SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-Q
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(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to ____
Commission File Number 0-12954
CADMUS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1274108
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
6620 West Broad Street, Suite 500
Richmond, Virginia 23230
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code:
(804) 287-5680
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 1996.
Class Outstanding at April 30, 1996
Common Stock, $.50 Par Value 7,907,556
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -- 3
March 31, 1996 and June 30, 1995
Consolidated Statements of Income -- 4
Three and Nine-Month Periods Ended
March 31, 1996 and 1995
Consolidated Statements of Cash Flows -- 5
Nine Months Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
PART I. Financial Information
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,460 $ 226
Accounts receivable, net 69,106 57,204
Inventories 20,426 16,308
Deferred income taxes 1,092 1,092
Prepaid expenses and other 3,964 1,489
------------ -----------
Total current assets 97,048 76,319
Property, plant, and equipment (net of accumulated depreciation
of $84,222 at March 31, 1996 and $76,789 at June 30, 1995) 94,433 84,570
Other assets 3,764 2,400
Goodwill and intangibles, net 21,417 8,281
------------ -----------
Total Assets $ 216,662 $ 171,570
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings 7,000 3,775
Current maturities of long-term debt 121 2,381
Accounts payable 21,894 17,907
Book overdraft 3,812 911
Accrued expenses:
Compensation 8,871 10,905
Other 10,794 7,907
Income taxes 897 0
Restructuring charge 40 120
------------ -----------
Total current liabilities 53,429 43,906
Long-term debt 43,765 53,961
Other long-term liabilities 8,495 7,180
Deferred income taxes 4,641 4,641
Shareholders' equity:
Common stock ($.50 par value; authorized-16,000 shares;
issued and outstanding shares-7,908 at March 31, 1996
and 6,030 at June 30, 1995) 3,953 3,015
Capital in excess of par value 52,825 12,448
Retained earnings 49,554 46,419
------------ -----------
Total shareholders' equity 106,332 61,882
------------ -----------
Total Liabilities and Shareholders' Equity $ 216,662 $ 171,570
============ ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------------- ----------------------------
1996 1995 1996 1995
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Net sales $ 84,361 $ 74,846 $ 244,870 $ 202,466
Operating expenses
Cost of sales 66,576 55,408 188,469 152,483
Selling and administrative 15,505 13,956 44,411 37,508
---------- --------- ---------- -----------
Operating income 2,280 5,482 11,990 12,475
Interest and other (income) expenses
Interest 955 1,323 3,772 4,063
Other 106 260 141 (38)
---------- --------- ---------- -----------
Income before income taxes 1,219 3,899 8,077 8,450
Income taxes 465 1,831 3,071 3,624
---------- --------- ---------- -----------
Income before extraordinary item 754 2,068 5,006 4,826
Extraordinary loss on early
extinguishment of debt, net of taxes (795)
---------- --------- ---------- -----------
Net income $ 754 $ 2,068 $ 4,211 $ 4,826
========== ========= ========== ===========
Earnings per share:
Income before extraordinary item $ .09 $ .33 $ .69 $ .78
Extraordinary loss on early
extinguishment of debt, net of taxes (.11)
---------- --------- ---------- -----------
Net income $ .09 $ .33 $ .58 $ .78
========== ========= ========== ===========
Average number of common shares
outstanding 8,169 6,195 7,299 6,189
========== ========= ========== ===========
Cash dividends per common share $ .05 $ .05 $ .15 $ .15
========== ========= ========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------------
1996 1995
---------- -----------
<S> <C> <C>
Operating Activities
Net income $ 4,211 $ 4,826
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,040 8,913
Extraordinary loss on debt prepayment 795
Other, net 1,163 636
---------- -----------
16,209 14,375
---------- -----------
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable (8,584) (8,349)
Inventories (2,645) (6,336)
Accounts payable, accrued expenses, and income taxes 4,252 7,512
Other, net (3,827) (563)
---------- -----------
(10,804) (7,736)
---------- -----------
Net cash provided by operating activities 5,405 6,639
---------- -----------
Investing Activities
Purchases of property, plant, and equipment (17,884) (16,929)
Proceeds from sale of property and equipment 355 3,741
Cash paid for businesses acquired (15,393) (1,080)
Proceeds from sale of unconsolidated joint venture 6,800
Proceeds from life insurance loans 2,939
Other, net (682) (667)
---------- -----------
Net cash used in investing activities (33,604) (5,196)
---------- -----------
Financing Activities
Proceeds from short-term borrowings 33,725 6,800
Repayment of short-term borrowings (30,500) (6,800)
Repayment of long-term debt (1,256) (1,150)
Retirement of long-term debt (11,200)
Penalty on early extinguishment of debt (1,282)
Increase/(decrease) in book overdraft 2,901 (1,700)
Dividends paid (1,090) (901)
Proceeds from stock offering, net 38,684
Proceeds from exercise of stock options 631 367
Other, net (180) 113
---------- -----------
Net cash provided by (used in) financing activities 30,433 (3,271)
---------- -----------
Increase (decrease) in cash and cash equivalents 2,234 (1,828)
Cash and cash equivalents at beginning of period 226 3,855
---------- -----------
Cash and cash equivalents at end of period $ 2,460 $ 2,027
========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The interim financial statements are unaudited. In the opinion of
management, they reflect all adjustments (which consist only of those of a
normal recurring nature) necessary for a fair presentation of results for
the periods indicated. The results of operations for any interim period are
not necessarily indicative of results for the full year. These financial
statements should be read in conjunction with the financial statements and
notes thereto contained in the Company's annual report for the year ended
June 30, 1995.
2. Net income per common share is computed based upon the weighted average
number of shares outstanding for each period presented. Shares issuable upon
exercise of currently exercisable stock options are treated as common stock
equivalents for purposes of computing primary and fully diluted net income
per share.
3. Inventories are valued at the lower of cost or market, principally using
the last-in, first-out (LIFO) method (66.2% as of March 31, 1996 and 70.5%
as of June 30, 1995). The first-in, first-out (FIFO) method is used to
value the remaining inventories. The components of inventories were as
follows (in thousands):
March 31, June 30,
1996 1995
------------ ------------
Raw materials and supplies $ 7,057 $ 6,044
Work in progress:
Materials 3,858 3,270
Other manufacturing costs 7,082 5,315
Finished goods 2,429 1,679
---------- ---------
$ 20,426 $ 16,308
========== =========
4. The Company's cash management system generates checks issued but not
presented to banks resulting in overdraft balances for accounting purposes
which are classified as "book overdraft" in the balance sheet.
5. The Company's Charlotte manufacturing facility experienced damage as a
result of an explosion and fire March 4, 1996. The plant operated at
diminished capacity for seven days and returned to full operation March 11,
1996. At March 31, 1996, the Company accrued $0.3 million for estimated
losses related to the fire and recorded a receivable of approximately $0.5
million for casualty, property damage, and business interruption insurance
claims due from its insurance carrier. The Company believes that it has
adequate insurance coverage and does not expect this event to have a
material adverse effect on the Company's financial condition or results of
operations.
6. On November 1, 1995, the Company acquired substantially all of the assets
and assumed certain liabilities of The Software Factory, Inc. (the "Software
Factory"). The Software Factory provides software packaging and media
duplication services and has annual sales of approximately $11.0 million.
The purchase price of $14.1 million consisted of $2.0 million value of
Cadmus common stock and $12.1 million in cash payments. The Company issued
79,681 common shares to the Software Factory shareholders based on an agreed
upon share price of $25.10. The cash payments included $0.5 million
deposited in escrow at closing, and $11.6 million cash disbursed to the
Software Factory shareholders and for other direct acquisition costs.
The following unaudited pro forma consolidated financial information
combines the results of the Software Factory as if it had been acquired as
of the beginning of the periods presented. The periods presented include the
impact of the following adjustments: amortization of the costs in excess of
the net assets acquired over twenty years and income taxes on the earnings
at an effective tax rate of 38.0% and 39.4% for the nine months ended March
31, 1996 and 1995, respectively, since the Software Factory qualified as an
"S" corporation which previously had no income tax expense.
<PAGE>
Nine Months Ended
March 31,
-----------------------------
1996 1995
----------- -----------
Net sales $ 248,722 $ 210,941
Income before extraordinary item 5,395 5,649
Net income 4,600 5,649
Earnings per share
Income before extraordinary item $ .74 $ .90
Net income .63 .90
The pro forma financial information is not necessarily indicative of what
would actually have occurred if the acquisition took place at the beginning
of the periods presented, nor is it intended to be indicative of future
results.
