding upon and inure to the benefit of New Loan Party, the other Loan Parties, Agent, and the Lenders, and their respective successors and assigns; provided , however , that the rights and obligations of New Loan Party and the other Loan Parties under this Joinder and Consent Agreement shall not be assigned or delegated without the prior written consent of Agent.

8.08 Expenses . Borrowers agree to pay Agent upon demand for all reasonable expenses, including reasonable fees of attorneys and paralegals for Agent incurred by Agent in connection with the preparation, negotiation and execution of this Joinder and Consent Agreement and any document required to be furnished herewith.

8.09 Integration . This Joinder and Consent Agreement, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

[Remainder of page intentionally left blank.]

 

7


IN WITNESS WHEREOF, each of the undersigned has caused this Joinder and Consent Agreement to be executed and delivered by a duly authorized officer as of the date first above written.

 

LINOTYPE CORP.,

a Delaware corporation

By:   / S / D OUGLAS J. S HAW

Name:

Title:

 

 


MONOTYPE IMAGING HOLDINGS CORP.,

as Parent

By:   / S / R OBERT M. G IVENS

Name:

Title:

 

President/CEO

 

 

MONOTYPE IMAGING, INC.,

as a Borrower

By:   / S / R OBERT M. G IVENS

Name:

Title:

 

President/CEO

 

 

INTERNATIONAL TYPEFACE CORPORATION, as a Borrower
By:   / S / R OBERT M. G IVENS

Name:

Title:

 

President/CEO

 

 

 

 

 

 

 

 

 

Signature Page to Joinder and Consent


Acknowledged this 28 th day of December, 2006:

 

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

By:   / S / D AVID S ANCHEZ

Name:

Title:

 

David Sanchez

Vice President


GOLDMAN SACHS SPECIALTY LENDING HOLDINGS, INC.
By:   / S / S TEPHEN W. H IPP

Name:

Title:

 

Stephen W. Hipp

Authorized Signatory


BERNARD NATIONAL SENIOR FUNDING, LTD.
By:   / S / L AWRENCE D. C UTLER

Name:

Title:

 

Lawrence D. Cutler

Chief Administrative & Compliance Officer

 

 

D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P.

By: D.B. Zwirn Partners, LLC, its General Partner

By: Zwirn Holdings, LLC, its Managing Member

By:   / S / L AWRENCE D. C UTLER

Name:

Title:

 

Lawrence D. Cutler

Chief Administrative & Compliance Officer

 

 

BERNARD NATIONAL LOAN INVESTORS, LTD.

By: Bernard Capital Funding, LLC, its Investment Advisor

By:   / S / L AWRENCE D. C UTLER

Name:

Title:

 

Lawrence D. Cutler

Chief Administrative & Compliance Officer

 


CANYON CAPITAL CLO 2004-1 LTD.

By: Canyon Capital Advisors LLC, a Delaware limited liability company,

its Collateral Manager

By:   / S / D OMINIQUE M IELLE

Name:

Title:

 

Dominique Mielle

Authorized Signatory

 

 

CANPARTNERS INVESTMENTS IV, L.L.C.,

in trust

By:   / S / K. R OBERT T URNER

Name:

Title:

 

K. Robert Turner

Managing Partner

 


FORTRESS CREDIT INVESTMENTS I LTD.

By:   / S / C ONSTANTINE D AKOLIAS

Name:

Title:

 

Constantine Dakolias

Director

 

 

FORTRESS CREDIT INVESTMENTS II LTD.

By:   / S / C ONSTANTINE D AKOLIAS

Name:

Title:

 

Constantine Dakolias

Director

 


GOLDENTREE CAPITAL OPPORTUNITIES, L.P.

By: GoldenTree Asset Management, L.P.

By:   / S / K AREN W EBER

Name:

Title:

 

Karen Weber

Director-Bank Debt

 


GSC PARTNERS CDO FUND IV, LIMITED

By: GSCP (NJ), L.P., as Collateral Manager

By:   / S / S ETH K ATZENSTEIN

Name:

Title:

 

Seth Katzenstein

Authorized Signatory

GSC Group

 

 

GSC PARTNERS CDO FUND V, LIMITED

By: GSCP (NJ), L.P., as Collateral Manager

By:   / S / S ETH K ATZENSTEIN

Name:

Title:

 

Seth Katzenstein

Authorized Signatory

GSC Group

 

 

GSC PARTNERS CDO FUND VI, LIMITED

By: GSCP (NJ), L.P., as Collateral Manager

By:   / S / S ETH K ATZENSTEIN

Name:

Title:

 

Seth Katzenstein

Authorized Signatory

GSC Group

 

 

GSC PARTNERS CDO FUND VII, LIMITED

By: GSCP (NJ), L.P., as Collateral Manager

By:   / S / S ETH K ATZENSTEIN

Name:

Title:

 

Seth Katzenstein

Authorized Signatory

GSC Group

 

 

GSC CAPITAL CORP. LOAN FUNDING 2005-1

By: GSCP (NJ), L.P., as Collateral Manager

By:   / S / S ETH K ATZENSTEIN

Name:

Title:

 

Seth Katzenstein

Authorized Signatory

GSC Group

 

 

GSC PARTNERS GEMINI FUND, LIMITED

By: GSCP (NJ), L.P., as Collateral Monitor

By: GSCP (NJ), Inc., its General Partner

By:   / S / S ETH K ATZENSTEIN

Name:

Title:

 

Seth Katzenstein

Authorized Signatory

GSC Group

Exhibit 10.63

Execution Version

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (this “ Trademark Security Agreement ”) is made this 28th day of December, 2006, among Grantors listed on the signature pages hereof (collectively, jointly and severally, “ Grantors ” and each individually, a “ Grantor ”) and WELLS FARGO FOOTHILL, INC., as Agent for the Lender Group and the Bank Product Providers (together with its successors and assigns, in such capacity, the “ Agent ”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated of November 5, 2004 (as amended, restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the “ Credit Agreement ”) among Imaging Holdings Corp., a Delaware corporation (f/k/a Monotype Imaging Holdings Corp.) (“ Parent ”), Monotype Imaging Inc., a Delaware corporation (f/k/a Monotype Imaging, Inc.) (“ Administrative Borrower ”), International Typeface Corporation, a New York corporation (“ Typeface ” and together with Administrative Borrower, the “ Borrowers ”), the lenders party thereto (the “ Lenders ”) and Agent, the Lender Group agreed to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, the members of the Lender Group are willing to make the financial accommodations to Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that the Grantors shall have executed and delivered to Agent, for the benefit of the Lender Group, that certain Security Agreement dated as of November 5, 2004 (including all annexes, exhibits or schedules thereto, as from time to time amended, restated, supplemented or otherwise modified, the “ Security Agreement ”);

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to Agent, for the benefit of the Lender Group and the Bank Product Providers, this Trademark Security Agreement; and

WHEREAS, pursuant to that certain Joinder and Consent Agreement to and Consent and Waiver under, Credit Agreement dated as of December 28, 2006 (the “ Joinder and Consent Agreement ”), Agent and Required Lenders agreed to consent to the transfer of ownership of certain Trademarks from the Parent to the Grantors as set forth on Schedule II .

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor hereby agrees as follows:

1. DEFINED TERMS . All capitalized terms used but not otherwise defined herein have the meanings given to them in the Security Agreement and/or the Credit Agreement.

2. TRANSFER OF OWNERSHIP OF TRADEMARKS . Pursuant to the Joinder and Consent Agreement, Parent has transferred the ownership of the Trademarks set forth on Schedule II to the Grantors and made any and all necessary filings with the United States Patent and Trademark Office as evidenced by the filings set forth on Schedule III .

3. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL . Each Grantor hereby grants to Agent, for the benefit of the Lender Group and the Bank Product Providers, a continuing first priority security interest in all of such Grantor’s right, title and interest in, to and under the following, whether presently existing or hereafter created or acquired (collectively, the “ Trademark Collateral ”):

 


(a) all of its Trademarks and rights in and to Trademark Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto;

(b) all extensions, modifications and renewals of the foregoing;

(c) all goodwill of the business connected with the use of, and symbolized by, each Trademark; and

(d) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future (i) infringement or dilution of any Trademark, or (ii) injury to the goodwill associated with any Trademark.

4. SECURITY AGREEMENT . The security interests granted pursuant to this Trademark Security Agreement are granted in conjunction with the security interests granted to Agent, for the benefit of the Lender Group and the Bank Product Providers, pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to the security interest in the Trademark Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

5. AUTHORIZATION TO SUPPLEMENT . Grantors hereby authorize Agent unilaterally to modify this Agreement by amending Schedule I to include any trademarks, registrations, or applications therefor (including, without limitation, extensions or renewals) which become part of the Trademark Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Trademark Security Agreement or amend Schedule I shall in any way affect, invalidate or detract from Agent’s continuing security interest in all Collateral, whether or not listed on Schedule I .

6. COUNTERPARTS . This Trademark Security Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Any signatures delivered by a party by facsimile transmission or by e-mail transmission shall be deemed an original signature hereto.

[signature page follows]

 


IN WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 

GRANTORS:    

LINOTYPE CORP., a Delaware

corporation, as a Grantor

      By:   / S / D OUGLAS J. S HAW
     

Name:

Title:

 

Douglas J. Shaw

 

PARENT:

   

IMAGING HOLDINGS CORP. a Delaware

corporation

      By:   / S / R OBERT M. G IVENS
     

Name:

Title:

 

Robert M. Givens

 

SIGNATURE PAGE TO TRADEMARK SECURITY AGREEMENT


AGENT:    

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

      By:   / S /    D AVID S ANCHEZ        
     

Name:

Title:

 

David Sanchez

Vice President

SIGNATURE PAGE TO TRADEMARK SECURITY AGREEMENT

Exhibit 10.64

Confidential

AGREEMENT NO. 1291-D93

08/15/91

INTELLIFONT SOFTWARE AND TYPE SOFTWARE AGREEMENT

This INTELLIFONT Software and Type Software Agreement (“Agreement”) is between Agfa Corporation, acting through its Typographic Systems Business Unit, 90 Industrial Way, Wilmington, Massachusetts 01887 (“Agfa”) and Lexmark International, Inc., 740 New Circle Road, Lexington, Kentucky, 40511 (“Customer”)

WHEREAS Agfa has developed certain know-how and technology as defined in paragraph 1(q) which shall be referred to hereinafter as Intellifont; and

Agfa has developed certain type software as defined in paragraph 1(ah) (“Type Software”) which operates on devices supported by Customer, and

Agfa intends to license Intellifont and Type Software in a manner which will protect proprietary rights and title of Agfa in Intellifont, Type Software, and all related documentation, and protect all Agfa patents, trademarks and copyrights in Intellifont and Type Software; and

Customer desires to obtain a license to use and have used, reproduce and have reproduced, make and have made Derivative Works, distribute and have distributed, and sublicense Intellifont, Type Software and their screen font solutions to its customers worldwide. subject to the proprietary and ownership rights of Agfa;

Now, therefore, the parties hereby agree as follows:

1. Definitions - The following terms shall have the meaning ascribed to them below in this Agreement:

(a) Aftermarket Typeface - shall mean Typefaces which are not be shipped with the PDL.

(b) Bit-Map - shall mean a digital representation of a single typeface at a fixed resolution, and in one weight, width, format, point size and orientation.

(c) Code - shall mean computer programming code. If not otherwise specified, Code shall include both Object Code and Source Code. Code shall include any Modifications or Enhancements in existence from time to time.

(d) Code Error -

(i) a function described in the documentation which is omitted from the code; or

(ii) a function which does not operate or gives incorrect results; or

8/21/91

 

*** Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as /*Confidential Treatment Requested*/. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


Confidential

 

(e) Customer Distributor - a distributor of Customer Products, contractually authorized by Customer to so distribute and sublicense.

(f) Customer OEM - an original equipment manufacturer, contractually authorized by Customer to distribute and sublicense products.

(g) Customer Product - the Customer products listed on Schedule 1 on which the Data Software is resident. The Customer may at its sole discretion and, upon informing Agfa, add to Schedule 1 from time-to-time.

(h) CRU - Customer Replaceable Unit - any Customer Product, or component thereof, which is replaced by Customer, Customer Distributor or Customer OEM of a Customer Product as an upgrade to the Data Software.

(i) Data Software - all Agfa software identified and set forth in Schedule 3 on this Agreement, all related documentation and other software as may be added to Schedule 3 from time-to-time by written agreement of the parties and all Derivative Works thereof. This includes Intellifont, Type Software, Type Director, Intellifont for Windows 3.0 and Future Screen Font Solutions.

(j) Derivative Work - a work which is based upon one or more pre-existing work(s), such as a revision, modification, translation, abridgement, condensation, expansion, collection, compilation, or any other form in which such pre-existing works may be recast, transformed or adapted, and which, if prepared without authorization by the owner of the pre-existing work, would constitute a copyright infringement.

(k) Development Fee(s) - the amount stated in Schedule 2 which Customer pays Agfa for each typeface licensed by Agfa to Customer.

(l) End-User - the ultimate user of any Customer Product.

(m) Enhancements - changes, revisions or additions to Data Software, and related documentation that (1) provide substantial additional value and utility, (2) as a practical matter, may be priced and offered separately as optional additions to the Code and documentation, and (3) are not made available to any of Agfa’s customers without separate charge, except for those customers who have participated jointly with Agfa in developing the changes, revisions or additions. All Enhancements of Data Software shall be made available to Customer for a negotiated Fee or Royalty. Notwithstanding any provision in this Agreement to the contrary, Type Director 2.5 and the Future Screen Font Solution for Microsoft Windows Version 3.1 are deemed to be Enhancements.

(n) Extended Resident Typefaces - shall mean the thirteen (13) original Typefaces listed in Schedule 2, paragraph 1 (b) which will be shipped with a PDL.

(o) FRU - Field Replaceable Unit - any Customer Product, or component thereof, which because of failure, is being replaced by Customer, Customer Distributor or Customer OEM of Customer Product.

 

8/21/91   2  


Confidential

 

(p) Future Screen Font Solutions - font management program utilities, including Modifications, Enhancements and Code, that provide PC users access to the Agfa Intellifont outline type library for on-line generation of bitmap type at desired resolution/point size combinations, generation of metric information for use with screens and application compatible printers.

(q) Intellifont - the proprietary Agfa software as described in the document “Intellifont Subsystem Version 2.3”, all Modifications and Enhancements thereto, all related Code and documentation and any other supporting software or materials furnished by Agfa as may be added to Schedule 3 from time-to-time.

(r) Intellifont-for-Windows 3.0 - a font management program utility, including Modifications, Enhancements and Object Code, that provides PC users running Microsoft Windows Version 3.0 access to the Agfa Intellifont outline type library for on-line generation of bitmap type at desired resolution/point size combinations, generation of metric information for use with screens and application compatible printers.

(s) License - the /*Confidential Treatment Requested*/ license to use and have used, reproduce and have reproduced, make and have made Derivative Works, distribute and have distributed, and sublicense Data Software granted to Customer under the terms and conditions of the Agreement.

(t) License Fee(s) - the total dollar amount to be paid by Customer as a license fee for Agfa Code and materials listed on Schedule 2.

(u) Modifications - changes, revisions, or additions to Data Software which Agfa owns or has the right to license which:

(i) provide Code Error correction for Data Software, or

(ii) are not Enhancements. All Modifications released during this Agreement shall, at Customer’s election, be furnished and licensed to Customer free of charge and without additional fees or Royalties, except to the extent that Agfa is obligated to pay a fee or Royalty to a third party for such Modifications licensed to Customer, in which case Customer shall pay pass through Royalties, or

(iii) which are generally desirable by End-Users of Customer Products incorporating Data Software.

(v) Non-Resident Typefaces - shall mean all additional Typefaces licensed under this Agreement.

(w) Object Code - shall mean the machine-readable form of the Code.

(x) PDL - shall mean a page description language interpreter.

(y) Resident Typeface - shall mean the eight (8) original Typefaces listed in Schedule 2, paragraph 1(a) which will be shipped with a PDL.

 

8/21/91   3  


Confidential

 

(z) Royalty(ies) - the total dollar amount due quarterly and in accordance with Schedule 2 to Agfa on account of Sublicenses of Royalty Units.

(aa) Royalty Unit(s) - a specific unit of Intellifont and Type Software listed in Schedule 2 upon whose Sublicense by Customer a Royalty is payable to Agfa pursuant to paragraph 6.

(ab) Software Program - a program, which contains Data Software and is sublicensed or sold separately from Customer hardware.

(ac) Source Code - shall mean the human-readable form of computer programming code and related system documentation, including all comments and any procedural code such as job control language.

(ad) Stick Font - shall mean a graphical representation of letter forms specifically designed to be manipulated by graphical software applications.

(ae) Subsidiary(ies) - a corporation, company or other entity:

(1) more than fifty percent (50%) of whose outstanding shares or securities representing the right to vote for the election of directors or other managing authority arc; or

(2) which does not have outstanding shares or securities as may be the case in a partnership, joint venture or unincorporated association, but more than fifty percent (50%) of the ownership interest representing the right to make the decisions for such corporation, company or other entity is:

now or hereafter, owned or controlled, directly or indirectly, by a party hereto, but such corporation, company or other entity shall be deemed to be a Subsidiary only so long as ownership or control exists.

(af) Type Director - a font management program utility, including Modifications, Enhancements and Code, that provides PC users and software developers access to the Agfa Intellifont outline type library for the off-line generation of bitmap type at desired resolution/point size combinations, metric information, and downloadable PCLEO outlines for use with printers, screens, and application software.

(ag) Typeface - a set of pre-determined characters (alphanumerics, design-related characters and universal symbols) in one single weight and version, contained within Type Software.

(ah) Type Software - the proprietary Agfa typeface software identified by typeface number in Schedule 2 and described in the document “Intellifont Scalable Typeface Description”, all Modifications and Enhancements thereto, all related Code and documentation and other such Typeface software as may be added to Schedule 2 from time-to-time by written agreement of the parties.

 

8/21/91   4  


Confidential

 

(ai) Validation Testing - the testing by Agfa of Customer Product, to the specification set forth in Schedule 9.

2. License - Agfa hereby grants to Customer the following Licenses:

(a) Intellifont - Agfa hereby grants to Customer the License to use and have used, reproduce and have reproduced, make and have made Derivative Works, and as more fully described in Section 3 below, distribute Intellifont and Derivative Works of Intellifont by and under the terms and conditions of this Agreement. The use and distribution of Intellifont under the License shall be limited to the Customer Products. Agfa agrees to deliver to Customer information and assistance as shall be necessary to enable Customer to utilize Intellifont. The foregoing grants Customer a license to distribute to third parties Intellifont for the purposes of developing and preparing Customer Products. Such third parties shall have no License or Distribution rights in Intellifont. All licenses granted to Customer by this Agreement shall extend to Customer and its Subsidiaries.

(b) Type Software - Agfa hereby grants Customer the License to use and have used, reproduce and have reproduced and as more fully described in Section 3 below, distribute the Type Software by and under the terms and conditions of this Agreement. The use and distribution of the Type Software under the License shall be limited to the Customer Products. Agfa agrees to deliver to Customer information and assistance as shall be necessary to enable Customer to utilize the Type Software. The foregoing grants Customer a license to distribute to third parties the Type Software for the purposes of developing and preparing Customer Products. Such third parties shall have no License or Distribution rights in the Type Software. All licenses granted to Customer by this Agreement shall extend to Customer and its Subsidiaries.

(c) Type Director - Agfa hereby grants Customer the License to use and have used, reproduce and have reproduced, make and have made Derivative Works and as more fully described in Section 3 below, distribute Type Director and Derivative Works of Type Director by and under the terms and conditions of this Agreement. However, Customer shall have a right to make or have made Derivative Works to Enhancements to Type Director only to the extent Agfa has a right to furnish to Customer Source Code for such Enhancements. Agfa agrees to deliver to Customer information and assistance as shall be necessary to enable Customer to utilize Type Director. The foregoing grants Customer a license to distribute to third parties Type Director for the purposes of developing and preparing Customer Products. Such third parties shall have no License or Distribution rights in Type Director. All licenses granted to Customer by this Agreement shall extend to Customer and its Subsidiaries.

(d) Intellifont-for-Windows 3.0 - Agfa hereby grants Customer the License to use and have used, reproduce and have reproduced and as more fully described in Section 3 below, distribute Intellifont-for-Windows 3.0 by and under the terms and conditions of this Agreement. Agfa agrees to deliver to Customer information and assistance as shall be necessary to enable Customer to utilize Intellifont-for Windows 3.0. All licenses granted to Customer by this Agreement shall extend to Customer and its Subsidiaries.

(e) Future Screen Font Solutions - Agfa hereby grants Customer the License to use and have used, reproduce and have reproduced, make and have made Derivative Works

 

8/21/91   5  


Confidential

 

and as more fully described in Section 3 below, distribute Agfa’s Future Screen Font Solutions and Derivative Works of Agfa’s Future Screen Font Solutions by and under the terms and conditions of this Agreement. However, Customer shall have a right to make or have made Derivative Works to Enhancements to Future Screen Font Solutions only to the extent Agfa has a right to furnish to Customer Source Code for such Enhancements. Agfa agrees to deliver to Customer information and assistance as shall be necessary to enable Customer to utilize Agfa’s Future Screen Font Solutions. The foregoing grants Customer a license to distribute to third parties Agfa’s Future Screen Font Solutions for the purposes of developing and preparing Customer Products. Such third parties shall have no License or Distribution rights in Agfa’s Future Screen Font Solutions. All licenses granted to Customer by this Agreement shall extend to Customer and its Subsidiaries.

(f) Bitmap and Stick Fonts - If Customer pays the respective License Fees, Agfa hereby grants Customer the License to use and have used, reproduce and have reproduced, make and have made Derivative Works and as more fully described in Section 3 below, distribute the Bit-Map and Stick Fonts and Derivative Works of the Bit-Map and Stick Fonts by and under the terms and conditions of this Agreement. The use and distribution of the Bit-Map and Stick Fonts under the License shall be limited to the Customer Products. Agfa agrees to deliver to Customer information and assistance as shall be necessary to enable Customer to utilize the Bit-Map and Stick Fonts. The foregoing grants Customer a license to distribute to third parties the Bit-Map and Stick Fonts for the purposes of developing and preparing Customer Products. Such third parties shall have no License or Distribution rights in the Bit-Map and Stick Fonts. All licenses granted to Customer by this Agreement shall extend to Customer and its Subsidiaries.

3. Sublicense - So long as Customer complies with the terms and conditions of this Agreement, Customer shall have the right, subject to this Agreement, to Sublicense in Object Code form only the use of Data Software to End-Users, directly and through Customer Distributors and/or Customer OEMs, for use only on Customer Product pursuant to Sublicense agreements.

Except as expressly provided in the immediately following sentence, nothing contained in this Agreement shall require a written agreement between Customer and any Customer Distributors, Customer OEMs or End-Users, or between the latter three. When the Customer Product is a Software Program, Customer will include the current Customer program license agreement or corresponding statement, if any, then currently used by Customer in the country of distribution and will follow the then-current Customer procedures with respect to such agreement or statement. The current U.S. version of this program license agreement is attached as Schedule 7, which may be changed from time to time, subject to Agfa’s approval, which shall not be unreasonably withheld. With respect to hardware implementations of Data Software, no written agreement between Customer and Customer Distributors, Customer OEMs or End-Users will be required.

Customer shall maintain records capable of identifying all Customer Distributor(s) and Customer OEM(s) who have received Customer Products that contain Intellifont and Type Software. Customer shall, upon written request, during normal business hours, but not more frequently than once each calendar year, provide access to such records to an independent accounting firm chosen and compensated by Agfa, for purposes of audit. Such accounting firm

 

8/21/91   6  


Confidential

 

shall be required to sign an agreement with Customer protecting Customer’s confidential information and shall be authorized by Customer to report to Agfa only the amount of royalties due and payable for the period examined and the existence and nature of any relevant sublicenses apparently unauthorized under this agreement.

4. Obligations of Customer - In consideration of this Agreement and the License, Customer agrees:

(a) Validation Testing - to submit Customer Products incorporating Intellifont and Type software for Validation Testing prior to any reproduction, distribution or sublicensing of Intellifont and Type Software. Agfa will be the judge of whether Customer Product meets Validation Testing specifications, which shall be no more stringent than similar Agfa specifications for its own products, approval of which will not be unreasonably withheld.

(b) Best Efforts - will make best efforts to ensure that advertising and marketing material which use any trademarks licensed under this Agreement, comply with Schedule 10. Nothing in this Agreement shall require Customer to use any Agfa trademarks.

(c) Payment - to pay the Fees pursuant to paragraph 6, and otherwise comply with this Agreement.

(d) Typeface Reproduction - to faithfully reproduce the Type Software and not alter or change the typeface names set forth in Schedule 2.

5. Obligations of Agfa - In consideration of this Agreement and the License, Agfa agrees:

(a) Intellifont - to provide Customer with Intellifont software and documentation as described in Schedule 3.

(b) Type Software - to provide Customer with a master copy, as specified in Schedule 3, of each typeface of Type Software set forth in Schedule 2 and a Master Copy of Type Software subsequently added to Schedule 2.

(c) Screen Font Solutions - to provide Customer with software and documentation as described in Schedule 3, immediately for screen font solutions currently available, and Future Screen Font Solutions when available, per the conditions set forth in Section 2(e).

(d) Technical Assistance - to provide Customer with reasonable technical assistance per Schedule 5.

(e) Validation Testing - to conduct Validation Tests, and report the results thereof, in a timely manner.

(f) Code Errors - to provide Customer, notice of and a description of any Code Error reported by parties other than Customer or Customer Subsidiaries or discovered by Agfa. Customer, at its option, may require Agfa to correct such Code Errors within a reasonable period of time.

 

8/21/91   7  


Confidential

 

(g) Modifications - to use its reasonably commercial efforts to provide Customer with information regarding the availability of Modifications to Data Software, and/or Derivative Works thereof.

(h) Enhancements - to use its reasonably commercial efforts to provide Customer with information regarding the availability of Enhancements to Data Software, and/or Derivative Works thereof.

(i) Maintenance - shall correct all Code Errors for a period of 1 year after the delivery of each Enhancement at no additional charge to Customer.

(j) Programs/Documentation Update - to use its reasonably commercial efforts to update Type Director, Intellifont-for-Windows 3.0 and Future Screen Font Solutions programs and documentation, that are within Agfa’s control, to include the Customer Product names within a reasonable period of time.

6. Fee(s) and Royalties - Customer agrees to pay Agfa the Development Fee(s), the Intellifont License Fee(s) and the Royalties set forth in Schedule 2 for each Royalty Unit sublicensed to an End-User, Customer Distributor, or Customer OEM for use on a Customer Product. Customer agrees to pay Agfa the Bit-Map /*Confidential Treatment Requested*/ License Fee(s) and the Stick Font Software /*Confidential Treatment Requested*/ License Fee if used in a Customer Product. There are no other Fees, Royalties or payments required under this Agreement. Customer shall provide Agfa with a report, pursuant to Section 8, of all Royalty Unit shipments accompanied by a check for Royalties due on a quarterly basis. Royalties due will be tendered in the time, and to the place specified, in Section 23.

No royalty or other charge shall be payable by Customer for any copies of the Data Software used, executed, reproduced, displayed, performed and/or distributed only (1) for development, maintenance or support activities, (2) for marketing, sales, demonstrations, customer test periods, training or educational purposes, or (3) as backup copies. No additional royalty or other charge shall be payable by Customer for pictorial, graphic or audio/visual works, including but not limited to, icons, screens, music and characters, created as a result of execution of the Data Software or Derivative Works thereof whether such works are created by the Data Software or with other programming or through other means. No additional royalty or other charge shall be payable by Customer for use, execution, reproduction, display, performance or distribution of Modifications prepared by either Customer or Agfa. No royalty or other charge shall be payable by Customer for the distribution of FRUs and CRUs.

7. /*Confidential Treatment Requested*/

8. Reports and Records - Customer shall maintain, for a period of three (3) years after the royalties to which such records relate have accrued and been paid, a complete record of Royalty Unit sublicense transactions. Beginning with the date of this Agreement, Customer shall forward to Agfa within forty-five (45) days after the end of each Customer fiscal quarter, a report in the form of Schedule 8 whose accuracy shall be certified by an authorized officer of Customer.

 

8/21/91   8  


Confidential

 

The foregoing reports and records and the information contained therein shall be the confidential property of the Customer and will not be disclosed to third parties or used by Agfa other than for the purposes of assuring compliance with this Agreement.

9. Limited Warranty

(a) Right to License - Agfa represents and warrants to Customer that Agfa has full and exclusive rights to grant the license and rights granted herein, that the works licensed hereunder have not been published under circumstances which have caused a loss of copyright therein, and that the works delivered to Customer by Agfa hereunder do not infringe any copyright or other intellectual property rights (including trade secrets or privacy or similar rights) of any third party.

(b) Intellectual Property Claims - Agfa further represents and warrants that no claim, whether or not embodied in an action past or present, of infringement of any patent, copyright, trademark or other intellectual property right, privacy or similar right, has been made or is pending against Agfa or any entity from which Agfa has obtained such rights relative to the works licensed hereunder.

(c) Applicable Laws - Agfa warrants that it will comply with all applicable laws, regulations, and ordinances pertaining to its performance hereunder.

(d) Limited Warranty - AGFA WARRANTS FOR ONE (1) YEAR AFTER DELIVERY TO CUSTOMER THAT THE MASTER COPIES OF THE TYPE SOFTWARE AND INTELLIFONT SUPPLIED TO CUSTOMER UNDER THIS AGREEMENT WILL MEET THE AGFA SPECIFICATIONS ATTACHED AS SCHEDULE 3, AND IN SUPPLIED OEM DOCUMENTATION. CUSTOMER AGREES AND UNDERSTANDS THAT THE MASTER COPIES WILL BE DEEMED TO BE WITHIN APPLICABLE WARRANTY SPECIFICATIONS UNLESS CUSTOMER PRESENTS TO AGFA A TIMELY WARRANTY CLAIM. AGFA MAKES NO WARRANTIES CONCERNING THE TYPE SOFTWARE AND INTELLIFONT OTHER THAN THOSE SET FORTH IN THIS PARAGRAPH 9(d) AND IN PARAGRAPHS 9(a), 9(b), 9(c) and 9(e). ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY ARE EXCLUDED.

(e) Warranty Applicability - THE WARRANTIES SET FORTH HEREIN ARE PROVIDED ONLY TO CUSTOMER AND MAY NOT BE PASSED THROUGH TO CUSTOMERS DISTRIBUTORS OR END-USERS. CUSTOMER SHALL PROVIDE ITS OWN WARRANTY TO END-USERS, CUSTOMER DISTRIBUTORS AND CUSTOMER OEMs.

10. Limitation of Remedies - IN NO EVENT WILL AGFA BE LIABLE FOR: (1) LOST PROFITS OR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, REGARDLESS OF THE FORM OF THE ACTION WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF AGFA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; OR (2) DAMAGES CAUSED BY CUSTOMER’S FAILURE TO PERFORM ITS

 

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Confidential

 

RESPONSIBILITIES. THESE LIMITATIONS DO NOT APPLY TO AGFA’S OBLIGATION TO INDEMNIFY, DEFEND OR HOLD CUSTOMER HARMLESS AGAINST CLAIMS BY THIRD PARTIES.

11. Audit - Customer shall maintain complete and accurate accounting records in accordance with sound accounting practices, to support and document revenue received and royalties payable in connection with Intellifont and Type Software. Such records shall be retained for a period of three (3) years after the royalties to which such records relate have accrued and been paid. Customer shall, upon written request, during normal business hours, but not more frequently than once each calendar year, provide access to such records to an independent accounting firm chosen and compensated by Agfa, for purposes of audit. Such accounting firm shall be required to sign an agreement with Customer protecting Customer’s confidential information and shall be authorized by Customer to report to Agfa only the amount of royalties due and payable for the period examined.

12. Indemnification

12.1 Indemnification by Agfa

Agfa shall, at its own expense and in a timely fashion, defend, protect, and indemnify Customer and its Subsidiaries, Customer Distributors and Customer OEM’s against any and all liabilities, damages, costs and expenses, including reasonable attorneys’ fees, which are awarded by a court against Customer by reason of any action, suit, proceeding or claim instituted against Customer by any third party for infringement of any patent, copyright or trademark or for the misappropriation of trade secrets relating to the Data Software or trade names or trademarks licensed hereunder, provided that (1) Customer promptly notifies Agfa of any such action, suit, proceeding or claim and cooperates fully with Agfa in the defense thereof, (2) Agfa has control of the defense and any settlement negotiations, and (3) Customer has the right to participate actively in any such defense and settlement negotiations at its cost.

If Agfa receives notice of an alleged infringement or if Customer’s use of the Data Software shall be prevented by permanent injunction, Agfa may at its sole option and expense, (a) procure for Customer the right to continue use of the infringing item as provided hereunder, (b) modify the infringing item so that it is no longer infringing, or (c) replace the infringing item with computer software or hardware of equal or superior functioning capability; provided, however, that if Agfa is unable to accomplish one of (a), (b), or (c) after using its best efforts, all of Agfa’s obligations, representations and warranties under this Agreement shall remain in full effect and Customer shall have all remedies available at law or equity for breach thereof.

Agfa shall have no liability to Customer, its Subsidiaries, Customer Distributors, or Customer OEM’s under this Section to the extent any infringement or claim based upon (a) any programs not (i) supplied by Agfa or (ii) Derivative Works of Data Software supplied by Agfa, (b) the use of the Data Software in a manner not specified in this Agreement if such claim or infringement would have been avoided except for such use, (c) the combination of the Data Software with any program, data, device, or component not supplied by Agfa unless Agfa’s delivery to Customer of such Data Software amounts to contributory infringement or if such infringement would have been avoided except for the use of some other program, data, device or component.

 

8/21/91   10  


Confidential

 

12.2 Indemnification by Customer

Customer shall, at its own expense and in a timely fashion, defend, protect, and indemnify Agfa against any and all liabilities, damages, costs and expenses, including reasonable attorneys’ fees, which Agfa may incur or be held liable for by reason of any action, suit, proceeding or claim instituted against Agfa by any third party for infringement of any patent, copyright or trademark or for the misappropriation of trade secrets relating to materials used in or with the Customer Products which have not been provided by Agfa, unless such infringement would have been avoided but for materials or Code supplied by Agfa, provided that (1) Agfa promptly notifies Customer of any such action, suit, proceeding or claim and cooperates fully with Customer in the defense thereof, (2) Customer has control of the defense and any related settlement negotiations, and (3) Agfa has the right to participate actively in any such defense and settlement negotiations at its cost.

13. Trademarks and Copyrights - Agfa hereby grants Customer a worldwide right, without obligation, to use the registered trademarks “Agfa”, “Agfa Compugraphic”, “Type Director” as well as “Intellifont” in conjunction with the product name, advertising, promotion and sublicensing of any Customer Product incorporating any or all of the Data Software, including the right to identify such items as having been developed by Agfa; provided, however, that Customer shall take reasonable steps to modify such advertising and marketing materials if Agfa reasonably objects in writing to the usage of its trademark(s), trade name(s), and product name(s) in a manner inconsistent with Section 4(b) of this Agreement. Customer agrees that it shall distribute the Data Software only pursuant to the product names designated by Agfa when such names are provided by Agfa. By way of example only, Customer shall not distribute the typeface CG Times under any name but CG Times.

Agfa shall have no right to use Customer’s trademark(s), trade name(s), or product name(s) or to refer to Customer or any of its Subsidiaries in connection with any Agfa product, promotion, or publication without the prior written approval of Customer, provided, however that this Agreement does not prohibit Agfa from using Customer trademark(s), trade name(s), or product name(s) in any way in which they can be used by persons in the general public in compliance with local laws and customs covering the protection of trademarks, trade names and product names.

Except for product name, advertising, promotion and sublicensing of a Customer Product, the parties agree not to use or refer to this Agreement or any provision thereof in any advertising or publicity without the express written approval of the other party.

14. Title to Intellifont and Type Software - Agfa owns Intellifont and Type Software furnished to Customer. Customer acknowledges that the Licenses granted herein transfer no title to, or ownership in, the Intellifont and Type Software, but only the rights granted in this Agreement. Customer shall own the new portions of any Derivative Work(s) that Customer develops or pays to have developed.

 

8/21/91   11  


Confidential

 

15. Taxes - All taxes on the use, license, sublicense or possession of Intellifont and Type Software by Customer shall be borne and paid by Customer, except taxes based upon the income or assets of Agfa. All taxes on the use, license, or possession of Intellifont and Type Software by Agfa shall be borne and paid by Agfa, except taxes based upon the income or assets of Customer.

16. Injunctive Relief - The parties acknowledge that, due to the nature of Intellifont and Type Software and the inherent difficulty of adequately protecting the proprietary rights of Agfa in Intellifont and Type Software and the criticality of the Data Software to Customer’s product plans and strategies, money damages for the breach of this Agreement would likely be inadequate. Customer agrees to cooperate reasonably with Agfa regarding any party in possession of Intellifont or Type Software by or through Customer on the grounds of violation of proprietary rights in connection with Intellifont or Type Software.

17. Term and Termination - This Agreement shall become effective on the first day that (1) it has been executed by Customer, and (2) Agfa has executed it or delivered the Data Software to Customer. Unless sooner terminated hereunder, this Agreement shall remain in force through the final expiration of all of Agfa’s proprietary rights in the Data Software, including, but not limited to, its copyrights, patents, trademarks and/or other intellectual property rights in the Data Software, but in no event fewer than 10 years. Either party may terminate this Agreement upon ninety (90) days prior written notice to the other party if the other party fails to comply with any of the terms and conditions of this Agreement, and such default has not been cured within such ninety (90) day period or within such longer period as is reasonable in view of the significance of the item or condition not complied with and the circumstances to remedy such non-compliance.

The termination of this Agreement shall not affect any /*Confidential Treatment Requested*/ right or license granted Customer hereunder. In the event of termination of this Agreement for any reason, in whole or in part, any right, license or sublicense exercised or granted prior to such termination (including those for internal use by Customer, Customer’s Subsidiaries, Customer Distributors, Customer OEMs and End-Users and for distribution by Customer Distributors and Customer OEMs), and any corresponding royalty obligations of Customer hereunder, shall survive and continue. Without limiting the generality of the foregoing, (1) Customer may sublicense, sell, lease and distribute any inventory or products based on the Data Software including work in progress on hand at the time of such termination, (2) Customer may continue to exercise the rights and licenses granted hereunder for a period of up to six (6) months to fill any orders received by Customer, its Subsidiaries, Customer Distributors and Customer OEMs and accepted from End-Users prior to the effective date of termination, and (3) Customer may continue to exercise the rights and licenses granted hereunder as necessary to provide maintenance and support for End-Users.

Neither Customer, its Subsidiaries, Customer Distributors, Customer OEMs and End-Users shall have any obligation to return to Agfa any copies of the Data Software or Derivative Works thereof made or obtained prior to such termination.

Existing valid sublicenses, both internal to the parties and to their customers, End-Users or Distributors shall survive such termination. The confidentiality obligations of the parties to this Agreement shall survive any termination.

 

8/21/91   12  


Confidential

 

In addition, the provisions of Sections 9, 12 and 13 shall survive and continue with respect to the Data Software that was the subject of this Agreement at the time of termination.

18. Reservation of Rights - Subject only to the foregoing surviving obligations, in the event of termination or expiration, Customer, its Subsidiaries, Customer Distributors, Customer OEMs and End-Users shall have all rights which it or they would have had if Customer had never entered into this Agreement and which the public has at the time of termination.

19. No Undertaking to Market - Customer shall have full freedom and flexibility in its decisions concerning marketing of products that incorporate or are based on the Data Software, including the decision of whether to market or discontinue marketing any particular Customer Product, whether to offer Customer Products separately or in combination with other Code or documentation and in its decisions regarding terms, conditions and pricing. Nothing in this Agreement shall be construed as an obligation, guarantee or commitment by Customer that any Customer Product that incorporates or is based on the Data Software shall be announced and marketed by Customer, or that any marketing effort will be productive of any level of sales or royalty payments.

It is understood that Customer may offer Customer Products that incorporate or are based on the Data Software at volume discounts, promotional or special charges, dealer discounts, special bids or other pricing arrangements and may increase or decrease any prices, charges or fees relating to any Customer Product, without notice to or approval of Agfa.

20. Confidentiality - In connection with this Agreement, Customer does not wish to receive any information which may be considered confidential by Agfa or any third party. Accordingly, except with respect to the rights of Agfa or any third party under valid patents and copyrights, no obligation of any kind is assumed by or to be implied against Customer by virtue of Customer’s discussions with Agfa or with respect to any information received (in whatever form) from Agfa. However, Customer will implement or have implemented internal procedures regulating the management, control, access to, and use of Source Code, which the parties acknowledge is confidential information to Agfa, of the Data Software, including related development level documentation, in accordance with Schedule 6 attached hereto. Except as set forth in this paragraph, the Confidential Disclosure Agreement No. 4504, dated April 12. 1991, shall remain in full force and effect.

All data processing ideas, concepts, know-how and techniques related to, disclosed by, or contained in information disclosed to Customer under this Agreement may be freely disclosed by Customer except to such extent that any use thereof is protected by valid Agfa patents and copyrights not licensed to Customer.

21. Development Restrictions - There shall be no restrictions on Customer’s freedom to independently develop, specify and market products, software and documentation which may be competitive with Agfa products, Data Software and their documentation regardless of their similarity to such Agfa products, Data Software and their documentation.

22. Notices - All notices and consents under this Agreement shall be deemed given when in writing and mailed, certified mail addressed as follows:

 

8/21/91   13  


Confidential

 

TO AGFA:

Agfa Compugraphic Division

Agfa Corporation

90 Industrial Way

Wilmington, MA 01887

Attn: Vice President, Typographic Systems

With a copy to:

General Counsel

200 Ballardvale Street

Wilmington, MA 01887

TO CUSTOMER:

Lexmark International, Inc

740 New Circle Rd.

Lexington, KY 40511

Attn: Purchasing

With a copy to:

Lexmark International, Inc.

Site General Counsel

740 New Circle Rd.

Lexington, KY 40511

23. Payments - Customer shall pay the Development Fees and the License Fee(s) at contract signing and Royalty payments shall be paid per contract terms to:

Agfa Compugraphic Division

Agfa Corporation

90 Industrial Way

Wilmington, MA 01887

Attn: Type Controller

Wire transfer information:

State Street Bank & Trust Co.

P.O. Box 351 - Boston, MA 02101

For Boston A/C # /*Confidential Treatment Requested*/

Compugraphic FSC

24. Export Compliance - Customer will be responsible for compliance with U.S. Export Control Regulations as enacted by the Export Administration Act of 1979, as amended, and will not export or re-export Customer Products without first obtaining a license from the U.S. Department of Commerce or other agency of the U.S. Government as required by law.

 

8/21/91   14  


Confidential

 

25. General - Neither party may assign or delegate any of its rights or obligations under this Agreement without the prior written consent of the other party except in the case of the sale of the business unit that includes the products governed by this Agreement. This Agreement is the complete understanding of the parties and supersedes any prior oral and written discussions and negotiations. No modification, waiver, or amendment of this Agreement shall be effective unless it is in writing and signed by an authorized signatory of Customer and Agfa. The validity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision. Neither party shall be liable for failure to perform due to acts of God, war, governmental action, or other causes beyond its reasonable control. This Agreement shall be governed by the laws of the Commonwealth of Massachusetts.

This Agreement is executed and shall be effective this fifteenth day of August, 1991.

 

AGFA CORPORATION   Lexmark International, Inc.

Name

  Robert M. Givens   Name   Paul J. Curlander

Signature

  /s/ Robert M. Givens   Signature   /s/ Paul J. Curlander

Title

  Vice President   Title   Director

 

8/21/91   15  


Confidential

 

SCHEDULE 1

Customer Product(s)

 

1. PCL5 Emulation Option for the IBM LaserPrinter 4029 Series.

 

8/21/91   16  


Confidential

 

SCHEDULE 2

Intellifont and Type Software

License and Royalty Fees

Development Fees

 

1. Type Software

 

  (a) Resident Typefaces [shipped with PDL]

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

1.

   92500    CG Times    /*Confidential Treatment Requested*/

2.

   92501    CG Times Bold    /*Confidential Treatment Requested*/

3.

   92504    CG Times Italic    /*Confidential Treatment Requested*/

4.

   92505    CG Times Bold Italic    /*Confidential Treatment Requested*/

5.

   94021    Univers Medium    /*Confidential Treatment Requested*/

6.

   94022    Univers Bold    /*Confidential Treatment Requested*/

7.

   94023    Univers Medium Italic    /*Confidential Treatment Requested*/

8.

   94024    Univers Bold Italic    /*Confidential Treatment Requested*/
   Subtotal Development Fee    /*Confidential Treatment Requested*/

 

8/21/91   17  


Confidential

 

(b) Extended Resident Typefaces (Resident Typefaces plus:)

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

9.

   94029    Univers Medium Condensed    /*Confidential Treatment Requested*/

10.

   94039    Univers Medium Condensed Italic    /*Confidential Treatment Requested*/

11.

   94030    Univers Bold Condensed    /*Confidential Treatment Requested*/

12.

   94040    Univers Bold Condensed Italic    /*Confidential Treatment Requested*/

13.

   03848   

ITC Zapf Dingbats (comp # 10271)

(includes 100, 200, 300 Series)

   /*Confidential Treatment Requested*/

(c) Additional Typefaces

25 Font Card

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

1.

   94029    Univers Medium Condensed    /*Confidential Treatment Requested*/

2.

   94039    Univers Medium Condensed Italic    /*Confidential Treatment Requested*/

3.

   94030    Univers Bold Condensed    /*Confidential Treatment Requested*/

4.

   94040    Univers Bold Condensed Italic    /*Confidential Treatment Requested*/

5.

   91119    Antique Olive    /*Confidential Treatment Requested*/

6.

   91846    Antique Olive Italic    /*Confidential Treatment Requested*/

 

8/21/91   18  


Confidential

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

7.

   91118    Antique Olive Bold    /*Confidential Treatment Requested*/

8.

   91120    Antique OliveCompact    /*Confidential Treatment Requested*/

9.

   92546    CG Century Schoolbook    /*Confidential Treatment Requested*/

10.

   92547    CG Century Schoolbook Italic    /*Confidential Treatment Requested*/

11.

   92548    CG Century Schoolbook Bold    /*Confidential Treatment Requested*/

12.

   93812    CG Century Schoolbook Bold Italic    /*Confidential Treatment Requested*/

13.

   92532    CG Palacio    /*Confidential Treatment Requested*/

14.

   92533    CG Palacio Italic    /*Confidential Treatment Requested*/

15.

   92534    CG Palacio Bold    /*Confidential Treatment Requested*/

16.

   92535    CO Palacio Bold Italic    /*Confidential Treatment Requested*/

17.

   90385    Stymie Medium    /*Confidential Treatment Requested*/

18.

   90386    Stymie Medium Italic    /*Confidential Treatment Requested*/

19.

   90387    Stymie Bold    /*Confidential Treatment Requested*/

20.

   90068    Stymie Bold Italic    /*Confidential Treatment Requested*/

21.

   90316    ITC Souvenir Light    /*Confidential Treatment Requested*/

 

8/21/91   19  


Confidential

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

22.

   90332    ITC Souvenir Light Italic    /*Confidential Treatment Requested*/

23.

   90338    ITC Souvenir Demi    /*Confidential Treatment Requested*/

24.

   90339    ITC Souvenir Demi Italic    /*Confidential Treatment Requested*/

25.

   03848    ITC Zapf Dingbats (comp # 10271)    /*Confidential Treatment Requested*/
   Subtotal Development Fee    /*Confidential Treatment Requested*/

26 Font Card

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

1.

   92133    Shannon Book    /*Confidential Treatment Requested*/

2.

   92422    Shannon Book Oblique    /*Confidential Treatment Requested*/

3.

   92424    Shannon Book Bold    /*Confidential Treatment Requested*/

4.

   92134    Shannon Book Extrabold    /*Confidential Treatment Requested*/

5.

   92581    CG Bodoni Book    /*Confidential Treatment Requested*/

6.

   92582    CG Bodoni Book Italic    /*Confidential Treatment Requested*/

7.

   92585    CG Bodoni Book Bold    /*Confidential Treatment Requested*/

8.

   92586    CG Bodoni Book Bold Italic    /*Confidential Treatment Requested*/

 

8/21/91   20  


Confidential

 

Item

  

Typerface Number

  

Typerface Name

  

Development Fee Treatment Requested*/

9.

   92506    CO Omega    /*Confidential Treatment Requested*/

10.

   92507    CG Omega Italic    /*Confidential Treatment Requested*/

11.

   92510    CG Omega Bold    /*Confidential Treatment Requested*/

12.

   92511    CG Omega Bold Italic    /*Confidential Treatment Requested*/

13.

   91545    Garamond Antiqua    /*Confidential Treatment Requested*/

14.

   91546    Garamond Kursiv    /*Confidential Treatment Requested*/

15.

   91547    Garamond Halbfett    /*Confidential Treatment Requested*/

16.

   91548    Garamond Kursiv Halbfcu    /*Confidential Treatment Requested*/

17.

   91331    ITC Benguiat Book    /*Confidential Treatment Requested*/

18.

   91332    ITC Benguiat Book Italic    /*Confidential Treatment Requested*/

19.

   91335    ITC Benguiat Bold    /*Confidential Treatment Requested*/

20.

   91336    ITC Benguiat Bold Italic    /*Confidential Treatment Requested*/

21.

   91454    ITC Bookman Light    /*Confidential Treatment Requested*/

22.

   91455    ITC Bookman Light Italic    /*Confidential Treatment Requested*/

 

8/21/91   21  


Confidential

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

23.    91467    ITC Bookman Demi    /*Confidential Treatment Requested*/
24.    91468    ITC Bookman Demi Italic    /*Confidential Treatment Requested*/
25.    90369    Cooper Black    /*Confidential Treatment Requested*/
26.    92127    Revue Light    /*Confidential Treatment Requested*/
          
   Subtotal Development Fee    /*Confidential Treatment Requested*/

Customer may license Additional Typefaces for a Development Fee of /*Confidential Treatment Requested*/ per typeface.

 

Total Development Fees

   /*Confidential Treatment Requested*/

There are no other Development Fees payable for any other Data Software licensed under this Agreement, except for custom Type Software developed by Agfa for Customer which will be at a reasonable negotiated fee.

License Fees

 

2. Intellifont License Fee

/*Confidential Treatment Requested*/

 

3. Bit-Map Font /*Confidential Treatment Requested*/ License Fee

/*Confidential Treatment Requested*/

 

Item

   Typeface Name    Pitch    Point Size    Orientation
1.    Courier    12.00    10    Portrait
2.    Courier    10.00    12    Portrait
3.    Courier Bold    12.00    10    Portrait
4.    Courier Bold    10.00    12    Portrait
5.    Courier Italic    12.00    10    Portrait
6.    Courier Italic    10.00    12    Portrait
7.    Line Printer    16.67    8.5    Portrait
8.    Courier Medium    10.00    12    Landscape

 

8/21/91   22  


Confidential

 

9.    Courier Bold    10.00    12    Landscape
10.    Line Printer    16.67    8.5    Landscape
Note:  Each bit-map font is available in the following symbol sets: LEGAL, PC-850, PC8 DN, PC-8, EC-94 L1, ROMAN 8

There shall be no other Royalties or Fees payable for Customer’s License for Bit-Map fonts defined in this Section.

 

4. Stick Font Software /*Confidential Treatment Requested*/ License Fee

/*Confidential Treatment Requested*/

There shall be no other Royalties or Fees payable for Customer’s License for Stick fonts.

 

5. Type Director License Fee

There is no charge for Type Director Code, Modifications, related documentation and artwork when promoted with Customer Products containing Intellifont. If Customer promotes in its product manuals, promotional brochures and advertising Type Director in conjunction with non-Intellifont products, a reasonable negotiated Royalty may be required. Customer may choose to purchase completed packages of the Type Director product from Agfa at Agfa’s cost to produce the packages. Enhancements of Type Director will be made available to Customer at a reasonable negotiated fee.

 

6. Intellifont-for-Windows 3.0 License Fee

There is no charge for Intellifont-for-Windows 3.0 object code, Modifications, related documentation and artwork. Customer may choose to purchase completed product packages of Intellifont-for-Windows 3.0 from Agfa at Agfa’s cost to reproduce the packages. Enhancements of Intellifont-for-Windows 3.0 will be made available to Customer at a reasonable negotiated fee.

 

7. Future Screen Font Solutions License Fee

Future Screen Font Solutions Source Code, related documentation and artwork will be provided, if and when available, at a reasonable negotiated fee when promoted with Customer Products containing Intellifont. If Customer promotes in its product manuals, promotional brochures and advertising Future Screen Font Solutions in conjunction with non-Intellifont products, a reasonable negotiated Royalty may be required. Customer may purchase completed product packages of the Future Screen Font Solutions from Agfa at Agfa’s cost to reproduce the packages.

There are no other License Fees payable for any other Data Software licensed under this Agreement.

 

8/21/91   23  


Confidential

 

Royalties

 

8. Pre-Paid Royalty Fee

A non-refundable advance against Royalties (minimum royalty payment) totaling /*Confidential Treatment Requested*/ is due by September 1, 1992 for Intellifont and Type Software and is comprised of the following: a minimum total of /*Confidential Treatment Requested*/ in Royalties to be paid by September 1, 1991 with a minimum total of /*Confidential Treatment Requested*/ to be paid by September 1, 1992 if the total royalties paid to Agfa have not exceeded /*Confidential Treatment Requested*/ by that time. 100% of Royalties due may be credited against this advance until the advance is exhausted.

 

9. Royalty Unit - Resident Type Software

For each Royalty Unit, comprised of Intellifont and the eight Typefaces (four weights of CG Times, four weight of Univers), sublicensed to an End-User, Customer Distributor, or an Customer OEM there will be a /*Confidential Treatment Requested*/ Royalty until the aggregated number of Typefaces shipped reaches /*Confidential Treatment Requested*/. The Royalty will be reduced to /*Confidential Treatment Requested*/ in the event the aggregated number of Typefaces shipped is between /*Confidential Treatment Requested*/. The Royalty will be reduced to /*Confidential Treatment Requested*/ in the event the aggregated number of Typefaces shipped exceeds /*Confidential Treatment Requested*/.

Customer reserves the right to substitute other Typefaces for the 8 resident Typefaces. There shall be no additional cost for such additional Typefaces except for any additional Typefaces which are third party Royalty-bearing Typefaces. These additional Royalty-bearing Typefaces are subject to the then current Typeface Royalty for ITC and Monotype Typefaces when the Typeface is shipped with a Customer PDL or an additional /*Confidential Treatment Requested*/ Royalty, of Agfa’s resident inclusion Typeface Royalty, per non-ITC/Monotype third party Royalty-bearing Typeface. This additional /*Confidential Treatment Requested*/ Royalty is currently /*Confidential Treatment Requested*/.

 

10. Royalty Unit - Extended Resident Type Software

For each Royalty Unit, comprised of Intellifont and the thirteen Extended Resident Typefaces (four weights of CG Times, four weights of Univers and ITC Zapf Dingbats) sublicensed to an End-User, Customer Distributor, or an Customer OEM there will be an /*Confidential Treatment Requested*/ Royalty to Agfa until the aggregated number of Typefaces shipped reaches /*Confidential Treatment Requested*/. The Royalty will be reduced to /*Confidential Treatment Requested*/ in the event the aggregated number of Typefaces shipped is between /*Confidential Treatment Requested*/. The Royalty will be reduced to /*Confidential Treatment Requested*/ in the event the aggregated number of Typefaces shipped exceeds /*Confidential Treatment Requested*/. These Royalties exclude the additional Royalty for ITC Zapf Dingbats.

Customer reserves the right to substitute other Typefaces for the 13 extended resident Typefaces. There shall be no additional cost for such additional Typefaces except for any additional Typefaces which are third party Royalty-bearing Typefaces. These additional Royalty-

 

8/21/91   24  


Confidential

 

bearing Typefaces are subject to the then current Typeface Royalty for ITC and Monotype Typefaces when the Typeface is shipped with a Customer PDL or an additional /*Confidential Treatment Requested*/ Royalty, of Agfa’s resident inclusion Typeface Royalty, per non-ITC/Monotype third party Royalty-bearing Typeface.

Customer may license additional Typefaces for resident inclusion in its product(s). The Royalty due to Agfa for additional Typefaces will be /*Confidential Treatment Requested*/ per Typeface.

Additional resident Royalty-bearing Typefaces ate subject to the then current Typeface Royalty for ITC and Monotype Typefaces when the Typeface is shipped with a Customer PDL or an additional /*Confidential Treatment Requested*/ Royalty, of Agfa’s resident inclusion Typeface Royalty, per non-ITC/Monotype third party Royalty-bearing Typeface. This additional /*Confidential Treatment Requested*/ Royalty is currently /*Confidential Treatment Requested*/. Customer shall not pay a third-party Royalty for any non-ITC thud party Royalty-bearing Typefaces set forth in the Development Fees Section of Schedule 2.

 

11. Royalty - Aftermarket Type Software

A Royalty of /*Confidential Treatment Requested*/ per Aftermarket Typeface sublicensed by Customer will be due to Agfa. The Royalty for the 25 Font Card is /*Confidential Treatment Requested*/. The Royalty for the 26 Font Card is /*Confidential Treatment Requested*/.

Aftermarket Royalty-bearing typefaces are subject to the then current Typeface Royalty for ITC and Monotype Typefaces only if not shipped with a Customer PDL or an additional 10% Royalty, of Agfa’s Aftermarket Typeface Royalty, per non ITC/Monotype third party Royalty-bearing Typeface. This additional /*Confidential Treatment Requested*/ Royalty is currently /*Confidential Treatment Requested*/. Customer shall not pay a third party Royalty for any non-ITC third party Royalty-bearing Typefaces set forth in the Development Fees Section of Schedule 2.

 

12. No Further Royalties

The foregoing are the only Royalties due under this Agreement.

 

8/21/91   25  


Confidential

 

SCHEDULE 3

Description of Data Software and Deliverables

Description of Intellifont Code/Documentation:

1. A description of and Code embodying Intellifont technology and how to use it as described by the document “Intellifont Subsystem Version 2.3”.

2. Agfa Corporation’s C Code - software version of Intellifont.

3. Code implementing Intellifont.

Description of Type Software Master Copy Specifications

1. All edges shall be smoothly defined within the limits of describing straight line circular arc data. Edges shall be free of errant stroke endings or continuous lines that exceed the designed contour of the character or that disrupt its aesthetic properties.

2. All stems, straight and rounded, shall be of uniform thickness within the designed weight except those designs that feature contrasting or non-uniform thickness.

3. Stems, straight and round, shall be symmetrical within the characters except in such cases as it is inherent to the design to be non-symmetrical.

4. Alignment characteristics, base alignment, and space between characters, shall reflect the same standards as maintained in the original design for Agfa Compugraphic equipment.

5. Character heights, weights, and all other dimensional parameters will reflect the same standards as the original design.

6. Agfa shall deliver one Master Copy, in Intellifont format, of each unit of Type Software. Master Copy media are to be certified and not previously written upon and will be written on a drive that is certified by a qualified Service Engineer during normally scheduled Preventative Maintenance of our computers. (All computers at Agfa Compugraphic are routinely serviced monthly.)

Description of Type Director

1. A description of and Code embodying Type Director and how to use it as described by the document “Type Director 2.0 Technical Reference Manual”.

2. Agfa’s Type Director software product in Object Code and sublicenseable C code modules that allows access to all Intellifont functions contained in the Object Code. The Code also allows additional devices and applications to be added to the user menu.

3. Code implementing Type Director.

 

8/21/91   26  


Confidential

 

Description of Intellifont-for-Windows 3.0

1. A description of and Object Code embodying Intellifont-for-Windows 3.0 and how to use it as described by the document “Intellifont-for-Windows Information Guide”.

2. Agfa Corporation’s Object Code - software version of Intellifont-for-Windows 3.0 in 3 1/2 inch diskette high density format. Agfa shall provide other diskette formats, if and when available, at no additional charge.

3. Object Code implementing Intellifont for-Windows 3.0.

Description of Future Screen Font Solutions

1. Documents describing the Future Screen Font Solutions and how to use them.

2. Agfa Corporation’s C Code - software versions of the Future Screen Font Solutions.

3. Code implementing the Future Screen Font Solutions, when available.

 

8/21/91   27  


Confidential

 

SCHEDULE 5

In order to provide support for Customer’s integration of Intellifont with Customer’s product and for Customer’s utilization of Intellifont data with that technology, Agfa will:

1. Furnish to Customer one copy of the document entitled, “Intellifont Scalable Font Description”;

2. Furnish to Customer the C-code of the Intellifont Sub-System, consisting of the Intellifont process and font manager,

3. Furnish to Customer one copy of the Appendix entitled, “Interfacing to the Intellifont Sub-System”;

4. Provide to Customer (within a mutually agreeable timeframe) telephone and on-site technical assistance in the form of specification and document review, implementation consultation, and output quality review, the total of such time to be reasonable.

 

8/21/91   28  


Confidential

 

SCHEDULE 6

Data Software Source Code Internal Handling Procedures(s)

I. Data Software Source Code is the property of Agfa and, as such, requires handling procedures commensurate with any Source Code asset of the corporation.

II. Access to Data Software Source Code is limited to those personnel and vendors who require the material in the normal course of work activities.

III. When not in use, the Data Software Source Code and any duplicates shall be stored in a protected environment.

IV. Duplicates of the Data Software Source Code shall only be made in conjunction with preparation of working master copies in the production areas and for development purposes.

V. Original or duplicate copies of the Data Software Source Code may only leave the premises under a signed non-disclosure agreement with a company vendor (i.e., disk duplication facility).

Treatment of Source Code

Customer agrees to treat any Source Code version of the Data Software, including related development level documentation, with the same care and discretion with which it treats the similar Source Code versions of its own programming products under similar circumstances, for a period of five (5) years after the date of receipt of such Source Code. Designated Source Code shall be marked “Agfa Confidential” and treated by Customer with the same procedures established by Customer for its own documents that are classified “Lexmark Confidential.” The foregoing obligations shall not apply to any Agfa Source Code that is (1) publicly available or becomes so in the future without restriction, (2) rightfully received by Customer from a third party and not accompanied by confidentiality obligations, (3) already in Customer’s possession and lawfully received from sources other than Agfa, (4) independently developed by Customer, or (5) approved in writing for release or disclosure without restriction by Agfa’s Technical Coordinator.

 

8/21/91   29  


Confidential

 

SCHEDULE 7

End User License Agreement

Lexmark International, Inc. Greenwich, Connecticut 06836

END USER LICENSE AGREEMENT

BEFORE USE OF THE ENCLOSED PRODUCT, YOU SHOULD CAREFULLY READ THE FOLLOWING TERMS AND CONDITIONS. USE OF THE PRODUCT INDICATES YOUR ACCEPTANCE OF THESE TERMS AND CONDITIONS. IF YOU DO NOT AGREE WITH THEM, YOU SHOULD PROMPTLY RETURN THE PACKAGE UNUSED AND YOUR MONEY WILL BE REFUNDED.

This is a license agreement and not an agreement for sale. LEXMARK owns, or has licensed from other owners, copyrights in the microcode, computer programs, and coded fonts including bitmap font data and outline fonts (collectively, the “Software”) contained in this printer, printer accessory, or font product. You obtain no rights to the intellectual property in the Software, other than the license granted you to the Software under this Agreement. Title to the enclosed copy of the Software, and any copy made from it, is retained by LEXMARK or such other owners. You assume all responsibility for the selection of the Software to achieve your intended results and for the installation of, use of, and results obtained from, the Software.

LICENSE

You may:

1. install and use the Software (excluding related screen fonts and font metrics data) on only one printer workstation or host processing system at any one time to reproduce and display weights, styles, and versions of letters, numerals, characters and symbols;

2. make a copy of the Software for backup or installation purposes only in support of the normal and intended use of the Software, provided that any copies of the Software shall contain the same copyright and trademark notices which appear on or in such Software;

3. transfer possession of copies of the Software to another party by transferring this copy of this Agreement and all other documentation along with at least one complete, unaltered copy of the Software, provided that (1) you must, at the same time, either transfer to such other party or destroy all your other copies of the Software, (2) such transfer of possession terminates your license from LEXMARK, and (3) such other party shall accept and be bound by these license terms by its initial use of the Software; and

4. use any trademark associated with the Software only in accordance with accepted trademark practice, including identification of the trademark owner’s name.

You shall not, without the written consent of LEXMARK:

 

8/21/91   30  


Confidential

 

l. use, copy, modify, merge, or transfer copies of the Software except as provided herein;

2. reverse assemble or reverse compile the Software; or

3. sublicense, rent, lease or assign the Software of any copy thereof.

LIMITED WARRANTY

Warranty details and limitations for the hardware which contains the Software are described in the Statement of Limited Warranty which was supplied with the hardware or is available upon request from LEXMARK or its Authorized remarketers. With regard to Software contained in a disk or diskette, LEXMARK provides a three-month limited warranty, as measured from the data of delivery to the original customer, on the media for all Software. With the exception of the foregoing express warranties applicable to hardware and media only, the Software is not warranted and is provided “AS IS.”

SUCH WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

Some states do not allow the exclusion of implied warranties, so the above exclusion may not apply to you.

LIMITATION OF REMEDIES

LEXMARK’s entire liability and your exclusive remedy shall be as follows:

1. LEXMARK will provide the warranty described in LEXMARK’s Statement of Limited Warranty. If LEXMARK does not remedy defective media as warranted, you may terminate your license and your money will be refunded upon the return of all of your copies of the Software.

2. For any claim arising out of LEXMARK’s limited warranty, or for any other claim whatsoever related to the subject matter of these terms, LEXMARK’s liability for actual damages, regardless of the form of action, shall be limited to the greater of $5,000 or the money paid to LEXMARK or its Authorized remarketers for the license for the Software that caused the damages or that is the subject matter of, or is directly related to, the cause of action. This limitation will not apply to claims for personal injury or damages to real or tangible personal property caused by LEXMARK’s negligence.

3. In no event will LEXMARK be liable for any lost profits, lost savings, or any incidental damages or other consequential damages, even if LEXMARK or its Authorized remarketers have been advised of the possibility of such damages, or for any claim by you based on a third party claim.

Some states do not allow the limitation or exclusion of incidental or consequential damages so the above limitation or exclusion my not apply to you.

 

8/21/91   31  


Confidential

 

GENERAL

You may terminate your license at any time by destroying all your copies of the Software or as otherwise described in these terms.

LEXMARK may terminate your license if you fail to comply with these terms. Upon such termination, you agree to destroy all your copies of the Software.

Any attempt to sublicense, rent, lease or assign, or except as expressly provided herein, to transfer any copy of the Software is void.

You agree that you are responsible for payment of any taxes, including personal property taxes, resulting from this Agreement.

No action, regardless of form, arising out of this Agreement may be brought by either party more than two years after the cause of action has arisen except for breach of the provisions in the Section entitled “License” in which event four years shall apply.

This Agreement will be construed under the Uniform Commercial Code of the State of New York.

UNITED STATES GOVERNMENT RESTRICTED RIGHTS

This software and documentation arc provided with RESTRICTED RIGHTS. Use, duplication or disclosure by the Government is subject to restrictions as set forth in subparagraph (c)(1)(ii) of the Rights in Technical Data and Computer Software clause at FEARS 252.227-7013 and in applicable FAR provisions: Lexmark International, Inc., Greenwich, Connecticut 06836.

 

8/21/91   32  


Confidential

 

SCHEDULE 8

Royalty Report

 

Month   Number of Units Shipped   Description   Royalty Amount Due
     
     
     
     

 

8/21/91   33  


Confidential

 

SCHEDULE 9

Intellifont Certification Guidelines

 

A. Review Copyright and Technical Information in Documentation

AGFA rhombus

Intellifont

Typeface names

 

B. Load Released FAIS Typefaces

Off-the-shelf

 

C. Load Un-released FAIS typefaces

Un-released, non-Intellifont outlines

    9600/9400 data

    fontalias information

    non-pseudo typefaces

    released product code

    Pi & Logo typefaces

 

D. Qualify Hardcopy Output

Waterfall

Text blocks

QA “stories”

 

8/21/91   34  


Confidential

 

SCHEDULE 10

Guidelines for the Representation

of Agfa Corporation Intellifont-Based Products

Agfa and Intellifont Logos

The company logo consists of the name AGFA, in uppercase letters, followed by the Agfa Rhombus. Agfa Corporation will provide artwork of the Agfa Rhombus in various sizes. Please note that the Rhombus should always be accompanied by the name AGFA, immediately preceding it.

Agfa recommends that software products that incorporate Intellifont technology or type display the Intellifont logo on the spine, specification sheet, and cover of packaging, as well as on diskettes and documentation. Hardware products may display the Intellifont logo on printer boxes, end user guides, or other point of sale literature or manuals.

Agfa shall provide Customer with black and white artwork of the Intellifont and Agfa logos in a variety of sizes. Neither logo can be altered in any way. Agfa logos typically appear without trademark symbols but accompanied by a citation. If space prohibits the inclusion of a citation for a logo, then the appropriate trademark symbol must be used with the logo.

Product and Company Names

Intellifont type should always be referred to as Intellifont Scalable Typefaces, the scaling technology as Intellifont, and the end-user font management product as Type Director. The correct company name is Agfa Corporation, Typographic Systems Business Unit.

Marketing Material, Publications and Advertising

The first and most prominent use of an Agfa trademark in each item must be followed by the designation R after each registered trademark, and the designation TM or equivalent notice after each unregistered trademark, provided, however, that a prominent listing of trademarks near the front of any publication shall be a sufficient designation of any trademark listing. Corresponding Trademark Citations must be provided (see below).

Product Packaging

The first and most prominent use of an Agfa trademark on each product package must be followed by the designation R after each registered trademark, and the designation TM or equivalent notice after each unregistered trademark. Corresponding Trademark Citations must be provided (see below).

Typeface Prefixes

Agfa does not require a trademark symbol for the CG prefix, but does require a citation.

 

8/21/91   35  


Confidential

 

Agfa Trademark Citations

Agfa and the Agfa Rhombus arc registered trademarks of Agfa-Gevaert, AG. CG, Garth Graphic, Intellifont and Type Director are registered trademarks, and the Intellifont logo, Nadianne, Shannon and CG Triumvirate are trademarks of Agfa Corporation. CG Bodoni, CG Century Schoolbook, CG Goudy Old Style, CG Melliza, Microstyle, CG Omega, CG Palacio, and CG Poster Bodoni are products of Agfa Corporation. CG Times, based on Times New Roman under license from The Monotype Corporation plc, is a product of Agfa Corporation.

Other Citations

Univers is a registered trademark of Linotype AG and/or its subsidiaries. Letraset is a registered trademark, and Aachen, Revue and University Roman are trademarks of Esselte Pendaflex Corporation. Futura is a registered trademark of Fundicion Tipografica Neufville, S.A.

ITC Avant Garde Gothic, ITC Benguiat, ITC Bookman, ITC Century, ITC Cheltenham, ITC Clearface, ITC Galliard, ITC Korinna, ITC Lubalin Graph, ITC Souvenir, ITC Tiepolo,ITC Zapf Chancery, and ITC Zapf Dingbats are registered trademarks of International Typeface Corporation. Albertus, Gill Sans, and Times New Roman are registered trademarks and Monotype Baskerville is a trademark of The Monotype Corporation plc. Hiroshige, Marigold, and Oxford are trademarks of AlphaOmega Typography, Inc.

 

8/21/91   36  


Confidential

 

JG-21.WP1   9/22/92

ADDENDUM NO. 1

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

THIS ADDENDUM to the Intellifont Software and Type Software Agreement, Agreement No. 1291-D93, between Lexmark and the former Agfa Corporation (Agreement) is made and entered as of the 16 th day of December, 1992 by and between Miles Inc., successor in interest to Agfa Corporation, acting through its Agfa Division, 90 Industrial Way, Wilmington, Massachusetts 01887 (“Agfa”) and Lexmark International, Incorporated, 740 New Circle Road, Lexington, Kentucky, 40511 (“Customer”).

Whereas all of Agfa Corporation’s rights and obligations under the Agreement have been transferred by operation of law to Miles Inc. and Miles Inc. agrees and affirms that it assumes all of Agfa’s obligations under the Agreement and the rights and obligations of Lexmark shall be neither reduced or enhanced as a result of such transfer, and

Whereas, the parties desire to amend the Agreement, NOW, THEREFORE, it is mutually agreed to as follows:

1. In Section 1.(c) of Schedule 2 of the Agreement, immediately beneath the line “Subtotal Development Fee./*Confidential Treatment Requested*/”, insert the following:

WordPerfect Card

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

1.

   92639    Albertus Medium    /*Confidential Treatment Requested*/

2.

   92642    Albertus Extrabold    /*Confidential Treatment Requested*/

3.

   91810    Futura Book II    /*Confidential Treatment Requested*/

4.

   91811    Futura Book Italic II    /*Confidential Treatment Requested*/

5.

   91816    Futura Bold II    /*Confidential Treatment Requested*/

6.

   91817    Futura Bold Italic II    /*Confidential Treatment Requested*/

 

  1  


ADDENDUM NO. 1 (cont’d)

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

7.

   92532    CG Palado    /*Confidential Treatment Requested*/

8.

   92533    CG Palacio Italic    /*Confidential Treatment Requested*/

9.

   92534    CG Palacio Bold    /*Confidential Treatment Requested*/

10.

   92535    CG Palado Bold Italic    /*Confidential Treatment Requested*/

11.

   92569    ITC Galliard    /*Confidential Treatment Requested*/

12.

   92570    ITC Galliard Italic    /*Confidential Treatment Requested*/

13.

   91571    ITC Galliard Bold    /*Confidential Treatment Requested*/

14.

   91572    ITC Galliard Bold Italic    /*Confidential Treatment Requested*/

15.

   94029    Univers Medium Condensed    /*Confidential Treatment Requested*/

16.

   94039    Univers Medium Condensed Italic    /*Confidential Treatment Requested*/

17.

   94030    Univers Bold Condensed    /*Confidential Treatment Requested*/

18.

   94040    Univers Bold Condensed Italic    /*Confidential Treatment Requested*/

19.

   92546    CG Century Schoolbook    /*Confidential Treatment Requested*/

20.

   92547    CG Century Schoolbook Italic    /*Confidential Treatment Requested*/

21.

   92548    CG Century Schoolbook Bold    /*Confidential Treatment Requested*/

 

  2  


ADDENDUM NO. 1 (cont’d)

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

22.

   93812    CG Century Schoolbook Bold Italic    /*Confidential Treatment Requested*/

23.

   90268    Microstyle Bold    /*Confidential Treatment Requested*/

24.

   90349    Park Avenue    /*Confidential Treatment Requested*/

25.

   90133    Dom Casual    /*Confidential Treatment Requested*/

26.

   93949    ITC Zapf Chancery Medium Italic    /*Confidential Treatment Requested*/
      Subtotal Development Fee    /*Confidential Treatment Requested*/

2. Substitute “/*Confidential Treatment Requested*/ “ for “/*Confidential Treatment Requested*/.” in Section 1.(c) of Schedule 2 of the Agreement.

3. Add the following to Subparagraph 11 of Schedule 2 of the Agreement immediately after “/*Confidential Treatment Requested*/.”:

“The Royalty for the WordPerfect Card is /*Confidential Treatment Requested*/.

Except as expressly amended hereby, the “Intellifont Software and Type Software Agreement” is hereby reaffirmed and remains in full force and effect.

This Agreement is executed and shall be effective this 15 th day of December, 1992.

 

AGFA DIVISION. MILES INC.    LEXMARK INTERNATIONAL, INC.

/s/ Robert M. Givens

  

/s/ Ronald E. Bingham

Signature

   Signature

Vice President

  

Bus. Area Mgr.

Title

   Title

 

  3  


ADDENDUM NO. 1 (cont’d)

 

Robert M. Givens

  

Ronald E. Bingham

Print Name

   Print Name

 

  4  


JG-26.WP9    12/14/92

ADDENDUM NO. 2

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 (“Agreement”) dated August 15th, 1992 by and between Agfa Division of Miles Inc. (“Agfa”) and Lexmark International, Incorporated (“Customer’).