On December 18, 1995, the Company acquired the assets of the Atlanta
division of Encryption Technology Corporation ("ETC") for approximately $2.6
million in cash payments. ETC provides software packaging, media
duplication, and documentation services. The cash payments consisted of $1.3
million paid at closing and $1.3 million paid in February 1996.
In July 1995, Cadmus acquired the assets of Na-Tex, Inc. ("Na-Tex"), the
publisher of Collector's World of Racing (subsequently renamed RPM). In
September 1995, the Company acquired certain assets of The Mowry Company
("Mowry"), a direct marketing agency located in Long Beach, California. In
October 1995, the Company acquired the assets of PeachWeb Corp.
("PeachWeb"), a developer of Internet web sites.
The Na-Tex, Mowry, ETC, and PeachWeb acquisitions were not material, either
individually or in the aggregate, to the Company's financial statements.
All acquisitions were accounted for under the purchase method and,
accordingly, the costs of the acquisitions were allocated to the assets
acquired and liabilities assumed based on their respective fair values, with
the excess of purchase price over the fair value, if any, amortized by the
straight-line method over twenty years. The funds used to acquire the
Software Factory, ETC, and PeachWeb were provided from the proceeds of the
issuance of 1.725 million shares of common stock (see Note 8).
7. On December 14, 1995, the Company retired $11.2 million principal of 9.76%
Senior Notes due June 2000, and recorded a $1.3 million ($0.8 million after
tax) extraordinary loss relating to the early retirement of this debt. The
funds used for the debt retirement were provided from the proceeds of the
issuance of 1.725 million shares of common stock (see Note 8).
On January 5, 1996, the Company entered into an agreement for a revolving
credit facility of $85 million with four major banks, replacing the former
lines of credit. This new unsecured line of credit has a five-year term
expiring January 2001. The Company has the following interest rate options:
(i) adjusted LIBOR; (ii) the higher of the prime rate or one-half of one
percent above the federal funds rate or (iii) money market rate. This
agreement also requires an annual facility fee based on the Company's ratio
of funded debt to total capital. As of March 31, 1996, borrowings under this
facility totaled $2.5 million leaving an unused balance of $82.5 million.
8. On November 7, 1995, the Company completed the issuance of an additional
1.725 million shares of common stock through a public offering, resulting in
net proceeds (after deducting issuance costs) of $38.7 million. The Company
used the net proceeds to (i) repay $11.2 million of 9.76% Senior Notes due
June 2000, plus a $1.3 million ($0.8 million after tax) prepayment penalty,
(ii) fund the $14.9 million cash portion of the acquisition cost of the
assets of the Software Factory, ETC, and PeachWeb, and (iii) repay
short-term borrowings used to fund seasonal working capital needs with an
interest rate of approximately 6.4% and a maturity of February 1997.
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the third quarter of fiscal 1996 increased 12.7% to $84.4
million compared to $74.8 million for the third quarter last year. Adjusted
for acquisitions, net sales rose 4.4%. Operating income for the third
quarter of fiscal 1996 was $2.3 million as compared to $5.5 million for the
same period of fiscal 1995. Net income for the third quarter of fiscal 1996
was $0.8 million, or $.09 per share. Net income for the same quarter of
fiscal 1995 amounted to $2.1 million, or $.33 per share. There were
8,169,000 average outstanding shares for the third quarter of fiscal 1996,
compared to 6,195,000 average outstanding shares for the same period of
last year. This increase reflects shares issued in connection with the
Company's equity offering completed on November 7, 1995.
For the nine-month period ended March 31, 1996, net sales increased to
$244.9 million, up 20.9% from $202.5 million for the same period of fiscal
1995. Adjusted for acquisitions, net sales rose 15.8%. Operating income for
the first nine months of fiscal 1996 was $12.0 million as compared to $12.5
million for the same period of fiscal 1995. Income before extraordinary
item was $5.0 million, or $.69 per share, compared to $4.8 million, or $.78
per share, recorded for the same period of fiscal 1995. Net income for the
nine months ended March 31, 1996, included an $0.8 million (after tax), or
$.11 per share, extraordinary loss resulting from the prepayment of $11.2
million of 9.76% Senior Notes. After this extraordinary item, net income
was $4.2 million, or $.58 per share, compared to $4.8 million, or $.78 per
share, for the nine months ended March 31, 1996 and 1995, respectively.
There were 7,299,000 average outstanding shares for the first nine months
of fiscal 1996, compared to 6,189,000 average outstanding shares for the
same period of last year.
The following table presents the major components from the Consolidated
Statements of Income as a percent of sales for the three and nine-month
periods ended March 31, 1996 and 1995:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------------- --------------------------
1996 1995 1996 1995
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 78.9 74.0 77.0 75.3
-------- -------- ------- --------
Gross profit 21.1 26.0 23.0 24.7
Selling and administrative expenses 18.4 18.7 18.1 18.5
-------- -------- ------- --------
Operating income 2.7 7.3 4.9 6.2
Interest expense 1.1 1.8 1.5 2.0
Other expense 0.1 0.3 0.1 0.0
-------- -------- ------- --------
Income before income taxes 1.5 5.2 3.3 4.2
Income taxes 0.6 2.4 1.3 1.8
======== ======== ======= ========
Income before extraordinary item 0.9% 2.8% 2.0% 2.4%
======== ======== ======= ========
</TABLE>
Sales
The Company groups sales into three business groups: printing, marketing,
and publishing. The table below displays net sales for each of these groups
expressed as a percent of net sales:
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------- ----------------------------
1996 1995 1996 1995
------------ ----------- ------------- ------------
Printing 71.6% 74.4% 71.8% 74.4%
Marketing 21.8 20.0 21.6 18.9
Publishing 6.6 5.6 6.6 6.7
========= ======== ========= =========
100.0% 100.0% 100.0% 100.0%
========= ======== ========= =========
<PAGE>
Sales increased in each business group for both the three and nine-month
periods, respectively, of fiscal 1996 compared to the same periods of
fiscal 1995 as follows: printing 4.6% and 13.0% increases; marketing 18.3%
and 33.9% increases; and publishing 27.7% and 16.0% increases. The increase
in sales for the nine month-period was broad-based with ten of the
Company's eleven product lines recording improvement. Adjusted for
acquisitions and the cessation of operations of certain marketing
operations, overall marketing sales were down 18.4% for the third quarter
and up 8.0% for the first nine months of fiscal 1996, compared to the same
periods of fiscal 1995.
Printing Sales
The increases in printing sales for both the third quarter and nine-month
period ended March 31, 1996, compared to the same periods in fiscal 1995
were primarily attributable to growth in the financial communications
(38.6% and 72.9% increases) and magazines (6.1% and 21.0% increases)
product lines. Financial communications revenues rose due to continued
growth of the mutual fund business. The growth was attributable to both
expanded services for existing customers, as well as the addition of new
customers. Sales growth in the magazines product line increased due to the
addition of new customers. The remaining product lines were essentially
flat for the third quarter and nine-month period. However, specialty
packaging revenues for the first nine months of fiscal 1996 increased
21.7%, compared to fiscal 1995, due to growth from existing customers.
Marketing Sales
The increases in marketing revenues for the third quarter and first nine
months of fiscal 1996, compared to the same periods in fiscal 1995, were
driven by the combination of internal growth and the acquisitions of the
Software Factory and two direct marketing agencies. Revenues from these
acquisitions were partially offset by a 10.2% decline in the
point-of-purchase product line for the third quarter. This decrease was
attributable to an overall downturn in demand from beverage customers, the
merger of two customers resulting in decreased volume, and the deferral by
customers of certain projects to the fourth quarter. Year-to-date
point-of-purchase revenues rose 12.5% as compared to fiscal 1995 due to
increased activity with quick service restaurant customers as well as the
addition of new customers.
Direct marketing sales for fiscal 1996 increased 58.6% for the third
quarter and 50.4% for the nine-month period as compared to fiscal 1995.
These increases resulted primarily from the acquisition of Ronald James
Direct, Inc., in the fourth quarter of fiscal 1995 and the acquisition of
Mowry in the first quarter of fiscal 1996. These gains were partially
offset due to the loss of certain customers, which should adversely impact
the fourth quarter as well, combined with the deferral by customers of
several projects. Cadmus Interactive, which was formed at the end of the
first quarter of fiscal 1995, experienced a 19.2% decrease in revenues
during the third quarter of fiscal 1996 due to the deferral by customers of
several projects. However, revenues for this multimedia product line
increased 73.5% for the nine-month period ended March 31, 1996 as compared
to fiscal 1995.