Whereas Agfa has developed certain know-how and technology hereinafter defined and referred to as Universal Font Scaling Technology; and

Whereas Customer desires to obtain a license to use, reproduce and distribute to End Users the Universal Font Scaling Technology; and

Whereas the parties desire to amend the Agreement, NOW, THEREFORE, the parties agree as follows:

1. Definitions . Make the following revisions to Section 1, Definitions of the Agreement:

1.1 Delete Definition (g) in its entirety and replace with the following:

“(g) Customer Product - will mean the Customer Products listed on Schedule 1 on which Type Software and either Intellifont or UFST are utilized which may be added to from time-to-time subject to reasonable negotiation of royalties where not provided.”

1.2 Add the following to the last sentence of Section 1 (i) of the original agreement immediately after “Intellifont-For-Windows 3.0,” and before “,and Future Font Solutions,”:

“Universal Font Scaling Technology (UFST)”

1.3 Delete Definition (n), Extended Resident Typeface in its entirety; Definition (n) will be intentionally left blank.

1.4 Delete Definition (y) Resident Typeface and replace with the following:

“(y) Resident Typeface - shall mean the eight (8), thirteen (13), five (5), forty five (45) and thirty six (36) original typefaces listed in Schedule 2 as amended, Section’s 1(a), (b), (c), (d) and (e) which will be shipped with a PDL.”

1.5 Delete Definition (aa) in its entirety and replace with the following:

 

  1   Confidential


“(aa) Royalty Unit(s) - a specific unit of either Intellifont or UFST and Type Software listed in Schedule 2 upon whose Sublicense by Customer a Royalty is payable to Agfa pursuant to Section 6.”

1.6 Modify Section 1 (ab) to read as follows:

(ab) Software Program - a program, which contains Data Software residing on floppy diskette and being PC host-based, that is sublicensed or sold separately from Customer hardware.

1.7 Delete Definition (ah) Type Software in its entirety and replace with the following:

“(ah) Type Software - the proprietary Agfa typeface software identified by typeface number or format in Schedule 2 and described in the document “Intellifont Scalable Typeface Description”, Apple’s TrueType type software specifications, Microsoft’s TrueType type software specifications and Adobe’s PostScript Type 1 format specifications, all Modifications and Enhancements thereto, all related Code and documentation and other such Typeface software as may be added to Schedule 2 from time to time by written agreement of the parties.”

1.8 Add the following new Definitions (ai) UFST Source Code, (aj) Universal Font Scaling Technology (“UFST”), (ak) Updates and (al) Intellifont-for-Windows 3.1:

“(ai) UFST Source Code - will mean the source code and associated documentation for Agfa’s UFST outline font scaling technology comprised of Intellifont Source Code, Type 1 and TrueType Source Code.

(aj) Universal Font Scaling Technology (“UFST”) - will mean the proprietary Agfa software, including the associated internal software interface, but not external software interfaces which communicates therewith, and auxiliary software utilities, that offers the capability to process Intellifont ® , Type 1, TrueType and hinted Printer Command Language Encapsulated Outline (PCLEO) Type Software within a single application interface, the specifications for which are set forth in Exhibit A to this Addendum to be incorporated into Schedule 3 of the Agreement.

(ak) Updates - will mean any bug fixes, enhancements, improvements, new developments or other modifications to the UFST Source Code.

(al) Intellifont ® -for-Windows™ 3.1- a font management program utility, including Modifications, Enhancements and Object Code, that provides PC users running Microsoft Windows Version 3.1 access to the Agfa Intellifont outline type library for on-line generation of bitmap type at desired resolution/point size combinations, generation of metric information for use with screens and application compatible printers.”

1.9 Renumber Definition (ai) Validation Testing to (am).

1.10 Add the following definition:

 

  2   Confidential


“(an) Scalable Font Printer Driver(s) - application specific printer driver executable Software Program(s), developed by Customer for use on PC host based computer systems running MS DOS, MS Windows and IBM OS/2 operating systems where either Intellifont or UFST is incorporated, distributed by Customer to End Users, Customer Distributors, Customer OEMs and Customer Independent Software Developer’s (ISVs) for use with Customer Product(s) incorporating either Intellifont, UFST or at least one component of UFST and no Type Software.”

2. License . In Section 2(c) of the Agreement, Type Director, add the following immediately after first and subsequent uses of the words “Type Director”:

“Version 2.0”

3. In Section 2(e) of the Agreement, Future Screen Font Solutions, immediately after “Derivative Works of Agfa’s Future Screen Font Solutions” add the following:

“to the extent of Agfa’s capabilities”

4. Add the following Item (g), UFST to Section 2 of the Agreement, License:

“(g) UFST - In consideration of the Royalties and fees set forth in Section 6, Agfa hereby grants to Customer the license to (a) use and have used, copy and have copied, edit and have edited, format have formatted, modify and have modified and create and have created Updates and Derivative Works of UFST source code solely for use in conjunction with Customer’s font, imaging and printing technologies products; and (b) to reproduce and have reproduced, distribute and have distributed to and by third parties, subject to the sublicense provisions described in Section 3 of the Agreement as amended, UFST Source Code, including any object code versions of the Updates or Derivative Works thereof solely for or in conjunction with Customer’s font, imaging and printing technologies products. Such third parties shall have no License or Distribution rights in UFST. All licenses granted to Customer by this Agreement shall extend to Customer and its Subsidiaries. Agfa agrees to deliver to Customer information and assistance as shall be necessary to enable Customer to utilize UFST.’

5. Sublicense . Add “including UFST distributed as a Software Program” immediately following the first occurrence of the word ‘Program’ in the second sentence of the second paragraph of Section 3 in the Agreement.

6. Obligations of Customer . Delete Section 4 (b) of the Agreement, Best Efforts, in its entirety and replace with the following:

“Customer agrees to use its reasonably commercial best efforts to assist Agfa in the promotion of Agfa Type Software to Customer End Users. These reasonably commercial best efforts may include trade show participation, inclusion of Agfa Company name, when appropriate, in product documentation, press releases and press announcements.”

7. Obligations of Agfa . Add the following to Section 5 of the Agreement, Obligations of Agfa:

 

  3   Confidential


Add “Intellifont-for-Windows 3.1, UFST” immediately following “Intellifont for-Windows 3.0” in subparagraph (j) of Section 5 in the original agreement.

Add a new item (k)

(k) UFST - to provide Customer with UFST software and documentation as described in Schedule 3.”

8. Fees and Royalties . Add the following after the first sentence to Section 6 of the Agreement, Fee(s) and Royalties:

“Customer agrees to pay Agfa the UFST License Fees and Royalties set forth in Schedule 2 as amended.”

9. Limited Warranty . Replace “...INTELLIFONT SUPPLIED...” with “...DATA SOFTWARE SUPPLIED...” in subparagraph (d) of Section .9 in the original agreement.

10. Limitation of Remedies . Section 10, of the Agreement shall be modified as follows:

In the first line, change the word “AGFA” to “EITHER PARTY’. In the fifth line of Section 10, change “AGFA” to “THAT PARTY”. At the end of the sixth line of Section 10, add “THE OTHER PARTY’S”. In the seventh line of Section 10, delete the word ‘CUSTOMERS”.

11. Trademarks and Copyrights . Add “, “Universal Font Scaling Technology”, “UFST” immediately following ‘Agfa Compugraphic’ in Section 13 of the original agreement.

12. Ownership of UFST . Add the following sentence to Section 14 of the original agreement:

“Except as licensed to Customer under this Addendum, all right, title and interest in and to UFST and the UFST Source Code, including Updates or Derivative Works thereof, will remain with Agfa and/or its third party Licensors. Any Derivative Works or Updates to the UFST Source Code shall be considered UFST Source Code owned by Agfa or Agfa’s third party Licensors and licensed pursuant to the terms of the Agreement and this Addendum.’

13. Term and Termination . Add the following paragraph to Section 17 of the original agreement:

“Notwithstanding all of the above, the Wingdings Type Software (listed in Schedule 2 as amended, Item 17 (d) and (g) of this Addendum) license shall have a term of ten (10) years, subject, however, to automatic, successive renewal terms of one (1) year each. At the expiration of the initial Term, the parties will negotiate in good faith a renewal. Such renewal not to be unreasonably withheld.”

14. Confidentiality of UFST . Section 20 of the Agreement, Confidentiality is hereby amended as follows:

 

  4   Confidential


14.1 In the second paragraph, immediately following the word “Agreement”, add the following:

“except for Source Code’

14.2 Add the following to the end of Section 20, Confidentiality:

“Disclosure of confidential information shall not be precluded if such disclosure is:

(a) in response to a valid order of a court or other governmental body of the United States or any political subdivision thereof; provided, however, that Customer shall first have given notice to Agfa and made a reasonable effort to obtain a protective order requiring that the information and/or documents so disclosed be used only for the purposes for which the order was issued, or

(b) otherwise required by law, or

(c) necessary to establish rights under this Agreement.

Notwithstanding any other provisions of this Agreement, the obligations specified in this Agreement with respect to confidential information will not apply to any information that:

(a) is already in the possession of Customer or any of its Subsidiaries without obligation of confidence;

(b) is independently developed by Customer of any of its Subsidiaries;

(c) is or becomes publicly available without breach of this Agreement;

(d) is rightfully received by Customer from a third party;

(e) is released for disclosure by Agfa with its written consent or

(f) except for Source Code, is inherently disclosed in the use, lease, sale or other distribution of, or publicly available supporting documentation for, any present or future product or service by or for Customer or any of its Subsidiaries.

15. Applicability of Agreement to UFST. Add the following Section to the Agreement:

“26. Application of Agreement to UFST - Unless otherwise stated in this Addendum, the parties specifically agree and understand that every term and condition of the Agreement applies to the UFST product. Unless otherwise stated, terms used herein retain the same meaning as contained in the Agreement.”

16. Schedule 1 . Add the following below item 1 in Schedule 1 of the Agreement:

 

  5   Confidential


Those future Lexmark Products where otherwise subject to royalties under this agreement as follows:

“2. Laser Printers, including LED (Monochrome and Multi-color)

3. Laser Printers, Options (Monochrome and Multi-color)

4. Ink Jet Printers (Monochrome and Multi-color)

5. Ink Jet Printer Options (Monochrome and Multi-color)

6. Aftermarket Font Products to be marketed for use with Customer Products 1 and 3.”

17. Schedule 2 - Development Fees/Type Software . Delete items (a) and (b) from Subparagraph 1, Development Fees, Type Software in their entirety and replace by the following:

“(a) Resident -Typefaces [eight (8) shipped with PDL]

 

Item

  

Typeface Number

  

Typeface Name

  

Development Fee

1.

   92500    CG Times    /*Confidential Treatment Requested*/

2.

   92501    CG Times Italic    /*Confidential Treatment Requested*/

3.

   92504    CG Times Bold    /*Confidential Treatment Requested*/

4.

   92505    CG Times Bold Italic    /*Confidential Treatment Requested*/

5.

   94021    Univers Medium    /*Confidential Treatment Requested*/

6.

   94022    Univers Medium Italic    /*Confidential Treatment Requested*/

7.

   94023    Univers Bold    /*Confidential Treatment Requested*/

8.

   94024    Univers Bold Italic    /*Confidential Treatment Requested*/
      Subtotal Development Fee    /*Confidential Treatment Requested*/

 

  6   Confidential


(b) Resident Typefaces [thirteen (13) shipped with PDL]

 

Item

  

Typeface Number

  

Typeface Name

  

Item Number

1.    92500    CG Times    /*Confidential Treatment Requested*/
2.    92501    CG Times Italic    /*Confidential Treatment Requested*/
3.    92504    CG Times Bold    /*Confidential Treatment Requested*/
4.    92505    CG Tunes Bold Italic    /*Confidential Treatment Requested*/
5.    94021    Univers Medium    /*Confidential Treatment Requested*/
6.    94022    Univers Medium Italic    /*Confidential Treatment Requested*/
7.    94023    Univers Bold    /*Confidential Treatment Requested*/
8.    94024    Univers Bold Italic    /*Confidential Treatment Requested*/
9.    94029    Univers Medium Condensed    /*Confidential Treatment Requested*/
10.    94039    Univers Medium Condensed Italic    /*Confidential Treatment Requested*/
11.    94030    Univers Bold Condensed    /*Confidential Treatment Requested*/
12.    94040    Univers Bold Condensed Italic    /*Confidential Treatment Requested*/

 

  7   Confidential


Item

  

Typeface Number

  

Typeface Name

  

Item Number

13.

   03848    ITC Zapf Dingbats (comp 110271)
(includes 100, 200, 300 Series)
   /*Confidential Treatment Requested*/
      Subtotal Development Fee    /*Confidential Treatment Requested*/

(c) Resident Typefaces [five (5) shipped with PDL]

 

Item

  

Typeface Number

  

Typeface Name

  

Development

1.

   92500    CG Times    /*Confidential Treatment Requested*/

2.

   92501    CG Times Italic    /*Confidential Treatment Requested*/

3.

   94021    Univers Medium    /*Confidential Treatment Requested*/

4.

   94022    Univers Medium Italic    /*Confidential Treatment Requested*/

5.

   93950    Courier (comp # 10300)    /*Confidential Treatment Requested*/
      Subtotal Development Fees    /*Confidential Treatment Requested*/

(d) Resident Typefaces [forty-five (45) shipped with PDL]

 

Item

  

Typeface Number

  

Typeface Format

  

Development Fee

1.

   Coronet    Intellifont    /*Confidential Treatment Requested*/

2.

   Clarendon Condensed    Intellifont    /*Confidential Treatment Requested*/

3.

   Marigold    Intellifont    /*Confidential Treatment Requested*/

4.

   Letter Gothic*    Intellifont    /*Confidential Treatment Requested*/

 

  8   Confidential


Item

  

Typeface Number

  

Typeface Format

  

Development Fee

5.

   Letter Gothic Italic*    Intellifont    /*Confidential Treatment Requested*/

6.

   Letter Gothic Bold*    Intellifont    /*Confidential Treatment Requested*/

7.

   Arial    TrueType    /*Confidential Treatment Requested*/

8.

   Arial Italic    TrueType    /*Confidential Treatment Requested*/

9.

   Arial Bold    TrueType    /*Confidential Treatment Requested*/

10.

   Arial Bold Italic    TrueType    /*Confidential Treatment Requested*/

11.

   Times New Roman    TrueType    /*Confidential Treatment Requested*/

12.

   Times New Roman Italic    TrueType    /*Confidential Treatment Requested*/

13.

   Times New Roman Bold    TrueType    /*Confidential Treatment Requested*/

14.

   Times New Roman Bold Italic    TrueType    /*Confidential Treatment Requested*/

15.

   Symbol    TrueType    /*Confidential Treatment Requested*/

16.

   Wingdings    TrueType    /*Confidential Treatment Requested*/

17.

   CG Times    Intellifont    /*Confidential Treatment Requested*/

18.

   CG Times Italic    Intellifont    /*Confidential Treatment Requested*/

 

  9   Confidential


Item

  

Typeface Number

  

Typeface Format

  

Development Fee

19.

   CG Times Bold    Intellifont    /*Confidential Treatment Requested*/

20.

   CG Times Bold Italic    Intellifont    /*Confidential Treatment Requested*/

21.

   CG Omega    Intellifont    /*Confidential Treatment Requested*/

22.

   CG Omega Italic    Intellifont    /*Confidential Treatment Requested*/

23.

   CG Omega Bold    Intellifont    /*Confidential Treatment Requested*/

24.

   CG Omega Bold Italic    Intellifont    /*Confidential Treatment Requested*/

25.

   Univers Medium    Intellifont    /*Confidential Treatment Requested*/

26.

   Univers Medium Italic    Intellifont    /*Confidential Treatment Requested*/

27.

   Univers Bold    Intellifont    /*Confidential Treatment Requested*/

28.

   Univers Bold Italic    Intellifont    /*Confidential Treatment Requested*/

29.

   Univers Medium Condensed    Intellifont    /*Confidential Treatment Requested*/

30.

   Univers Medium Condensed It.    Intellifont    /*Confidential Treatment Requested*/

31.

   Univers Bold Condensed    Intellifont    /*Confidential Treatment Requested*/

32.

   Univers Bold Condensed Italic    Intellifont    /*Confidential Treatment Requested*/

33.

   Antique Olive    Intellifont    /*Confidential Treatment Requested*/

 

  10   Confidential


Item

  

Typeface Number

  

Typeface Format

  

Development Fee

34.

   Antique Olive Italic    Intellifont    /*Confidential Treatment Requested*/

35.

   Antique Olive Bold    Intellifont    /*Confidential Treatment Requested*/

36.

   Garamond Antiqua    Intellifont    /*Confidential Treatment Requested*/

37.

   Garamond Kursiv    Intellifont    /*Confidential Treatment Requested*/

38.

   Garamond Halbfett    Intellifont    /*Confidential Treatment Requested*/

39.

   Garamond Kursiv Halbfett    Intellifont    /*Confidential Treatment Requested*/

40.

   Courier*    Intellifont    /*Confidential Treatment Requested*/

41.

   Courier Italic*    Intellifont    /*Confidential Treatment Requested*/

42.

   Courier Bold*    Intellifont    /*Confidential Treatment Requested*/

43.

   Courier Bold Italic*    Intellifont    /*Confidential Treatment Requested*/

44.

   Albertus    Intellifont    /*Confidential Treatment Requested*/

45.

   Albertus Extrabold    Intellifont    /*Confidential Treatment Requested*/

Subtotal Development Fees

      /*Confidential Treatment Requested*/

* Available in Complement # 10300

 

  11   Confidential


(e) Resident Typefaces [thirty six (36) shipped with a PDLJ

 

Item

  

Typeface Name

  

Typeface Format

  

Development Fee

1.

   Coronet    Intellifont    /*Confidential Treatment Requested*/

2.

   Clarendon Condensed    Intellifont    /*Confidential Treatment Requested*/

3.

   Marigold    Intellifont    /*Confidential Treatment Requested*/

4.

   Letter Gothic*    Intellifont    /*Confidential Treatment Requested*/

5.

   Letter Gothic Italic*    Intellifont    /*Confidential Treatment Requested*/

6.

   Letter Gothic Bold*    Intellifont    /*Confidential Treatment Requested*/

7.

   ITC Zapf Dingbats    Intellifont    /*Confidential Treatment Requested*/

8.

   CG Times    Intellifont    /*Confidential Treatment Requested*/

9.

   CG Times Italic    Intellifont    /*Confidential Treatment Requested*/

10.

   CG Times Bold    Intellifont    /*Confidential Treatment Requested*/

11.

   CG Times Bold Italic    Intellifont    /*Confidential Treatment Requested*/

12.

   CG Omega    Intellifont    /*Confidential Treatment Requested*/

13.

   CG Omega Italic    Intellifont    /*Confidential Treatment Requested*/

14.

   CG Omega Bold    Intellifont    /*Confidential Treatment Requested*/

 

  12   Confidential


Item

  

Typeface Name

  

Typeface Format

  

Development Fee

15.    CG Omega Bold Italic    Intellifont    /*Confidential Treatment Requested*/
16.    Univers Medium    Intellifont    /*Confidential Treatment Requested*/
17.    Univers Medium Italic    Intellifont    /*Confidential Treatment Requested*/
18.    Univers Bold    Intellifont    /*Confidential Treatment Requested*/
19.    Univers Bold Italic    Intellifont    /*Confidential Treatment Requested*/
20.    Univers Medium Condensed    Intellifont    /*Confidential Treatment Requested*/
21.    Univers Medium Condensed It.    Intellifont    /*Confidential Treatment Requested*/
22.    Univers Bold Condensed    Intellifont    /*Confidential Treatment Requested*/
23.    Univers Bold Condensed Italic    Intellifont    /*Confidential Treatment Requested*/
24.    Antique Olive    Intellifont    /*Confidential Treatment Requested*/
25.    Antique Olive Italic    Intellifont    /*Confidential Treatment Requested*/
26.    Antique Olive Bold    Intellifont    /*Confidential Treatment Requested*/
27.    Garamond Antiqua    Intellifont    /*Confidential Treatment Requested*/
28.    Garamond Kursiv    Intellifont    /*Confidential Treatment Requested*/
29.    Garamond Halbfett    Intellifont    /*Confidential Treatment Requested*/

 

  13   Confidential


Item

  

Typeface Name

  

Typeface Format

  

Development Fee

30.    Garamond Kursiv Halbfett    Intellifont    /*Confidential Treatment Requested*/
31.    Courier*    Intellifont    /*Confidential Treatment Requested*/
32.    Courier Italic*    Intellifont    /*Confidential Treatment Requested*/
33.    Courier Bold*    Intellifont    /*Confidential Treatment Requested*/
34.    Courier Bold Italic*    Intellifont    /*Confidential Treatment Requested*/
35.    Albertus    Intellifont    /*Confidential Treatment Requested*/
36.    Albertus Extrabold    Intellifont    /*Confidential Treatment Requested*/
Subtotal Development Fees       /*Confidential Treatment Requested*/

* Available in Complement # 10300

(f) Twenty Three (23) Intellifont Typefaces unbundled or shipped with a Customer Product that contains a PDL

 

Item

  

Typeface Name

  

Typeface Format

  

Development Fee

1.    Coronet    Intellifont    /*Confidential Treatment Requested*/
2.    Clarendon Condensed    Intellifont    /*Confidential Treatment Requested*/
3.    Marigold    Intellifont    /*Confidential Treatment Requested*/

 

  14   Confidential


 

Item

  

Typeface Name

  

Typeface Format

  

Development Fee

4.

   Letter Gothic*    Intellifont    /*Confidential Treatment Requested*/

5.

   Letter Gothic Italic*    Intellifont    /*Confidential Treatment Requested*/

6.

   Letter Gothic Bold*    Intellifont    /*Confidential Treatment Requested*/

7.

   CG Omega    Intellifont    /*Confidential Treatment Requested*/

8.

   CG Omega Italic    Intellifont    /*Confidential Treatment Requested*/

9.

   CG Omega Bold    Intellifont    /*Confidential Treatment Requested*/

10.

   CG Omega Bold Italic    Intellifont    /*Confidential Treatment Requested*/

11.

   Antique Olive    Intellifont    /*Confidential Treatment Requested*/

12.

   Antique Olive Italic    Intellifont    /*Confidential Treatment Requested*/

13.

   Antique Olive Bold    Intellifont    /*Confidential Treatment Requested*/

14.

   Garamond Antiqua    Intellifont    /*Confidential Treatment Requested*/

15.

   Garamond Kursiv    Intellifont    /*Confidential Treatment Requested*/

16.

   Garamond Halbfett    Intellifont    /*Confidential Treatment Requested*/

17.

   Garamond Kursiv Halbfett    Intellifont    /*Confidential Treatment Requested*/

18.

   Courier*    Intellifont    /*Confidential Treatment Requested*/

 

  15   Confidential


 

Item

  

Typeface Name

  

Typeface Format

  

Development Fee

19.

   Courier Italic*    Intellifont    /*Confidential Treatment Requested*/

20.

   Courier Bold*    Intellifont    /*Confidential Treatment Requested*/

21.

   Courier Bold Italic*    Intellifont    /*Confidential Treatment Requested*/

22.

   Albertus    Intellifont    /*Confidential Treatment Requested*/

23.

   Albertus Extrabold    Intellifont    /*Confidential Treatment Requested*/

Subtotal Development Fees

      /*Confidential Treatment Requested*/

* Available in Complement # 10300

(g) Thirty Three (33) Non-Resident Typefaces shipped in a ROM/IC Card Option [twenty three (23) Intellifont format and ten (10) TrueType format]

 

Item

  

Typeface Name

  

Typeface Format

  

Development Fee

1.

   Coronet    Intellifont    /*Confidential Treatment Requested*/

2.

   Clarendon Condensed    Intellifont    /*Confidential Treatment Requested*/

3.

   Marigold    Intellifont    /*Confidential Treatment Requested*/

4.

   Letter Gothic*    Intellifont    /*Confidential Treatment Requested*/

5.

   Letter Gothic Italic*    Intellifont    /*Confidential Treatment Requested*/

6.

   Letter Gothic Bold*    Intellifont    /*Confidential Treatment Requested*/

 

  16   Confidential


Item

  

Typeface Name

  

Typeface Format

  

Development Fee

7.    Arial    TrueType    /*Confidential Treatment Requested*/
8.    Arial Italic    TrueType    /*Confidential Treatment Requested*/
9.    Arial Bold    TrueType    /*Confidential Treatment Requested*/
10.    Arial Bold Italic    TrueType    /*Confidential Treatment Requested*/
11.    Times New Roman    TrueType    /*Confidential Treatment Requested*/
12.    Times New Roman Italic    TrueType    /*Confidential Treatment Requested*/
13.    Times New Roman Bold    TrueType    /*Confidential Treatment Requested*/
14.    Times New Roman Bold Italic    TrueType    /*Confidential Treatment Requested*/
15.    Symbol    TrueType    /*Confidential Treatment Requested*/
16.    Wingdings    TrueType    /*Confidential Treatment Requested*/
17.    CG Omega    Intellifont    /*Confidential Treatment Requested*/
18.    CG Omega Italic    Intellifont    /*Confidential Treatment Requested*/
19.    CG Omega Bold    Intellifont    /*Confidential Treatment Requested*/
20.    CG Omega Bold Italic    Intellifont    /*Confidential Treatment Requested*/
21.    Antique Olive    Intellifont    /*Confidential Treatment Requested*/

 

  17   Confidential


 

Item

  

Typeface Name

  

Typeface Format

  

Development Fee

22.

   Antique Olive Italic    Intellifont    /*Confidential Treatment Requested*/

23.

   Antique Olive Bold    Intellifont    /*Confidential Treatment Requested*/

24.

   Garamond Antiqua    Intellifont    /*Confidential Treatment Requested*/

25.

   Garamond Kursive    Intellifont    /*Confidential Treatment Requested*/

26.

   Garamond Halbfett    Intellifont    /*Confidential Treatment Requested*/

27.

   Garamond Kursiv Halbfett    Intellifont    /*Confidential Treatment Requested*/

28.

   Courier*    Intellifont    /*Confidential Treatment Requested*/

29.

   Courier Italic*    Intellifont    /*Confidential Treatment Requested*/

30.

   Courier Bold*    Intellifont    /*Confidential Treatment Requested*/

31.

   Courier Bold Italic*    Intellifont    /*Confidential Treatment Requested*/

32.

   Albertus    Intellifont    /*Confidential Treatment Requested*/

33.

   Albertus Extrabold    Intellifont    /*Confidential Treatment Requested*/

Subtotal Development Fees

      /*Confidential Treatment Requested*/

* Available in Complement # 10300

 

  18   Confidential


 

18. Schedule 2 - Development Fees/Type Software . Renumber item (c) in Subparagraph 1 to item (h).

19. Schedule 2 - License Fees . Add the following to Subparagraph 2:

“UFST Source Code, including Intellifont ® , Type 1 and TrueType ® components and related documentation - /*Confidential Treatment Requested*/.”

20. Schedule 2 - License Fees. Add the following Subparagraph 3, and renumber all remaining Subparagraphs:

“3. Customer will pay Agfa a License Fee of /*Confidential Treatment Requested*/ upon election of Customer to develop a Scalable Font Printer Driver integrating Intellifont or UFST or portions thereof supporting Customer Laser Printer(s) and Ink jet Printer(s) with either Intellifont or UFST or at least one component of UFST, subject to the following conditions:

(a) Intellifont or UFST Software must be implemented in such a manner as unauthorized access to the Intellifont or UFST Source Code is prohibited. For example, the Scalable Font Printer Driver will ship only as an executable Software Program.

(b) Customer’s distribution rights are limited to;

(i) Customer Product(s) that incorporate Intellifont, UFST or at least one component of UFST within a Customer PDL;

(ii) Customer’s Bulletin Board;

(iii) Compuserve and/or Prodigy Bulletin Boards; and

(iv) Bundled with software applications distributed by Customer’s independent software vendors (ISVs), value added resellers (VARs) and operating system distributors.

(c) Customer will use its commercially reasonable best efforts to ensure that Customer End Users accessing the Scalable Font Printer Driver are authorized to do so (eg., have purchased Customer Product(s) that incorporate Intellifont, UFST or at least one component of UFST).

(d) Customer agrees that Agfa reserves the right to charge additional License Fees over and above the /*Confidential Treatment Requested*/, if Customer requests in writing, engineering work that may need to be done in order to satisfy Customer’s technical specifications.

21. Schedule 2 - Royalties . Make the first paragraph of Subparagraph 8, as originally numbered item 9 (a) and add the following as item 9 (b):

 

  19   Confidential


“(b) In addition to the Royalty Fees above, Customer will pay to Agfa an additional non-refundable advance against Royalties (minimum royalty payment) totaling /*Confidential Treatment Requested*/ based on the following payment schedule:

 

  - /*Confidential Treatment Requested*/ payable by or on January 30, 1993

 

  - /*Confidential Treatment Requested*/ payable by or on April 1, 1993

 

  - /*Confidential Treatment Requested*/ payable by or on July 1, 1993

 

  - /*Confidential Treatment Requested*/ payable by or on October 1, 1993

The new prepayment includes printer resident offerings from Customer which incorporate the Type Software and either Intellifont or UFST

Royalty Unit. 100% of Royalties may be credited against this advance until the advance is exhausted.”

22. Schedule 2 - Royalties . Subparagraphs’ 9 and 10, as originally numbered in Schedule 2 of the Agreement, will be deleted in their entirety and be replaced by the following new Subparagraph 10:

“10. Royalty Unit - Resident Type Software

(a) Commencing on January 1, 1993, for each Royalty Unit, comprised of either Intellifont or UFST and up to thirteen (13) Typefaces in Intellifont format, contained in Section 17 (b) above, sublicensed to an End-User, Customer Distributor, or a Customer OEM there will be a Royalty of /*Confidential Treatment Requested*/ of Customer’s United States (U.S.) Product list price as of the end of the applicable quarter with a maximum Royalty of /*Confidential Treatment Requested*/ and a minimum Royalty of /*Confidential Treatment Requested*/ per Product.

(b) Commencing on January 1, 1993, for each Royalty Unit, comprised of either Intellifont or UFST and five (5) Typefaces in Intellifont format, contained in Section 17 (c) above sublicensed to an End-User, Customer Distributor, or a Customer OEM there will be a Royalty of /*Confidential Treatment Requested*/ of Customer’s United States (U.S.) Product list price as of the end of the applicable quarter with a maximum royalty of /*Confidential Treatment Requested*/ and a minimum royalty of /*Confidential Treatment Requested*/ per Product.

(c) Commencing on January 1, 1993, for each Royalty Unit, comprised of UFST and forty-five (45) Typefaces, 35 in Intellifont format and 10 in TrueType format, contained in Section 17 (d) above sublicensed to an End-User, Customer Distributor, or a Customer OEM there will be a Royalty of /*Confidential Treatment Requested*/ of Customer’s United States (U.S.) Product list price as of the end of the applicable quarter with a maximum Royalty of /*Confidential Treatment Requested*/ and a minimum royalty of /*Confidential Treatment Requested*/ per Product.

 

  20   Confidential


(d) Commencing on January 1, 1993, for each Royalty Unit, comprised of either Intellifont or UFST and thirty six (36) Typefaces in Intellifont format contained in Section 17 (e) above, sublicensed to an End-User, Customer Distributor, or a Customer OEM there will be a Royalty of /*Confidential Treatment Requested*/ of Customer’s United States (U.S.) Product list price as of the end of the applicable quarter with a maximum royalty of /*Confidential Treatment Requested*/ and a minimum royalty of /*Confidential Treatment Requested*/ per Product.

(e) Commencing on January 1, 1993, for each Royalty Unit, comprised of twenty three (23) Typefaces in Intellifont format distributed on ROM/IC CARD media and shipped bundled or unbundled with a PDL, contained in Section 17 (f) above, sublicensed to an End-User, Customer Distributor, or a Customer OEM there will be a Royalty of /*Confidential Treatment Requested*/ of Customer’s United States (U.S.) Product list price as of the end of the applicable quarter with a maximum royalty of /*Confidential Treatment Requested*/ and a minimum royalty of /*Confidential Treatment Requested*/ per Product.

(f) Commencing on January 1, 1993, for each Royalty Unit, comprised of thirty three (33) Typefaces, 23 in Intellifont format and 10 In TrueType format, contained in Section 17 (g) and distributed on ROM/IC CARD media, there will be a /*Confidential Treatment Requested*/ royalty per product.

(g) Customer reserves the right to substitute other Typefaces for the Typefaces contained in Section 17 (a) through (h) above. There shall be no additional cost for such substituted Typefaces of equal value. Substituted Typefaces which are not of equal value and which are third party Royalty-bearing Typefaces are subject to a higher Royalty to be negotiated in good faith by Agfa and Customer.

(h) Customer, at its option, may license additional Typefaces for resident and non-Resident inclusion in its Product(s). Changes made to the Unit Royalty definitions contained in Section 17 (a), (b), (c), (d), (e), (f), (g) and (h) above will require a separate royalty schedule which will be negotiated in good faith by Customer and Agfa. Royalties due Agfa will be based on a combination of Agfa’s designated royalty per typeface plus third party royalties. ITC and/or Monotype will be subject to the then current Typeface Royalty for ITC and Monotype Typefaces. Non-ITC and Monotype, third party Royalty-bearing Typefaces, will be subject to an additional Royalty of /*Confidential Treatment Requested*/ of Agfa’s received royalty per Typeface.

23. Summary of Fees To Be Paid by Lexmark to Agfa for Addendum No. 2 . Below are the Prepaid Royalty payments, Development Fees and License Fees required under this Addendum:

Development Fees/Prepaid Royalties:

 

UFST

   /*Confidential Treatment Requested*/ (Due on invoice after execution of Addendum)

Typefaces

   /*Confidential Treatment Requested*/ (Due on invoice after execution of Addendum)

 

  21   Confidential


Prepaid Royalties

   /*Confidential Treatment Requested*/ (See Addendum Section 21 (b))

Total

   /*Confidential Treatment Requested*/

Scalable Font Printer Driver

   /*Confidential Treatment Requested*/ (Due on invoice, if Customer elects to develop driver utilizing UFST/Intellifont Technology)

Balance of Prepaid Royalties Due In 1993:

 

   /*Confidential Treatment Requested*/ (See Addendum Section 21 (b))

Total Fees - Addendum No. 2:

 

   /*Confidential Treatment Requested*/ (If Customer elects not to develop driver utilizing UFST/Intellifont Technology)

24. Schedule 3 – Description of Data Software and Deliverables . Add the following paragraph:

“The Universal Font Scaling Developer’s Kit is shipped in three different modules. The base module contains general information and software to integrate the UFST subsystem for Intellifont. The other two modules are optional items containing the software for integrating the additional font scaling formats: TrueType and/or PostScript Type 1. A UFST Developer’s Kit will include the base module and one or more of the optional modules based on the Customer’s specific request:

Base Module

Universal Font Scaling Technology Technical Reference Manual

Intellifont Subsystem Code; 1-4, MS-DOS 5  1 / 4 ”- 1.2Mb Diskettes

Intellifont Font Data; 1-5, MS-DOS 5  1 / 4 ”- 1.2Mb Diskettes

Optional Modules

UFST PostScript Code; 1 MS-DOS 5  1 / 4 ” - 1.2Mb Diskette

UFST PostScript Font Data; 1 MS-DOS 5  1 / 4 - 1.2Mb Diskette

UFST TrueType Code; 1 MS-DOS 5  1 / 4 ” - 1.2Mb Diskette

UFST TrueType Font Data; 2 MS-DOS 5  1 / 4 ” - 1.2Mb Diskettes

Appendix

Appendix A: Agfa Intellifont Character Glyph List

Appendix B: Agfa PostScript Character Glyph List

Appendix C: Agfa TrueType Character Glyph List

 

  22   Confidential


Appendix D: PostScript Encapsulated Outline Format

Appendix E: PCL Encapsulated TrueType Outline Format

Intellifont subsystem Version 3.01

Intellifont Bug Report Form

Notes: TrueType Type Software based on the Apple/Microsoft TrueType Specification

Type 1 Software based on the Adobe Type 1 Format Specification”

25. Schedule 10 . Delete Schedule 10 of the original agreement in its entirety and replace with a new Schedule 10 set forth in Exhibit B.

This Agreement is executed and shall be effective this 16 th day of December 1992. Except as expressly amended hereby, the “Intellifont Software and Type Software Agreement” is hereby reaffirmed and remains in full force and effect.

 

AGFA DIVISION MILES INC.     LEXMARK INTERNATIONAL, INC.

/s/ Robert M. Givens

   

/s/ Ronald E. Bingham

Signature     Signature

Vice President

   

Bus. Area Mgr.

Title     Title

Robert M. Givens

   

Ronald E. Bingham

Print Name     Print Name

 

  23   Confidential


EXHIBIT A.

(See Attached)

UFST documentation titled “UFST 1.1 Technical Reference Manual” released on October 26th, 1992 and shipped to Customer on November 30th, 1992.

 

  24   Confidential


EXHIBIT B.

SCHEDULE 10

Guidelines for the Representation of Agfa Division, Miles Inc.

UFST and/or Intellifont-Based Products

Agfa and Intellifont/UFST Logo(s)

The company logo consisting of the name AGFA, in uppercase letters, followed by the Agfa Rhombus. Agfa Division, Miles Inc. will provide artwork of the Agfa Rhombus in various sizes. Please note that the Rhombus should always be accompanied by the name AGFA, immediately preceding it.

Agfa recommends that software products that incorporate Intellifont or Universal Font Scaling Technology (UFST) or type display the Intellifont/UFST logo on the spine, specification sheet, and cover of packaging, as well as on diskettes and documentation. Hardware products may display the Intellifont/UFST logo on printer boxes, end user guides, or other point of sale literature or manuals.

Agfa shall provide Customer with black and white artwork of the Intellifont, UFST and Agfa logos in a variety of sizes. Logos may not be altered in any way. Agfa logos typically appear without trademark symbols but accompanied by a citation. If space prohibits the inclusion of a citation for a logo, then the appropriate trademark symbol must be used with the logo.

Product and Company Names

Intellifont type should always be referred to as Intellifont Scalable Typefaces, the scaling technology as Intellifont ® or Universal Font Scaling Technology, the end-user font management product(s) as Type Director ® and Intellifont ® -for-Windows. The correct company name is Agfa Division, Miles Inc. After the initial reference, however, subsequent mentions do not need to include the word Division. Universal Font Scaling Technology can be referred to as UFST .

Press Releases

Initial announcement news releases for UFST and/or Intellifont-based printers should state that the product utilizes UFST and/or Intellifont scaling technology from Agfa. Releases for any products that include Intellifont typefaces should acknowledge that the fonts are licensed from Agfa. Typeface names must be correctly represented. (Please see the current Agfa Intellifont Scalable Typeface brochure for correct spellings, CG prefixes, etc.).

Marketing Collateral and Advertising

The first and most prominent use of an Agfa trademark in each item must be followed by the designation ® after each registered trademark, and the designation n or equivalent notice after each unregistered trademark, provided, however, that a prominent listing of trademarks near the front of any publication shall be a sufficient designation of any trademark listing. Corresponding Trademark Citations must be provided (see below).

 

  25   Confidential


Product Packaging

The first and most prominent use of an Agfa trademark on each product package must be followed by the designation ® after each registered trademark, and the designation ™ or equivalent notice after each unregistered trademark. Corresponding Trademark Citations must be provided (see below).

Typeface Prefixes

Agfa does not require a trademark symbol for the CG prefix, but does require a citation.

Trademark Citations

Scalable type outlines are licensed from Agfa Division, Miles Inc. Agfa and the Agfa Rhombus are registered trademarks of Agfa-Gevaert, AG. CG, Garth Graphic, Intellifont, Type Director, ( ® ) registered trademarks, and Universal Font Scaling Technology, UFST, Shannon, CG Triumvirate are (™) trademarks of Agfa Division, Miles Inc. CG Bodoni, CG Century Schoolbook, CG Goudy Old Style, CG Melliza, Microstyle, CG Omega, and CG Palacio are products of Agfa Division, Miles Inc. CG Times, based on Tunes New Roman under license from The Monotype Corporation plc, is a product of Agfa Division, Miles Inc.

TrueType is a registered trademark of Apple Computer, Inc. The Type 1 processor resident in UFST is under license from Pipeline Associates, Inc.

Other Citations

Univers is a registered trademark of Linotype AG and/or its subsidiaries. Letraset is a registered trademark, and Aachen, Revue and University Roman are trademarks of Esselte Pendaflex Corporation. Futura is a registered trademark of Fundicion Tipografica Neufville, S.A.

ITC Avant Garde Gothic, ITC Benguiat, ITC Bookman, ITC Century, ITC Cheltenham, ITC Clearface, ITC Galliard, ITC Korinna, ITC Lubalin Graph, ITC Souvenir, ITC Tiepolo, ITC Zapf Chancery, and ITC Zapf Dingbats are registered trademarks of International Typeface Corporation. Anal, Albertus, Gill Sans and Times New Roman are registered trademarks and Mono” Baskerville is a trademark of The Monotype Corporation plc. Hiroshige and Marigold are trademarks of AlphaOmega Typography, Inc. Antique Olive is a trademark of Monsieur Marcel OLIVE. Wingdings™ is a trademark of Microsoft Corporation.

 

  26   Confidential


ADDENDUM NO. 3

To The Intellifont Software and Type Software

Agreement Agreement No. 1291-D93

This is an Addendum, entered into this 28 th day of July, 1993, to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D9 3 (“Agreement”) dated August 15th, 1991, by and between Agfa Division of Miles Inc. (“Agfa”) and Lexmark International, Incorporated (“Customer”). Unless otherwise defined herein, capitalized terms shall have the meanings ascribed to them in the Agreement and the prior Addendums thereto.

Whereas the parties desire to amend the Agreement, NOW, THEREFORE, it is mutually agreed to as follows:

1. The Royalties for the 25 Font Card, the 26 Font Card and the WordPerfect Font Card in Section 11 of Schedule 2, as amended by Addendum No. 1, are amended as follows:

“The Royalty for the 25 Font Card is /*Confidential Treatment Requested*/. The Royalty for the 26 Font Card is /*Confidential Treatment Requested*/. The Royalty for the WordPerfect Font Card is /*Confidential Treatment Requested*/.”

2. The Royalties for the 25 Font Card, the 26 Font Card and the WordPerfect Font Card shall not be subject to the additional Typeface Royalties described in paragraph 2, Section 11 of Schedule 2 of the Agreement.

Except as expressly amended hereby, the “Intellifont Software and Type Software Agreement” is hereby reaffirmed and remains in full force and effect.

This Agreement is executed and shall be effective this 31 st day of March 1993.

 

AGFA DIVISION MILES INC.

    LEXMARK INTERNATIONAL, INC.

/s/ Robert M. Givens

   

/s/ Ronald E. Bingham

Signature

    Signature

Vice President

   

Dev. Operations Mgr.

Title

    Title

Robert M. Givens

   

Ronald E. Bingham

Print Name

    Print Name

 

1


File Name: JG-80-WP9   Revised: 9/30/94

ADDENDUM NO. 4

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 as amended from time to time (“Agreement”) dated August 15, 1991, by and between Agfa Division of Miles Inc. (“Agfa”) and Lexmark International, Incorporated (“Customer”).

WHEREAS Agfa has developed certain technology described in Sections 1(ao) through 1(aq) below and for the purposes of this Addendum is defined and referred to as the Licensed Software; and

WHEREAS Customer desires to obtain a license to use, reproduce and distribute t to End Users, Customer Distributors, Customer OEMs, Customer Developers and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree as follows:

1. Definitions . Add the following new definitions to Section 1 of the amended Agreement.

ao) UFST Converter - the proprietary Agfa Software Program and associated documentation which converts Intellifont, TrueType and Type One typefaces into PCLEO, PCLETTO, and PSEO downloadable format typefaces and described in the documents titled “UFST PCLexo Generator Developer’s Manual” and “The Font Converter Users Guide”.

ap) Customer Developer - an original equipment manufacturer contractually authorized by Customer to develop and distribute such manufacturer’s own font, imaging, and printing technology products incorporating Intellifont or UFST and Type Software.

aq) TrueType Screen Fonts - a single disk, font management executable program consisting of Agfa’s LaserJet 4 and LaserJet 4L compatible Typefaces in a compressed TrueType format and Agfa’s custom installation utilities for Windows 3.1. This s a screen font solution for Customer Products or Customer Developer product(s) incorporating Intellifont or UFST Software and the LaserJet 4 compatible Type Software only.

2. License Grant . Add the following items (h), Customer Developer(s), (i), TrueType Screen Fonts, (j), UFST Converter, and (k), Third Party Developer(s), to Section 2, License, of the Agreement:

(h) Customer Developer(s) - Agfa hereby grants to Customer the right to grant Customer Developer(s) with a Sublicense to use, reproduce, and distribute, subject to the Sublicense provisions of the Agreement, partial or complete versions of the Licensed Software, including any object code versions of Updates or Derivative Works thereof, to End Users for use with Customer Developer’s font, imaging and printing technology products.

 

  1   Confidential


Customer may ship object code version of the Licensed Software to Customer Developer as long as Customer discloses the identity of Customer Developer to Agfa in writing prior to shipment and the Customer Developer has executed a Confidential Disclosure Agreement substantially similar to the one contained in Exhibit B of this Addendum.

Such distribution shall be subject to the Royalties set forth in Exhibit A, except that distribution solely of the UFST Converter as described in Section 2 (j) shall be Royalty free.

(i) TrueType Screen Fonts - Agfa hereby grants to Customer /*Confidential Treatment Requested*/, nonexclusive, worldwide License to (a) use, produce, and copy TrueType Screen Fonts in conjunction with Customer’s font, imaging and printing technologies products; and (b) to distribute, subject to the sublicense provisions described in Section 3 of the Agreement, TrueType Screen Fonts in object code only, to End Users directly and through authorized Customer Distributors and/or Customer OEMs, in conjunction with Customer Products incorporating Intellifont or UFST Software and Type Software.

(j) UFST Converter - Agfa hereby grants to Customer a non-exclusive, worldwide License to:

Distribute, market or otherwise transfer the UFST Converter, in object code only, to End Users directly and through authorized Customer Distributors and/or Customer OEMs. Notwithstanding any provision of this Agreement to the contrary, this License to distribute the UFST Converter shall be /*Confidential Treatment Requested*/ provided the following conditions are met:

a) The UFST Converter must be distributed only:

(i) with Customer Product(s) that incorporate Intellifont, UFST or at least one component of UFST within a Customer PDL;

(ii) on Customer Bulletin Board;

(iii) on Compuserve Boards or other similar services; or

(iv) Bundled with software applications distributed by Customer independent software vendors, value added resellers (VARs) or operating system developers or manufacturers.

Notwithstanding anything herein to the contrary, all other licensed software licensed by Agfa to Customer pursuant to the Agreement other than the UFST Converter may be distributed only by sublicense as set fort in Section 3 of the Agreement.

b) Customer will use its best efforts to ensure that Customer End Users accessing the UFST Converter have purchased, or will purchase, Customer Product(s) that incorporate Intellifont, UFST or at least one component of UFST. This provision shall apply to all means of access other than Customer Bulletin Board, Compuserve, and other related services.

 

    Confidential


c) Customer agrees that Agfa reserves the right to charge a Development Fee if Customer requests in writing, engineering work to satisfy Customer’s technical specifications. In the event Customer distributes the UFST Converter other than as set forth in Sections 2(j)(a), (i) through (iv), Agfa reserves the right to charge a License Fee.

(k) Third Party Developers - Agfa hereby grants to Customer the right to have used, have reproduced, and have modified, Intellifont, UFST, UFST Font Installer/Converter, and to have used, to have reproduced, the Type Software by any third party(ies) (“Third Party Developer(s)”) provided one of the following conditions is met: the Third Party Developer (i) executes a Non-Disclosure Agreement containing terms and conditions substantially similar to those contained in Paragraph 20 of the Agreement, (ii) is authorized by a written agreement of Customer and Agfa, (iii) has executed a Non-Disclosure Agreement with Agfa directly, or (iv) is an Agfa authorized licensee (such as, for example, Phoenix Technologies, Ltd.).

3. Fees and Royalties - Customer agrees to pay Agfa the License Fees and Royalties set forth in Schedule 2 as amended hereby and pursuant to the Agreement.

4. Payments . Section 23 of the Agreement is amended as follows:

Wire Transfer Information:

FIRST NATIONAL BANK OF BOSTON

BOSTON, MA 02110, U.S.A.

ABA # /*Confidential Treatment Requested*/

FOR CREDIT TO MILES INC., ACCT. #/*Confidential Treatment Requested*/

SWIFT ID /*Confidential Treatment Requested*/

5. Copyrights & Trademarks .

a) Agfa hereby grants Customer the right to use the trademarks “Agfa”, “Intellifont”, “Universal Font Scaling Technology”, “UFST”, and “Type Director”, and the “Agfa Rhombus” and the “UFST logo” in advertising, promotion and sublicensing of Customer Products incorporating the Licensed Software in accordance with Agfa’s policies regarding trademark usage for materials originated a commercially reasonable time after Agfa’s written communication to Customer of such policies.

b) The trademarks and trade names under which Agfa markets the UFST and Type Software are all exclusive property of Agfa or its licensor(s). The copyright notices, name and/or labels on UFST and Type Software, or any part thereof, must be displayed and may not be removed by Customer without the prior written approval of Agfa.

Customer must include the printed notice “Copyright © 1989, 1991, 1994. Agfa Division, Miles Inc. All rights reserved.”, © 1989 - 1994, Miles Inc.”, where space for the preceding notice is not available on products containing UFST and Type Software where space on the product label permits such notices for all copyright material embedded in said product.

c) Customer will include one of the following notations in the published technical specification for each Customer printer announced for general availability within a commercially reasonable time after execution of this Addendum No. 4 that contains one or more of the Intellifont, UFST, or UFST Font Converter/Installer technologies:

 

    Confidential


“Contains Intellifont ® under license from Agfa Division, Miles Inc.”

“Contains Universal Font Scaling Technology ® or [Contains UFST ® ] under license from Agfa Division, Miles Inc.”

“Contains Universal Font Scaling Technology’ ® or [Contains UFST ® ] Converter/Installer under license from Agfa Division, Miles Inc.”

The following trademark notations apply to the trademarks listed:

“Universal Font Scaling Technology, UFST, Intellifont, Type Director, Agfa, Agfa Rhombus, and the UFST logo are all trademarks of Agfa Division of Miles Inc. and/or its affiliated companies”

6. Schedule 2 - Development Fees/Type Software . Replace “forty-five (45)” with “forty-six (46)” in the heading of Schedule 2, subparagraph 1(d) of the Agreement and add the following at the end of Schedule 2 subparagraph l(d) of the amended Agreement:

“46. ITC Zapf Dingbats Intellifont            /*Confidential Treatment Requested*/”

7. Schedule 2 - Development Fees/Type Software . The following will be added to the end of Section 17 of Schedule 2 of the Agreement:

“(i) Customer shall pay to Agfa /*Confidential Treatment Requested*/ License Fee and royalty for the following Type Software. Pursuant to this Schedule of the Agreement, Customer is paying a Royalty for the CG Times and Univers Type Software. Agfa irrevocably waives any additional Royalties for the Type Software listed below. All other License Fees and Royalties will remain in effect.

 

Item   

Typeface Name

  

Format

1.    Cyrillic/Latin CG Times    Intellifont
2.    Cyrillic/Latin CG Times Italic    Intellifont
3.    Cyrillic/Latin CG Times Bold    Intellifont
4.    Cyrillic/Latin CG Times Bold Italic    Intellifont
5.    Cyrillic/Latin Univers Medium    Intellifont
6.    Cyrillic/Latin Univers Medium Italic    Intellifont
7.    Cyrillic/Latin Univers Bold    Intellifont
8.    Cyrillic/Latin Univers Bold Italic    Intellifont
9.    Greek/Latin CG Times    Intellifont
10.    Greek/Latin CG Times Italic    Intellifont
11.    Greek/Latin CG Times Bold    Intellifont
12.    Greek/Latin CG Times Bold Italic    Intellifont
13.    Greek/Latin Univers Medium    Intellifont
14.    Greek/Latin Univers Medium Italic    Intellifont

 

    Confidential


15.    Greek/Latin Univers Bold    Intellifont
16.    Greek/Latin Univers Bold Italic    Intellifont
17.    Eastern Europe/Latin CG Times    Intellifont
18.    Eastern Europe/Latin CG Times Italic    Intellifont
19.    Eastern Europe/Latin CG Times Bold    Intellifont
20.    Eastern Europe/Latin CG Times Bold Italic    Intellifont
21.    Eastern Europe/Latin Univers Medium    Intellifont
22.    Eastern Europe/Latin Univers Medium Italic    Intellifont
23.    Eastern Europe/Latin Univers Bold    Intellifont
24.    Eastern Europe/Latin Univers Bold Italic    Intellifont
25.    Turkish/Latin CG Times    Intellifont
26.    Turkish/Latin CG Time Italic    Intellifont
27.    Turkish/Latin CG Times Bold    Intellifont
28.    Turkish/Latin CG Times Bold Italic    Intellifont
29.    Turkish/Latin Univers Medium    Intellifont
30.    Turkish/Latin Univers Medium Italic    Intellifont
31.    Turkish/Latin Univers Bold    Intellifont
32.    Turkish/Latin Univers Bold Italic    Intellifont
33.    Arabic/Latin CG Times    Intellifont
34.    Arabic/Latin CG Times Bold    Intellifont
35.    Hebrew/Latin CG Times    Intellifont
36.    Hebrew/Latin CG Times Bold    Intellifont
37.    Greek Courier    Intellifont
38.    Greek Courier Italic    Intellifont
39.    Greek Courier Bold    Intellifont
40.    Greek Courier Bold Italic    Intellifont

8. Schedule 2 - License Fees . The following will be added to the License Fee section of Schedule 2 as subparagraph 9 of the Agreement:

“9. Customer shall pay to Agfa /*Confidential Treatment Requested*/ License Fee for the following Bit-Map fonts to be utilized in Lexmark Product(s).

 

Item   

Typeface Name

  

Point
Size

  

Pitch
Size

  

Character

Set

1.    Line Printer    8.5    16.67    2N ISO 8859/2 Latin 2
            5N ISO 8859/9 Latin 5
            9U Windows 3.0 Latin 1
            19U Windows 3.1 Latin 1
            9E Windows 3.1 Latin 2
            5T Windows 3.1 Latin 5
            17U PC-852 Latin 2
            9T PC-Turkish, Code Page 437T
            7J DeskTop
            10J PS Text

 

    Confidential


      13J Ventura International
      14J Ventura US
      6J Microsoft Publishing
      12J Macintosh
      5M PS Math
      6M Ventura Math
      8M Math-8
      15U Pi Font
      8U Roman-8
      10U PC-8
      11U PC-8 (Danish/Norwegian)
      12U PC-850 Unutilized
      ON ISO 8859-1 Latin 1 (ECMA-94)
      1U Legal

9. Schedule 2 – Royalties . Add the following to Section 10, Royalty Unit - Resident Type Software, of Schedule 2 of the amended Agreement.

“(i) Commencing on the effective date of this Addendum, for each Royalty Unit, comprised of either Intellifont or UFST and forty six (46) Typefaces, 36 in Intellifont format including ITC Zapf Dingbats and 10 in TrueType format, contained in Schedule 2, subparagraph 1(d) sublicensed to an End-User, Customer Distributor, or Customer OEM there will be a Royalty of /*Confidential Treatment Requested*/ of Customer’s United States (U.S.) Product list price as of the end of the applicable quarter with a maximum Royalty of /*Confidential Treatment Requested*/ and a minimum Royalty of /*Confidential Treatment Requested*/ per Product.

(j) Commencing on the effective date of this Addendum, Customer shall have the right to distribute the licensed Software (eg., any of the Royalty Unit definitions above) to a Customer Developer subject to the Royalties based on the schedule listed in Exhibit A of this Addendum.

(k) Commencing on the effective date of this Addendum, for each Royalty Unit, comprised of an upgrade ROM/EPROM SIMM with UFST and forty six (46) Typefaces, 36 in Intellifont format including ITC Zapf Dingbats and 10 TrueType format, contained in Schedule 2, subparagraph 1(d), sublicensed to an End-User, Customer Distributor, Customer OEM or Customer Developer there will be an Royalty of /*Confidential Treatment Requested*/ per Product.

(l) Solely for the purpose of calculating the Royalty applicable to Customer OEM sublicensing, the List Price of the U.S. Customer Product that most closely resembles the OEM customer’s product shall be used.

 

    Confidential


10. Summary of Fees to Be Paid By Lexmark to Agfa for Addendum No. 4. - Below are the /*Confidential Treatment Requested*/ Fees required under this Addendum:

Development Fees:

 

Custom Greek Courier Fonts + Agfa’s non-Latin Type
Software
   /*Confidential Treatment Requested*/

License Fee

   /*Confidential Treatment Requested*/
Line Printer Bitmap/
*Confidential Treatment
Requested*/ License Fee
   /*Confidential Treatment Requested*/
Total Fees - Addendum No. 4:    /*Confidential Treatment Requested*/

This Addendum is agreed to and executed as of the 30 th day of September, 1994.

 

AGFA DIVISION, MILES INC.

    LEXMARK INTERNATIONAL, INC.

/s/ Robert M. Givens

   

/s/ Ronald E. Bingham

Signature

    Signature

Robert M. Givens

   

Ronald E. Bingham

Print Name

    Print Name

Vice President

   

Director, Site Operations

Title

    Title

 

    Confidential


EXHIBIT A.

The following royalties will apply in lieu of all other Royalties and fees for UFST and Type Software to sublicensing to Customer Developers’ only of Licensed Software unless Agfa and Customer agree upon lower royalties in writing on a case-by-case basis.

PCL 5 Emulation Pricing for the LaserJet III Family of Printers

 

Royalty

Per Unit

  

Minimum

Unit
Commitment

  

Prepaid
Royalties

/*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/
/*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/
/*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/

PCL 5e Emulation Pricing For the LaserJet 4 Family of Printers

 

Royalty

Per Unit

  

Minimum

Unit
Commitment

  

Prepaid
Royalties

/*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/
/*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/
/*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/
/*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/    /*Confidential Treatment Requested*/

NOTE: All prepaid royalties are due at Customer Developer contract signing.

 

    Confidential


The sole and exclusive remedy and the Customer’s sole and exclusive liability, for failure of the Customer Developer to achieve the minimum unit commitment is that the Customer Developer forfeits, and Agfa is permitted to keep the entire prepaid royalty amount.

 

    Confidential


EXHIBIT B.

Agfa Division, Miles Inc.

Confidential Disclosure Agreement

Effective Date:              , 19     

In order to protect certain confidential information and proprietary property which may be disclosed between them, Agfa Division, Miles Inc. (“Agfa”), Lexmark International, Inc. (“Lexmark”) individually and collectively as the (“Discloser(s)”) and                              (hereinafter referred to as “Recipient”) agree that:

1. The Discloser(s) of confidential information is (are):

Agfa via Lexmark (fill in “Discloser(s)”, (fill in “Discloser(s)”, “Recipient” or “both Parties”)

2. The parties’ representatives for receiving confidential information are:

Recipient:                                                  

3. The confidential information disclosed under this Agreement is described as:

Agfa Proprietary data, trade secrets, design approaches, technical documentation, the UFST Object Code (“Object Code”) and related technology. For purposes of the Agreement, “UFST” Object Code is described as the Object Code and associated documentation for Agfa’s UFST outline raw data font technology comprised of Intellifont font data, TrueType font data and Type One font data.

In order to qualify as and be protected under this Agreement as confidential information, such matter must be specifically identified as such in writing by Discloser(s).

4. Any information delivered in object code form will not be considered to be confidential under this agreement, Recipient agrees not to make any non-archival copies or to deliver or make copies available to any third party or to reverse translate confidential information and Object Code.

5. The Recipient shall use the confidential information only for the purposes of:

Internal development, testing and maintenance of printer control code for integration into font, imaging and printing technology products under sublicense from Lexmark.

6. The Recipient shall protect the disclosed confidential information and Object Code by using the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized use, dissemination or publication of the confidential information as the Recipient uses to protect its own confidential information.

 

    Confidential


7. This agreement shall terminate on                               ,          . All obligations of confidentiality shall expire under this agreement three (3) years from the date of initial disclosure.

8. This Agreement imposes no obligation upon a Recipient with respect to confidential information and Object Code which (a) was in the Recipient’s possession before receipt from the Discloser(s); (b) is or becomes a matter of public knowledge through no fault of the Recipient; (c) is rightfully received by the Recipient form a third party without a duty of confidentiality; (d) was independently developed by the Recipient without the use of or access to the confidential information received from the Discloser(s).

9. Recipient also agrees not to divulge such confidential information and Object Code to third parties unless such disclosure is made in response to a valid order of a court or other governmental body or agency of the United States or of an individual State or is necessary to establish or to determine the extent of rights and obligations under this Agreement and, insofar as reasonably possible, impart or disclose such confidential information only to such of your employees, agents, or associates as have a “need to know”. As well, Recipient agrees not to copy of otherwise duplicate any confidential information or Object Code and to either destroy or return such information to the Discloser(s) within ten (10) days after request by the Discloser(s).

10. Moreover, Recipient shall not itself use, practice or exploit, without express written permission from the Discloser(s) except as permitted under Section 5 of this Agreement (i) the fact of this disclosure by the Discloser(s), or (ii) any confidential information and Object Code insofar as it is to be held in confidence by Recipient pursuant to this Agreement.

11. It is understood that nothing herein shall obligate the Discloser(s) to disclose to Recipient any particular information.

12. Neither party acquires any intellectual property rights under this Agreement other than as permitted to be exercised by Recipient under Section 5 of this Agreement.

13. The validity, performance, construction, and effect of this Agreement shall be governed by the substantive laws of the Commonwealth of Massachusetts.

14. The parties do not intend that any agency or partnership relationship be created between them by this Agreement.

 

    Confidential


15. All additions or modifications to this Agreement must be made in writing and must be signed and dated by both parties.

 

AGFA DIVISION, MILES INC.     LEXMARK INTERNATIONAL, INC.

Address: 90 Industrial Way, MS # 90-2-4C

    Address:  

 

                Wilmington, MA 01887

     

 

Signature:

 

 

    Signature:  

 

Name:

 

Robert M. Givens

    Name:  

 

Title:

 

Vice President

    Title:  

 

Date:

 

 

    Date:  

 

Recipient:

 

 

     

Address:

 

 

     
 

 

     

Signature:

 

 

     

Name:

 

 

     

Title:

 

 

     

Date:

 

 

     

 

    Confidential


BAYER

 

September 19, 1995       AGFA Division    
   

Bayer Corporation

   

90 Industrial Way

Wilmington, MA

01887-3495

Phone: 508 658-5600

Mr. Walter Speed

Lexmark International, Inc.

740 New Circle Road, NW

Lexington, KY 40511

Dear Walt:

Please find below pricing for the printer models planned for release in the second half of 1995:

Notwithstanding the provisions to the contrary to Addendum No. 5 or any other Addendum of Agreement No. 1291-D93 dated August 15, 1991, between Agfa Division of Bayer Corporation and Lexmark International, Inc. Lexmark International, Inc. and the Agfa Division of Bayer Corporation hereby agree as follows:

1. The royalty of UFST 2.X and 26 PCL fonts in ROM is /*Confidential Treatment Requested*/.

2. The royalty of UFST 3.X (MicroType, Intellifont, TrueType, PostScript) and 45 PCL fonts in ROM, as set forth in Addendum No. 5, Section 7, Schedule 2, Paragraph (n), shall be /*Confidential Treatment Requested*/ for each Royal Unit contained in the laser printer models that Lexmark now plans to announce in the second half of 1995.

3. The royalty for UFST IX (MicroType, Intellifont, TrueType, PostScript) and 45 PCL fonts in ROM, and the Agfa Font Manager with a total of 96 fonts, as set forth in Addendum No. 5, Section 7, Schedule 2, Paragraph (o), shall be /*Confidential Treatment Requested*/ for each Royal Unit contained in the laser printer models that Lexmark now plans to announce in the second half of 1995.

Accepted and Agreed:

 

Agfa Division Bayer Corporation    Lexmark International, Inc.

/s/ Robert M. Givens

  

/s/ Ronald E. Bingham

Signature    Signature

October 9, 1995

  

September 25, 1995

Date:    Date:

Vice President

  

Director, Site Operations

Title    Title

Robert M. Givens

  

Ronald E. Bingham

Print Name    Print Name

 

    Confidential


Lex 9/19/95-5  

Addendum No. 5

February 5, 2007

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 as amended from time to time (“Agreement”) dated August 15, 1991, by and between Agfa Division of Bayer Corporation (Agfa) and Lexmark International Incorporated (“Customer”).

WHEREAS Agfa has developed certain technology described in Sections 1 (at) through I (at) below and for the purposes of this Addendum is defined and referred to as the “Licensed Software”; and

WHEREAS Customer desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Customer Developers, Customer Distributors, Customer OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree as follows:

1. Definitions . Add the following new definitions to Section 1 of the amended Agreement.

ar) MicroType Software - will mean the proprietary Source Code, Object Code and associated documentation for Agfa’s outline font, hint-based compression technology.

as) Type Software - The typefaces listed in Exhibits B, C, D, and E here to which are licensed by Customer under this Addendum, and any amendments hereto, and all related documentation.

at) Agfa Font Manager(s) - Agfa’s proprietary font management program, which includes: UFST Font Installer/converter Software (Object Code, Source Code and associated documentation), 96 typefaces in MicroType and TrueType format, and MS Windows typeface install program (Object Code, Source Code and associated documentation).

2. License Grant . Add the following items (1) and (m) MicroType Software to Section 2, License, of the amended Agreement:

(1) MicroType Software- In consideration of the Royalties and License Fees set forth in Schedule 2, Agfa hereby grants to Customer the non-exclusive, worldwide license to (i) use, to have used and to reproduce, the Licensed Software and (ii) to sublicense and distribute and to have distributed the Licensed Software, directly and through Customer’s Distributors, Customer Developers, and OEMs, in object code form only, for use by the end-user with the Customer product. Agfa further grants Customer the right to modify and to have modified and to create Updates and Derivative Works of the Licensed Software; provided, however, Customer shall not have the rights to modify Type Software. Customer Distributors shall have only the limited right to distribute the Licensed Software by sublicense in accordance with the terms of the amended

 

1


Agreement, and shall not have the right to reproduce the Licensed Software. Customer Developers, and OEMs shall have the right to reproduce the Licensed Software. Customer shall not distribute or modify the Licensed Software except as provided in this Addendum.

Customer shall have the right to sublicense Third Party Developers with the right to use, reproduce, and modify the Licensed Software, for purposes of reproducing, developing, or distributing Customer Product as provided for in this Agreement. Customer shall obtain a written confidentiality agreement with Third Party Developer which contains, at a minimum the terms and conditions set forth in Section 20 of the Agreement.

(m) Customer will have the right to distribute and to have distributed the HQ3 font set (See Exhibit C), ITC Zaph Dingbats and Intellifont for Windows to all their customers who require these fonts.

3. Fee(s) and Royalties . Customer agrees to pay Agfa the License Fees and Royalties set forth in Schedule 2 of the Agreement as amended herein.

4. Trademarks and Copyrights . Delete Schedule 10 of Addendum No. 2 and replace with Schedule 10 (a) for any Customer Products announced a reasonable period of time after execution of this addendum.

Agfa hereby grants Customer the right to use the trademarks “MicroType” in advertising, promotion, and sublicensing of Customer Products incorporating the Licensed Software in accordance with Agfa’s policies regarding trademark usage for materials originated a commercially reasonable time after Agfa’s written communication to Customer of such policies.

5. Schedule 2 - Development Fees/Type Software . The following will be added to the end of Section 17 of Schedule 2 of the amended Agreement:

(ii) Customer shall pay Agfa, /*Confidential Treatment Requested*/ after the execution of Addendum 5 and upon Customer receipt of an Agfa invoice for MicroType Source Code and documentation.

(iii) In the event of election by Customer to receive the Agfa Font Manager Object Code, Source Code, and associated documentation, Customer shall pay Agfa, after execution of Addendum 5 and upon Customer receipt of an Agfa invoice, /*Confidential Treatment Requested*/.

(iv) Customer shall pay Agfa after execution of Addendum 5 and upon Customer receipt of an Agfa invoice, a total of, /*Confidential Treatment Requested*/ License Fee for the OEM rights to distribute the Four CG Times Bitmaps listed below:

CG Times 6 and 12 point

CG Times Italic 6 and 12 point

(v) Agfa will design for Customer, a custom version of the Courier font to the Customers specification at no additional development cost. Customer will have exclusive rights to the Courier font for distribution. There will be-no additional royalties payable with regard to this custom version provided that it is included with any set of standard fonts outlined in Section 7, (m), (n), (o), (p), (q), and (r) for which a royalty is payable.

 

2


6. Schedule 2 - Royalties . Add the following as item 9 (c):

“(c) A non-refundable advance against Royalties totaling /*Confidential Treatment Requested*/ is due for the Licensed Software on December 1,1995. One hundred percent of all royalties under this Agreement or any amendment/addendum hereto will be applied toward this advance. Upon depletion of this advance against royalties, Customer will pay royalties as specified in the amended Agreement.

7. Schedule 2 - Royalty Unit . Add the following to Section 10, Royalty Unit- Resident Type Software, of Schedule 2 of the amended Agreement.

(m) Laser: For each Royalty Unit, comprised of USFT 3.X (MicroType, Intellifont, TrueType, PostScript) and the twenty six (26) typefaces (see Exhibit B for the list of Typefaces), ROM resident within Customer’s Product, sublicensed to an End User, Distributor or OEM, there will be a Royalty of /*Confidential Treatment Requested*/ unless at least 3 months prior to the announcement of affected Customer Product, Agfa delivers a version of the twenty six (26) typefaces set forth above which is able to reside in 570K or less of printer memory, in which case the Royalty will be /*Confidential Treatment Requested*/. Customer would be required to notify Agfa of the appropriate royalty rate for the specific Customer Product no later than 60 days before first customer shipment of each Customer Product.

(n) Laser: For each Royalty Unit, comprised of USFT 3.X (MicroType, Intellifont, TrueType, PostScript) and the forty five (45) typefaces (see Exhibit B for the list of Typefaces), ROM resident within Customer’s Product, sublicensed to an End User, Distributor or OEM, there will be a Royalty of /*Confidential Treatment Requested*/ unless at least 3 months prior to the announcement of affected Customer Product, Agfa delivers a version of the forty five (45) typefaces set forth above which is able to reside in 990K or less of printer memory, in which case the Royalty will be /*Confidential Treatment Requested*/. Agfa and Customer shall, however, negotiate in good faith a reduction in the /*Confidential Treatment Requested*/ royalty, in the event that the cost savings of ROM memory chips is less than the Customer currently projects. Customer would be required to notify Agfa of the appropriate royalty rate for the specific Customer Product no later than 60 days before first customer shipment of each Customer Product.

(o) For each Royalty Unit comprised of the Agfa Font Manager with a total of 96 fonts listed in Exhibit E, which Customer distributes separately from or together with another Customer Product, for use with any of the Licensed Products described in subsections 7.0 (m), (n), (p), (r), or (u) herein sublicensed to an End User, Distributor, or OEM, there will be a royalty of /*Confidential Treatment Requested*/.

(p) Laser: For each Royalty Unit comprised of UFST 3.X (MicroType, Intellifont, TrueType, PostScript) and forty five (45) typefaces (see Exhibit B for the list of Typefaces), 39 PostScript Fonts (listed in exhibit D) ROM resident within Customer’s Product sublicensed to an End User, Distributor or OEM, there will be a Royalty of /*Confidential Treatment Requested*/

 

3


unless at least 3 months prior to the announcement of affected Customer Product, Agfa delivers a version of the forty five (45) typefaces set forth above which are able to reside in 990K or less of printer memory, and the thirty nine (39) typefaces set forth above are able to reside in 520K or less of printer memory, in which case the Royalty will be/*Confidential Treatment Requested*/. Agfa and Customer shall, however, negotiate in good faith a reduction in the /*Confidential Treatment Requested*/, in the event that the cost savings of ROM memory chips is less than the Customer currently projects. Customer would be required to notify Agfa of the appropriate royalty rate for the specific Customer Product no later than 60 days before first customer shipment of each Customer Product.

(q) Laser: For each Royalty Unit, comprised of USFT 2.X (Intellifont, TrueType, PostScript) and the twenty six (26) typefaces (see Exhibit B for the list of Typefaces), ROM resident within Customer’s Product, sublicensed to an End User, Distributor or OEM, there will be a Royalty of/*Confidential Treatment Requested*/.

(r) Laser: For each Royalty Unit comprises of UFST (Intellifont, TrueType, PostScript and MicroType) the thirty nine (39) Postscript fonts (listed in Exhibit D) ROM resident within Customer’s Product sublicensed to an End User, Distributor or OEM, there will be a Royalty of /*Confidential Treatment Requested*/ plus any additional NRE required for the additional 4 Lexmark specific fonts listed in Exhibit D.

(s) Inkjet: Customer shall pay Agfa a Royalty of /*Confidential Treatment Requested*/ per Inkjet Customer Product Royalty Unit comprised of UFST (with the Type I render only).

(t) HQ3 Font set, ITC Zaph Dingbats, Intellifont for Windows. Customer will /*Confidential Treatment Requested*/ to Agfa for the distribution of any of the HQ3 Font set, ITC Zaph Dingbats, Intellifont for Windows when distributed to Customers End User, Distributor, Customer Developer, or OEM.

(u) UFST 3.X Upgrades: For a Royalty Unit comprised of an upgrade from UFST 2.X (35 Intellifont and 10 TrueType) to a ROM/EPROM SIMM with UFST 3.X and forty five (45) Typefaces, forty four (44) in MicroType format, and one (1) in TrueType format contained in Schedule 2, subparagraph 7(n), sublicensed to an End User, Customer Distributor, Customer OEM or Customer Developer there will be /*Confidential Treatment Requested*/ per product. Customer will include the number of upgrades shipped in its quarterly reports.

8. Summary of Payments by Lexmark to Agfa for Addendum No. 5 . - Below are the Prepaid Royalty payments, Development Fees and License Fees required under this Addendum:

 

4


Development Fees:

 

MicroType Source Code and Documentation    /*Confidential Treatment Requested*/

/*Confidential Treatment Requested*/License for Bitmaps

   /*Confidential Treatment Requested*/

* Prepaid Advance Against Royalties

  

/*Confidential Treatment Requested*/

(Due December 1, 1995)

Total Payments - Addendum No. 5

   /*Confidential Treatment Requested*/

Except as provided herein, all the terms and conditions of the Agreement shall apply with equal force and effect to the Licensed Software licensed hereunder.

Except as expressly amended hereby, the “Intellifont and Type Software Agreement” is hereby reaffirmed and remains in full force and effect.

This Addendum is executed and will be effective as of September 25, 1995.

 

AGFA DIVISION MILES INC.    LEXMARK INTERNATIONAL, INC.

/s/ Robert M. Givens

  

/s/ Ronald E. Bingham

Signature    Signature

Vice President, Typographic Systems

  

Director, Site Operations

Title    Title

Robert M. Givens 10/9/95

  

Ronald E. Bingham

Print Name    Print Name

 

5


EXHIBIT B

Type Software

Typeface Formats include MicroType (PCL Fonts), and TrueType

 

Item #

  

Typeface Name

  

Typeface Format

  

Development Fee

*1.

   Coronet    MicroType    /*Confidential Treatment Requested*/

2.

   Clarendon Condensed    MicroType    /*Confidential Treatment Requested*/

3.

   Marigold    MicroType    /*Confidential Treatment Requested*/

*4.

   Letter Gothic    MicroType    /*Confidential Treatment Requested*/

*5.

   Letter Gothic Bold    MicroType    /*Confidential Treatment Requested*/

*6.

   Letter Gothic Italic    MicroType    /*Confidential Treatment Requested*/

7.

   Arial    MicroType    /*Confidential Treatment Requested*/

8.

   Arial Bold    MicroType    /*Confidential Treatment Requested*/

9.