Publishing Sales
Publishing revenues rose 27.7% in the third quarter of fiscal 1996
resulting in an increase of 16.0% for the first nine months compared to the
same periods of fiscal 1995. The increase in publishing revenues was
attributable to increases in the custom publishing product line of 49.5%
and 45.7% for the third quarter and first nine months of fiscal 1996,
respectively. These increases are due to the addition of several new
accounts during fiscal 1996.
Sales in the consumer publishing product line were flat for the third
quarter and were down 3.7% for the first nine months of fiscal 1996
compared to the same periods of fiscal 1995. The decrease in consumer
publishing sales for the first nine months resulted primarily from the
timing of a trade show and a decline in Tuff Stuff special edition
mailings. The softness in consumer publishing revenues is expected to
continue into the fourth quarter.
Operating Expenses
The cost of sales ratio increased 4.9% for the third quarter driven equally
by manufacturing inefficiencies and a change in the product sales mix.
Manufacturing inefficiencies resulted primarily from external factors,
including severe weather conditions and a fire in the Charlotte facility
which caused several jobs to be relocated to other Cadmus facilities, but
were also driven by poor manufacturing performance. The change in sales mix
was a result of a shift from high-margin creative projects to low-value
projects with higher material costs in the direct marketing and
point-of-purchase product lines. This shift in sales mix in the direct
marketing product line is anticipated to continue into the fourth quarter.
These same factors contributed to a 1.7% increase in the cost of sales
ratio for the nine months ended March 31, 1996, but were partially offset
by savings generated from procurement activities and from reductions in the
workforce related to the restructuring of the Company's composition and
prepress operations which began during the first quarter of fiscal 1995.
Selling and administrative expenses increased 11.1% and 18.4% for the three
and nine-month periods, respectively of fiscal 1996 compared to the same
period of fiscal 1995. These increases resulted from costs associated with
reorganizing and unifying Cadmus, establishing a team to service the
General Electric contract, establishing and operating a New York office for
the financial communications product line, expanding the capacity and
capabilities of the Company's fulfillment operations, and hiring executives
and staff to support the Company's service offerings. As a percent of
sales, the impact of these additional costs was offset by the combination
of increased sales volume and efforts within each product line to control
overhead costs through discretionary spending control measures. As a
result, selling and administrative expenses as a percentage of sales
decreased slightly, by 0.3% and 0.4%, for the third quarter and nine-month
period of fiscal 1996, respectively.
Interest, Other Expense, and Income Taxes
Interest expense decreased 27.8% and 7.2% for the third quarter and first
nine months, respectively, of fiscal 1996 as compared to fiscal 1995. This
is due to a combination of $11.2 million in debt retirement and lower
short-term interest rates.
Other expense shifted from 0.3% and zero percent of sales for the third
quarter and first nine months, respectively, of fiscal 1995, to 0.1% of
sales for both periods in the current year due to the sale of the Company's
fifty percent ownership in Central Florida Press, L.C. during the third
quarter of fiscal 1995. Equity income from this partnership totaled $0.4
million during the first nine months of fiscal 1995.
The effective income tax rate decreased to 38.0% for the third quarter and
first nine months of fiscal 1996 from 47.0% and 42.9%, respectively, for
the same periods of fiscal 1995, due to tax liabilities arising from the
sale of the Company's fifty percent joint venture interest in Central
Florida Press, L.C. in the third quarter of fiscal 1995. The fiscal 1995
effective tax rate, excluding this transaction, was 39.4% for both the
third quarter and first nine months. The decline from the fiscal 1995 39.4%
effective tax rate of 38.0% for fiscal 1996, was due to both higher levels
of pretax income and a decrease in the overall effective state tax rate.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities decreased to $5.4 million for the
first nine months of fiscal 1996 from $6.6 million for the same period of
fiscal 1995 due to additional cash used by operating assets and liabilities
of $3.1 million. This change resulted from a decrease in funds provided by
accounts payable and income taxes and an increase in funds used by other
operating assets and liabilities, offset partially by a decline in funds
used for accrued expenses and inventories. The lower funds provided by
accounts payable resulted from moderating paper prices which also produced
the lower $2.6 million cash used to finance inventories. In addition, the
lower funds provided by income taxes was due to the tax liabilities
resulting from the sale of the joint venture in fiscal 1995 and the tax
benefit resulting from the extraordinary charge on early extinguishment of
debt. The increase in funds used by other assets and liabilites resulted
from an increase in prepaid expenses. The decline in funds used for accrued
expenses resulted primarily from the change in the restructuring reserve as
payments were made during fiscal 1995.
Net cash used in investing activities totaled $33.6 million for the first
nine months of fiscal 1996 compared to $5.2 million for the same period of
fiscal 1995. The increase was due primarily to the use of $15.4 million in
cash which was paid in connection with acquisitions during the current
fiscal year, offset somewhat by proceeds received in fiscal 1995 from the
Company's sale of its interest in the joint venture, the sale and leaseback
of land, building, and building improvements, and life insurance loans.
Capital investment in property, plant, and equipment totaled $17.9 million
during the first nine months of fiscal 1996. Significant projects included
in this amount were presses for both the Richmond and Baltimore
manufacturing facilities, a saddle stitcher and digital scanning equipment
for another Richmond manufacturing facility, various prepress equipment for
certain facilities, an automated imposing platemaker for the magazine
product line in Richmond, a platesetter for the Easton manufacturing
facility, and a die cutter and gluer for the Charlotte manufacturing
facility.
For the first nine months of fiscal 1996, net cash provided by financing
activities totaled $30.4 million, which represents a $33.7 million change
from the $3.3 million used in financing activities for the first nine
months of fiscal 1995. The change from the prior year was due to $38.7 in
net proceeds received from the issuance of 1.725 million shares of common
stock, partially offset by the use of these funds to repay $11.2 million of
senior notes and the $1.3 million, $0.8 million after tax, prepayment
penalty, and to repay short-term borrowings which were used to finance
seasonal working capital needs.
Total debt at March 31, 1996 was $50.9 million, representing a $9.2 million
decrease from the $60.1 million at June 30, 1995. The decline in debt was
due to the retirement of senior notes, partially offset by an increase in
short-term borrowings. The Company's debt-to-capital ratio at March 31,
1996 was 32.4% compared to 49.3% at June 30, 1995. At March 31, 1996, there
were $7.0 million in short-term borrowings, with a weighted average
interest rate of 6.2%. Of these short-term borrowings, $2.5 million was
borrowed against the Company's $85 million revolving credit facility,
leaving $82.5 million unused credit available.
On January 5, 1996, the Company entered into an agreement for a revolving
credit facility of $85 million with four major banks, replacing the former
lines of credit. This new unsecured line of credit has a five-year term
expiring January 2001. The Company has the following interest rate options:
(i) adjusted LIBOR; (ii) the higher of the prime rate or one-half of one
percent above the federal funds rate or (iii) money market rate. This
agreement also requires an annual facility fee based on the Company's ratio
of funded debt to total capital.
On November 7, 1995, the Company completed the issuance of an additional
1.725 million shares of common stock through a public offering, resulting
in net proceeds (after deducting issuance costs) of $38.7 million. The
Company used the net proceeds to (i) repay $11.2 million of 9.76% Senior
Notes due June 2000, plus a $1.3 million ($0.8 million after tax)
prepayment penalty; (ii) fund the $14.9 million cash portion of the
acquisition cost of the assets of the Software Factory, ETC, and PeachWeb;
and (iii) repay short-term borrowings used to fund seasonal working capital
needs with an interest rate of approximately 6.4% and a maturity at
February 1997.
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Description
Exhibit 4.1 Credit Agreement dated as of January 5, 1996, among
Cadmus, Wachovia Bank of Georgia, N.A., First
Union National Bank of Virginia, and NationsBank, N.A.
Exhibit 11 Statement Regarding Computation of Net Income per Share
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K: There were no reports on Form 8-K filed
for the three months ended March 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CADMUS COMMUNICATIONS CORPORATION
Date: May 10, 1996
/s/ C. Stephenson Gillispie, Jr.
C. Stephenson Gillispie, Jr.
Chairman, President, and Chief
Executive Officer
Date: May 10, 1996
/s/ Michael Dinkins
Michael Dinkins
Vice President and Chief
Financial Officer
$85,000,000
CREDIT AGREEMENT
dated as of
January 5, 1996
among
CADMUS COMMUNICATIONS CORPORATION
The Banks Listed Herein,
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent,
FIRST UNION NATIONAL BANK OF VIRGINIA,
as Co-Agent
and
NATIONSBANK, N.A.,
as Co-Agent
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS
SECTION 1.01. Definitions................................................1
SECTION 1.02. Accounting Terms and Determinations.......................12
SECTION 1.03. Use of Defined Terms......................................12
SECTION 1.04. Terminology...............................................12
SECTION 1.05. References................................................12
ARTICLE II - THE CREDITS
SECTION 2.01. Commitments to Make Syndicated Loans......................13
SECTION 2.02. Method of Borrowing Syndicated Loans......................13
SECTION 2.03. Money Market Loans........................................15
SECTION 2.04. Notes.....................................................18
SECTION 2.05. Maturity of Loans.........................................18
SECTION 2.06. Interest Rates............................................18
SECTION 2.07. Fees......................................................20
SECTION 2.08. Optional Termination or Reduction of Commitments..........21
SECTION 2.09. Mandatory Reduction and Termination of Commitments........22
SECTION 2.10. Optional Prepayments......................................22
SECTION 2.11. Mandatory Prepayments.....................................22
SECTION 2.12. General Provisions as to Payments.........................22
SECTION 2.13. Computation of Interest and Fees..........................23
ARTICLE III-CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to Closing.....................................24
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SECTION 3.02. Conditions to All Borrowings............................25
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power...........................26
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention........................................26
SECTION 4.03. Binding Effect..........................................26
SECTION 4.04. Financial Information...................................26
SECTION 4.05. Litigation..............................................26
SECTION 4.06. Compliance with ERISA...................................27
SECTION 4.07. Taxes...................................................27
SECTION 4.08. Subsidiaries............................................27
SECTION 4.09. Not an Investment Company...............................27
SECTION 4.10 Public Utility Holding Company Act.......................27
SECTION 4.11. Ownership of Property; Liens............................27
SECTION 4.12. No Default..............................................27
SECTION 4.13. Full Disclosure.........................................27
SECTION 4.14. Environmental Matters..................................28
SECTION 4.15. Compliance with Laws....................................28
SECTION 4.16. Capital Stock...........................................28
SECTION 4.17. Margin Stock............................................28
SECTION 4.18. Insolvency..............................................29
SECTION 4.19. Existing Facilities.....................................29
ARTICLE V - COVENANTS
SECTION 5.01. Information.............................................29
SECTION 5.02. Inspection of Property, Books and Records...............30
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SECTION 5.03. Ratio of Consolidated Funded Debt to
Consolidated Total Capital......................31
SECTION 5.04. Minimum Consolidated Net Worth..................31
SECTION 5.05. Fixed Charges Coverage..........................31
SECTION 5.06. Loans or Advances...............................31
SECTION 5.07. Investments.....................................31
SECTION 5.08. Negative Pledge.................................32
SECTION 5.09. Maintenance of Existence........................33
SECTION 5.10. Dissolution.....................................33
SECTION 5.11. Consolidations, Mergers and Sales of Assets.....33
SECTION 5.12. Use of Proceeds.................................33
SECTION 5.13. Compliance with Laws; Payment of Taxes..........33
SECTION 5.14. Insurance.......................................34
SECTION 5.15. Change in Fiscal Year...........................34
SECTION 5.16. Maintenance of Property.........................34
SECTION 5.17. Environmental Notices...........................34
SECTION 5.18. Environmental Matters...........................34
SECTION 5.19. Environmental Release...........................34
SECTION 5.20. Transactions with Affiliates....................34
SECTION 5.21. Significant Subsidiaries........................34
ARTICLE VI - DEFAULTS
SECTION 6.01. Events of Default...............................35
SECTION 6.02. Notice of Default...............................37
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ARTICLE VII - THE AGENT
SECTION 7.01. Appointment, Powers and Immunities.........38
SECTION 7.02. Reliance by Agent..........................38
SECTION 7.03. Defaults...................................38
SECTION 7.04. Rights of Agent and its Affiliates
as a Bank..................................39
SECTION 7.05. Indemnification............................39
SECTION 7.06. CONSEQUENTIAL DAMAGES......................39
SECTION 7.07. Payee of Note Treated as Owner.............40
SECTION 7.08. Non-Reliance on Agent and Other Banks......40
SECTION 7.09. Failure to Act.............................40
SECTION 7.10. Resignation or Removal of Agent............40
SECTION 7.11. Execution of Intercreditor Agreement.......41
ARTICLE VIII - CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair.......................41
SECTION 8.02. Illegality.................................41
SECTION 8.03. Increased Cost and Reduced Return..........42
SECTION 8.04. Base Rate Loans Substituted for
Fixed Rate Loans...........................43
SECTION 8.05. Compensation...............................43
ARTICLE IX - MISCELLANEOUS
SECTION 9.01. Notices....................................44
SECTION 9.02. No Waivers.................................44
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification............................44
SECTION 9.04. Setoffs; Sharing of Set-Offs...............45
SECTION 9.05. Amendments and Waivers.....................46
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SECTION 9.06. Margin Stock Collateral..................46
SECTION 9.07. Successors and Assigns...................46
SECTION 9.08. Confidentiality..........................48
SECTION 9.09. Representation by Banks..................48
SECTION 9.10. Obligations Several......................48
SECTION 9.11. Survival of Certain Obligations..........49
SECTION 9.12. Georgia Law..............................49
SECTION 9.13. Severability.............................49
SECTION 9.14. Interest.................................49
SECTION 9.15. Interpretation...........................49
SECTION 9.16. Consent to Jurisdiction..................49
SECTION 9.17. Counterparts.............................50
SCHEDULES AND EXHIBITS
SCHEDULE 4.08 Existing Subsidiaries
SCHEDULE 4.14 Environmental Matters
EXHIBIT A Form of Syndicated Note
EXHIBIT B Form of Money Market Note
EXHIBIT C Opinion of Counsel for the Borrower and Guarantors
EXHIBIT D Opinion of Womble Carlyle Sandridge & Rice, PLLC,
Special Counsel for the Agent
EXHIBIT E Form of Money Market Quote Request
EXHIBIT F Form of Money Market Quote
EXHIBIT G Form of Closing Certificate of Cadmus Communications
Corporation and Certain of its Subsidiaries
EXHIBIT H Form of Cadmus Communications Corporation Secretary's
Certificate
EXHIBIT I Form of Compliance Certificate
EXHIBIT J Form of Assignment and Acceptance
EXHIBIT K Form of Notice of Borrowing
EXHIBIT L Form of Guaranty Agreement
EXHIBIT M Intercreditor Agreement
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<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of January 5, 1996 among CADMUS
COMMUNICATIONS CORPORATION, the BANKS listed on the signature pages hereof,
FIRST UNION NATIONAL BANK OF VIRGINIA, as Co-Agent, NATIONSBANK, N.A., as
Co-Agent, and WACHOVIA BANK OF GEORGIA, N.A., as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this
Section 1.01 shall, for all purposes of this Agreement and any amendment hereto
(except as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.06(c).
"Affiliate" of any Person means (i) any other Person which
directly, or indirectly through one or more intermediaries, controls such
Person, (ii) any other Person which directly, or indirectly through one or more
intermediaries, is controlled by or is under common control with such Person, or
(iii) any other Person of which such Person owns, directly or indirectly, 20% or
more of the common stock or equivalent equity interests. As used herein, the
term "control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" means Wachovia Bank of Georgia, N.A., a national
banking association organized under the laws of the United States of America, in
its capacity as agent for the Banks hereunder, and its successors and permitted
assigns in such capacity.
"Agent's Letter Agreement" means that certain letter
agreement, dated as of October 13, 1995, between the Borrower and the Agent
relating to the structure of the Loans, and certain fees from time to time
payable by the Borrower to the Agent, together with all amendments and
modifications thereto.
"Agreement" means this Credit Agreement, together with all
amendments and supplements hereto.
"Applicable Facility Fee Rate" has the meaning set forth in
Section 2.07(a).
"Applicable Margin" has the meaning set forth in Section
2.06(a).
"Assignee" has the meaning set forth in Section 9.07(c).