   Arial Italic    MicroType    /*Confidential Treatment Requested*/

10.

   Arial bold Italic    MicroType    /*Confidential Treatment Requested*/

11.

   Times New Roman    MicroType    /*Confidential Treatment Requested*/

12.

   Times New Roman Bold    MicroType    /*Confidential Treatment Requested*/

13.

   Times New Roman Italic    MicroType    /*Confidential Treatment Requested*/

14.

   Times New Roman Bold Italic    MicroType    /*Confidential Treatment Requested*/

15.

   Symbol    MicroType    /*Confidential Treatment Requested*/

*16.

   Wingdings    TrueType    /*Confidential Treatment Requested*/

*17.

   CG Times    MicroType    /*Confidential Treatment Requested*/

*18.

   CG Times Bold    MicroType    /*Confidential Treatment Requested*/

*19.

   CG Times Italic    MicroType    /*Confidential Treatment Requested*/

*20.

   CG Times Bold Italic    MicroType    /*Confidential Treatment Requested*/

 

6


21.

   CG Omega    MicroType   

/*Confidential Treatment Requested*/

22.

   CG Omega Bold    MicroType   

/*Confidential Treatment Requested*/

23.

   CG Omega Italic    MicroType   

/*Confidential Treatment Requested*/

24.

   CG Omega Bold Italic    MicroType   

/*Confidential Treatment Requested*/

*25.

   Univers Medium    MicroType   

/*Confidential Treatment Requested*/

*26.

   Univers Bold    MicroType   

/*Confidential Treatment Requested*/

*27.

   Univers Medium Italic    MicroType   

/*Confidential Treatment Requested*/

*28.

   Univers Bold Italic    MicroType   

/*Confidential Treatment Requested*/

*29.

   Univers Medium Condensed    MicroType   

/*Confidential Treatment Requested*/

*30.

   Univers Bold Condensed    MicroType   

/*Confidential Treatment Requested*/

*31.

   Univers Medium Condensed Italic    MicroType   

/*Confidential Treatment Requested*/

*32.

   Univers Bold Condensed Italic    MicroType   

/*Confidential Treatment Requested*/

*33.

   Antique Olive    MicroType   

/*Confidential Treatment Requested*/

*34.

   Antique Olive Bold    MicroType   

/*Confidential Treatment Requested*/

*35.

   Antique Olive Italic    MicroType   

/*Confidential Treatment Requested*/

36.

   Garamond Antiqua    MicroType   

/*Confidential Treatment Requested*/

37.

   Garamond Halbfett    MicroType   

/*Confidential Treatment Requested*/

38.

   Garamond Kursiv    MicroType   

/*Confidential Treatment Requested*/

39.

   Garamond Kursiv Halbfett    MicroType   

/*Confidential Treatment Requested*/

*40.

   Courier    MicroType/Intellifont   

/*Confidential Treatment Requested*/

*41.

   Courier Bold    MicroType   

/*Confidential Treatment Requested*/

*42.

   Courier Italic    MicroType/Intellifont   

/*Confidential Treatment Requested*/

*43.

   Courier Bold Italic    MicroType   

/*Confidential Treatment Requested*/

 

7


*44.

   Albertus Medium    MicroType   

/*Confidential Treatment Requested*/

*45.

   Albertus Extra Bold    MicroType   

/*Confidential Treatment Requested*/

        

*Denotes 26 Font Solution

 

8


EXHIBIT C

HQ3 Characters

HQ3 Libraries:

ITC Zaph Dingbats

Brush

Park Avenue

Dom Casual

Revue Shadow

Garamond Halbfett

CG Times

CG Times Italic

CG Tunes Bold Italic

Univers

Univers Medium

Univers Medium Italic

Univers Bold

Univers Bold Italic

Plugins

 

9


EXHIBIT D

PostScript Fonts

 

1.    Arial
2.    Arial Bold
3.    Arial Bold Italic
4.    Arial Italic
S.    Arial Narrow
6.    Arial Narrow Bold
7.    Arial Narrow Italic
8.    Arial Narrow Bold Italic
9.    Book Antiqua
10    Book Antiqua Bold
11.    Book Antiqua Bold Italic
12.    Book Antiqua Italic
13.    Bookman
14.    Bookman Bold Italic
15.    Bookman Italic
16.    Bookman Bold
17    Century Gothic
18.    Century Gothic Bold
19.    Century Gothic Bold Italic
20.    Century Gothic Italic
21    Century Schoolbook
22.    Century Schoolbook Bold
23.    Century Schoolbook Bold Italic
24.    Century Schoolbook Italic
25.    Courier
26.    Courier Bold
27.    Courier Bold Italic
28.    Courier Italic
29.    Symbol
30.    Times New Roman
31.    Times New Roman Bold
32.    Times New Roman Bold Italic
33.    Times New Roman Italic
34.    Monotype Corsiva
35.    Monotype Sorts
*36.    Helvitica Light
*37.    Helvitica Light Oblique
*38.    Helvitica Black
*39.    Helvitica Black Oblique

* Lexmark specific fonts

 

10


Exhibit E

Agfa Font Manager Fonts

 

1. Albertus Oblique

  

43. CG Times Bold

   91. Symbol /1/

2. Albertus Bold

  

44. CG Times Bold Italic

   92. Times New Roman /1/

3. Albertus Extrabold

  

45. CG Times Italic

   93. Times New Roman Bold /1/

4. Albertus Medium

  

46. Clarendon

   94. Times New Roman Bold Italic /1/

5. Antique Olive

  

47. Clarendon Bold

   95. Times New Roman Italic /1/

6. Antique Olive Bold

  

48. Clarendon Bold Extended

   96. Univers

7. Antique Olive Extra Bold

  

49. Clarendon Condensed

   97. Univers Bold

8. Antique Olive Oblique

  

50. Cooper Black

   98. Univers Bold Condensed

9. Arial

  

51. Cooper Black Italic

   99. Univers Bold Condensed Italic

10. Arial Bold /1/

  

52. Coronet

   100. Univers Bold Extended

11. Arial bold Italic /1/

  

53. Courier /1/

   101. Univers Bold Extended Italic

12. Arial Italic /1/

  

54. Courier Bold /1/

   102. Univers Bold Italic

13. Arial Narrow

  

55. Courier Bold Italic /1/

   103. Univers Condensed

14. Arial Narrow Bold

  

56. Courier Italic /1/

   104. Univers Condensed Italic

15. Arial Narrow Italic

  

57. Garamond Antiqua

   105. Univers Extended

16. Arial Narrow Bold Italic

  

58. Garamond Halbfett

   106. Univers Extended Italic

17. Bodini

  

59. Garamond Kursive

   107. Univers Italic

18. Bodini Black

  

60. Garamond Kursive Halbfett

   108. Univers Light Condensed

19. Bodini Bold

  

61. Gill Sans

   109. Univers Light Condensed Italic

20. Bodini Bold Italic

  

62. Gill Sans Bold

   110. Wingdings

21. Bodini Italic

  

63. Gill Sans Bold Condensed

  

22. Book Antiqua

  

64. Gill Sans Bold Condensed

  

23. Book Antiqua Bold

  

65. Gill Sans Condensed

  

24. Book Antiqua Bold Italic

  

66. Gill Sans Extrabold

  

25. Book Antiqua Italic

  

67. Gill Sans Italic

  

26. Bookman

  

68. Gill Sans Light

  

27. Bookman Bold Italic

  

69. Gill Sans Light Italic

  

28. Bookman Italic

  

70. Goudy Oldstyle

  

29. Bookman Bold

  

71. Goudy Oldstyle Bold

  

30. Century Gothic

  

72. Goudy Oldstyle Extrabold

  

31. Century Gothic Bold

  

73. Goudy Oldstyle Bold Italic

  

32. Century Gothic Bold Italic

  

74. Goudy Oldstyle Italic

  

34 Century Schoolbook

  

75. Graphos Bold (To be renamed)

  

35 Century Schoolbook Bold

  

76. Graphos (To be renamed)

  

36 Century Schoolbook Bold Italic

  

77. Graphos Bold Oblique (To be renamed)

  

37 Century Schoolbook Italic

  

78. Graphos Oblique (To be renamed)

  

38. CG Omega

  

79. Letter Gothic

  

39. CG Omega Bold

  

80. Letter Goth Bold

  

40. CG Omega Bold Italic

  

81. Letter Gothic Bold Italic

  

41. CG Omega Italic

  

82. Letter Gothic Italic

  

42. CG Times

  

83. Marigold

  
  

84. MicroStyle

  
  

85. MicroStyle Bold

  
  

86. MicroStyle Bold Extended

  
  

87. MicroStyle Extended

  
  

88. Monotype Corsivs

  
  

89. Monotype Sorts

  
  

90. Strider (To be renamed)

  

/1/ These fonts are shipped in TrueType format with Windows 3.1, Window ‘95 and will not be included as a MicroType Font.

 

11


Schedule 10(a)

Guidelines for the Representation of Agfa Division, Bayer Corporation,

UFST, MicroType, and Agfa Typeface Based Products – 10/25/94

In order to ensure proper adherence to these guidelines, Agfa Division of Bayer Corporation (“Agfa”) reserves the right to review and approve upon specific, timely request of Agfa but shall not unreasonably delay or withhold approval thereof - prior to production - all product packaging, advertising, marketing collateral, promotional material or press releases when Agfa technology is mentioned for products that utilize, Universal Font Scaling Technology (UFST), MicroType Font Compression Technology, Intellifont, TrueType, and Type I Font Scaling Technologies, and Agfa Typefaces.

Agfa Logo

In the event that the Customer elects to use the company logo (consisting of the name AGFA, in uppercase letters, followed by the Agfa Rhombus) on all product packaging, advertising, marketing collateral and promotional materials for products that utilize UFST, MicroType technology, or Agfa Typefaces it will comply with the provisions of this schedule. Agfa will provide stats of the Agfa Rhombus in various sizes. Please note that the Rhombus should always be accompanied by the name AGFA, immediately preceding it.

Trademarks

Appropriate trademark citations will be used in product packaging, advertising, marketing collateral and promotional materials for products that incorporate UFST ® , Intellifont ® , MicroType™ Font Compression technology, Type 1, TrueType, and Agfa Typefaces whenever these Agfa technologies are acknowledged or trademarks are used. (See Trademark Citations below.)

Trademarks citations are not required in press releases.

Company and Product Names

The correct company name is Agfa Division, Bayer Corporation. After the initial reference, however, subsequent mentions do not need to include the word Division or the term Bayer Corporation. Universal Font Scaling Technology ® can be referred to as UFST ® , MicroType Font Compression Technology can be referred to as MicroType™.

Press Releases

News releases mentioning UFST and MicroType based products may state that the product utilizes UFST and MicroType Font Compression Technology from Agfa. Releases for any products that include Agfa Typefaces may acknowledge that the fonts are licensed from Agfa Typeface names must be correctly represented.

 

12


Marketing Collateral and Advertising

Marketing collateral and advertising for any products incorporating UFST, MicroType, Agfa Typefaces may acknowledge this when Agfa Technology is mentioned. The first and most prominent use of an Agfa trademark must be followed by the designation ® after each registered trademark, and the designation Tm after each unregistered trademark provided, however that a prominent listing of trademarks near the front of any publication shall be a sufficient designation of any trademark listing. Corresponding citations must be provided (see below).

Product Packaging

All products utilizing UFST, MicroType, or Agfa Typefaces may be so identified on the exterior of product packaging, diskettes, and documentation. For the first and most prominent use of an Agfa trademark is used, it must be followed by the designation ® after each registered trademark, and the designation™ after each unregistered trademark. Corresponding citations must be provided (see below).

Trademark Citations

Scalable type outlines are licensed from Agfa Division of Bayer Corporation. Agfa and the Agfa Rhombus are registered trademarks of Agfa-Gevaert A.G.

CG, Compugraphic, Garth Graphic, Intellifont, Type Director, Universal Font Scaling Technology, UFST, are ( ® ) registered trademarks, and MicroType, Shannon, CG Triumvirate are ™ trademarks of Bayer Corporation. CG Bodoni, CG Century Schoolbook, CG Goudy Old Style, CG Melliza, Microstyle, CG Omega, and CG Palacio are products of Bayer Corporation.

CG Times, based on Times New Roman under license from The Monotype Corporation plc, is a product of Bayer Corporation.

TrueType is a trademark of Apple Computer, Inc.

The Type I processor resident in UFST is under license from Pipeline Associates, Inc. Univers is a registered trademark of Linotype-Hell and/or its subsidiaries.

Letraset is a registered trademark, and Aachen, Revue and University Roman are trademarks of Esselte Pendaflex Corporation.

Futura is a registered trademark of Fundicion Tipografica Neufville, S.A.

ITC Avant Garde Gothic, ITC Benguiat, ITC Bookman, ITC Century, ITC Cheltenham, ITC Clearface, ITC Galliard, ITC Korinna, ITC Lubalin Graph, ITC Souvenir, ITC Tiepolo, ITC Zapf Chancery, and ITC Zapf Dingbats are registered trademarks of International Typeface Corporation.

Arial, Times New Roman, Albertus, Book Antiqua, Bookman Old Style, Corsiva, Sorts, Century Gothic, and Gill Sans are registered trademarks, and Monotype Baskerville is a trademark of The Monotype Corporation plc.

 

13


Hiroshige and Marigold are trademarks of AlphaOmega Typography, Inc.

Antique Olive is a trademark of Monsieur Marcel OLIVE.

Wingdings is a trademark of Microsoft Corporation.

 

14


LEX 6/20/96

ADDENDUM NO. 6

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 as amended from time to time (“Agreement”) dated August 15, 1991, by and between Agfa Division of Bayer Corporation (Agfa) and Lexmark International Incorporated (“Customer”).

WHEREAS Agfa has developed certain technology described in Section 1 and for the purposes of this Addendum is defined and referred to as the “Licensed Software”; and

WHEREAS Customer desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Customer Developers, Customer Distributors, Customer OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree as follows:

1. Definitions. Replace the following new definitions to Section 1 of the amended Agreement.

(j) Derivative Work - A Derivative Work is a work which is based upon one or more pre-existing works, such a revision, modification, translation, abridgment, condensation, expansion, collection, compilation or any other form in which the pre-existing works may be recast, transformed, or adapted, and which, if prepared without authorization by the owner of the copyright in the preexisting work, would constitute a copyright infringement.

as) Type Software - The typefaces listed in Exhibits B, C, D, E, F and G here to which are licensed by Customer under this Addendum, and any amendments hereto, and all related documentation.

2. Fee(s) and Royalties. Customer agrees to pay Agfa the License Fees and Royalties set forth in Schedule 2 of the Agreement as amended herein. Add (n) Section 2 as follows:

(n) Derivative Works - Customer is granted license of the right to prepare or to have prepared Derivative Works based upon Agfa bitmap Typefaces and use such Derivative Works with Customer Products /*Confidential Treatment Requested*/.

3. Schedule 1- Customer Product(s). Add the following below item #6 in Schedule 1 of the Agreement:

7. Multi-Function Products.

 

1


4. Schedule 2 - Development Fees/Type Software. The following will be added to the end of Section 17 of Schedule 2 of the amended Agreement:

(vi) Customer shall pay Agfa, /*Confidential Treatment Requested*/ per bitmap up to, and not to exceed, a fee of /*Confidential Treatment Requested*/ for all bitmap fonts derived from a single Typeface outline. Once Customer has paid the maximum of/*Confidential Treatment Requested*/.

(vii) Customer has the right to distribute, /*Confidential Treatment Requested*/, MicroType to TrueType converter software as a screen font solution which matches ROM Resident Fonts for existing Customer Products.

(viii) Customer shall pay Agfa after execution of Addendum 6 and upon Customer receipt of an Agfa invoice, a one time fee of /*Confidential Treatment Requested*/ for the characters, in MicroType format, needed to support the additional languages as listed in Exhibit H. /*Confidential Treatment Requested*/ shall be payable for the distribution of such additional characters, provided that such characters are distributed with other Royalty bearing Typefaces or software.

5. Schedule 2 - Royalty Unit. Add and modify the following to Section 10, Royalty Unit-Resident Type Software, of Schedule 2 of the amended Agreement.

Modify (n) by adding at the end of the paragraph: “Notwithstanding the forgoing provisions of this Section (n), for Customer Products with engine speed at, or below, six (6) pages per minute, and resolutions of six hundred (600) dots per inch or less, the royalty will be /*Confidential Treatment Requested*/ per unit regardless of ROM savings.”

Replace (o) with the following. “For each Royalty Unit comprised of the Agfa Font Manager with a total of Zero (0) to Ninety Six (96) fonts listed in Exhibit E, which Customer distributes separately from or together with another Customer Product, for use with any of the Licensed Products described in Schedule 2, Sections (m), (n), (p), (r), (u), (x), (y), (z), (aa) and the 4039 10 Plus herein sublicensed to an End User, Customer Distributor, Customer OEM, or Customer Developer, there will be a Royalty of /*Confidential Treatment Requested*/ and for each additional TrueType font not listed on Exhibit E there will be an additional charge of /*Confidential Treatment Requested*/ per Typeface.

(v) Customer has the right to internally distribute and use up to /*Confidential Treatment Requested*/ of the Agfa Font Manager (Lexmark’s FontVision) at no Royalty to Agfa. These copies will be marked as “Lexmark International Internal Copy. Not for Resale.”

(w) Customer has the right to distribute the Agfa Font Manager as a “Trade Show Sample”. A “Trade Show Sample” shall consist of the Agfa Font Manager (Lexmark’s FontVision) with some number of fonts selected by Customer. For each copy distributed, Customer shall pay Agfa a Royalty of /*Confidential Treatment Requested*/ per Agfa Font Manager (Lexmark’s FontVision) plus /*Confidential Treatment Requested*/ per Typeface included with the Agfa Font Manager. This specific “Trade Show Sample” can not be sold for revenue by the Customer.

 

2


(x) Commencing on the effective date of this Addendum for each Royalty Unit comprised of an upgrade ROMIEPROM Simm with UFST and the Nineteen (19) Intellifont and TrueType Typefaces listed, but not marked (*) in Exhibit B, sublicensed to an End-User, Customer Distributor, Customer OEM, or Customer Developer, there will be a Royalty of /*Confidential Treatment Requested*/ per Product.

(y) For each Royalty Unit comprised of UFST 3.X (MicroType, Intellifont, PostScript and TrueType) and forty five (45) typefaces (see Exhibit B for the list of Typefaces), Eighteen (18) or more MicroType PostScript fonts (listed in Exhibit F) ROM resident within Customer s Product, sublicensed to an End User, Customer Distributor, Customer Developer or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/ plus any additional third party royalty obligation, provided that the total Royalty payable under this Section (y) shall not exceed Royalty in Schedule 2, Section (z). Customer is responsible to pay directly to the applicable third party royalties associated with the four (4) Times New Roman Typefaces listed in Exhibit G.

(z) For each Royalty Unit comprised of UFST 3.X (MicroType, Intellifont, PostScript, and TrueType) and forty five (45) typefaces (see Exhibit B for the list of Typefaces), Thirty-nine (39) PostScript fonts (listed in Exhibit G) ROM resident within Customer’s Product, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/. Customer is responsible to pay directly to the applicable third party royalties associated with the four (4) Times New Roman Typefaces listed in Exhibit G.

(aa) For each Royalty Unit comprised of UFST 3.X (MicroType, Intellifont, PostScript, and TrueType) and forty five (45) typefaces (see Exhibit B for the list of Typefaces) and Seventeen (17) (marked with an *) of the Thirty-nine (39) PostScript fonts (listed in Exhibit G) ROM resident within Customer’s Product, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/. Customer is responsible to pay directly to the applicable third party royalties associated with the four (4) Times New Roman Typefaces listed in Exhibit G.

Except as provided herein, all the terms and conditions of the Agreement as previously amended shall apply with equal force and effect to the Licensed Software licensed hereunder.

Except as expressly amended hereby, the “Intellifont and Type Software Agreement” as previously amended is hereby reaffirmed and remains in full force and effect.

 

3


This Addendum is executed and will be effective as of June 25, 1996.

 

AGFA DIVISION BAYER CORPORATION         LEXMARK INTERNATIONAL, INC.

/s/ Robert M. Givens

   

/s/ Ronald E. Bingham

Signature     Signature

Vice President

   

Director, Site Operations

Title     Title

Robert M. Givens

   

Ronald E. Bingham

Print Name     Print Name

 

4


EXHIBIT B

Type Software

Typeface Formats include MicroType (PCL Fonts), and TrueType

 

Item #   

Typeface Name

  

Typeface Format

  

Development Fee

*1.    Coronet    MicroType   

/*Confidential

Treatment

Requested*/

2.    Clarendon Condensed    MicroType   

/*Confidential

Treatment

Requested*/

3.    Marigold    MicroType   

/*Confidential

Treatment

Requested*/

*4.    Letter Gothic    MicroType   

/*Confidential

Treatment

Requested*/

*5.    Letter Gothic Bold    MicroType   

/*Confidential

Treatment

Requested*/

*6.    Letter Gothic Italic    MicroType   

/*Confidential

Treatment

Requested*/

7.    Axial    MicroType   

/*Confidential

Treatment

Requested*/

8.    Axial Bold    MicroType   

/*Confidential

Treatment

Requested*/

9.    Arial Italic    MicroType   

/*Confidential

Treatment

Requested*/

10.    Ariel Bold Italic    MicroType   

/*Confidential

Treatment

Requested*/

11.    Times New Roman    MicroType   

/*Confidential

Treatment

Requested*/

12.    Times New Roman Bold    MicroType   

/*Confidential

Treatment

Requested*/

13.    Times New Roman Italic    MicroType   

/*Confidential

Treatment

Requested*/

 

5


14.    Times New Roman Bold Italic    MicroType   

/*Confidential

Treatment

Requested*/

15.    Symbol    MicroType   

/*Confidential

Treatment

Requested*/

*16.    Wingdings    TrueType   

/*Confidential

Treatment

Requested*/

*17.    CG Times    MicroType   

/*Confidential

Treatment

Requested*/

*18.    CG Times Bold    MicroType   

/*Confidential

Treatment

Requested*/

*19.    CG Times Italic    MicroType   

/*Confidential

Treatment

Requested*/

*20.    CG Times Bold Italic    MicroType   

/*Confidential

Treatment

Requested*/

21.    CG Omega    MicroType   

/*Confidential

Treatment

Requested*/

22.    CG Omega Bold    MicroType   

/*Confidential

Treatment

Requested*/

23.    CG Omega Italic    MicroType   

/*Confidential

Treatment

Requested*/

24.    CG Omega Bold Italic    MicroType   

/*Confidential

Treatment

Requested*/

*25.    Univers Medium    MicroType   

/*Confidential

Treatment

Requested*/

*26.    Univers Bold    MicroType   

/*Confidential

Treatment

Requested*/

*27.    Univers Medium Italic    MicroType   

/*Confidential

Treatment

Requested*/

*28.    Univers Bold Italic    MicroType   

/*Confidential

Treatment

Requested*/

*29.    Univers Medium Condensed    MicroType   

/*Confidential

Treatment

Requested*/

 

6


*30.    Univers Bold Condensed    MicroType   

/*Confidential

Treatment

Requested*/

*31.    Univers Medium Condensed Italic    MicroType   

/*Confidential

Treatment

Requested*/

*32.    Univers Bold Condensed Italic    MicroType   

/*Confidential

Treatment

Requested*/

*33.    Antique Olive    MicroType   

/*Confidential

Treatment

Requested*/

*34.    Antique Olive Bold    MicroType   

/*Confidential

Treatment

Requested*/

*35.    Antique Olive Italic    MicroType   

/*Confidential

Treatment

Requested*/

36.    Garamond Antiqua    MicroType   

/*Confidential

Treatment

Requested*/

37.    Garamond Halbfett    MicroType   

/*Confidential

Treatment

Requested*/

38.    Garamond Kursiv    MicroType   

/*Confidential

Treatment

Requested*/

39.    Garamond Kursiv Halbfett    MicroType   

/*Confidential

Treatment

Requested*/

*40.    Courier    MicroType   

/*Confidential

Treatment

Requested*/

*41.    Courier Bold    MicroType   

/*Confidential

Treatment

Requested*/

*42.    Courier Italic    MicroType   

/*Confidential

Treatment

Requested*/

*43.    Courier Bold Italic    MicroType   

/*Confidential

Treatment

Requested*/

*44.    Albertus Medium    MicroType   

/*Confidential

Treatment

Requested*/

 

7


*45.    Albertus Extra Bold    MicroType   

/*Confidential

Treatment

Requested*/

        

*Denotes 26 Font

Solution

 

8


EXHIBIT C

HQ3 Characters

HQ3 Libraries:

ITC Zaph Dingbats

Brush

Park Avenue

Dom Casual

Revue Shadow

Garamond Halbfett

CG Times

CG Times Italic

CG Times Bold Italic

Univers

Univers Medium

Univers Medium Italic

Univers Bold

Univers Bold Italic

Plugins

 

9


Exhibit D

PostScript Fonts

 

1. Axial

 

2. Arial Bold

 

3. Arial Bold Italic

 

4. Arial Italic

 

5. Arial Narrow

 

6. Arial Narrow Bold

 

7. Arial Narrow Italic

 

8. Arial Narrow Bold italic

 

9. Book Antiqua

 

10 Book Antiqua Bold

 

11. Book Antiqua Bold Italic

 

12. Book Antiqua Italic

 

13. Bookman

 

14. Bookman Bold Italic

 

15. Bookman Italic

 

16. Bookman Bold

 

17 Century Gothic

 

18. Century Gothic Bold

 

19. Century Gothic Bold Italic

 

20. Century Gothic Italic

 

21 Century Schoolbook

 

22. Century Schoolbook Bold

 

23. Century Schoolbook Bold Italic

 

24. Century Schoolbook Italic

 

25. Courier

 

26. Courier Bold

 

27. Courier Bold Italic

 

28. Courier Italic

 

29. Symbol

 

30. Times New Roman

 

31. Times New Roman Bold

 

32. Times New Roman Bold Italic

 

33. Times New Roman Italic

 

34. Monotype Corsiva

 

35. Monotype Sorts

 

*36 Helvitica Light

 

*37 Helvitica Light Italic

 

*38 Helvitica Black

 

*39 Helvitica Black Italic

* Lexmark specific fonts

 

10


Exhibit E

Agfa Font Manager Fonts

 

1. Albertus Medium   39. CG Omega Bold   79.   Letter Gothic
2. Albertus Bold   40. CG Omega Bold Italic   80.   Letter Gothic Bold
3. Albertus Extra Bold   41 CG Omega Italic   81.   Letter Gothic Bold Italic
4. Albertus Medium Italic   42. CG Times   82.   Letter Gothic Italic
5. Antique Olive   43. CG Times Bold   83.   Marigold
6. Antique Olive Bold   44. CG Times Bold Italic   84.   Microstyle
7. Antique Olive Italic   45. CG Times Italic   85.   Microstyle Bold
8. Antique Olive Compact   46. Clarendon Book   86.   Microstyle Extended
9. Arial 1   47. Clarendon Bold   87.   Micrustyle Extended Bold
10. Arial Bold   48. Clarendon Extended Bold   88.   Monotype Corsiva
11. Arial Bold Italic 1   49. Clarendon Condensed   89.   Monotype Sorts
12. Arial Italic 1   50. Cooper Black   90.   Seattle
13. Arial Narrow   51. Cooper Black Italic   91.   Symbol 1
14. Arial Narrow Bold   52. Coronet   92.   Times New Roman 1
15. Arial Narrow Italic   53. Courier 1   93.   Tunes New Roman Bold 1
16. Arial Narrow Bold Italic   54. Courier Bold 1   94.   Times New Roman Bold
17. Bodoni   55. Courier Bold Italic 1           Italic 1
18. Bodoni Black   56. Courier Italic 1   95.   Times New Roman Italic 1
19. Bodoni Bold   57. Garamond Antique   96.   Univers Medium
20. Bodoni Bold Italic   58. Garamond Halbfett   97.   Univers Bold
21. Bodoni Italic   59. Garamond Kursiv   98.   Univers Bold Condensed
22. Book Antiqua   60. Garamond Kursiv Halbfett   99.   Univers Bold Condensed
23. Book Antiqua Bold   61. Gill Sans           Italic
24. Book Antique Bold Italic   62. Gill Sans Bold   100. Univers Extended Bold
25. Book Antique Italic   63. Gill Sans Condensed Bold   101. Univers Extended Bold
26. Bookman Old Style   64. Gill Sans Bold Italic           Italic
27. Bookman Old Style Bold   65. Gill Sans Condensed   102. Univers Bold Italic
      Italic   66. Gill Sans Extra Bold   103. Univers Medium
28. Bookman Old Style Italic   67. Gill Sans Italic           Condensed
29. Bookman Old Style Bold   68. Gill Sans Light   104. Univers Medium
30. Century Gothic   69. Gill Sans Light Italic           Condensed Italic
31. Century Gothic Bold   70. Goudy Oldstyle   105. Univers Extended
32. Century Gothic Bold Italic   71. Goudy Oldstyle Bold           Medium
33. Century Gothic Italic   72. Goudy Oldstyle Extra Bold   106. Univers Extended
34. Century Schoolbook   73. Goudy Oldstyle Bold Italic           Medium Italic
35. Century Schoolbook Bold   74. Goudy Oldstyle Italic   107. Univers Medium Italic
36. Century Schoolbook Bold   75. Granite   108. Univers Light Condensed
      Italic   76. Granite Bold   109. Univers Light Condensed
37. Century Schoolbook Italic   77. Granite Bold Italic           Italic
38. CG Omega   78. Granite Italic   110. Wingdings 1

1 These Fonts are shipped on TrustType format with Windows 3.1. Windows ‘95 and will not be included as a MicroType font.

 

11


Exhibit F

Interim PostScript Fonts

 

      

Front Name

  

Font Type

1.    Helvetica    Type 1
2.    Helvetica Bold    Type 1
3.    Helvetica Bold Italic    Type 1
4.    Helvetica Italic    Type 1
5.    Helvetica Narrow    Type 1
6.    Helvetica Narrow Bold    Type 1
7.    Helvetica Narrow Italic    Type 1
8.    Helvetica Narrow Bold Italic    Type 1
9.    Palatino    MicroType
10    Palatino Bold    MicroType
11.    Palatino Bold Italic    MicroType
12.    Palatino Italic    MicroType
13.    ITC Bookman    MicroType
14.    ITC Bookman Bold Italic    MicroType
15.    ITC Bookman Italic    MicroType
16,    ITC Bookman Bold    MicroType
17.    ITC Avant Garde    MicroType
18.    ITC Avant Garde Bold    MicroType
19.    ITC Avant Garde Bold Italic    MicroType
20.    ETC Avant Garde Italic    MicroType
21    Century Schoolbook    Type 1
22.    Century Schoolbook Bold    Type 1
23.    Century Schoolbook Bold Italic    Type 1
24.    Century Schoolbook Italic    Type 1
25.    Courier    Type 1
26.    Courier Bold    Type 1
27.    Courier Bold Italic    Type 1
28.    Courier Italic    Type 1
29.    Symbol    Type 1
30.    Times New Roman    MicroType
31.    Times New Roman Bold    MicroType
32.    Times New Roman Bold Italic    MicroType
33.    Times New Roman Italic    MicroType
34.    ETC Zaph Chancery Medium Italic    MicroType
35.    ITC Zaph Dingbats    MicroType
36.    Helvetica Light    Type 1
37.    Helvetica Light Italic    Type 1
38.    Helvetica Black    Type 1
39.    Helvetica Black Italic    Type 1

 

12


Exhibit G

PostScript Fonts

 

      

Front Name

  

Font Type

1.    Helvetica    MicroType
2.    Helvetica Bold    MicroType
3.    Helvetica Bold Italic    MicroType
4.    Helvetica Italic    MicroType
5.    Helvetica Narrow    MicroType
6.    Helvetica Narrow Bold    MicroType
7.    Helvetica Narrow Italic    MicroType
8.    Helvetica Narrow Bold Italic    MicroType
9.    Palatino    MicroType
10    Palatino Bold    MicroType
11.    Palatino Bold Italic    MicroType
12.    Palatino Italic    MicroType
13.    ITC Bookman    MicroType
14.    ITC Bookman Bold Italic    MicroType
15.    ITC Bookman Italic    MicroType
16,    ITC Bookman Bold    MicroType
17.    ITC Avant Garde    MicroType
18.    ITC Avant Garde Bold    MicroType
19.    ITC Avant Garde Bold Italic    MicroType
20.    ETC Avant Garde Italic    MicroType
21    Century Schoolbook    MicroType
22.    Century Schoolbook Bold    MicroType
23.    Century Schoolbook Bold Italic    MicroType
24.    Century Schoolbook Italic    MicroType
25.    Courier    MicroType
26.    Courier Bold    MicroType
27.    Courier Bold Italic    MicroType
28.    Courier Italic    MicroType
29.    Symbol    MicroType
30.    Times New Roman    MicroType
31.    Times New Roman Bold    MicroType
32.    Times New Roman Bold Italic    MicroType
33.    Times New Roman Italic    MicroType
34.    ETC Zaph Chancery Medium Italic    MicroType
35.    ITC Zaph Dingbats    MicroType
36.    Helvetica Light    MicroType
37.    Helvetica Light Italic    MicroType
38.    Helvetica Black    MicroType
39.    Helvetica Black Italic    MicroType

 

13


Exhibit H

MicroType Scaleable Font Data

Support for Additional Languages

Typeface Description

Number of Characters Latin 6

 

Typeface Description    Latin 6    Cyrillic    Greek

Number of Characters

  

[40]

   [95]    [70]

Courier

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Courier Italic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Courier Bold

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Courier Bold Italic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

CG Times

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

CG Times Italic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

CG Times Bold

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

CG Times Bold Italic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Univers Medium

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Univers Medium Italic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Univers Bold

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

 

14


Univers Bold Italic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Letter Gothic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Letter Gothic Italic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Letter Gothic Bold

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Letter Gothic Bold Italic

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/

Subtotal

  

/*Confidential

Treatment

Requested*/

   /*Confidential
Treatment
Requested*/
   /*Confidential
Treatment
Requested*/
         Total
/*Confidential
Treatment
Requested*/
        

NA indicates “Not Available” for this release.

15


Lx121897

ADDENDUM NO. 7

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 as amended from time to time (“Agreement”) dated August 15, 1991, by and between Agfa Division of Bayer Corporation (Agfa) and Lexmark International Incorporated (“Customer”).

WHEREAS Agfa has developed certain technology described in Section 1 and for the purposes of this Addendum is defined and referred to as the “Licensed Software”; and

WHEREAS Customer desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Customer Developers, Customer Distributors, Customer OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree as follows:

1. Definitions . Add the following new definitions to Section 1 of the amended Agreement.

as) Type Software - The Asian typefaces listed in Exhibit C here to which are licensed by Customer under this Addendum, and any amendments hereto, and all related documentation.

2. Fee(s) and Royalties . Customer agrees to pay Agfa the License Fees and Royalties set forth in Schedule 2 of the Agreement as amended herein.

3. Schedule 2 - Development Fees/ Type Software . The following will be added to the end of Section 17 of Schedule 2 of the amended Agreement:

(ix) Customer shall pay Agfa /*Confidential Treatment Requested*/ after execution of Addendum 7 and Customer election to use the Asian Compression of TrueType Module in Customer products, and upon Customer receipt of an Agfa invoice for Asian Compression of TrueType Module which will include /*Confidential Treatment Requested*/ the Asian Double-Byte Module.

(x) Customer shall pay Agfa /*Confidential Treatment Requested*/ per typeface for a total of 2 typefaces, listed in Exhibit C, after execution of Addendum 7 and upon Customer receipt of an Agfa invoice for/*Confidential Treatment Requested*/.

4. Schedule 2 – Royalty .

A non-refundable prepaid advance against Royalties totaling /*Confidential Treatment Requested*/ is due for the Asian typefaces listed in Exhibit C. One Hundred Percent (100%) of all royalties under this Addendum will be applied only to the Asian ROM based products.

 

1


5. Schedule 2 - Royalty Unit . Add and modify the following to Section 10, Royalty Unit-Resident Type Software, of Schedule 2 of the amended Agreement.

Replace (n) with “Laser: For each Royalty Unit comprised of UFST 3.X (MicroType, Intellifont, PostScript, and TrueType) and the forty-five (45) typefaces (see Exhibit A - Schedule) ROM resident within Customer’s Product, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/. Notwithstanding the forgoing provisions of this Section (n), for Customer Products with engine speed at, or below, eight (8) pages per minute and resolutions of six hundred (600) dots per inch or less regardless of ROM savings there will be a Royalty of /*Confidential Treatment Requested*/.”

(ab) For each Royalty Unit comprised of UFST 3.X (MicroType, Intellifont, PostScript and TrueType) and forty-five (45) typefaces (see Exhibit A - Schedule 2), thirty-nine (39) typefaces (see Exhibit B - Schedule 2), and two (2) Asian typefaces (see Exhibit C - Schedule 2), ROM resident within a Customer’s Product, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/. With regard to such Royalty Units, the Customer will not be responsible for any additional Royalty due to /*Confidential Treatment Requested*/, the source for Agfa for the Asian typefaces listed on Exhibit C. Agfa will be responsible for all sublicensing Royalties due to /*Confidential Treatment Requested*/.

(ac) For each Royalty Unit comprised of two (2) Asian typefaces (see Exhibit C for the list of Typefaces) ROM resident within Customer’s Product, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/. With regard to such Royalty Units, the Customer will not be responsible for any additional Royalty due to /*Confidential Treatment Requested*/, the source for Agfa for the Asian typefaces listed on Exhibit C. Agfa will be responsible for all sublicensing Royalties due to /*Confidential Treatment Requested*/.

(ad) An “option only” for each Royalty Unit, as described in Section 5 (n), comprised of UFST 3.X (MicroType) and the ROM based forty-five (45) PCL Fonts listed in Exhibit A. As an option, the Host based Thirty-nine (39) PostScript Fonts listed in Exhibit B there will be a royalty of /*Confidential Treatment Requested*/.

(ae) For each Royalty Unit comprised of UFST 3.X (MicroType) with the ROM based forty-five (45) PCL Fonts listed in Exhibit A and the Thirty-nine (39) PostScript Fonts listed in Exhibit B, Lexmark can distribute, /*Confidential Treatment Requested*/ Royalty, the Lexmark FontVision product with the matching screen fonts.

(af) For each Royalty Unit comprised of the Forty-eight (48) fonts listed in Exhibit D, available from the Lexmark WEB site, to be downloaded to individual Host systems there will be a royalty of /*Confidential Treatment Requested*/. These fonts will be available only to Lexmark customers who have purchased a Lexmark printer which included the Lexmark FontVision product. Lexmark will provide a downloaded copy of the End User License attached to the WEB Fonts and will make it’s best effort to assure the fonts are available only to Lexmark customers who have registered their printers with Lexmark.

 

2


(ag) For each Royalty Unit comprised of a UNIX Host based PostScript RIP to drive Lexmark InkJet printers only, with UFST 3.X (MicroType) with the forty-five (45) PCL Fonts listed in Exhibit A and the Thirty-nine (39) PostScript Fonts listed in Exhibit B, there will be a royalty /*Confidential Treatment Requested*/.

(ah) For each Royalty Unit, as described in Section 5 (n), comprised of UFST 3.X (MicroType) with the forty-five (45) PCL Fonts ROM resident, listed in Exhibit A and the Seventeen (17) PostScript Fonts, data only with no typeface names seen by the End User on either Documentation or Screen, listed in Exhibit B, Superscript 1 , there will be a royalty of /*Confidential Treatment Requested*/.

(ai) For each Royalty Unit comprised of UFST 3.X (MicroType, Intellifont, PostScript and TrueType) and forty-five (45) typefaces (see Exhibit A - Schedule 2), thirty-nine (39) typefaces (see Exhibit B - Schedule 2), ROM resident within a Customer’s Product, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/. Notwithstanding the forgoing provisions of this Section (ai), this Royalty Unit is for Customer Inkjet based Products only with engine speed at, or below, ten (10) pages per minute black and white and five (5) pages per minute color, and optical resolutions of one thousand two hundred (1,200) dots per inch or less.

Except as provided herein, all the terms and conditions of the Agreement as previously amended shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of 12/19/1997.

 

AGFA DIVISION BAYER CORPORATION         LEXMARK INTERNATIONAL, INC.

/s/ Robert M. Givens

   

/s/ Timothy P. Craig

Signature     Signature

Vice President

   

Vice President & General Manager, New
Product, Business Printer Div.

Title     Title

Robert M. Givens

   

Timothy P. Craig

Print Name     Print Name

3


Summary or Payments

by Lexmark to Agfa for technology described in Addendum #7

License Fees

 

Asian Compression for TrueType   

/*Confidential Treatment

Requested*/

Double-Byte Module   

/*Confidential Treatment

Requested*/

This License Fee (above) is due upon Customer election to use the Asian Compression of TrueType Module in Customer products

The Fees below are due upon execution of this Addendum and will be invoiced by Agfa with sixty (60) day terms for payment.

 

Development Fees  

Asian Typeface (2 @

/*Confidential Treatment

Requested*/

 

/*Confidential

Treatment Requested*/

Prepaid Royalty for Asian Fonts    

/*Confidential

Treatment Requested*/

Total for this Addendum    

/*Confidential

Treatment Requested*/

 

4


Exhibit A - Schedule 2

Type Software

Typeface Formats include MicroType (PCL6 Fonts)

 

Item #

  

Typeface Name

  

Typeface Format

    
1.    Coronet    MicroType   
2.    Clarendon Condensed    MicroType   
3.    Marigold    MicroType   
4.    Letter Gothic    MicroType   
5.    Letter Gothic Bold    MicroType   
6.    Letter Gothic Italic    MicroType   
7.    Arial    MicroType   
8.    Arial Bold    MicroType   
9.    Arial Italic    MicroType   
10.    Arial Bold Italic    MicroType   
11.    Times New Roman    MicroType   
12.    Times New Roman Bold    MicroType   
13.    Times New Roman Italic    MicroType   
14.    Times New Roman Bold Italic    MicroType   
15.    Symbol    MicroType   
16.    Wingdings    MicroType   
17.    CG Times    MicroType   
18.    CG Times Bold    MicroType   
19.    CG Times Italic    MicroType   
20.    CG Times Bold Italic    MicroType   
21.    CG Omega    MicroType   
22.    CG Omega Bold    MicroType   
23.    CG Omega Italic    MicroType   
24.    CG Omega Bold Italic    MicroType   
25.    Univers Medium    MicroType   
26.    Univers Bold    MicroType   
27.    Univers Medium Italic    MicroType   
28.    Univers Bold Italic    MicroType   
29.    Univers Medium Condensed    MicroType   
30.    Univers Bold Condensed    MicroType   
31.    Univers Medium Condensed Italic    MicroType   
32.    Univers Bold Condensed Italic    MicroType   
33.    Antique Olive    MicroType   
34.    Antique Olive Bold    MicroType   
35.    Antique Olive Italic    MicroType   
36.    Garamond Antiqua    MicroType   
37.    Garamond Halbfett    MicroType   
38.    Garamond Kursiv    MicroType   
39.    Garamond Kursiv Halbfett    MicroType   
40.    Courier    MicroType   
41.    Courier Bold    MicroType   

 

5


Item #

  

Typeface Name

  

Typeface Format

      
42.    Courier Italic    MicroType     
43.    Courier Bold Italic    MicroType   
44.    Albertus Medium    MicroType   
45.    Albertus Extra Bold    MicroType   

 

6


Exhibit B - Lexmark PostScript 39

Font Name

 

         

Font Type

1.    Helvetica 1    MicroType
2.    Helvetica Bold 1    MicroType
3.    Helvetica Bold Italic 1    MicroType
4.    Helvetica Italic 1    MicroType
5.    Helvetica Narrow 1    MicroType
6.    Helvetica Narrow Bold 1    MicroType
7.    Helvetica Narrow Italic 1    MicroType
8.    Helvetica Narrow Bold Italic 1    MicroType
9.    Palatino    MicroType
10.    Palatino Bold    MicroType
11.    Palatino Bold Italic    MicroType
12.    Palatino Italic    MicroType
13.    ITC Bookman    MicroType
14.    ITC Bookman Bold Italic    MicroType
15.    ITC Bookman Italic    MicroType
16.    ITC Bookman Bold    MicroType
17.    ITC Avant Garde    MicroType
18.    ITC Avant Garde Bold    MicroType
19.    ITC Avant Garde Bold Italic    MicroType
20.    ITC Avant Garde Italic    MicroType
21    Century Schoolbook    MicroType
22.    Century Schoolbook Bold    MicroType
23.    Century Schoolbook Bold Italic    MicroType
24.    Century Schoolbook Italic    MicroType
25.    Courier 1    MicroType
26.    Courier Bold 1    MicroType
27.    Courier Bold Italic 1    MicroType
28.    Courier Italic 1    MicroType
29.    Symbol 1    MicroType
30.    Times New Roman 1    MicroType
31.    Times New Roman Bold 1    MicroType
32.    Times New Roman Bold Italic 1    MicroType
33.    Times New Roman Italic 1    MicroType
34.    ITC Zaph Chancery Medium Italic    MicroType
35.    ITC Zaph Dingbats    MicroType
36.    Helvetica Light    MicroType
37.    Helvetica Light Italic    MicroType
38.    Helvetica Black    MicroType
39.    Helvetica Black Italic    MicroType

1 These fonts are included in the configuration described in Item 5, Schedule 2 - Royalty Unit, (ah) of this Addendum.

 

7


EXHIBIT C

Type Software

Typeface Format - TrueType

 

   

Item #Typeface Name

  

Typeface Format

  

Development Fee

1.   HG Mincho Light    TrueType   

/*Confidential Treatment

Requested*/

2.   HG Gothic Bold    TrueType   

/*Confidential Treatment

Requested*/

 

8


Exhibit D

Fonts for Lexmark Web Site

TrueType Format

 

1. Albertus Bold

 

2. Albertus Medium Italic

 

3. Antique Olive Compact

 

4. Bodoni

 

5. Bodoni Black

 

6. Bodoni Bold

 

7. Bodoni Bold Italic

 

8. Bodoni Italic

 

9. Clarendon Book

 

10. Clarendon Bold

 

11. Clarendon Extended Bold

 

12. Cooper Black

 

13. Cooper Black Italic

 

14. Gill Sans

 

15. Gill Sans Bold

 

16. Gill Sans Bold Italic

 

17. Gill Sans Italic

 

18. Gill Sans Condensed

 

19. Gill Sans Condensed Bold

 

20. Gill Sans Extra Bold

 

21. Gill Sans Light

 

22. Gill Sans Light Italic

 

23. Goudy Old Style

 

24. Goudy Old Style Bold

 

25. Goudy Old Style Bold Italic

 

26. Goudy Old Style Italic

 

27. Goudy Old Style Extra Bold

 

28. Granite

 

29. Granite Bold

 

30. Granite Bold Italic

 

31. Granite Italic

 

32. Letter Gothic Bold Italic

 

33. Microstyle

 

34. Microstyle Bold

 

35. Microstyle Extended

 

36. Microstyle Extended Bold

 

37. Seattle

 

38. Univers Extended

 

39. Univers Extended Bold

 

40. Univers Extended Bold Italic

 

41. Univers Extended Italic

 

42. Univers Light Condensed

 

43. Univers Light Condensed Italic

 

9


44. Harlow Solid

 

45. Signet Roundhand

 

46. Signs

 

47. Slipstream

 

48. Yearbook Outline

 

10


A83299

ADDENDUM NO. 8

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 as amended from time to time (“Agreement”) dated August 15, 1991, by and between Agfa Corporation, formally known as Agfa Division of Bayer Corporation (Agfa) and Lexmark International Incorporated (“Customer”).

WHEREAS Agfa has developed certain technology described in Section 1 of the Agreement, and for the purposes of this Addendum is defined and referred to as the “Licensed Software”; and

WHEREAS Customer desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Customer Developers, Customer Distributors, Customer OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Intellifont and Type Software Agreement dated August 15, 1991 shall be amended as follows:

 

1. Schedule 1 shall be amended to include the following product: Any Lexmark printer which will be sold to Cable TV Customers that does not contain resident fonts, which will utilize the nine (9) typefaces listed in Exhibit A of this Addendum, resident on Cable providers’ server.

 

2. Schedule 2, Section 8-Pre-Paid Royalty shall be modified to add the following:

“A non-refundable prepaid advance against Royalties totaling /*Confidential Treatment Requested*/ is due, 30 days after the first shipment of a printer listed in amended Schedule 1 to an End User by Lexmark. One Hundred Percent (100%) of all royalties under this Addendum will be applied only to the Cable TV Service Provider/Printer based products.”

 

3. Schedule 2, Section 9 - Royalty Unit , shall be modified to add the following:

“For each Royalty Unit comprised of one (1) Lexmark printer (listed in amended Schedule 1) sold to a Cable TV Customer and therefore connected to a Cable TV Service Provider server with resident UFST X (MicroType) licensed hereunder and nine (9) typefaces listed in Exhibit A of this Addendum. Lexmark shall pay a Royalty /*Confidential Treatment Requested*/. Agfa and Lexmark agree to negotiate in good faith to reduce the per unit royalty when /*Confidential Treatment Requested*/ units are sold. In the event that the number of printer service subscriptions reported by Cable TV Service Providers decreases from the highest number reported in any quarter, neither Lexmark nor any Cable TV Service Provider shall be entitled to reimbursement or rebate of any royalties paid to Agfa in any previous quarter.”

 

1


Except as provided herein, all the terms and conditions of the Agreement as previously amended shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of May 13, 1999.

 

AGFA CORPORATION       LEXMARK INTERNATIONAL, INC.

/s/ Robert M. Givens

   

/s/ Patrick King

Signature     Signature

Vice President

   

General Manager Inkjet Printers

Title     Title

Robert M. Givens

   

Patrick King

Print Name     Print Name

2


Exhibit A

Type Software

Typeface Formats in MicroType

 

Item #

  

Typeface Name

   Typeface Format

1.

   CG Times    MicroType

2.

   CG Times Bold    MicroType

3.

   CG Times Italic    MicroType

4.

   CG Times Bold Italic    MicroType

5.

   Univers Medium    MicroType

6.

   Univers Bold    MicroType

7.

   Univers Medium Italic    MicroType

8.

   Univers Bold Italic    MicroType

9.

   Courier    MicroType

 

3


A9080300

ADDENDUM NO. 9

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 as amended from time to time (“Agreement”) dated August 15, 1991, by and between Agfa Monotype Corporation, formally known as Agfa Division of Bayer Corporation (Agfa) and Lexmark International Inc. (“Customer”).

WHEREAS Agfa has developed certain technology described in Section I of the Agreement, and for the purposes of this Addendum is defined and referred to as the “Licensed Software”; and

WHEREAS Customer desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Customer Developers, Customer Distributors, Customer OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Intellifont and Type Software Agreement dated August 15, 1991 shall be amended as follows:

1. Definitions . Following definitions are hereby added to Section 1 of the Agreement.

at) The EuroFont Characters, used to denote Euro Currency, has been created in the required typeface sensitive designs for each font and Typeface.

aj) The following underlined terms shall be added at the end of Section, Universal Font Scaling Technology (UFST 4.X ) “that offers the capability to process Intellifont, Type 1, TrueType, hinted Printer Command Language Encapsulated Outline (PCLEO) Type Software, Asian Compression for TrueType (ACT) , MicroType 1 and MicroType 2 within a single application interface.”

2. Section 2, License Grant . The following item shall be inserted into Section 2 of the Agreement:

“(n) EuroFont Software - Customer will have the right to distribute and to have distributed the EuroFont Characters for no additional royalties or other payment of any type, including those described in Section 6, “Fees and Royalties”, except the Development Fee. No additional royalty shall be payable by Customer for the distribution of the EuroFont when provided to support printers with Agfa ROM resident technology.”

3. Schedule 2, Development Fees/Type Software . Shall be modified to add the following at the end of Section 17 of Schedule 2:

“(xi) Customer shall pay Agfa /*Confidential Treatment Requested*/ after the execution of Addendum #9 for the development of the Euro Font Characters to be typeface sensitive as mutually agreed.”

 

1


Schedule 2, Unit Royalty . Section 10, “Royalty Unit - Resident Type Software”, of Schedule 2 of the Agreement shall be modified as follows:

Replace the current Item (n) in its entirety with the following :

“Laser or Inkjet: For each Royalty Unit comprised of UFST 3X or 4X (MicroType 1 or 2, Intellifont, PostScript and TrueType) and the forty five (45) typefaces (See Exhibit C) ROM resident within the Customer Product, at or below ten (10) pages per minute. sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.

For each Royalty Unit comprised of UFST 3X or 4X (MicroType 1 or 2, Intellifont, PostScript and TrueType) and the forty five (45) typefaces (See Exhibit C) ROM resident within the Customer Product, above ten (10) pages per minute, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.”

Replace the current Item (o) in its entirety with the following :

“For each Royalty Unit comprised of the Agfa Font Manager with a total of Zero (0) to Ninety Six (96) fonts listed in Exhibit H, which Customer distributes separately from or together with another Customer Product with a minimum of the forty-five (45) ROM resident typefaces (See Exhibit C), herein sublicensed to an End User, Customer Distributor, Customer OEM, or Customer Developer, there will be a Royalty of /*Confidential Treatment Requested*/ and for each additional TrueType font not listed on Exhibit E there will be an additional charge of /*Confidential Treatment Requested*/ per Typeface.”

Replace the current Item (z) in its entirety with the following :

“Laser or Inkjet: For each Royalty Unit comprised of UFST 3X or 4X (MicroType 1 or 2, Intellifont, PostScript and TrueType) and the forty-five (45) typefaces (See Exhibit C) with the Thirty-nine (39) PostScript Level 2 typefaces (See Exhibit D) ROM resident within the Customer Product, at or below ten (10) pages per minute sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.

For each Royalty Unit comprised of UFST 3X or 4X (MicroType 1 or 2, Intellifont PostScript and TrueType) and the forty five (45) typefaces (See Exhibit C) with the Thirty-nine (39) PostScript Level 2 typefaces (See Exhibit D) ROM resident within the Customer Product, above ten (10) pages per minute sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.”

Replace the current Item (q) in its entirety with the following :

“Laser or Inkjet: For each Royalty Unit, comprised of UFST 2.x/3.X/4.X (MicroType 1 or 2, Intellifont, TrueType, PostScript) and the twenty-six (26) typefaces (see Exhibit B for the list of Typefaces), ROM resident within the Customer Product, sublicensed to an End User, Distributor or OEM, there will be a Royalty of /*Confidential Treatment Requested*/.”

 

2


Replace the current Item (ae) in its entirety with the following :

“Laser or Inkjet: For each Royalty Unit comprised of UFST 3X or 4X (MicroType 1 or 2, Intellifont, PostScript and TrueType) with up to One Hundred Eight-one (181) typefaces (See Exhibit B) and including Gold Sans MM and Gold Serif MM, ROM resident within the Customer Product, Lexmark can distribute, for /*Confidential Treatment Requested*/ Royalty, the Lexmark FontVisioon product with the matching screen fonts.

Add Item :

(aj) “Laser or Inkjet: For each Royalty Unit comprised of UFST 4X (MicroType 1 or 2, Intellifont, PostScript and TrueType) and the One Hundred Eighty-one (181) typefaces (See Exhibit B) and including Gold Sans MM and Gold Serif MM, ROM resident within the Customer Product, at or below ten (10) pages per minute sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty /*Confidential Treatment Requested*/.

For each Royalty Unit comprised of UFST 4X (MicroType 1 or 2, Intellifont, PostScript and TrueType) and the One Hundred Eighty-one (181) typefaces (See Exhibit B) and include Gold Sans MM and Gold Serif MM, ROM resident within the Customer Product, above ten (10) pages per minute sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.”

Add Item :

(ak) “Notwithstanding any other provision of this Agreement, solely for the Optra T610 and Optra T610N: Customer Product Royalty Unit comprised of UFST 4X (MicroType 1 or 2, Intellifont, PostScript and TrueType) and the One Hundred Eighty-one (181) typefaces (See Exhibit B) and including Gold Sans MM and Gold Serif MM, ROM resident within the Customer Product sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.”

Add Item :

(al) “Notwithstanding any other provision of this Agreement, solely for the Optra M410 and Optra M410N series and printers based on the same engine as the Optra M410 and Optra M410N, (600 x 600 true resolution, 12 - 17 PPM): For each Customer Product Royalty Unit comprised of UFST 4X (MicroType 1 or 2, Intellifont, PostScript and TrueType) and the Forty-five (45) typefaces (See Exhibit C), the PostScript Thirty-nine (39) typefaces with the PostScript 3 Character Set (See Exhibit D), 25 Adobe PostScript 3 typefaces which provide only the use of the convergent fonts, but do not allow the End User to see any additional font names beyond the Lexmark Eighty-four (84) and include Gold Sans MM and Gold Serif MM, ROM resident within the Customer Product sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/. For a PostScript 3 Option to include the balance of One Hundred Thirty-six (136) typefaces listed in Exhibit B as items #1 - # 136 for the Customer Product only there will be a Royalty of /*Confidential Treatment Requested*/.”

 

3


Add Item :

(am) “To support Optional PDF printing Lexmark may distribute Gold Sans MM and Gold Serif MM, ROM resident within the Customer Product, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM with /*Confidential Treatment Requested*/ payment to Agfa provided the product with this option includes an Agfa Royalty bearing PostScript font block.”

Add Item :

(an) For each Lexmark INA Card containing the Line Printer Font, Lexmark may distribute the Line Printer Font with /*Confidential Treatment Requested*/ payment to Agfa. This will allow users of the INA Card to print headers on pages, which are printed remotely since the Line Printer Font is resident in Lexmark Printers.

Add Item :

(ao) Lexmark may use the Corporate license for the Frutiger typeface to generate printer test pages with no Royalty or other payment to Agfa. This is understood that the test page is generated as a full-page bitmap and that the Frutiger typeface is not being used as outline technology.

Add Item :

(ap) For each Royalty Unit comprised of UFST 4X (MicroType 1 or 2) and the Eight (8) typefaces (See Exhibit E), restricted to the pitch and point size listed in Exhibit F, in regular and algorithmically produced bolding, ROM resident within Customer’s Inkjet Product sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.

Add Item :

(aq) Laser or Inkjet: For each Royalty Unit comprised of UFST 3X or 4X (MicroType 1 or 2, Intellifont, TrueType and ACT) and the four (4) Chinese typefaces (See Exhibit G/Simplified) ROM resident within the Customer Product or for a Customer Product option, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.

For each Royalty Unit comprised of UFST 3X or 4X (MicroType 1 or 2, Intellifont, TrueType and ACT) and the three (3) typefaces (See Exhibit G J Traditional) ROM resident within the Customer Product or for a Customer Product option, sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.”

4


4. Schedule 10 - Last revised as “Schedule 10 (a)” in Addendum #5, September 25, 1995, shall be replaced in its entirety with the following:

Schedule 10

Guidelines for the Representation of Agfa Corporation, its products and technologies

In order to ensure proper adherence to these guidelines, Agfa Corporation (“Agfa”) reserves the right to review and approve upon specific. timely request of Agfa but shall not unreasonably delay or withhold approval thereof—prior to production—all product packaging, advertising, marketing collateral, promotional material or press releases when Agfa technology is mentioned for products that utilize Universal Font Scaling Technology™, (UFST™), UFSTi™, Intellifont ® technology, Intellifont ® Scalable Typefaces, Agfa Typefaces, MicroType ® technology, MicroType ® Typefaces, The Agfa Font Manager™, MicroType Express™ technology, Agfa Balanced Screening™, CristalRaster™, ColorTune™, Agfa Asian Compression for TrueType™ technology, EuroFont, and Type Director ® .

Agfa Logo

In the event that the Customer elects to use the company logo (consisting of the name AGFA, in uppercase letters, followed by the Agfa Rhombus) on all product packaging, advertising, marketing collateral and promotional materials for products that use Universal Font Scaling Technology (UFST), UFSTi, products that utilize Intellifont technology, Intellifont Scalable Typefaces and Agfa Typefaces, MicroType Technology, MicroType Typefaces, the Agfa Font Manager, MicroType Express technology, Agfa Balanced Screening, CristalRaster, ColorTune, Agfa Asian Compression for TrueType technology it will comply with the provisions of this schedule, Agfa will provide stats of the Agfa Rhombus in various sizes. Please note that the Rhombus should always be accompanied by the name AGFA, immediately preceding it.

Agfa Trademarks

Appropriate trademark citations will be used in product packaging, advertising, marketing collateral and promotional materials for products that incorporate Universal Font Scaling Technology™ (UFST™), UFSTi™, Intellifont ® technology, Intellifont ® Scalable Typefaces, Type l, and Agfa Typefaces, MicroType ® Technology, MicroType ® Typefaces, Agfa Font Manager™, MicroType ® Express, Agfa Balanced Screening™, CristalRaster™, ColorTune™, Agfa Asian Compression for TrueType™, EuroFont, Candid, Taffy and Type Director ® whenever these Agfa technologies are acknowledged or trademarks are used. (See Trademark citations below).

Trademark citations are not required in press releases.

Product and Company Names

The correct company name is Agfa Corporation. Universal Font Scaling Technology™ can be referred to as UFST™, Universal Font Scaling Technology™ for interactive television, internet/WWW and wireless technology applications can be referred to as UFSTi. MicroType

 

5


Express is the lossless compression technology for application developers of electronic documentation creation software. The tool to make bitmap and scalable printer fonts and screen fonts from typeface designs is Type Director, Agfa Font Manager™ is the comprehensive Windows font management utility. The font compression and two-byte rendering for embedded ROM applications is Agfa Asian Compression for TrueType (ACT).

Press Releases

News releases mentioning UFST and MicroType based products may state that the product utilizes UFST and MicroType Font Compression Technology from Agfa. Releases for Intellifont based products may state that the product utilizes Intellifont Scaling technology from Agfa. Releases for UFST and UFSTi based products may state that the product utilizes UFST, Universal Font Scaling technology from Agfa. Releases for any products that include Agfa Typefaces may acknowledge that the fonts are licensed from Agfa. Typeface names must be correctly represented. Releases for any products that include the Agfa Font Manager may acknowledge that the technology has been licensed from Agfa. Releases for MicroType Express products may acknowledge that the technology is from Agfa. Releases for any products that contain Agfa Balanced Screening or CristalRaster may acknowledge that the technology has been licensed from Agfa. Releases for any ColorTune products may state that the product utilizes ColorTune color management technology from Agfa. Releases that include Agfa Asian Compression for TrueType fonts may state that the fonts were licensed from Agfa. Releases that include the EuroFont may state that the font was licensed from Agfa.

E.g.:

UFSTi may be referred to as a UFST based product for the Interactive television, the Internet and wireless communications.

MicroType Express maybe referred to as the lossless font compression technology.

Agfa Balanced Screening may be referred to as a technology that produces clear, conventional dot patterns in an open, PostScript™ desktop compatible market.

CristalRaster may be referred to as a stochastic screening technology that produces photo realistic image quality.

ColorTune may be referred to as color management software.

Agfa Asian Compression for TrueType may be referred to as the font compression and two-byte rendering for embedded ROM applications.

EuroFont may be referred to as a symbol font with the 85 typeface sensitive versions of the European currency symbol, Agfa delivers Candid and Taffy, which are metrically compatible to Adobe’s Carta™ and Tekton™. Agfa delivers Gold Sans MM and Gold Serif MM which are metrically compatible to the multiple master fonts Adobe Sans™ and Adobe Serif™.

 

6


Marketing Collateral and Advertising

Marketing collateral and advertising for any products incorporating Universal Font Scaling Technology (UFST), UFSTi, Intellifont technology, Intellifont Scalable Typefaces, Agfa Typefaces, MicroType technology, MicroType Typefaces, the Agfa Font Manager, MicroType Express technology, Agfa Balanced Screening, CristalRaster, ColorTune, Agfa Asian Compression for TrueType technology and Type Director may acknowledge this when Agfa Technology is mentioned. The first and most prominent use of an Agfa trademark must be followed by the designation ® after each registered trademark and the designation ™ after each unregistered trademark provided, however that a prominent listing of trademarks near the front of any publication shall be a sufficient designation of any trademark listing. Corresponding citations must be provided (see below).

Product Packaging

All products utilizing Universal Font Scaling Technology, (UFST), UFSTi, Intellifont technology, Intellifont Scalable Typefaces, Agfa Typefaces, MicroType technology, MicroType Typefaces. The Agfa Font Manager, MicroType Express technology, Agfa Balanced Screening, CristalRaster, ColorTune, Agfa Asian Compression for TrueType technology, EuroFont, Candid, Taffy, Gold Sans MM, Gold Serif MM, Type Director output may be so identified on the exterior of product packaging, diskettes, and documentation. For the first and most prominent use of an Agfa trademark, it must be followed by the designation ® after each registered trademark and the designation ™ after each unregistered trademark. Corresponding citations must be provided (see below).

Trademark Citations

Scalable type outlines are licensed from Agfa Corporation. Agfa and the Agfa Rhombus, are ( ® ) registered trademarks of Agfa-Gevaert AG. Agfa Balanced Screening is a (™) trademark of Agfa-Gevaert AG. CristalRaster is a (™) trademark of Agfa-Gevaert NV, Belgium, CristalRaster is a ( ® ) registered trademark in the U.S.

Intellifont, Type Director, UFST and MicroType are ( ® ) registered trademarks, and Universal Font Scaling Technology, UFSTi, ColorTune, Agfa Font Manager, Agfa Asian Compression for TrueType, Shannon, Candid, Taffy, Gold Sans MM, Gold Serif MM, CG Triumvirate are (™) trademarks of Agfa Monotype Corporation, EuroFont is a trademark of Agfa Monotype Corporation registered in the U.S. Compugraphic and CG are ( ® ) registered trademarks of Agfa, CG Bodoni, CG Century Schoolbook, CG Goudy Old Style, CG Melliza, Microstyle, CG Omega and CG Palacio are products of Agfa Monotype Corporation.

CG Times, based on Times New Roman under license from The Monotype Corporation, is a product of Agfa Monotype Corporation, Agfa Monotype Corporation has approved the use of the prefix “Intl-” to be used with CG Times, Courier and Univers to denote additional characters required for the European market as shown in Exhibit A of this Addendum.

TrueType, Apple, Chancery, Chicago, Geneva, Monaco and New York are (™) trademarks of Apple Computer, Inc.

The Type 1 processor resident in UFST and UFSTi and is under licensed from Pipeline Associates. Inc.

 

7


Clarendon is a trademark (™) and Helvetica, Optima, Palatino, Stempel Garamond, Times and Univers are ( ® ) registered trademarks of Heidelberger Druckmaschinen AG. Letraset is a ( ® ) registered trademark, and Aachen, Revue and University Roman are (™) trademarks of Esselte Corporation.

Futura is a ( ® ) registered trademark of Fundicion Tipografica Neufville, S.A.

Marigold and Oxford are trademarks of Arthur Baker.

ITC Avant Garde Gothic, ITC Benguiat, ITC Bookman, ITC Century, ITC Cheltenham, ITC Clearface, ITC Galliard, ITC Korinna, ITC Lubalin Graph, ITC Mona Lisa, ITC Souvenir, ITC Tiepolo, ITC Zapf Chancery, and ITC Zapf Dingbats are ( ® ) registered trademarks of International Typeface Corporation.

Albertus, Arial, GillSans, Joanna and Times New Roman are ( ® ) registered trademarks and Monotype Baskerville is a trademark of The Monotype Corporation.

Antique Olive is a registered trademark of Monsieur Marcel OLIVE.

Eurostile is a trademark of Nebiolo.

Hoefler is a trademark of Jonathan Hoefler Type Foundry.

HGPGothicB, HGPMinchoL, HGGothicB and HGMinchoL are ( ® ) registered trademarks of the Ricoh Company, LTD.

MingMT, MHei, Mkai, MSung and CFangSong are ( ® ) registered trademarks of Monotype Typography Ltd.

The previous registered trademarks should be noted when the following Monotype Typography, Ltd. fonts are referenced: CFangSong GB-Light (MT_(6977)(4F53)_GB2312], MheiMedium, MkaiMedium [MT_(6977)(4F53) GB2312], MsungLight, MSungS-Medium-U, MHeiS-Bold-U [MT_(9EDI)(4F53)], MSungS-Light-U [MT_(5B8B)(4F53)), MHeiS-Medium-U, MingMTLight [MTT(7D30)(660E)(9AD4)), MingMT-LightP [MT_(65B0)(7D30)(660E)(9AD4)], MHeiMedium, Mkai-Medium[MT_(6A19)(6977)(9AD4)], Msung-Light, MSungUGL-Light, MSungTLight-U, MSungT-Medium-U, MHeiT-Medium-U and MHeiT-Bold-U.

HYSinMyeongJo-Medium, HYGoThic-Medium, HYRGoThic-Medium, HYGungSo-Bold, HYShortSamul-Medium and HYGraPhic-Medium are ( ® ) registered trademarks of the HanYang Systems, Inc.

Wingdings is a ( ® ) registered trademark of Microsoft Corporation, Windows is a ( ® ) registered trademark of Microsoft Corporation.

PostScript and Frutiger are (™) trademarks of Adobe Systems, Inc.

Macintosh and TrueType are ( ® ) registered trademarks of Apple Computer, Inc.

 

8


PCL, FontSmart, HP and LaserJet are ( ® ) registered trademarks of Hewlett-Packard Company. All other product names are the property of the respective owners. Updated 08/20/99.”

 

9


Except as provided herein, all the terms and conditions of the Agreement as previously amended shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of August 21, 2000.

 

MONOTYPE IMAGING CORPORATION       LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

Signature

   

/s/ Glen A. Hudson

Signature

Senior Vice President

Title

   

VP, GM of AHACH DIV.

Title

Douglas J. Shaw

Print Name

   

Glenn A. Hudson

Print Name

 

10


Summary of License and Development Fees for

Addendum #9

 

Access Fees for Seven (7) Chinese fonts at    /*Confidential Treatment Requested*/
/*Confidential Treatment Requested*/ per font   
Development Fee for Euro Character Development    /*Confidential Treatment Requested*/
Addendum #9 Total    /*Confidential Treatment Requested*/

 

11


Exhibit A

Type Software

Typeface Formats in MicroType

 

Item #    Typeface Name    Typeface Format
1.    Intl-CG Times    MicroType
2.    Intl-CG Times Bold    MicroType
3.    Intl-CG Times Italic    MicroType
4.    Intl-CG Times Bold Italic    MicroType
5.    Intl-Univers Medium    MicroType
6.    Intl-Univers Bold    MicroType
7.    Intl-Univers Medium Italic    MicroType
8.    Intl-Univers Bold Italic    MicroType
9.    Intl-Courier    MicroType
10.    Intl-Courier Bold    MicroType
11.    Intl-Courier Italic    MicroType
12.    Intl-Courier Bold Italic    MicroType

 

12


Exhibit B

Type Software

Typeface List in MicroType Format

PCL6 and POSTSCRIPT 3 Dual Emulation (181)

POSTSCRIPT 3

 

1. Albertus MT

 

2. Albertus MT Light

 

3. Albertus MT Italic

 

4. Antique Olive Roman

 

5. Antique Olive Italic

 

6. Antique Olive Bold

 

7. Antique Olive Compact

 

8. Apple Chancery

 

9. Arial *

 

10. Arial Italic *

 

11. Arial Bold *

 

12. Arial Bold Italic*

 

13. ITC Avant Garde Gothic Book

 

14. ITC Avant Garde Gothic Book Oblique

 

15. ITC Avant Garde Gothic Demi

 

16. ITC Avant Garde Gothic Demi Oblique

 

17. ITC Bookman Light

 

18. ITC Bookman Light Italic

 

19. ITC Bookman Demi

 

20. ITC Bookman Demi Italic

 

21. Bodoni Roman

 

22. Bodoni Italic

 

23. Bodoni Bold

 

24. Bodoni Bold Italic

 

25. Bodoni Poster

 

26. Bodoni Poster Compressed

 

27. Candid

 

28. Chicago

 

29. Clarendon Light

 

30. Clarendon Roman

 

31. Clarendon Bold

 

32. Cooper Black

 

33. Cooper Black Italic

 

34. Copperplate Gothic Thirty-Two BC

 

35. Copperplate Gothic Thirty-Three BC

 

36. Coronet Regular

 

37. Courier

 

38. Courier Oblique

 

39. Courier Bold

 

13


40. Courier Bold Oblique

 

41. Eurostile Medium

 

42. Eurostile Bold

 

43. Eurostile Extended #2

 

44. Eurostile Bold Extended #2

 

45. Geneva

 

46. Gill Sans Light

 

47. Gill Sans Light Italic

 

48. Gill Sans

 

49. Gill Sans Italic

 

50. Gill Sans Bold

 

51. Gill Sans Bold Italic

 

52. Gill Sans Extra Bold

 

53. Gill Sans Condensed

 

54. Gill Sans Bold Condensed

 

55. Goudy Old Style

 

56. Goudy Old Style Italic

 

57. Goudy Bold

 

58. Goudy Bold Italic

 

59. Goudy Extra Bold

 

60. Helvetica

 

61. Helvetica Oblique

 

62. Helvetica Bold

 

63. Helvetica Bold Oblique

 

64. Helvetica Condensed Medium

 

65. Helvetica Condensed Oblique

 

66. Helvetica Condensed Bold

 

67. Helvetica Condensed Bold Oblique

 

68. Helvetica Narrow

 

69. Helvetica Narrow Oblique

 

70. Helvetica Narrow Bold

 

71. Helvetica Narrow Bold Oblique

 

72. Hoefler Text

 

73. Hoefler Text Italic

 

74. Hoefler Text Black

 

75. Hoefler Text Black Italic

 

76. Hoefler Text Ornaments

 

77. Joanna MT

 

78. Joanna MT Italic

 

79. Joanna MT Bold

 

80. Joanna MT Bold Italic

 

81. Letter Gothic

 

82. Letter Gothic Slanted

 

83. Letter Gothic Bold

 

84. Letter Gothic Bold Slanted

 

85. ITC Lubalin Graph Book

14


86. ITC Lubalin Graph Book Oblique

 

87. ITC Lubalin Graph Demi

 

88. ITC Lubalin Graph Demi Oblique

 

89. Marigold

 

90. Monaco

 

91. ITC Mona Lisa Recut

 

92. New Century Schoolbook Roman

 

93. New Century Schoolbook Italic

 

94. New Century Schoolbook Bold

 

95. New Century Schoolbook Bold Italic

 

96. New York

 

97. Optima Roman

 

98. Optima Italic

 

99. Optima Bold

 

100. Optima Bold Italic

 

101. Oxford

 

102. Palatino Roman

 

103. Palatino Italic

 

104. Palatino Bold

 

105. Palatino Bold Italic

 

106. Stempel Garamond Roman

 

107. Stempel Garamond Italic

 

108. Stempel Garamond Bold

 

109. Stempel Garamond Bold Italic

 

110. Symbol

 

111. Taffy

 

112. Times Roman

 

113. Times Italic

 

114. Times Bold

 

115. Times Bold Italic

 

116. Times New *

 

117. Times New Italic *

 

118. Times New Bold *

 

119. Times New Bold Italic *

 

120. Univers 45 Light

 

121. Univers 45 Light Oblique

 

122. Univers 53 Extended

 

123. Univers 53 Extended Oblique

 

124. Univers 55 Roman

 

125. Univers 55 Oblique

 

126. Univers 57 Condensed

 

127. Univers 57 Condensed Oblique

 

128. Univers 63 Bold Extended

 

129. Univers 63 Bold Extended Oblique

 

130. Univers 65 Bold

 

131. Univers 65 Bold Oblique

 

15


132. Univers 67 Condensed Bold

 

133. Univers 67 Condensed Bold Oblique

 

134. Wingdings *

 

135. ITC Zapf Chancery Medium Italic

 

136. ITC Zapf Dingbats

PCL

 

137. Albertus Medium

 

138. Albertus Extra Bold

 

139. Antique Olive

 

140. Antique Olive Italic

 

141. Antique Olive Bold

 

142. Arial *

 

143. Arial Italic *

 

144. Arial Bold *

 

145. Arial Bold Italic *

 

146. Clarendon Condensed

 

147. Coronet

 

148. Courier

 

149. Courier Italic

 

150. Courier Bold

 

151. Courier Bold Italic

 

152. Garamond Antiqua

 

153. Garamond Kursiv

 

154. Garamond Halbfett

 

155. Garamond Kursiv Halbfett

 

156. Letter Gothic

 

157. Letter Gothic Italic

 

158. Letter Gothic Bold

 

159. Marigold

 

160. CG Omega

 

161. CG Omega Italic

 

162. CG Omega Bold

 

163. CG Omega Bold Italic

 

164. Symbol

 

165. CG Times

 

166. CG Times Italic

 

167. CG Times Bold

 

168. CG Times Bold Italic

 

169. Times New *

 

170. Times New Italic *

 

171. Times New Bold *

 

172. Times New Bold Italic *

 

173. Univers Medium

 

174. Univers Medium Italic

 

175. Univers Bold

 

176. Univers Bold Italic

 

16


177. Univers Medium Condensed

 

178. Univers Medium Condensed Italic

 

179. Univers Condensed Bold

 

180. Univers Condensed Bold Italic

 

181. Wingdings *

* Indicates fonts common to both PostScript. Nine (9) outlines are common to PCL and PostScript 3. Because of this commonality the ROM block will consist of 172 outlines. Gold Sans MM and Gold Serif MM are Multi Masters included with the PostScript 3 Font Block.