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"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.07(c) in the form attached hereto as
Exhibit J.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as
having a Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day, the rate
per annum equal to the higher as of such day of (i) the Prime Rate, and (ii)
one-half of one percent above the Federal Funds Rate for such day. For purposes
of determining the Base Rate for any day, changes in the Prime Rate and the
Federal Funds Rate shall be effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear
interest at a rate based upon the Base Rate.
"Borrower" means Cadmus Communications Corporation, a
corporation incorporated under the laws of the Commonwealth of Virginia, and its
successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower at the same time by, in the case of a Syndicated Borrowing,
the Banks, or, in the case of a Money Market Borrowing, one or more of the
Banks, in each case pursuant to Article II. A Borrowing is a "Syndicated
Borrowing" if such Loans are Syndicated Loans or a "Money Market Borrowing" if
such Loans are Money Market Loans. A Borrowing is a "Domestic Borrowing" if such
Loans are Domestic Loans or a "Euro-Dollar Borrowing" if such Loans are
Euro-Dollar Loans. A Domestic Borrowing is a "Base Rate Borrowing" if such
Domestic Loans are Base Rate Loans.
"Capital Stock" means any nonredeemable capital stock of the
Borrower or any Consolidated Subsidiary (to the extent issued to a Person other
than the Borrower), whether common or preferred.
"Cash Available for Fixed Charges" for any period means the
sum of (i) Consolidated Net Income, (ii) taxes on income, (iii) Consolidated
Fixed Charges, (iv) Depreciation and Amortization, and (v) other non-cash
expenses for such period, all determined with respect to the Borrower and its
Consolidated Subsidiaries on a consolidated basis for such period and in
accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq. and its implementing
regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section
8.02.
"Closing Certificate" has the meaning set forth in Section
3.01(e).
2
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"Closing Date" means January 5, 1996.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Commitment" means, with respect to each Bank, (i) the amount
set forth opposite the name of such Bank on the signature pages hereof, or (ii)
as to any Bank which enters into an Assignment and Acceptance (whether as
transferor Bank or as Assignee thereunder), the amount of such Bank's Commitment
after giving effect to such Assignment and Acceptance, in each case as such
amount may be reduced from time to time pursuant to Sections 2.08 and 2.09.
"Compliance Certificate" has the meaning set forth in Section
5.01(c).
"Consolidated Fixed Charges" for any period means the sum of
(i) Consolidated Interest Expense for such period, and (ii) all payment
obligations of the Borrower and its Consolidated Subsidiaries for such period
under all operating leases and rental agreements.
"Consolidated Funded Debt" means, at any date, the Debt of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date.
"Consolidated Interest Expense" for any period means interest,
whether expensed or capitalized, in respect of Debt of the Borrower or any of
its Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" means, for any period, the Net
Income of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of the Borrower or any Subsidiary in the unremitted earnings of any
Person that is not a Subsidiary.
"Consolidated Net Worth" means, at any time, Stockholders'
Equity.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Borrower in its consolidated financial statements
as of such date.
"Consolidated Total Assets" means, at any time, the total
assets of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in
accordance with GAAP.
"Consolidated Total Capital" means, at any time, the sum of
(i) Consolidated Net Worth, and (ii) Consolidated Funded Debt, provided, that
for purposes of this definition only, in determining Consolidated Funded Debt,
clauses (vii), (viii) and (ix) of the definition of Debt contained in this
Agreement shall be disregarded.
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"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under capital
leases, (v) all obligations of such Person to reimburse any bank or other Person
in respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or similar instrument, (viii)
all Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person, and (ix) all Debt of others Guaranteed by
such Person.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived in writing, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day,
the Base Rate for such day.
"Depreciation and Amortization" means for any period the sum
of all depreciation and amortization expenses of the Borrower and its
Consolidated Subsidiaries for such period, as determined in accordance with
GAAP.
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Georgia are authorized or
required by law to close.
"Domestic Loans" means Base Rate Loans.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
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"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way associated with
any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or alleged noncompliance
with or liability under any Environmental Requirement, including without
limitation any complaints, citations, demands or requests from any Environmental
Authority or from any other person or entity for correction of any violation of
any Environmental Requirement or any investigations concerning any violation of
any Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated with any
Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to the Borrower,
any Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state and
local laws, ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Euro-Dollar Loan" means a Loan which bears or is to bear
interest at a rate based upon the London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.06(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Facilities" means the credit facilities aggregating
$25,000,000 available to the Borrower from Crestar Bank, First Union National
Bank of Virginia, NationsBank, N.A. and Wachovia
5
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Bank of North Carolina, N.A., pursuant to four separate Credit Agreements, each
dated February 14, 1994.
"Facility Fee Determination Date" has the meaning set forth in
Section 2.07(a).
"Facility Fee Payment Date" means each March 31, June 30,
September 30 and December 31.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to Wachovia on such day on
such transactions as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Rate Borrowing" means a Euro-Dollar Borrowing.
"Fixed Rate Loans" means Euro-Dollar Loans.
"GAAP" means generally accepted accounting principles applied
on a basis consistent with those which, in accordance with Section 1.02, are to
be used in making the calculations for purposes of determining compliance with
the terms of this Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantors" means, collectively, the following: American
Graphics, Inc., a Georgia corporation, Cadmus Direct Marketing, Inc., a North
Carolina corporation, Cadmus Interactive, Inc., a Georgia corporation, Cadmus
Journal Services, Inc., a Virginia corporation, Cadmus Marketing Group, Inc., a
Virginia corporation, Cadmus Printing Group, Inc., a Virginia corporation,
Cadmus Publishing
6
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Group, Inc., a Virginia corporation, Cadmus Software Services, Inc., a Virginia
corporation, Expert Graphics, Inc., a Virginia corporation, Garamond/Pridemark
Press, Inc., a Maryland corporation, Marblehead Communications, Inc., a Delaware
corporation, The William Byrd Press, Incorporated, a Virginia corporation, Three
Score, Inc., a Georgia corporation, Tuff Stuff Publications, Inc., a Virginia
corporation and Washburn Graphics, Inc., a North Carolina corporation and each
Significant Subsidiary that executes the Guaranty pursuant to Section 5.21.
"Guaranty" means the guaranty agreement executed by each of
the Guarantors substantially in the form of Exhibit L hereto, either as
originally executed or as it may be from time to time supplemented, modified,
amended, renewed or extended.
"Hazardous Materials" includes, without limitation, (a) solid
or hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. ss.6901 et seq. and its implementing regulations and amendments,
or in any applicable state or local law or regulation, (b) any "hazardous
substance", "pollutant" or "contaminant", as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Intercreditor Agreements" means the Intercreditor Agreements
by and among the applicable Guarantors, the Agent, as agent for the Banks, and
the 1993 Senior Noteholders (as defined therein), substantially in the form of
Exhibit M hereto, either as originally executed or as they may be from time to
time supplemented, modified, amended, renewed or extended.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period (subject to clause (c) below) which
would otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding EuroDollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to clause (c) below, end on the last Euro-Dollar
Business Day of the appropriate subsequent calendar month; and
(c) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
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(a) any Interest Period (subject to clause (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall
be extended to the next succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(3) with respect to each Money Market Borrowing, the period commencing on the
date of such Borrowing and ending 7 to 180 days thereafter, as the Borrower may
indicate in the applicable Money Market Quote Request; provided that:
(a) any Interest Period (subject to clause (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall
be extended to the next succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
"Investment" means any investment in any Person, whether by
means of purchase or acquisition of obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person, making of a
time deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Lending Office" means, as to each Bank, its office located at
its address set forth on the signature pages hereof (or identified on the
signature pages hereof as its Lending Office) or such other office as such Bank
may hereafter designate as its Lending Office by notice to the Borrower and the
Agent.
"Lien" means, with respect to any asset, any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan" means a Syndicated Loan or a Money Market Loan and
"Loans" means Syndicated Loans or Money Market Loans, or any or all of them, as
the context shall require.
"Loan Documents" means this Agreement, the Notes, the
Guaranty, any other document evidencing, relating to or securing the Loans, and
any other document or instrument delivered from time to time in connection with
this Agreement, the Notes, the Guaranty or the Loans, as such documents and
instruments may be amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.06(c).