 

17


Exhibit C

Type Software

Typeface Format is MicroType

 

Item #  

Typeface Name

*1.   Coronet
2.   Clarendon Condensed
3.   Marigold
*4.   Letter Gothic
*5.   Letter Gothic Bold
*6.   Letter Gothic Italic
7.   Arial
8.   Arial Bold
9.   Arial Italic
10.   Arial Bold Italic
11.   Times New Roman
12.   Times New Roman Bold
13.   Times New Roman Italic
14.   Times New Roman Bold Italic
15.   Symbol
*16.   Wingdings
*17.   CG Times
*18.   CG Times Bold
*19.   CG Times Italic
*20.   CG Times Bold Italic
21.   CG Omega
22.   CG Omega Bold
23.   CG Omega Italic
24.   CG Omega Bold Italic
*25.   Univers Medium
*26.   Univers Bold
*27.   Univers Medium Italic
*28.   Univers Bold Italic
*29.   Univers Medium Condensed
*30.   Univers Bold Condensed
*31.   Univers Medium Condensed Italic
*32.   Univers Bold Condensed Italic
*33.   Antique Olive
*34.   Antique Olive Bold
*35.   Antique Olive Italic
36.   Garamond Antiqua
37.   Garamond Halbfett
38.   Garamond Kursiv
39.   Garamond Kursiv Halbfett
*40.   Courier

 

18


Item #  

Typeface Name

*41.   Courier Bold
*42.   Courier Italic
*43.   Courier Bold Italic
*44.   Albertus Medium
*45.   Albertus Extra Bold

* Denotes 26 Font Solution

19


Exhibit D

39 PostScript Level 2 Fonts in MicroType Format

 

1. Helvetica

 

2. Helvetica Bold

 

3. Helvetica Bold Italic

 

4. Helvetica Italic

 

5. Helvetica Narrow

 

6. Helvetica Narrow Bold

 

7. Helvetica Narrow Italic

 

8. Helvetica Narrow Bold Italic

 

9. Palatino

 

10. Palatino Bold

 

11. Palatino Bold Italic

 

12. Palatino Italic

 

13. ITC Bookman

 

14. ITC Bookman Bold Italic

 

15. ITC Bookman Italic

 

16. ITC Bookman Bold

 

17. ITC Avant Garde

 

18. ITC Avant Garde Bold

 

19. ITC Avant Garde Bold Italic

 

20. ITC Avant Garde Italic

 

21. Century Schoolbook

 

22. Century Schoolbook Bold

 

23. Century Schoolbook Bold Italic

 

24. Century Schoolbook Italic

 

25. Courier

 

26. Courier Bold

 

27. Courier Bold Italic

 

28. Courier Italic

 

29. Symbol

 

30. Times New Roman

 

31. Times New Roman Bold

 

32. Times New Roman Bold Italic

 

33. Times New Roman Italic

 

34. ITC Zaph Chancery Medium Italic

 

35. ITC Zaph Dingbats

 

36. Helvetica Light

 

37. Helvetica Light Italic

 

38. Helvetica Black

 

39. Helvetica Black Italic

 

20


Exhibit E

Eight (8) fonts in MicroType format

The eight (8) scalable fonts to generate bitmap size and resolution specific data to be used in Inkjet devices:

 

1. Courier Regular

 

2. Courier Italic

 

3. Letter Gothic Regular

 

4. Letter Gothic Italic

 

5. Univers Regular

 

6. Univers Italic

 

7. CG Times Regular

 

8. CG Times Italic

Exhibit F

The following fonts will be emulated using the above eight scalable fonts. Also, algorithmic bolding will be applied to each of these fonts.

Courier 5 pitch 6 point

Courier 10 pitch 6 point

Courier 16.67 pitch 6 point

Courier 20 pitch 6 point

Courier 5 pitch 12 point

Courier 10 pitch 12 point

Courier 16.67 pitch 12 point

Courier 20 pitch 12 point

Courier 5 pitch 24 point

Courier 10 pitch 24 point

Courier 16.67 pitch 24 point

Courier 20 pitch 24 point

Courier Italic 5 pitch 6 point

Courier Italic 10 pitch 6 point

Courier Italic 20 pitch 6 point

Courier Italic 5 pitch 12 point

Courier Italic 10 pitch 12 point

Courier Italic 20 pitch 12 point

Courier Italic 5 pitch 24 point

Courier Italic 10 pitch 24 point

Courier Italic 20 pitch 24 point

Letter Gothic 6 pitch 6 point

Letter Gothic 12 pitch 6 point

Letter Gothic 24 pitch 6 point

Letter Gothic 6 pitch 12 point

Letter Gothic 12 pitch 12 point

Letter Gothic 24 pitch 12 point

 

21


Letter Gothic 6 pitch 24 point

Letter Gothic 12 pitch 24 point

Letter Gothic 24 pitch 24 point

Letter Gothic 16.67 pitch 4.75 point

Letter Gothic 16.67 pitch 9.5 point

Letter Gothic 16.67 pitch 19 point

Letter Gothic Italic 6 pitch 6 point

Letter Gothic Italic 12 pitch 6 point

Letter Gothic Italic 24 pitch 6 point

Letter Gothic Italic 6 pitch 12 point

Letter Gothic Italic 12 pitch 12 point

Letter Gothic Italic 24 pitch 12 point

Letter Gothic Italic 6 pitch 24 point

Letter Gothic Italic 12 pitch 24 point

Letter Gothic Italic 24 pitch 24 point

CGTimes 5 point

CGTimes 6 point

CGTimes 7 point

CGTimes 8 point

CGTimes 10 point

CGTimes 12 point

CGTimes 14 point

CGTimes Italic 5 point

CGTimes Italic 6 point

CGTimes Italic 7 point

CGTimes Italic 8 point

CGTimes Italic 10 point

CGTimes Italic 12 point

CGTimes 14 point

Univers 5 point

Univers 6 point

Univers 7 point

Univers 8 point

Univers 10 point

Univers 12 point

Univers 14 point

Univers Italic 5 point

Univers Italic 6 point

Univers Italic 10 point

Univers Italic 12 point

 

22


Exhibit G

Chinese Fonts

Simplified

 

Font Name/Unicode Value

  

Encoding/Format

   Access Fee

MKai-Medium

MT_(6977)(4F53)_GB2312

  

GB cmap

Unicode

ACT format

   /*Confidential Treatment Requested*/

CFangSongGB-Light

MT_(4EFFX5B8B)_GB2312

  

GB cmap

Unicode

ACT format

   /*Confidential Treatment Requested*/

MHei-Bold

MT_(9ED1)(4F53)

  

GBK cmap

Unicode

ACT format

   /*Confidential Treatment Requested*/

MSungS-Light

MT_(5B8B)(4F53)

  

GBK cmap

Unicode

ACT format

   /*Confidential Treatment Requested*/
Traditional      

Font Name/Unicove Value

  

Encoding/Format

    

MingMT-Light

MT_(7D30)(660E)(9AD4)

  

BIG5 cmap

Unicove

ACT format

   /*Confidential Treatment Requested*/

MingMT-LightP

MT_(65B0)(7D30)(660E)(9AD4)

  

BIG5 cmap

Unicove

ACT format

   /*Confidential Treatment Requested*/

MKai-Medium

MT_(6A19)(6977)(9AD4)

  

BIG5 cmap

Unicove

ACT format

   /*Confidential Treatment Requested*/
      Total Access Fee /*Confidential
Treatment Requested*/

 

23


Exhibit H

Micro Type Fonts and

Agfa Font Manager Fonts

 

1.        Albertus Medium

  

45.      CG Times Italic

  

89.      Monotype Sorts

2.        Albertus Bold

  

46.      Clarendon Book

  

90.      Seattle

3.        Albertus Extra Bold

  

47.      Clarendon Bold

  

91.      Symbol 1

4.        Albertus Medium Italic

  

48.      Clarendon Extended Bold

  

92.      Times New Roman 1

5.        Antique Olive

  

49.      Clarendon Condensed

  

93.      Times New Roman Bold 1

6.        Antique Olive Bold

  

50.      Cooper Black

  

94.      Times New Roman Bold Italic 1

7.        Antique Olive Italic

  

51.      Cooper Black Italic

  

95.      Times New Roman Italic 1

8.        Antique Olive Compact

  

52.      Coronet

  

96.      Univers Medium

9.        Arial 1

  

53.      Courier 1

  

97.      Univers Bold

10.      Arial Bold 1

  

54.      Courier Bold 1

  

98.      Univers Bold Condensed

11.      Arial Bold Italic 1

  

55.      Courier Bold Italic 1

  

99.      Univers Bold Condensed Italic

12.      Arial Italic 1

  

56.      Courier Italic 1

  

100.    Univers Extended Bold

13.      Arial Narrow

  

57.      Garamond Antiqua

  

101.    Univers Extended Bold Italic

14.      Arial Narrow Bold

  

58.      Garamond Halbfett

  

102.    Univers Bold Italic

15.      Arial Narrow Italic

  

59.      Garamond Kursiv

  

103.    Univers Medium Condensed

16.      Arial Narrow Bold Italic

  

60.      Garamond Kursiv Halbfett

  

104.    Univers Medium Condensed Italic

17.      Bodoni

  

61.      Gill Sans

  

105.    Univers Extended Medium

18.      Bodoni Black

  

62.      Gill Sans Bold

  

106.    Univers Extended Medium Italic

19.      Bodoni Bold

  

63.      Gill Sans Condensed Bold

  

107.    Univers Medium Italic

20.      Bodoni Bold Italic

  

64.      Gill Sans Bold Italic

  

108.    Univers Light Condensed

21.      Bodoni Italic

  

65.      Gill Sans Condensed

  

109.    Univers Light Condensed Italic

22.      Book Antiqua

  

66.      Gill Sans Extra Bold

  

110.    Wingdings 1

23.      Book Antiqua Bold

  

67.      Gill Sans Italic

  

24.      Book Antiqua Bold Italic

  

68.      Gill Sans Light

  

25.      Book Antiqua Italic

  

69.      Gill Sans Light Italic

  

26.      Bookman Old Style

  

70.      Goudy Old Style

  

27.      Bookman Old Style Bold Italic

  

71.      Goudy Old Style Bold

  

28.      Bookman Old Style Italic

  

72.      Goudy Old Style Extra Hold

  

29.      Bookman Old Style Bold

  

73.      Goudy Old Style Bold Italic

  

30.      Century Gothic

  

74.      Goudy Old Style Italic

  

31.      Century Gothic Bold

  

75.      Granite

  

32.      Century Gothic Bold Italic

  

76.      Granite Bold

  

33.      Century Gothic Italic

  

77.      Granite Bold Italic

  

34.      Century Schoolbook

  

78.      Granite Italic

  

35.      Century Schoolbook Bold

  

79.      Letter Gothic

  

36.      Century Schoolbook Bold Italic

  

80.      Letter Gothic Bold

  

37.      Century Schoolbook Italic

  

81.      Letter Gothic Bold Italic

  

38.      CG Omega

  

82.      Letter Gothic Italic

  

39.      CG Omega Bold

  

83.      Marigold

  

40.      CG Omega Bold Italic

  

84.      Microstyle

  

41.      CG Omega Italic

  

85.      Microstyle Bold

  

42.      CG Times

  

86.      Microstyle Extended

  

43.      CG Times Bold

  

87.      Microstyle Extended Bold

  

44.      CG Times Bold Italic

  

88.      Monotype Corsiva

  

1 These Fonts are shipped in TrueType format with Windows 3.1, Windows 95 and will not be included as a Micro Type font.

 

24


A10mar901

ADDENDUM NO. 10

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 as amended from time to time (“Agreement”) dated August 15, 1991, by and between Agfa Monotype Corporation (“Agfa” or “AMT”) and Lexmark International Inc. (“Lexmark”).

WHEREAS Agfa has developed certain technology described in Section 1 of the Agreement, and for the purposes of this Addendum is defined and referred to as the “Licensed Software”; and

WHEREAS Lexmark desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Intellifont and Type Software Agreement dated August 15, 1991 shall be amended as follows:

1. Definitions . Following definitions are hereby added to Section 1 of the Agreement.

Replace the following definitions in their entirety in Section 1 of the amended Agreement :

“(i) Data Software - all Agfa software identified and set forth in Schedule 3 of the Agreement, all related documentation and other software as may be added to Schedule 3 from time to time by written agreement of the parties and all Derivative Works thereof. This includes Intellifont. Type Software, Type Director, Intellifont for Windows 3.0, Future Screen Font Solutions and Agfa Balanced Screening.”

“(ah) Type Software –

i) The proprietary Agfa typeface software identified by typeface number in Schedule 2 and described in the document “Intellifont Scalable Typeface Description”, all Modifications and Enhancements thereto, all related Code and documentation and other such Typeface software as may be added to Schedule 2 from time to time by written agreement of the parties;

ii) The typefaces listed in Exhibits B, C, D, E, F, and G in Addendum No. 6, dated 6/25/96 here to which are licensed by Customer under this Addendum, and any amendments hereto, and all related documentation; and

iii) The Asian typefaces listed in Exhibits C in Addendum No. 7, dated 12/19/97, here to which are licensed by Customer under this Addendum, and any amendments hereto, and all related documentation.”

 

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“(as) EuroFont Characters—The characters used to denote Euro Currency which has been created in the required typeface sensitive designs for each font and Typeface.”

“(at) Agfa Font Manager(s)—Agfa’s proprietary font management program, which includes: UFST Font Installer/converter Software (Object Code, Source Code and associated documentation), 96 typefaces in MicroType and TrueType format, and MS Windows typeface install program (Object Code, Source Code and associated documentation).”

Add the following new definition in Section 1 of the amended Agreement :

“(au) Agfa Balanced Screening (ABS)—the proprietary Agfa Balanced Screening Software (ABS), as defined in Schedule 3, provides a method to convert continuous tone images, both monochrome and color, into periodical and angled halftones.”

2. Section 2 , License Grant . The following item shall be inserted into Section 2 of the amended Agreement:

“(o) Agfa Balanced Screening Software—For the /*Confidential Treatment Requested*/, Lexmark will have the right to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers. The Agfa Balanced screens generated by the software listed on Schedule 3 for a royalty as set forth in Schedule 2, Section 10.”

3. Indemnification . Replace Section 12.1. Indemnification by Agfa in its entirety in the amended Agreement with the following:

“Agfa shall, at its own expense and in a timely fashion, defend, protect, and indemnify Customer and its Subsidiaries, Customer Distributors and Customer OEM’s against any and all liabilities, damages, costs and expenses, including reasonable attorneys’ fees, which are awarded by a court against Customer by reason of any action, suit, proceeding or claim instituted against Customer by any third party for infringement of any patent, copyright or trademark or for the misappropriation of trade secrets relating to the Data Software or trade names or trademarks licensed hereunder, provided that (1) Customer promptly notifies Agfa of any such action, suit, proceeding or claim and cooperates fully with Agfa in the defense thereof, (2) Agfa has control of the defense and any settlement negotiations, and (3) Customer has the right to participate actively in any such defense and settlement negotiations at its cost.

If Agfa receives notice of an alleged infringement or if Customer’s use of the Data Software shall be prevented by permanent injunction, Agfa may at its sole option and expense, (a) procure for Customer the right to continue use of the infringing item as provided hereunder, (b) modify the infringing item so that it is no longer infringing, or (c) replace the infringing item with computer software or hardware of equal or superior functioning capability; provided, however, that if Agfa is unable to accomplish one of (a), (b), or (c) after using its best efforts, all of Agfa’s obligations, representations and warranties under this Agreement shall remain in full effect and Customer shall have all remedies available at law and equity for breach thereof.

 

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Agfa shall have no liability to Customer, its Subsidiaries, Customer Distributors, or Customer OEM’s under this Section to the extend any infringement or claim based upon (a) any programs not (i) supplied by Agfa or (ii) Dervative Works of Data Software supplied by Agfa, (b) the use of Data Software in a manner not specified in this Agreement if such claim or infringement would have been avoided except for such use, (c) the combination of the Data Software with any program, data, device, or component not supplied by Agfa unless (i) Agfa’s delivery to Customer of such Data Software amount to contributory infringement or (ii) such infringement would not have been avoided by the use of some other program, data, device or component.”

4. Schedule 2, Development Fees/Type Software . Shall be modified to add the following at the end of Subpargraph 10 of Schedule 2:

“(xii) Lexmark shall pay Agfa /*Confidential Treatment Requested*/ after the execution of Addendum #10. This will include an NRE of /*Confidential Treatment Requested*/ and the initial screen generation and annual screen support fee of /*Confidential Treatment Requested*/. These fees will apply directly to the unit royalty pool, only for the /*Confidential Treatment Requested*/ and only for the color royalty. Lexmark may elect, at its discretion, to annually renew the /*Confidential Treatment Requested*/ screen support at a cost of /*Confidential Treatment Requested*/. Such annual renewals will not be applied to the unit royalty pool for the /*Confidential Treatment Requested*/. However, Lexmark’s election to not renew the /*Confidential Treatment Requested*/ screen support will not affect any of the rights granted to Lexmark by AMT in item (o) of Schedule 2. License Grant . All other royalty bearing technology incorporated in the /*Confidential Treatment Requested*/ will be due at the current agreed rate.”

5. Schedule 2, Unit Royalty . Section 10, “Royalty Unit—Resident Type Software”, of Schedule 2 of the Agreement shall be modified as follows:

Change “Royalty Unit-Resident Type Software” by adding “Royalty Unit-Resident Type Software and Agfa Balanced Screening Software

Add Item:

(ar) /*Confidential Treatment Requested*/ Inkjet Printer: For each Royalty Unit comprised of Agfa Balanced screens resident within the /*Confidential Treatment Requested*/ sublicensed to an End User, Lexmark Distributor, Lexmark Developer, or Lexmark OEM, there will be a Royalty of /*Confidential Treatment Requested*/.

Add to Item (z) at the end of paragraph 1:

“Notwithstanding any other provision of this Agreement, solely for the /*Confidential Treatment Requested*/ printer, marketed as a PCL printer only: For each Royalty Unit comprised of UFST 3X or 4X (MicroType 1 or 2, Intellifont. PostScript and TrueType) and the forty-five (45) typefaces (See Addendum #9, Exhibit C) with the Thirty-nine (39) PostScript Level 2 typefaces (See Addendum #9, Exhibit D) ROM resident within the /*Confidential Treatment Requested*/ sublicensed to an End User, Customer Distributor, Customer Developer, or Customer OEM, there will be a Royalty of /*Confidential Treatment Requested*/.”

 

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6. Schedule 10, Guidelines for Reprentation of Agfa Corpration Intellifont-Base Products - Replace Schedule 10 in its entirety in the amended Agreement with the following:

“Schedule 10

Guidelines for the Representation of Agfa Monotype Corporation, its products and technologies

In order to ensure proper adherence to these guidelines, Agfa Monotype Corporation (“Agfa”) reserves the right to review and approve upon specific, timely request of Agfa but shall not unreasonably delay or withhold approval thereof - prior to production - all product packaging, advertising, marketing collateral, promotional material or press releases when Agfa technology is mentioned for products that utilize Universal Font Scaling Technology™, (UFST™), UFSTi™, Intellifont ® technology, Intellifont ® Scalable Typefaces, Agfa Typefaces, MicroType ® technology, MicroType ® Typefaces, The Agfa Font Manager™, MicroType Express™ technology, Agfa Balanced Screening™, CristalRaster™, ColorTune™, Agfa Asian Compression for TrueType™ technology, EuroFont, and Type Director ® .

Agfa Logo

In the event that the Customer elects to use the company logo (consisting of the name Agfa Monotype Corporation, followed by the Agfa Monotype Corporation logo) on all product packaging, advertising, marketing collateral and promotional materials for products that use Universal Font Scaling Technology (UFST), UFSTi, products that utilize Intellifont technology, Intellifont Scalable Typefaces and Agfa Typefaces, MicroType Technology, MicroType Typefaces, the Agfa Font Manager, MicroType Express technology, Agfa Balanced Screening, CristalRaster, ColorTune, Agfa Asian Compression for TrueType technology it will comply with the provisions of this schedule. Agfa will provide stats of the Agfa Monotype Corporation logo in various sizes

Agfa Trademarks

Appropriate trademark citations will be used in product packaging, advertising, marketing collateral and promotional materials for products that incorporate Universal Font Scaling Technology™(UFST™). UFSTi™, Intellifont ® technology, Intellifont ® Scalable Typefaces, Type 1, and Agfa Typefaces. MicroTypc ® Technology, MicroType ® Typefaces, Agfa Font Manager™, MicroType ® Express, Agfa Balanced Screening™, CristalRaster™, ColorTune™, Agfa Asian Compression for TrueType™, EuroFont, Candid, Taffy and Type Director ® whenever these Agfa technologies are acknowledged or trademarks are used. (See Trademark citations below).

Trademark citations are not required in press releases.

 

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Product and Company Names

The correct company name is Agfa Monotype Corporation. Universal Font Scaling Technology™ can be referred to as UFST™. Universal Font Scaling Technology™ for interactive television, internet/WWW and wireless technology applications can be referred to as UFSTi.

MicroType Express is the lossless compression technology for application developers of electronic documentation creation software. The tool to make bitmap and scalable printer fonts and screen fonts from typeface designs is Type Director. Agfa Font Manager™, is the comprehensive Windows font management utility. The font compression and two-byte rendering for embedded ROM applications is Agfa Asian Compression for TrueType (ACT).

Press Releases

News releases mentioning UFST and MicroType based products may state that the product utilizes UFST and MicroType Font Compression Technology from Agfa. Releases for Intellifont-based products may state that the product utilizes Intellifont Scaling technology from Agfa. Releases for UFST and UFSTi based products may state that the product utilizes UFST, Universal Font Scaling technology from Agfa. Releases for any products that include Agfa Typefaces may acknowledge that the fonts are licensed from Agfa. Typeface names must be correctly represented. Releases for any products that include the Agfa Font Manager may acknowledge that the technology has been licensed from Agfa. Releases for MicroType Express products may acknowledge that the technology is from Agfa. Releases for any products that contain Agfa Balanced Screening or CristalRaster may acknowledge that the technology has been licensed from Agfa. Releases for any ColorTune products may state that the product utilizes ColorTune color management technology from Agfa. Releases that include Agfa Asian Compression for TrueType fonts may state that the fonts were licensed from Agfa. Releases that include the EuroFont may state that the font was licensed from Agfa.

E.g.:

UFSTi may be referred to as a UFST based product for the Interactive television, the Internet and wireless communications.

MicroType Express maybe referred to as the lossless font compression technology.

Agfa Balanced Screening may be referred to as a technology that produces clear, conventional dot patterns in an open, PostScript™ desktop compatible market.

CristalRaster may be referred to as a stochastic screening technology that produces photo realistic image quality.

ColorTune may be referred to as color management software.

Agfa Asian Compression for TrueType may be referred to as the font compression and two-byte rendering for embedded ROM applications.

 

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EuroFont may be referred to as a symbol font with the 85 typeface sensitive versions of the European currency symbol. Agfa delivers Candid and Taffy, which are metrically compatible to Adobe’s Carta™ and Tekton™. Agfa delivers Gold Sans MM and Gold Serif MM which are metrically compatible to the multiple master fonts Adobe Sans™ and Adobe Serif™.

Marketing Collateral and Advertising

Marketing collateral and advertising for any products incorporating Universal Font Scaling Technology (UFST), UFST, Intellifont technology, Intellifont Scalable Typefaces, Agfa Typefaces, MicroType technology, MicroType Typefaces, the Agfa Font Manager, MicroType Express technology, Agfa Balanced Screening, CristalRaster, ColorTune, Agfa Asian Compression for TrueType technology and Type Director may acknowledge this when Agfa Technology is mentioned. The first and most prominent use of an Agfa trademark must be followed by the designation ® after each registered trademark and the designation ™ after each unregistered trademark provided, however that a prominent listing of trademarks near the front of any publication shall be a sufficient designation of any trademark listing. Corresponding citations must be provided (see below).

Product Packaging

All products utilizing Universal Font Scaling Technology, (UFST), UFSTi, Intellifont technology, Intellifont Scalable Typefaces, Agfa Typefaces, MicroType technology, MicroType Typefaces, The Agfa Font Manager, MicroType Express technology, Agfa Balanced Screening, CristalRaster, ColorTune, Agfa Asian Compression for TrueType technology, EuroFont, Candid, Taffy, Gold Sans MM, Gold Serif MM, Type Director output may be so identified on the exterior of product packaging, diskettes, and documentation. For the first and most prominent use of an Agfa trademark, it must be followed by the designation ® after each registered trademark and the designation ™ after each unregistered trademark. Corresponding citations must be provided (see below).

Trademark Citations

Scalable type outlines are licensed from Agfa Monotype Corporation. Agfa and the Agfa Rhombus, are ( ® ) registered trademarks of Agfa-Gevaert AG, Agfa Balanced Screening is a (™) trademark of Agfa-Gevaert AG. CristalRaster is a (™) trademark of Agfa-Gevaert NV, Belgium. CristalRaster is a ( ® ) registered trademark in the U.S.

Intellifont, Type Director, UFST and MicroType are ( ® ) registered trademarks, and Universal Font Scaling Technology, UFSTi, ColorTune, Agfa Font Manager, Agfa Asian Compression for TrueType, Shannon, Candid. Taffy, Gold Sans MM, Gold Serif MM, CG Triumvirate are (™) trademarks of Agfa Monotype Corporation. EuroFont is a trademark of Agfa Monotype Corporation registered in the U.S. Compugraphic and CG are ( ® ) registered trademarks of Agfa. CG Bodoni, CG Century Schoolbook, CG Goudy Old Style, CG Melliza, Microstyle, CG Omega and CG Palacio are products of Agfa Monotype Corporation.

CG Times, based on Times New Roman under license from The Monotype Corporation, is a product of Agfa Monotype Corporation. Agfa Monotype Corporation has approved the use of the prefix “Intl-” to be used with CG Times, Courier and Univers to denote additional characters required for the European market as shown in Exhibit A of this Addendum.

 

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TrueType, Apple, Chancery, Chicago, Geneva, Monaco and New York are (™) trademarks of Apple Computer, Inc.

The Type 1 processor resident in UFST and UFSTi and is under licensed from Pipeline Associates, Inc. now wholly owned by Electronics For Imaging.

Clarendon is a trademark (™) and Helvetica, Optima, Palatino, Stempel Garamond, Times and Univers are ( ® ) registered trademarks of Heidelberger Druckmaschinen AG.Letraset is a ( ® ) registered trademark, and Aachen, Revue and University Roman are (™) trademarks of Esselte Corporation.

Futura is a ( ® ) registered trademark of Fundicion Tipografica Neufville, S.A.

Marigold and Oxford are trademarks of Arthur Baker.

ITC Avant Garde Gothic, ITC Benguiat, ITC Bookman, ITC Century, ITC Cheltenham, ITC Clearface, ITC Galliard, ITC Korinna, ITC Lubalin Graph, ITC Mona Lisa, ITC Souvenir, ITC Tiepolo, ITC Zapf Chancery, and ITC Zapf Dingbats are ( ® ) registered trademarks of International Typeface Corporation.

Albertus, Arial, GillSans, Joanna and Times New Roman are ( ® ) registered trademarks and Monotype Baskerville is a trademark of The Monotype Corporation.

Antique Olive is a registered trademark of Monsieur Marcel OLIVE.

Eurostile is a trademark of Nebiolo.

Hoefler is a trademark of Jonathan Hoefler Type Foundry.

HGPGothicB, HGPMinchoL, HGGothicB and HGMinchoL are ( ® ) registered trademarks of the Ricoh Company, LTD.

MingMT, MHei, Mkai, MSung and CFangSong are ( ® ) registered trademarks of Monotype Typography Ltd.

The previous registered trademarks should be noted when the following Monotype Typography, Ltd. fonts are referenced: CFangSong GB-Light [MT_(6977)(4F53)_GB2312], MheiMedium, MkaiMedium [MT_(6977)(4F53)_GB2312], MsungLight, MSungS-Medium-U, MHeiS-Bold-U [MT_(9ED1)(4FS3)], MSungS-Light-U [MT_(5B8B)(4F53)], MHeiS-Medium-U, MingMT-Light (MT_(7D30)(660E)(9AD4)], MingMT-LightP [MT_(65B0)(7D30)(660E)(9AD4)], MHei-Medium, Mkai-Medium[MT_(6A19)(6977)(9AD4)], Msung-Light, MSungUGL-Light, MSungT-Light-U, MSungT-Medium-U, MHeiT-Medium-U and MHeiT-Bold-U.

 

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HYSinMyeongJo-Medium, HYGoThic-Medium, HYRGoThic-Medium, HYGungSo-Bold, HYShortSamul-Medium and HYGraPhic-Medium are ( ® ) registered trademarks of the HanYang Systems, Inc.

Wingdings is a ( ® ) registered trademark of Microsoft Corporation. Windows is a ( ® ) registered trademark of Microsoft Corporation.

PostScript and Frutiger are (™) trademarks of Adobe Systems, Inc.

Macintosh and TrueType are ( ® ) registered trademarks of Apple Computer, Inc.

PCL, FontSmart, HP and LaserJet are ( ® ) registered trademarks of Hewlett-Packard Company. All other product names are the property of the respective owners. Updated 03/09/01.”

7. Except as provided herein, all the terms and conditions of the Agreement as previously amended shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of June 22, 2001.

 

AGFA MONOTYPE CORPORATION   LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

 

/s/ Glenn A. Hudson

Signature   Signature

Senior Vice President

 

VP & GM, PSSD

Title   Title

Douglas J. Shaw

 

Glenn A. Hudson

Print Name   Print Name

 

8


SCHEDULE 2

License and Royalty Fees

 

I. License Fees

 

1. Source Code Fee - Licensed Software

Lexmark agrees to pay AMT /*Confidential Treatment Requested*/ for the Licensed Software as follows:

 

Agfa Balanced Screening   /*Confidential Treatment Requested*/
Initial Screen Generation/Annual Screen Support  

/*Confidential Treatment Requested*/

Addendum #10 Total   /*Confidential Treatment Requested*/

These fees will be applied to a Pre-Paid Royalty pool for the /*Confidential Treatment Requested*/ printer only. Additionally, this Royalty Pool will apply only to the Agfa Balanced Screening Software, not the font royalty. When the total shipment of /*Confidential Treatment Requested*/ exceeds /*Confidential Treatment Requested*/ units, the royalty of /*Confidential Treatment Requested*/ per unit will be reported and paid according to the existing agreement.

 

II. Royalties

 

1. Pre-Paid Royalty Fee

A non-refundable advance against Royalties totaling /*Confidential Treatment Requested*/ is due for the Licensed Software, which shall be used to offset Agfa Balanced Screening Software Royalties owed by Lexmark specifically for the /*Confidential Treatment Requested*/ Printer.

 

2. Royalty Unit—Licensed Software

For each Royalty Unit, comprised of Agfa Balanced Screening Software resident within a Lexmark product, sublicensed to an End User, Lexmark Distributor, or Lexmark OEM there will be a /*Confidential Treatment Requested*/ per unit royalty.

Summary of License and Royalty Fees

The following lists the License Fees required under this Agreement:

 

Agfa Balanced Screening Software Source Code    /*Confidential Treatment Requested*/
Initial Screen Generation/Annual   

Screen Support Fee

  

/*Confidential Treatment Requested*/

Addendum #10 Total

   /*Confidential Treatment Requested*/

These fees will be applied to a royalty pool for the /*Confidential Treatment Requested*/ printer only. Additionally, this royalty pool will apply only to the Agfa Balanced Screening Software, not the font royalty. When the total shipment of /*Confidential Treatment Requested*/ printers exceeds /*Confidential Treatment Requested*/ units, the royalty of /*Confidential Treatment Requested*/ per unit will be reported and paid according to the existing agreement.

 

9


SCHEDULE 3

Licensed Software/Documentation

1. The Agfa Balanced Screening software

2. The Agfa Balanced Screening will be delivered in a format to support the /*Confidential Treatment Requested*/ Printer.

3. The documentation will include specifically: the screens and the software to convert continuous tone images into halftones.

 

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Add 11 121802

ADDENDUM NO. 11

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont and Type Software Agreement, Agreement No. 1291-D93 as amended from time to time (“Agreement”) dated August 15, 1991, by and between Agfa Monotype Corporation (“Agfa” or “AMT”) and Lexmark International Inc. (“Lexmark”).

WHEREAS Agfa has developed certain technology described in Section 1 of the Agreement, and for the purposes of this Addendum is defined and referred to as the “Licensed Software”; and

WHEREAS Lexmark desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Intellifont and Type Software Agreement dated August 15, 1991 shall be amended as follows:

 

1. Definitions: following definitions are hereby added to Section 1 of the Agreement.

(av) Windows font block will be the fonts listed in Schedule 2, Exhibit A of this Addendum. (aw) Lite font block will be the fonts listed in Schedule 2, Exhibit B of this Addendum (ax) Full font block will be the fonts listed in Schedule 2, Exhibit C of this Addendum

(ay) The reference for Royalty groupings will be the Lexmark WEB Price. This will be established based on Lexmark’s suggested retail price for each royalty bearing product, as listed on the Lexmark Web site as of January 31 st of each calendar year. The WEB Price for new Lexmark Products introduced after January 31 st of each calendar year will be established as the first price listed on the Lexmark Web site for that product’s introduction for the remainder of that calendar year.

(az) Customer Multifunction or All-In-One products are products that provide scanning, copying and/or faxing capability along with the normal printer capabilities.

Other than as noted in “Pricing for existing devices” listed on Schedule 2, the Royalty Section will be replaced with the following pricing grid to establish the Royalty due for printers:

 

WEB Price   Windows   Lite   Full
Under $500  

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

$500-$999  

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

$1,000 - $1,499  

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

 

1


WEB Price

 

Windows

 

Lite

 

Full

$1,500 and over   /*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/
Color Printers   /*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/

 

2. Except as provided herein, all the terms and conditions of the Agreement as previously amended shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of January 1, 2002.

 

AGFA MONOTYPE CORPORATION   LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

 

/s/ Glenn A. Hudson

Signature   Signature

Senior Vice President

 

VP & GM, PS & SD

Title   Title

Douglas J. Shaw

 

Glenn A. Hudson

Print Name   Print Name

 

2


SCHEDULE 2

II. Royalties

 

WEB Price

 

Windows

 

Lite

 

Full

/*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/  

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

/*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/  

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

/*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/  

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

/*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/  

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

/*Confidential Treatment Requested*/   /*Confidential Treatment Requested*/  

/*Confidential

Treatment

Requested*/

 

/*Confidential

Treatment

Requested*/

Note: Customer Multifunction or All-In-One products will have the same royalty as the network printing product upon which it is based.

Pricing for existing Products

 

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

 

3


/*Confidential Treatment

Requested*/

 

/*Confidential Treatment Requested*/(Color and fonts per

Addendum #10)

  

/*Confidential Treatment

Requested*/

 

/*Confidential Treatment Requested*/(Color and fonts per

Addendum #10)

  

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

/*Confidential Treatment

Requested*/

  /*Confidential Treatment Requested*/   

 

4


Schedule 2, Exhibit A

Windows

 

Item #

 

Outline Name

 

Format

1   Arial   MicroType I, II
2   Arial Bold   MicroType I, II
3   Arial Bold Italic   MicroType I, II
4   Arial Italic   MicroType I, II
5   Times New Roman   MicroType I, II
6   Times New Roman Bold   MicroType I, II
7   Times New Roman Bold Italic   MicroType I, II
8   Times New Roman Italic   MicroType I, II
9   Courier   MicroType I, II
10   Courier Italic   MicroType I, II
11   Courier Bold   MicroType I, II
12   Courier Bold Italic   MicroType I, II

 

5


Schedule 2, Exhibit B

Lite

89 Fonts

 

Item #

 

Outline Name

 

Format

1   AlbertusMT   MicroType I, II
2   AlbertusMT-Italic   MicroType I, II
3   AlbertusMT-Light   MicroType I, II
4   AntiqueOlive-Bold   MicroType I, II
5   AntiqueOlive-Compact   MicroType I, II
6   AntiqueOlive-Italic   MicroType I, II
7   AntiqueOlive-Roman   MicroType I, II
8   Arial-BoldItalicMT   MicroType I, II
9   Arial-BoldMT   MicroType I, II
10   Arial-ItalicMT   MicroType I, II
11   ArialMT   MicroType I, II
12   AvantGarde-Book   MicroType I, II
13   AvantGarde-BookOblique   MicroType I, II
14   AvantGarde-Demi   MicroType I, II
15   AvantGarde-DemiOblique   MicroType I, II
16   Bookman-Demi   MicroType I, II
17   Bookman-DemiItalic   MicroType I, II
18   Bookman-Light   MicroType I, II
19   Bookman-LightItalic   MicroType I, II
20   Coronet-Regular   MicroType I, II
21   Courier   MicroType I, II
22   Courier-Bold   MicroType I, II
23   Courier-BoldOblique   MicroType I, II
24   Courier-Oblique   MicroType I, II
25   Garamond-Antiqua   MicroType I, II
26   Garamond-Halbfett   MicroType I, II
27   Garamond-Kursiv   MicroType I, II
28   Garamond-KursivHalbfett   MicroType I, II
29   Helvetica-Light   MicroType I, II
30   Helvetica-LightOblique   MicroType I, II
31   Helvetica-Black   MicroType I, II
32   Helvetica-BlackOblique   MicroType I, II
33   Helvetica   MicroType I, II
34   Helvetica-Oblique   MicroType I, II
35   Helvetica-Bold   MicroType I, II
36   Helvetica-BoldOblique   MicroType I, II
37   Helvetica-Narrow   MicroType I, II
38   Helvetica-NarrowOblique   MicroType I, II
39   Helvetica-Narrow-Bold   MicroType I, II

 

6


40   Helvetica-Narrow BoldOblique   MicroType I, II
41   Intl-CG-Times   MicroType I, II
42   Intl-CG-Times-Italic   MicroType I, II
43   Intl-CG-Times-Bold   MicroType I, II
44   Intl-CG-Times-BoldItalic   MicroType I, II
45   Intl-Univers-Medium   MicroType I, II
46   Intl-Univers-MediumItalic   MicroType I, II
47   Intl-Univers-Bold   MicroType I, II
48   Intl-Univers-BoldItalic   MicroType I, II
49   Intl-Courier   MicroType I, II
50   Intl-Courier-Bold   MicroType I, II
51   Intl-Courier-Oblique   MicroType I, II
52   Intl-Courier-BoldOblique   MicroType I, II
53   LetterGothic   MicroType I, II
54   LetterGothic-Bold   MicroType I, II
55   LetterGothic-BoldSlanted   MicroType I, II
56   LetterGothic-Slanted   MicroType I, II
57   Marigold   MicroType I, II
58   NewCenturySchlbk-Bold   MicroType I, II
59   NewCenturySchlbk-BoldItalic   MicroType I, II
60   NewCenturySchlbk-Italic   MicroType I, II
61   NewCenturySchlbk-Roman   MicroType I, II
62   Optima   MicroType I, II
63   Optima-Bold   MicroType I, II
64   Optima-BoldItalic   MicroType I, II
65   Optima-Italic   MicroType I, II
66   Palatino-Bold   MicroType I, II
67   Palatino-BoldItalic   MicroType I, II

68

  Palatino-Italic   MicroType I, II

69

  Palatino-Roman   MicroType I, II

70

  Symbol   MicroType I, II

71

  Times-Bold   MicroType I, II

72

  Times-BoldItalic   MicroType I, II

73

  Times-Italic   MicroType I, II

74

  Times-Roman   MicroType I, II

75

  TimesNewRomanPS-BoldItalicMT   MicroType I, II

76

  TimesNewRomanPS-BoldMT   MicroType I, II

77

  TimesNewRomanPS-ItalicMT   MicroType I, II

78

  TimesNewRomanPSMT   MicroType I, II

79

  Univers   MicroType I, II

80

  Univers-Oblique   MicroType I, II

81

  Univers-Bold   MicroType I, II

82

  Univers-BoldOblique   MicroType I, II

83

  Univers-Condensed   MicroType I, II

84

  Univers-CondensedBold   MicroType I, II

 

7


85   Univers-CondensedBoldOblique   MicroType I, II
86   Univers-CondensedOblique   MicroType I, II
87   Wingdings-Regular   MicroType I, II
88   ZapfChancery-MediumItalic   MicroType I, II
89   ZapfDingbats   MicroType I, II

 

8


Schedule 2, Exhibit C

Full

156 Fonts for PS3

 

Item #

 

Outline Name

 

Format

1   AlbertusMT   MicroType I, II
2   AlbertusMT-Italic   MicroType I, II
3   AlbertusMT-Light   MicroType I, II
4   AntiqueOlive-Bold   MicroType I, II
5   AntiqueOlive-Compact   MicroType I, II
6   AntiqueOlive-Italic   MicroType I, II
7   AntiqueOlive-Roman   MicroType I, II
8   Apple-Chancery   MicroType I, II
9   Arial-BoldItalicMT   MicroType I, II
10   Arial-BoldMT   MicroType I, II
11   Arial-ItalicMT   MicroType I, II
12   ArialMT   MicroType I, II
13   AvantGarde-Book   MicroType I, II
14   AvantGarde-BookOblique   MicroType I, II
15   AvantGarde-Demi   MicroType I, II
16   AvantGarde-DemiOblique   MicroType I, II
17   Bodoni   MicroType I, II
18   Bodoni-Bold   MicroType I, II
19   Bodoni-BoldItalic   MicroType I, II
20   Bodoni-Italic   MicroType I, II
21   Bodoni-Poster   MicroType I, II
22   Bodoni-PosterCompressed   MicroType I, II
23   Bookman-Demi   MicroType I, II
24   Bookman-DemiItalic   MicroType I, II
25   Bookman-Light   MicroType I, II
26   Bookman-LightItalic   MicroType I, II
27   Candid   MicroType I, II
28   Chicago   MicroType I, II
29   Clarendon   MicroType I, II
30   Clarendon-Bold   MicroType I, II
31   Clarendon-Light   MicroType I, II
32   CooperBlack   MicroType I, II

33

  CooperBlack-Italic   MicroType I, II

34

  CooperBlack-ThirtyThreeBC   MicroType I, II

35

  CooperBlack-ThirtyTwoBC   MicroType I, II

36

  Coronet-Regular   MicroType I, II

37

  Courier   MicroType I, II

38

  Courier-Bold   MicroType I, II

39

  Courier-BoldOblique   MicroType I, II

 

9


40   Courier-Oblique   MicroType I, II
41   Eurostile   MicroType I, II
42   Eurostile-Bold   MicroType I, II
43   Eurostile-BoldExtendedTwo   MicroType I, II
44   Eurostile-ExtendedTwo   MicroType I, II
45   Garamond-Antiqua   MicroType I, II
46   Garamond-Halbfett   MicroType I, II
47   Garamond-Kursiv   MicroType I, II
48   Garamond-KursivHalbfett   MicroType I, II
49   Geneva   MicroType I, II
50   GillSans   MicroType I, II
51   GillSans-Bold   MicroType I, II
52   GillSans-BoldCondensed   MicroType I, II
53   GillSans-BoldItalic   MicroType I, II
54   GillSans-Condensed   MicroType I, II
55   GillSans-ExtraBold   MicroType I, II
56   GillSans-Italic   MicroType I, II
57   GillSans-Light   MicroType I, II
58   GillSans-LightItalic   MicroType I, II
59   Goudy   MicroType I, II
60   Goudy-Bold   MicroType I, II
61   Goudy-BoldItalic   MicroType I, II
62   Goudy-ExtraBold   MicroType I, II
63   Goudy-Italic   MicroType I, II
64   Helvetica   MicroType I, II
65   Helvetica-Black   MicroType I, II
66   Helvetica-BlackOblique   MicroType I, II
67   Helvetica-Bold   MicroType I, II
68   Helvetica-BoldOblque   MicroType I, II
69   Helvetica-Condensed   MicroType I, II
70   Helvetica-Condensed-Bold   MicroType I, II
71   Helvetica-Condensed-BoldObl   MicroType I, II
72   Helvetica-Condensed-Oblique   MicroType I, II
73   Helvetica-Light   MicroType I, II
74   Helvetica-LightOblique   MicroType I, II
75   Helvetica-Narrow   MicroType I, II
76   Helvetica-Narrow-Bold   MicroType I, II
77   Helvetica-Narrow-BoldOblique   MicroType I, II
78   Helvetica-Narrow-Oblique   MicroType I, II
79   Helvetica-Oblique   MicroType I, II
80   Hoefler Text-Black   MicroType I, II
81   Hoefler Text-BlackItalic   MicroType I, II
82   Hoefler Text-Italic   MicroType I, II
83   Hoefler Text-Ornaments   MicroType I, II
84   Hoefler Text-Regular   MicroType I, II

 

10


85   Intl-CG-Times   MicroType I, II
86   Intl-CG-Times-Italic   MicroType I, II
87   Intl-CG-Times-Bold   MicroType I, II
88   Intl-CG-Times-BoldItalic   MicroType I, II
89   Intl-Courier   MicroType I, II
90   Intl-Courier-Bold   MicroType I, II
91   Intl-Courier-Oblique   MicroType I, II
92   Intl-Courier-BoldOblique   MicroType I, II
93   Intl-Univers-Medium   MicroType I, II
94   Intl-Univers-MediumItalic   MicroType I, II
95   Intl-Univers-Bold   MicroType I, II
96   Intl-Univers-BoldItalic   MicroType I, II
97   JoannaMT   MicroType I, II
98   JoannaMT-Bold   MicroType I, II
99   JoannaMT-BoldItalic   MicroType I, II
100   JoannaMT-Italic   MicroType I, II
101   LetterGothic   MicroType I, II
102   LetterGothic-Bold   MicroType I, II
103   LetterGothic-BoldSlanted   MicroType I, II
104   LetterGothic-Slanted   MicroType I, II
105   LubalinGraph-Book   MicroType I, II
106   LubalinGraph-BookOblique   MicroType I, II
107   LubalinGraph-Demi   MicroType I, II
108   LubalinGraph-DemiOblique   MicroType I, II
109   Marigold   MicroType I, II
110   MonaLisa-Recut   MicroType I, II
111   Monaco   MicroType I, II
112   NewCenturySchlbk-Bold   MicroType I, II
113   NewCenturySchlbk-BoldItalic   MicroType I, II
114   NewCenturySchlbk-Italic   MicroType I, II
115   NewCenturySchlbk-Roman   MicroType I, II
116   New York   MicroType I, II
117   Optima   MicroType I, II
118   Optima-Bold   MicroType I, II
119   Optima-BoldItalic   MicroType I, II
120   Optima-Italic   MicroType I, II
121   Oxford   MicroType I, II
122   Palatino-Bold   MicroType I, II
123   Palatino-BoldItalic   MicroType I, II
124   Palatino-Italic   MicroType I, II
125   Palatino-Roman   MicroType I, II
126   StempelGaramond-Bold   MicroType I, II
127   StempelGaramond-BoldItalic   MicroType I, II
128   StempelGaramond-Italic   MicroType I, II
129   StempelGaramond-Roman   MicroType I, II

 

11


130   Symbol   MicroType I, II
131   Taffy   MicroType I, II
132   Times-Bold   MicroType I, II
133   Times-BoldItalic   MicroType I, II
134   Times-Italic   MicroType I, II
135   Times-Roman   MicroType I, II
136   TimesNewRomanPS-BoldItalicMT   MicroType I, II
137   TimesNewRomanPS-BoldMT   MicroType I, II
138   TimesNewRomanPS-ItalicMT   MicroType I, II
139   TimesNewRomanPSMT   MicroType I, II
140   Univers   MicroType I, II
141   Univers-Bold   MicroType I, II
142   Univers-BoldExt   MicroType I, II
143   Univers-BoldExtObl   MicroType I, II
144   Univers-BoldOblique   MicroType I, II
145   Univers-Condensed   MicroType I, II
146   Univers-CondensedBold   MicroType I, II
147   Univers-CondensedBoldOblique   MicroType I, II
148   Univers-CondensedOblique   MicroType I, II
149   Univers-Extended   MicroType I, II
150   Univers-ExtendedObl   MicroType I, II
151   Univers-Light   MicroType I, II
152   Univers-LightOblique   MicroType I, II
153   Univers-Oblique   MicroType I, II
154   Wingdings-Regular   MicroType I, II
155   ZapfChancery-MediumItalic   MicroType I, II
156   ZapfDingbats   MicroType I, II

 

12


Add 12 071603

ADDENDUM NO. 12

To The Intellifont Software and Type Software Agreement

Agreement No. 1291 -D93

This is an Addendum to that certain Intellifont Software and Type Software Agreement, Agreement No. 1291-D93, as amended from time to time, (“Agreement”) dated August 15, 1991, by and between Agfa Monotype Corporation (“Agfa”) and Lexmark International Inc. (“Lexmark”).

WHEREAS Agfa has developed certain technology described in Section 1 of the Agreement, and for the purposes of this Addendum No. 12, such technology is defined and referred to as the “Licensed Software”; and

WHEREAS Lexmark desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Agreement shall be amended as follows:

 

  1. Definitions: following definitions are hereby added to Section 1 of the Agreement.

 

  (ba) SAP Font Set - The SAP Font Set will be the fonts listed in Schedule 1 of this Addendum.

 

  (bb) Asian Resident Font Set -Me Asian Resident Font Set will be any combination of fonts from Schedule 2 of this Addendum.

 

  (bc) Font Block Subsetting - For the purpose of simplifying the manufacturing and quality assurance process, Lexmark may create a single common font load for all printers, including all licensed fonts. Fonts which are not part of the royalty bearing font load for each printer model will be disabled, creating a font block subset for each printer model. Lexmark will use all commercially reasonable efforts to provide protection for the Licensed Software.

 

  (bd) Fonts on the WEB - Lexmark may provide the same driver/fonts solution on its WEB site as it provides on the printer CD with a printer. These fonts may only be distributed along with the associated driver for a specific printer. Lexmark will provide an approved EULA with these fonts. Lexmark will use all commercially reasonable efforts to provide protection for the Licensed Software.

 

  (be)

Common Code Load - For the purpose of simplifying the manufacturing and quality assurance process, Lexmark may create a single Common Code Load for all printers, including UFST. If

 

1


 

UFST is not part of a royalty bearing option for a printer model, UFST will be disabled for that printer model. Lexmark will use all commercially reasonable efforts to provide protection for the Licensed Software.

 

  2. Schedule 2, Royalties. The following are hereby added at the end of the Royalties section of Schedule 2 of the Agreement:

 

  (as) SAP Font Set - The Royalty due for each CD or diskette containing the SAP Font Set is /*Confidential Treatment Requested*/.

 

  (at) Asian Resident Font Set - The Royalty due for resident Typefaces of the Asian Resident Font Set will be /*Confidential Treatment Requested*/ for each Typeface selected. As an example, 1 Simplified Chinese Typeface, I Traditional Chinese Typeface and I Japanese Typeface would require a Royalty due of /*Confidential Treatment Requested*/ per unit.

 

  (au) /*Confidential Treatment Requested*/ - The Royalty due for the /*Confidential Treatment Requested*/, which will have the Lite Font Block as described in Section 1 of Addendum 11, will be /*Confidential Treatment Requested*/ per unit. This special pricing consideration is provided only for the /*Confidential Treatment Requested*/.

 

  (av) /*Confidential Treatment Requested*/ — The Royalty due for the /*Confidential Treatment Requested*/, which will have the Lite Font Block as described in Section 1 of Addendum 11, will be /*Confidential Treatment Requested*/ per unit. This special pricing consideration is provided only for the /*Confidential Treatment Requested*/.

 

  3. Except as provided herein, all the terms and conditions of the Agreement, as previously amended, shall apply with equal force and effect to the Licensed Software licensed hereunder.

 

2


  4. This Addendum is executed and will be effective as of January 1, 2003.

 

AGFA MONOTYPE CORPORATION   LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

 

/s/ G. Hudson

Signature   Signature

Senior Vice President

 

VP & GM

Title   Title

Douglas J. Shaw

 

G. Hudson

Print Name   Print Name

 

3


Schedule 1

SAP Font list for CD

All fonts support Unicode 3.0 standard

4 World Type fonts include:

Andale Mono WT J (Japanese version)

Andale Mono WT K (Korean version)

Andale Mono WT S (Simplified Chinese version)

Andale Mono WT T (Traditional Chinese version)

 

4


Schedule 2

Chinese Fonts

Simplified

 

Font Name/Unicode Value    Encoding/Format

MKai-Medium

MT_(6977)(4F53)_GB2312

  

GB cmap

ACT format

CFangSongGB-Light

MT_(4EFF)(5B8B)_GB2312

  

GB cmap

ACT format

MHei-Bold

MT_(9ED1)(4F53)

  

GBK cmap

ACT format

MSung-Light

MT_(5B8B)(4F53)

  

GBK cmap

Unicode

ACT format

Traditional   
FontName/Unicode Value    Encoding/Format

MingMT-Light

MT_(7D30_)(660E)(9AD4)

  

BIG5 cmap

ACT format

MingMT-LightP

MT_(65B0)(7D30)(660E)(9AD4)

  

BIG5 cmap

ACT format

MKai-Medium

MT_(6A19)(6977)(9AD4)

  

BIG5 cmap

ACT format

Japanese

 

HG-MinchoLight

HG_(660E)(671D)

  

Shift-JIS cmap

Unicode

TrueType format

HG-GothicBold

HG_(30B4)(30B7)(30C3)(3OAF)

  

Shift-JIS cmap

Unicode

TrueType format

 

5


Add 13 052605r2

ADDENDUM NO. 13

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont Software and Type Software Agreement, Agreement No. 12914M, as amended from time to time; (“Agreement) dated August 15, 1991, by and between Monotype Imaging Corporation (“MTI”), formally known as Agfa Monotype Corporation (“Agfa”) and Lexmark International Inc. (“Lexmark”).

WHEREAS MTI has developed certain technology described in Section 1 of the Agreement, and for the purposes of this Addendum No. 13, such technology is defined and referred to as the “Licensed Software”; and

WHEREAS Lexmark desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Agreement shall be amended as follows:

 

1. Definitions: following definitions are hereby added to Section 1 of the Agreement.

 

(bf) XHTML Font Set - The XHTML Font Set will be the fonts listed in Exhibit l of this Addendum. These fonts will be available primarily for labeling pictures produced by the follow-ons to the /*Confidential Treatment Requested*/. These printers can also receive and print simple text messages from cell phones on to the photo. There is no PC connection and no other text printing functions.

 

2. Changes and additions to Schedule 2.

 

  2.1. Replace Unit Royalty Pricing for UFST with the 12 Pont Load (Windows), as described in Schedule 2, Exhibit A of Addendum #11; UFST with the 89 Font Load (Lite), as described in Schedule 2, Exhibit B of Addendum #11; and UFST with the 156 Font Load (Full), as described in Schedule 2, Exhibit C of Addendum #11, using the following Royalty Pricing structure:

 

1


12 Font Load

 

89 Font Load

 

156 Font Load

/*Confidential

Treatment Requested*/

 

/*Confidential

Treatment Requested*/

 

/*Confidential

Treatment Requested*/

/*Confidential

Treatment Requested*/

 

/*Confidential

Treatment Requested*/

 

/*Confidential

Treatment Requested*/

/*Confidential

Treatment Requested*/

 

/*Confidential

Treatment Requested*/

 

/*Confidential

Treatment Requested*/

All Products   All Products   All Products

An example of how to use tine above pricing structure is as follows:

For Product A with a WEB Price of /*Confidential Treatment Requested*/ with the 89 Font Load the Unit Royalty would be calculated by multiplying /*Confidential Treatment Requested*/ times /*Confidential Treatment Requested*/ which is /*Confidential Treatment Requested*/. Since /*Confidential Treatment Requested*/ is greater than the minimum Unit Royalty of /*Confidential Treatment Requested*/ and less than the maximum Unit Royalty of /*Confidential Treatment Requested*/, the Unit Royalty will be /*Confidential Treatment Requested*/ for Product A. For Product B with a WEB Price of /*Confidential Treatment Requested*/ with the 89 Font Load, the Unit Royalty would be /*Confidential Treatment Requested*/, because /*Confidential Treatment Requested*/ times /*Confidential Treatment Requested*/ is /*Confidential Treatment Requested*/ which is greater than the maximum Unit Royalty of /*Confidential Treatment Requested*/ for the 89 Font Load. Similarly, the Unit Royalty would be /*Confidential Treatment Requested*/ for Product C with a WEB Price /*Confidential Treatment Requested*/ with the 89 Font Load because /*Confidential Treatment Requested*/ multiplied by /*Confidential Treatment Requested*/ is /*Confidential Treatment Requested*/, which is less than the minimum Unit Royalty of /*Confidential Treatment Requested*/ for the 89 Font Load.

The only exception to this pricing will be three (3) specific products with 12 fonts. They are defined as the /*Confidential Treatment Requested*/, currently listed at /*Confidential Treatment Requested*/, and two (2) unannounced acquisition AIO that are follow-ons to the /*Confidential Treatment Requested*/ projected to be priced at /*Confidential Treatment Requested*/ and /*Confidential Treatment Requested*/. These three products will have a Unit Royalty of /*Confidential Treatment Requested*/ each. This special pricing will not be extended to follow on products.

“List Price” is the price published on Lexmark’s WEB vita. For products that at not sold on Lexmark’s WEB site, Lexmark will provide equivalent List Prices for the purpose of determining the appropriate Royalty. The List Price for all products shipped from January 1, 2005 to December 31, 2005 has been established from the Lexmark WEB site List Price provided by Lexmark as of January 31, 2005. There will be no additional adjustments in List Prices for 2005 shipments. This pricing is effect as of January 1, 2005 for all Lexmark products.

2


Effective January 1, 2006, List Price will be determined by the Lexmark WEB site published price for each printer as listed on the last day of the first month of each calendar quarter. By example, January 31, 2006 will be the date that the WEB List Price is established for all products shipped from January 1, 2006 until March 31, 2006. April 30,2006 will be the date List Price is determined for all products shipped in Q2, 2006 and so on.

For new Lexmark products introduced mid-quarter, List Price will be established as the price published on Lexmark’s WEB site at introduction, or for those products not sold on Lexmark’s WEB site it will be the equivalent List Price, provided by Lexmark, at introduction.

List Pricing for Multifunction Products (MM) and All-In-One Products (AIOs) will be based on the network version of the printing engine used in each MFP or AIO.

 

  2.2 Add XHTML pricing as follows:

“XHTML Font Set — The Royalty due for each of the follow-ons to the /*Confidential Treatment Requested*/ which includes the 13 Latin fonts and I Japanese Stroke font listed in Exhibit 1 will be /*Confidential Treatment Requested*/.”

 

  2.3. Add pricing for the 16x16 bitmapped operator panel font:

“The development charges for the 16 x 16 bitmapped operator panel font which includes 25,171 of the CESI approved character designs shall be /*Confidential Treatment Requested*/. There shall be no Unit Royalty for usage.

Both parties agree to meet in October, 2005 to negotiate the appropriate Royalty structure for 2006.

Lexmark agrees to meet with M11 in December, 2006 to discuss potential modifications to the new Schedule 2.

 

3


MTI agrees to allow Lexmark the right to use bitmaps provided for display panel use as a utility printer font. The bitmap will be algorithmically changed to the DPI needed to print with no work required by Monotype Imaging. This is intended to be used only for utility printing.

Except as provided herein, all the terms and conditions of the Agreement, as previously amended, shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of May 30, 2005.

 

MONOTYPE IMAGING CORPORATION    LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

  

/s/ Greg W. Wild

Signature    Signature

Senior Vice President

  

Mgr. V.S. Operating Resources

Title    Title

Douglas J. Shaw

  

Greg W. Wild

Print Name    Print Name

 

4


XHTML Fonts

 

1. Arial

 

2. Arial Italic

 

3. Arial Bold

 

4. Arial Bold Italic

 

5. Times New Roman

 

6. Times New Roman Italic

 

7. Times New Roman Bold

 

8. Times New Roman Bold Italic

 

9. Courier New

 

10. Courier New Italic

 

11. Courier New Bold

 

12. Courier New Bold Italic

 

13. ITC Zapf Chancery Medium Italic

Monotype Sans Japanese Stroke Font

 

5


ADDENDUM NO. 14

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont Software and Type Software Agreement, Agreement No. 1291-D93, as amended from time to time; (“Agreement”) dated August 15, 1991, by and between Monotype Imaging Corporation (“MTI”), formally known as Agfa Monotype Corporation (“Agfa”) and Lexmark International Inc. (“Lexmark”).

WHEREAS MTI has developed certain technology described in Section 1 of the Agreement, and for the purposes of this Addendum No. 14, such technology is defined and referred to as the “Licensed Software”; and

WHEREAS Lexmark desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Agreement shall be amended as follows:

1. Schedule 2, Development Fess/Type Software. Shall be modified to add the following at the end of Section 17 of Schedule 2:

“(xii) Customer shall pay MTI the sum of /*Confidential Treatment Requested*/ after the execution of Addendum #14 for the development of the Chinese (and Western, Korean, and Japanese) bitmap (font) using Monotype Sans Stroke font as the source:

 

  1. 21,354 total characters

 

  2. BDF format at a width of 36 and height of 24 with 3 pixel stems

 

  3. Up to 2,750 hand tuned characters including Hebrew and Arabic

The development charge for this 36 X 24 bitmapped operator panel font is /*Confidential Treatment Requested*/.

Except as provided herein, all the terms and conditions of the Agreement, as previously amended, shall apply with equal force and effect to the Licensed Software licensed hereunder.

 

1


This Addendum is executed and will be effective as of November 21, 2005

 

MONOTYPE IMAGING CORPORATION    LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

  

/s/ Gregory W. Wild

Signature    Signature

Senior Vice President

  

Mgr. V.S. Operating Resources

Title    Title

Douglas J. Shaw

  

Gregory W. Wild

Print Name    Print Name

 

2


Add15012706r9

ADDENDUM NO. 15

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont Software and Type Software Agreement, Agreement No. 1291-D93, as amended from time to time; (“Agreement”) dated August 15, 1991, by and between Monotype Imaging Corporation (“MTI”), formally known as Agfa Monotype Corporation (“Agfa”) and Lexmark International Inc. (“Lexmark”).

WHEREAS MTI has developed certain technology described in Section 1 of the Agreement, and for the purposes of this Addendum No. 15, such technology is defined and referred to as the “Licensed Software”; and

WHEREAS Lexmark desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Agreement shall be amended as follows:

1. Changes and additions to Schedule 2.

2.1 Replace Unit Royalty Pricing for UFST and PCL and PostScript ROM resident fonts with the following:

“Effective January 1, 2006 all Lexmark Laser printer-based products will ship UFST and PCL and PostScript Font Loads as described in Addendum #11, Schedule 2, Exhibit A, B and C: Ultra Lite, Lite and Full. Matching screen fonts may also be provided with the products or in appropriate web page packages. In all cases an appropriate End User License Agreement will be required. /*Confidential Treatment Requested*/

/*Confidential Treatment Requested*/

2.2 Lexmark agrees that the unit pricing from Addendum # 13 remains in place for all of 2005 shipments.

2.3 Lexmark agrees to continue to report quarterly as in the past to track products and font loads.

2.4 Lexmark agrees to ship only MTI fonts to support PCL and PostScript in all Laser printer - based products. Additional non-MTI fonts that are not equivalent to the fonts described in Addendum #11, Schedule 2, Exhibit A, B and C may be at Lexmark’s discretion shipped in Laser printer-based products.

2.5 In Laser printer-based products in support of PCL and PostScript, Lexmark will ship the following font loads.

 

1


2.5.1 For Products equal to or less than /*Confidential Treatment Requested*/ the Lite Font load (89) described in Addendum #11, Schedule 2, Exhibit B will be shipped.

2.5.2 For Products more than /*Confidential Treatment Requested*/ the Lite Font load (89) or the Full Font load (156) described in Addendum #11, Schedule 2, Exhibit B or C will be shipped.

2.5.3 Exceptions to the pricing described above:

A) Products currently shipping or planned can ship the current or planned font load as described in Addendum #11, Schedule 2, Exhibit A, B or C.

B) Future Laser printer-based products with a WEB value under /*Confidential Treatment Requested*/ Lexmark may ship the Ultra Lite Font load (12) only where marketing determines product differentiation is required to support PCL emulation.

C) Subsequent price actions taken for any Lexmark Laser printer-based product after the initial introduction will not require Lexmark to alter the font load.

D) If Lexmark should OEM a Laser printer-based product for resale that contains NonM11 fonts, Lexmark is not required to ship MTI PCL and PostScript fonts with this specific printer.

2.6 MTI will provide UFST 5.0 and the current font loads described in Addendum #11, Schedule 2, Exhibit A, B and C. Support for UFST will continue as part of this Addendum and will include our standard maintenance updates, but does not include Enhancements as defined in the Agreement in Section 1(m).

2.6 All pricing for additional technology beyond UFST 5.0 and the PCL and PostScript ROM resident Fonts will remain as defined in the existing Agreement and subsequent Addendums #1 through #14.

Except as provided herein, all the terms and conditions of the Agreement, as previously amended, shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of January 1, 2006.

 

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MONOTYPE IMAGING CORPORATION     LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

   

/s/ Gregory W. Wild

Signature     Signature

Senior Vice President

   

Mgr. V.S. Operating Resources

Title     Title

Douglas J. Shaw

   

Gregory W. Wild

Print Name     Print Name

 

3


LOGO

Monotype Imaging Inc.

500 Unicorn Park Drive

Woburn, MA 01801

Phone: 781-970-6000

Fax: 781-970-6001

www.monotypeimaging.com

LEXMARK INTERNATIONAL, INC.

740 NEW CIRCLE ROAD

LEXINGTON, KY 4051 1

MR. WALT SPEED

MARCH 31, 2005

NOTIFICATION OF ASSIGNMENT OF AGREEMENT

AGFA MONOTYPE CORPORATION (“AGFA”) HAS ONE OR MORE AGREEMENTS WITH LEXMARK INTERNATIONAL, INC. (THE “COMPANY”), WHICH ARE CURRENTLY IN FULL FORCE AND EFFECT (COLLECTIVELY THE “AGREEMENT”). THIS LETTER HEREBY SERVES AS NOTIFICATION THAT AGFA WILL TRANSFER AND ASSIGN TO MONOTYPE IMAGING INC. (“MONOTYPE”), AND MONOTYPE WILL ACCEPT THE TRANSFER AND ASSIGNMENT OF THE AGREEMENT, THEREBY ACCEPTING AND ASSUMING ALL RIGHTS, LIABILITIES, DUTIES AND OBLIGATIONS OF AGFA UNDER THE AGREEMENT.

MONOTYPE IS A DELAWARE CORPORATION. THE MAJORITY SHAREHOLDERS OF MONOTYPE ARE PRIVATE FINANCIAL INSTITUTIONS AND THE MINORITY SHAREHOLDERS ARE EMPLOYEES OF MONOTYPE. THERE WILL BE NO CHANGE IN THE PERSONNEL ASSIGNED TO THE PERFORMANCE OF THE AGREEMENT BY AGFA AS A RESULT OF THE TRANSFER AND ASSIGNMENT OF THE AGREEMENT TO MONOTYPE.

ALL RIGHTS, LIABILITIES AND OBLIGATIONS CURRENTLY EXISTING BETWEEN AGFA AND THE COMPANY UNDER THE AGREEMENT WILL BE THE IDENTICAL RIGHTS, LIABILITIES AND OBLIGATIONS EXISTING BETWEEN MONOTYPE AND THE COMPANY AFTER THE TRANSFER AND ASSIGNMENT.

ALL FUTURE CORRESPONDENCE REGARDING THE AGREEMENT SHOULD BE DIRECTED TO DON MACDONALD AT 781-970-6140 OR DON.MACDONALD@MONOTYPEIMAGING.COM . PLEASE CONTACT ME WITH ANY QUESTIONS OR CONCERNS YOU MAY HAVE.

BEST REGARDS,

 

/s/ Dave McCarthy

DAVE McCARTHY

VICE PRESIDENT AND GENERAL MANAGER

PRINTER IMAGING

 

184


ADDENDUM NO. 16

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont Software and Type Software Agreement, Agreement No. 1291-D93, as amended from time to time; (“Agreement”) dated August 15, 1991, by and between Monotype Imaging Corporation (“MTI”), formally known as Agfa Monotype Corporation (“Agfa”) and Lexmark International Inc. (“Lexmark”).

WHEREAS MTI has developed certain technology described in Section 1 of the Agreement, and for the purposes of this Addendum No. 16, such technology is defined and referred to as the “Licensed Software”; and

WHEREAS Lexmark desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Agreement shall be amended as follows:

 

  1. Definitions : following definitions are hereby added to Section 1 of the Agreement.

 

  (bg) Korean Font Set - The Korean Font Set will include the five (5) fonts listed in Exhibit 1 of this Addendum. Each Royalty unit will consist of UFST with the Asian module and font data from the five (5) fonts listed in Exhibit 1 of this Addendum. These fonts will be ROM resident in Lexmark printers in TrueType format. The TrueType font data provides a screen font solution under this Addendum.

 

  2. Additions to Schedule 2 :

 

  2.8 The Royalty due for the ROM resident Korean fonts listed in Exhibit 1 of this Addendum will be /*Confidential Treatment Requested*/. By way of example, the five (5) Korean fonts listed, ROM resident in a Lexmark printer, would have a /*Confidential Treatment Requested*/ Royalty due.

Upon Lexmark’s acceptance of the font data for the five (5) fonts described in Exhibit 1 of this Addendum and Lexmark’s receipt of an invoice from MTI, Lexmark shall pay a License Fee of /*Confidential Treatment Requested*/ which is /*Confidential Treatment Requested*/ per font and a font data development fee of /*Confidential Treatment Requested*/ for all five (5) fonts which is a total payment of /*Confidential Treatment Requested*/ to be paid according to the usual payment terms.

 

1


Except as provided herein, all the terms and conditions of the Agreement, as previously amended, shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of August 31, 2006.

 

MONOTYPE IMAGING CORPORATION     LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

   

/s/ Gregory W. Wild

Signature     Signature

Senior Vice President

   

Mg. U.S. Operating Resources

Title     Title

Douglas J. Shaw

   

Gregory W. Wild

Print Name     Print Name

 

2


Summary of Fees

 

License Fee of /*Confidential Treatment Requested*/ per typeface (five typefaces)    /*Confidential Treatment Requested*/
Development Fee for five typefaces    /*Confidential Treatment Requested*/
Total License and Development Fees    /*Confidential Treatment Requested*/

Exhibit 1

Korean Fonts (Hanrang source for font data)

 

1. HeadLine   (aka: HYHeadLine-Medium)
2. NewGraphic   (aka: HYSinGraphic-Medium)
3. SunMyungio   (aka: HYSooN-MyeongJo)
4. Philgi   (aka: HYPiIIGi-Light)
5. Yeopseo   (aka: HYPost-Medium)

 

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Addl7rl

ADDENDUM NO. 17

To The Intellifont Software and Type Software Agreement

Agreement No. 1291-D93

This is an Addendum to that certain Intellifont Software and Type Software Agreement, Agreement No. 1291-D93, as amended from time to time; (“Agreement”) dated August 15, 1991, by and between Monotype Imaging Corporation (“MM), formally known as Agfa Monotype Corporation (“Agfa”) and Lexmark International Inc. (“Lexmark”).

WHEREAS MTI has developed certain technology described in Section I of the Agreement, and for the purposes of this Addendum No. 17, such technology is defined and referred to as the “Licensed Software”; and

WHEREAS Lexmark desires to obtain a license to use, to have used, to reproduce, to have reproduced and to distribute, to have distributed to End Users, Lexmark Developers, Lexmark Distributors, Lexmark OEMs, and Third Party Developers the Licensed Software.

NOW, THEREFORE, the parties agree that the Agreement shall be amended as follows:

 

1. Definitions: following definitions are hereby added to Section 1 of the Agreement.

(bh) XHTML Font Set for inclusion in selected Lexmark printers . – The XHTML Font Set will be the fonts listed in Exhibit 1 of this Addendum. This font set will be included in select XHTML-enabled Lexmark branded or Lexmark-OEM printers which are designed and produced by or for Lexmark’s Consumer Products Division. In these select printers, the font set will only be available to end users when these customers purchase a third party Bluetooth connection device to enable XHTML printing. The end users will not have any access to the font set files. They will only be able to view the font after it has been rendered and printed. This will protect MTI’s intellectual property.

 

2. Addition to Schedule 2:

2.9 Add XHTML pricing as follows:

“XHTML Font Set — The royalty due for each of the select printers defined in section 1 (bh), which includes UFST, MicroType, TrueType, and the Asian Module with the 13 Latin fonts and NewSans MT Stroke font listed in Exhibit 1, will be /*Confidential Treatment Requested*/. This royalty was calculated at a percentage of the total value of the XHTML Font Set assuming a limited usage. The actual number of users that will use thus font set by purchasing a third party Bluetooth connection device is estimated at /*Confidential Treatment Requested*/ of these select printers sold into the Asian market and /*Confidential Treatment Requested*/ of these select - printers sold outside the Asian

 

1


market. This royalty agreement is to be valid for all selected products that are announce before January 1, 2008 and will remain at the set royalty price throughout the products’ life cycles. Both companies agree to review our assumptions and to negotiate in good faith to concur on the estimated percentage of connectivity prior to the release of products that announce after January 1, 2008.”

Except as provided herein, all the terms and conditions of the Agreement, as previously amended, shall apply with equal force and effect to the Licensed Software licensed hereunder.

This Addendum is executed and will be effective as of November 30, 2006.

 

MONOTYPE IMAGING CORPORATION     LEXMARK INTERNATIONAL, INC.

/s/ Douglas J. Shaw

   

/s/ Alan Tippett

Signature     Signature

President & CEO

   

Commodity Manager

Title:     Title:

Douglas J. Shaw

   

Alan Tippett

Print Name     Print Name

2


Summary of Fees

 

Access Fee: /*Confidential
Treatment Requested*/
   Monotype Sans - CK Arabic and Hebrew (See Exhibit I below), due upon execution of this Addendum.
Royalty:    /*Confidential Treatment Requested*/ per unit, payable within 60 days of the end of each quarter or within 60 days of the date sales volumes are confirmed for these select XHTML-enabled products, whichever is later.

Exhibit 1

XHTML Fonts

 

1. Arial

 

2. Arial Italic

 

3. Arial Bold

 

4. Arial Bold Italic

 

5. Times New Roman

 

6. Times New Roman Italic

 

7. Times New Roman Bold

 

8. Times New Roman Bold Italic

 

9. Courier New

 

10. Courier New Italic

 

11. Courier New Bold

 

12. Courier New Bold Italic

 

13. ITC Zapf Chancery Medium Italic

 

14. NewSansMT Stroke Font supporting Latin, Chinese, Japanese and Korean: for code pages 936 GBK, 950 BigS, 932 Jis0208 and 949 KSC5601.

 

15. MT UniK Stroke Font supporting Arabic and Hebrew

 

3