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"Margin Stock" means "margin stock" as defined in Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System, as in
effect from time to time, together with all official rulings and interpretations
issued thereunder.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
(a) the financial condition, operations, business, properties or prospects of
the Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights
and remedies of the Agent or the Banks under the Loan Documents, or the ability
of the Borrower to perform its obligations under the Loan Documents to which it
is a party, as applicable, or (c) the legality, validity or enforceability of
any Loan Document.
"Money Market Loan" means a Loan which bears or is to bear
interest at a Money Market Rate.
"Money Market Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit B hereto, evidencing the obligation of the
Borrower to repay the Money Market Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto and "Money
Market Note" means any one of such Money Market Notes.
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03(c).
"Money Market Quote Request" has the meaning set forth in
Section 2.03(b).
"Money Market Rate" has the meaning set forth in Section
2.03(c)(ii)(C).
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period,
the aggregate amount of net income of such Person, after taxes, for such period,
as determined in accordance with GAAP.
"Net Proceeds of Capital Stock" means any and all proceeds
(whether cash or non-cash) or other consideration received by the Borrower or a
Consolidated Subsidiary in respect of the issuance of Capital Stock (including,
without limitation, the conversion of any Debt into Capital Stock), after
deducting therefrom all reasonable and customary costs and expenses incurred by
the Borrower or such Consolidated Subsidiary directly in connection with the
issuance of such Capital Stock.
"Note" means a Syndicated Note or a Money Market Note and
"Notes" means Syndicated Notes or Money Market Notes, or any or all of them, as
the context shall require.
"Notice of Borrowing" has the meaning set forth in Section
2.02.
"Officer's Certificate" has the meaning set forth in Section
3.01(f).
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"Participant" has the meaning set forth in Section 9.07(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means the acquisition of shares of
capital stock of any Person by the Borrower or any Subsidiary of the Borrower
if: (A) immediately after giving effect to such acquisition (i) such Person is a
Consolidated Subsidiary; (ii)the Borrower controls such Person directly or
indirectly through a Subsidiary; and (iii) no Default shall have occurred and be
continuing; (B) the line or lines of business engaged in by such Person are
related to the lines of business engaged in by the Borrower and its Subsidiaries
on the Closing Date; and (C) is made on a negotiated basis with the approval of
the Board of Directors of the Person to be acquired.
"Person" means an individual, a corporation, a partnership
(including without limitation, a joint venture), an unincorporated association,
a trust or any other entity or organization, including, but not limited to, a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by a member
of the Controlled Group for employees of any member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding 5 plan years made contributions.
"Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia. Wachovia
lends at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrower or any Subsidiary, wherever located.
"Quotation Date" has the meaning set forth in Section 2.03(b).
"Rate Determination Date" has the meaning set forth in Section
2.06(a).
"Redeemable Preferred Stock" of any Person means any preferred
stock issued by such Person which is at any time prior to the Termination Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Reported Net Income" means, for any period, the Net Income of
the Borrower and its Consolidated Subsidiaries determined on a consolidated
basis.
"Required Banks" means at any time Banks having at least 66
2/3% of the aggregate amount of the Commitments or, if the Commitments are no
longer in effect, Banks holding at least 66 2/3% of the aggregate outstanding
principal amount of the Notes.
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"Significant Subsidiary" means a Subsidiary that is a member
of the Significant Subsidiary Group; and "Significant Subsidiary Group" as at
any date means one or more Subsidiaries which account for (or in the case of a
recently formed or acquired Subsidiary would so account for on a pro forma
basis) at least (A) 70% of Consolidated Total Assets as measured as at the end
of the then most recently ended Fiscal Year or (B) 90% of Cash Available for
Fixed Charges for either of the two most recently ended Fiscal Years. The
determination of the Significant Subsidiary or the Significant Subsidiaries
comprising the Significant Subsidiary Group as of any date shall be made on the
basis of a group consisting of the smallest number of Subsidiaries necessary to
comprise the Significant Subsidiary Group as of such date. On the Closing Date,
the Significant Subsidiary Group is comprised of: (i) American Graphics, Inc;
(ii) Cadmus Journal Services, Inc.; (iii) The William Byrd Press, Incorporated;
and (iv) Washburn Graphics, Inc.
"Stockholders' Equity" means, at any time, the shareholders'
equity of the Borrower and its Consolidated Subsidiaries, as set forth or
reflected on the most recent consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries prepared in accordance with GAAP, but excluding any
Redeemable Preferred Stock of the Borrower or any of its Consolidated
Subsidiaries. Shareholders' equity generally would include, but not be limited
to (i) the par or stated value of all outstanding Capital Stock, (ii) capital
surplus, (iii) retained earnings, and (iv) various deductions such as (A)
purchases of treasury stock, (B) valuation allowances, (C) receivables due from
an employee stock ownership plan, (D) employee stock ownership plan debt
guarantees, and (E) translation adjustments for foreign currency transactions.
"Subsidiary" means any corporation or other 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 at the time directly or indirectly owned by the Borrower.
"Syndicated Loan" means a Domestic Loan or a Euro-Dollar Loan
and Syndicated Loans means Domestic Loans or Euro-Dollar Loans, or any or all of
them, as the context shall require.
"Syndicated Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Syndicated Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto and "Syndicated
Note" means any one of such Syndicated Notes.
"Taxes" has the meaning set forth in Section 2.12(c).
"Termination Date" means January 5, 2001.
"Total Assets" of any Person means, at any time, the total
assets of such Person, as set forth or reflected on the most recent balance
sheet of such Person, prepared in accordance with GAAP.
"Third Parties" means all lessees, sublessees, licensees and
other users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business and on a temporary basis.
"Transferee" has the meaning set forth in Section 9.07(d).
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"Unused Commitment" means at any date, with respect to any
Bank, an amount equal to its Commitment less the aggregate outstanding principal
amount of its Loans.
"Wachovia" means Wachovia Bank of Georgia, N.A., a national
banking association and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks, unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other Loan
Documents: (i) the Borrower shall have objected to determining such compliance
on such basis at the time of delivery of such financial statements, or (ii) the
Required Banks shall so object in writing within 30 days after the delivery of
such financial statements, in either of which events such calculations shall be
made on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made (which,
if objection is made in respect of the first financial statements delivered
under Section 5.01 hereof, shall mean the financial statements referred to in
Section 4.04).
SECTION 1.03. Use of Defined Terms. All terms defined in this
Agreement shall have the same meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall
otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 1.05. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits", "Schedules", and
"Sections" are references to articles, exhibits, schedules and sections hereof.
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ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Make Syndicated Loans. Each Bank
severally agrees, on the terms and conditions set forth herein, to make
Syndicated Loans to the Borrower from time to time before the Termination Date;
provided that, immediately after each such Syndicated Loan is made, the
aggregate outstanding principal amount of Syndicated Loans by such Bank shall
not exceed the amount of its Commitment, provided further that the aggregate
principal amount of all Syndicated Loans, together with the aggregate principal
amount of all Money Market Loans, at any one time outstanding shall not exceed
the aggregate amount of the Commitments of all of the Banks at such time. Each
Euro-Dollar Borrowing under this Section shall be in an aggregate principal
amount of $2,500,000 or any larger multiple of $500,000 and each Base Rate
Borrowing under this Section shall be in an aggregate principal amount of
$1,000,000 or any larger multiple of $500,000 (except that any such Syndicated
Borrowing may be in the aggregate amount of the Unused Commitments) and shall be
made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may borrow under this
Section, repay or, to the extent permitted by Section 2.10, prepay Syndicated
Loans and reborrow under this Section at any time before the Termination Date.
SECTION 2.02. Method of Borrowing Syndicated Loans. (a) The
Borrower shall give the Agent notice in the form attached hereto as Exhibit K (a
"Notice of Borrowing") prior to 11:00 A.M. (Atlanta, Georgia time) on the
Domestic Business Day of each Base Rate Borrowing, and at least 3 Euro-Dollar
Business Days before each Euro-Dollar Borrowing, specifying:
(i) the date of such Syndicated Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Syndicated Borrowing,
(iii) whether the Syndicated Loans comprising such Syndicated
Borrowing are to be Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Fixed Rate Borrowing, the duration of
the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's ratable
share of such Syndicated Borrowing and such Notice of Borrowing shall not
thereafter be revocable by the Borrower.
(c) Not later than 12:00 P.M. (Atlanta, Georgia time) on the
date of each Syndicated Borrowing, each Bank shall (except as provided in
subsection (d) of this Section) make available its ratable share of such
Syndicated Borrowing, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address referred to in or specified
pursuant to Section 9.01. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent will make
the funds so received from the Banks available to the Borrower at the Agent's
aforesaid
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<PAGE>
address. Unless the Agent receives notice from a Bank, at the Agent's address
referred to in Section 9.01, no later than 4:00 P.M. (local time at such
address) on the Domestic Business Day before the date of a Syndicated Borrowing
stating that such Bank will not make a Syndicated Loan in connection with such
Syndicated Borrowing, the Agent shall be entitled to assume that such Bank will
make a Syndicated Loan in connection with such Syndicated Borrowing and, in
reliance on such assumption, the Agent may (but shall not be obligated to) make
available such Bank's ratable share of such Syndicated Borrowing to the Borrower
for the account of such Bank. If the Agent makes such Bank's ratable share
available to the Borrower and such Bank does not in fact make its ratable share
of such Syndicated Borrowing available on such date, the Agent shall be entitled
to recover such Bank's ratable share from such Bank or the Borrower (and for
such purpose shall be entitled to charge such amount to any account of the
Borrower maintained with the Agent), together with interest thereon for each day
during the period from the date of such Syndicated Borrowing until such sum
shall be paid in full at a rate per annum equal to the rate at which the Agent
determines that it obtained (or could have obtained) overnight Federal funds to
cover such amount for each such day during such period, provided that any such
payment by the Borrower of such Bank's ratable share and interest thereon shall
be without prejudice to any rights that the Borrower may have against such Bank.
If such Bank shall repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Syndicated Loan included in such Syndicated
Borrowing for purposes of this Agreement.
(d) If any Bank makes a new Syndicated Loan hereunder on a day
on which the Borrower is to repay all or any part of an outstanding Syndicated
Loan from such Bank, such Bank shall apply the proceeds of its new Syndicated
Loan to make such repayment and only an amount equal to the difference (if any)
between the amount being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in subsection (c) of this
Section, or remitted by the Borrower to the Agent as provided in Section 2.12,
as the case may be.
(e) Notwithstanding anything to the contrary contained in this
Agreement, no Fixed Rate Borrowing may be made if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived in writing.
(f) In the event that a Notice of Borrowing fails to specify
whether the Loans comprising such Borrowing are to be Base Rate Loans or
Euro-Dollar Loans, such Loans shall be made as Base Rate Loans. If the Borrower
is otherwise entitled under this Agreement to repay any Loans maturing at the
end of an Interest Period applicable thereto with the proceeds of a new
Borrowing, and the Borrower fails to repay such Loans using its own moneys and
fails to give a Notice of Borrowing in connection with such new Borrowing, a new
Borrowing shall be deemed to be made on the date such Loans mature in an amount
equal to the principal amount of the Loans so maturing, and the Loans comprising
such new Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein,
(i) there shall not be more than nine (9) different Interest Periods outstanding
at the same time (for which purpose Interest Periods described in different
numbered clauses of the definition of the term "Interest Period" shall be deemed
to be different Interest Periods even if they are coterminous) and (ii) the
proceeds of any Base Rate Borrowing shall be applied first to repay the unpaid
principal amount of all Base Rate Loans (if any) outstanding immediately before
such Base Rate Borrowing.
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SECTION 2.03. Money Market Loans. (a) In addition to making
Syndicated Borrowings, the Borrower may, as set forth in this Section, request
the Banks to make offers to make Money Market Loans to the Borrower. The Banks
may, but shall have no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the manner set forth in
this Section, provided that:
(i) the aggregate principal amount of all Money Market Loans,
together with the aggregate principal amount of all Syndicated Loans,
at any one time outstanding shall not exceed the aggregate amount of
the Commitments of all of the Banks at such time;
(ii) the Borrower shall not request the Banks to make offers
to make Money Market Loans at any time that the Borrower's ratio of
Consolidated Funded Debt to Consolidated Total Capital is greater than
or equal to 0.50; and
(iii) the Banks shall have no obligation to fund a Money
Market Loan in respect of which the Borrower has accepted an offer in a
Money Market Quote if on the Quotation Date the Borrower's ratio of
Consolidated Funded Debt to Consolidated Total Capital is greater than
or equal to 0.50.
(b) When the Borrower wishes to request offers to make Money
Market Loans, it shall give the Agent (which shall promptly notify the Banks)
notice substantially in the form of Exhibit E hereto (a "Money Market Quote
Request") so as to be received no later than 12:00 P.M. (Atlanta, Georgia time)
one Domestic Business Day prior to the date of the Money Market Borrowing
proposed therein (or such other time and date as the Borrower and the Agent,
with the consent of the Required Banks, may agree), specifying:
(i) the proposed date of such Money Market Borrowing,
which shall be a Domestic Business Day (the "Quotation Date");
(ii) the aggregate amount of such Money Market Borrowing,
which shall be at least $2,500,000 (and in larger multiples of
$500,000) but shall not cause the limits specified in Section 2.03(a)
to be violated; and
(iii) the duration of the Interest Period applicable
thereto, which shall be 7 to 180 days.
The Borrower may request offers to make Money Market Loans for
up to three different Interest Periods in a single Money Market Quote Request;
provided that the request for each separate Interest Period shall be deemed to
be a separate Money Market Quote Request for a separate Money Market Borrowing.
Except as otherwise provided in the immediately preceding sentence, the Borrower
shall not deliver a Money Market Quote Request more frequently than once every 5
Domestic Business Days.
(c) (i) Each Bank may, but shall have no obligation to, submit
a Money Market Quote containing an offer to make a Money Market Loan in
response to any Money Market Quote Request; provided that, if the
Borrower's request under Section
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2.03(b) specified more than one Interest Period, such Bank may, but
shall have no obligation to, make a single submission containing a
separate offer for each such Interest Period and each such separate
offer shall be deemed to be a separate Money Market Quote. Each Money
Market Quote must be submitted to the Agent not later than 10:00 A.M.
(Atlanta, Georgia time) on the Quotation Date (or such other time and
date as the Borrower and the Agent, with the consent of the Required
Banks, may agree); provided that any Money Market Quote submitted by
Wachovia may be submitted, and may only be submitted, if Wachovia
notifies the Borrower of the terms of the offer contained therein not
later than 9:45 A.M. (Atlanta, Georgia time) on the Quotation Date.
Subject to Section 6.01, any Money Market Quote so made shall be
irrevocable except with the written consent of the Agent given on the
instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the
form of Exhibit F hereto and shall specify:
(A) the proposed date of the Money Market Borrowing
and the duration of the Interest Period therefor, which shall
be 7 to 180 days;
(B) the maximum principal amount of the Money Market
Loan which the quoting Bank is willing to make for the
applicable Interest Period, which principal amount (x) may be
greater than or less than the Commitment of the quoting Bank,
(y) shall be at least $2,500,000 or a larger multiple of
$500,000, and (z) may not exceed the principal amount of the
Money Market Borrowing for which offers were requested;
(C) the rate of interest per annum (rounded, if
necessary, to the nearest 1/100th of 1%) (the "Money Market
Rate") offered for each such Money Market Loan; and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Borrower, no Money Market
Quote shall contain qualifying, conditional or similar language or
propose terms other than or in addition to those set forth in the
applicable Money Market Quote Request (other than setting forth the
maximum principal amount of the Money Market Loan which the quoting
Bank is willing to make for the applicable Interest Period).
(d) The Agent shall as promptly as practicable after the Money
Market Quote is submitted (but in any event not later than 10:30 A.M. (Atlanta,
Georgia time) notify the Borrower of the terms (i) of any Money Market Quote
submitted by a Bank that is in accordance with Section 2.03(c) and (ii) of any
Money Market Quote that amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with respect to the same
Money Market Quote Request. Any such subsequent Money Market Quote shall be
disregarded by the Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money
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Market Quote. The Agent's notice to the Borrower shall specify (A) the maximum
aggregate principal amount of the Money Market Borrowing for which offers have
been received and (B) the maximum principal amount and Money Market Rates so
offered by each Bank (identifying the Bank that made each Money Market Quote).
(e) Not later than 11:00 A.M. (Atlanta, Georgia time) on the
Quotation Date (or such other time and date as the Borrower and the Agent, with
the consent of the Required Banks, may agree), the Borrower shall notify the
Agent of its acceptance or nonacceptance of the offers so notified to it
pursuant to Section 2.03(d) and the Agent shall promptly notify each Bank that
has submitted a Money Market Quote. In the case of acceptance, such notice shall
specify the aggregate principal amount of offers for each Interest Period that
are accepted. The Borrower may accept any Money Market Quote in whole or in part
(provided that any Money Market Quote accepted in part from any Bank shall not
be less than the amount set forth in the Money Market Quote of such Bank as the
minimum principal amount of the Money Market Loan such Bank was willing to make
for the applicable Interest Period); provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;
(ii) the aggregate principal amount of each Money Market
Borrowing shall be at least $2,500,000 (and in larger multiples of
$500,000) but shall not cause the limits specified in Section 2.03(a)
to be violated;
(iii) acceptance of offers may only be made in ascending
order of Money Market Rates; and
(iv) the Borrower may not accept any offer where the Agent has
advised the Borrower that such offer fails to comply with Section
2.03(c)(ii) or otherwise fails to comply with the requirements of this
Agreement (including, without limitation, Section 2.03(a)).
If offers are made by two or more Banks with the same Money Market Rates for a
greater aggregate principal amount than the amount in respect of which offers
are accepted for the related Interest Period, the principal amount of Money
Market Loans in respect of which such offers are accepted shall be allocated by
the Borrower among such Banks as nearly as possible (in multiples of $100,000)
in proportion to the aggregate principal amount of such offers. Determinations
by the Borrower of the amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
(f) Any Bank whose offer to make any Money Market Loan has
been accepted shall, not later than 12:00 P.M. (Atlanta, Georgia time) on the
Quotation Date, make the amount of such Loan available to the Agent at its
address referred to in Section 9.01 in immediately available funds. The amount
so received by the Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower on such date by depositing the
same, in immediately available funds, in an account of such Borrower maintained
with Wachovia.
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SECTION 2.04. Notes. (a) The Syndicated Loans of each Bank
shall be evidenced by a single Syndicated Note payable to the order of such Bank
for the account of its Lending Office in an amount equal to the original
principal amount of such Bank's Commitment.
(b) The Money Market Loans made by any Bank to the Borrower
shall be evidenced by a single Money Market Note payable to the order of such
Bank for the account of its Lending Office.
(c) Upon receipt of each Bank's Notes pursuant to Section
3.01, the Agent shall deliver such Notes to such Bank. Each Bank shall record,
and prior to any transfer of its Notes shall endorse on the schedule forming a
part thereof appropriate notations to evidence, the date, amount and maturity
of, and effective interest rate for, each Loan made by it, the date and amount
of each payment of principal made by the Borrower with respect thereto and
whether, in the case of such Bank's Syndicated Note, such Syndicated Loan is a
Base Rate Loan or Euro-Dollar Loan, and such schedule shall constitute
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Bank's Notes; provided that the failure of any Bank to make, or any error in
making, any such recordation or endorsement shall not affect the obligation of
the Borrower hereunder or under the Notes or the ability of any Bank to assign
its Notes. Each Bank is hereby irrevocably authorized by the Borrower so to
endorse its Notes and to attach to and make a part of any Note a continuation of
any such schedule as and when required.
SECTION 2.05. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
SECTION 2.06. Interest Rates. (a) "Applicable Margin"
shall be determined quarterly based upon the ratio of Consolidated Funded Debt
to Consolidated Total Capital (calculated as of the last day of each Fiscal
Quarter), as follows:
Ratio of Consolidated Funded
Debt to Consolidated Total Capital Base Rate Loans Euro-Dollar Loans
Greater than or equal to 50% 0% .425%
Greater than or equal to 40%
but less than 50% 0% .325%
Greater than or equal to 30%
but less than 40% 0% .25%
Less than 30% 0% .20%
The Applicable Margin shall be determined effective as of the date (herein, the
"Rate Determination Date") which is 60 days after the last day of the Fiscal
Quarter as of the end of which the foregoing ratio is being determined, based on
the quarterly financial statements for such Fiscal Quarter, and the Applicable
Margin so determined shall remain effective from such Rate Determination Date
until the date which is 60 days after the last day of the Fiscal Quarter in
which such Rate Determination Date falls (which latter date shall be a new Rate
Determination Date); provided that (i) for the period from and including the
Closing Date to but excluding the Rate Determination Date next following the
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Closing Date, the Applicable Margin shall be (A) 0% for Base Rate Loans, and (B)
.25% for Euro-Dollar Loans, (ii) in the case of any Applicable Margin determined
for the fourth and final Fiscal Quarter of a Fiscal Year, the Rate Determination
Date shall be the date which is 105 days after the last day of such final Fiscal
Quarter and such Applicable Margin shall be determined based upon the annual
audited financial statements for the Fiscal Year ended on the last day of such
final Fiscal Quarter, and (iii) if on any Rate Determination Date the Borrower
shall have failed to deliver to the Banks the financial statements required to
be delivered pursuant to Section 5.01(b) with respect to the Fiscal Quarter most
recently ended prior to such Rate Determination Date, then for the period
beginning on such Rate Determination Date and ending on the earlier of (A) the
date on which the Borrower shall deliver to the Banks the financial statements
to be delivered pursuant to Section 5.01(b) with respect to such Fiscal Quarter
or any subsequent Fiscal Quarter, or (B) the date on which the Borrower shall
deliver to the Banks annual financial statements required to be delivered
pursuant to Section 5.01(a) with respect to the Fiscal Year which includes such
Fiscal Quarter or any subsequent Fiscal Year, the Applicable Margin shall be
determined as if the ratio of Consolidated Funded Debt to Consolidated Total
Capital was more than 50% at all times during such period. Any change in the
Applicable Margin on any Rate Determination Date shall result in a corresponding
change, effective on and as of such Rate Determination Date, in the interest
rate applicable to each Syndicated Loan outstanding on such Rate Determination
Date.
(b) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate for such day plus the
Applicable Margin. Such interest shall be payable for each Interest Period on
the last day thereof. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period;
provided that if any Euro-Dollar Loan shall, as a result of clause (1)(c) of the
definition of Interest Period, have an Interest Period of less than one month,
such Euro-Dollar Loan shall bear interest during such Interest Period at the
rate applicable to Base Rate Loans during such period. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than 3 months, at intervals of 3 months after the first day
thereof. Any overdue principal of and, to the extent permitted by applicable
law, overdue interest on any Euro-Dollar Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan the rate
per annum determined on the basis of the offered rate for deposits in Dollars of
amounts equal or comparable to the principal amount of such Euro-Dollar Loan
offered for a term comparable to such Interest Period, which rate appears on the
Telerate Screen Page 3750 as of 11:00 a.m., London time, 2 Euro-Dollar Business
Days prior to the first day of
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such Interest Period, provided that (i) if more than one such offered rate
appears on the Telerate Screen Page 3750, the "London Interbank Offered Rate"
will be the arithmetic average (rounded upward, if necessary, to the next higher
1/100th of 1%) of such offered rates; and (ii) if no such offered rates appear
on such page, the "London Interbank Offered Rate" for such Interest Period will
be the arithmetic average (rounded, if necessary, to the next higher 1/100th of
1%) of rates quoted by not less than 2 major banks in New York City, selected by
the Agent, at approximately 10:00 a.m., New York City time, 2 Euro-Dollar
Business Days prior to the first day of such Interest Period, for deposits in
Dollars offered to leading European banks for a period comparable to such
Interest Period in an amount comparable to the principal amount of such
Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The Adjusted
London Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
(d) Each Money Market Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the Money Market Rate for such Loan quoted
by the Bank making such Loan in accordance with Section 2.03. Such interest
shall be payable for such Interest Period on the last day thereof and, if such
Interest Period is longer than 90 days, at intervals of 90 days after the first
day thereof. Any overdue principal of and, to the extent permitted by law,
overdue interest on any Money Market Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default Rate.
(e) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower and the
Banks by telecopy of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error.
(f) After the occurrence and during the continuance of a
Default, the principal amount of the Loans (and, to the extent permitted by
applicable law, all accrued interest thereon) may, at the election of the
Required Banks, bear interest at the Default Rate; provided, however, that
automatically whether or not the Required Banks elect to do so, any overdue
principal of and, to the extent permitted by law, overdue interest on any Loan
shall bear interest payable on demand, for each day until paid at a rate per
annum equal to the Default Rate.
SECTION 2.07. Fees. (a) The Borrower shall pay to the Agent
for the ratable account of each Bank a facility fee equal to the product of: (i)
the aggregate of the daily average amounts of such Bank's Commitment, times (ii)
a per annum percentage equal to the Applicable Facility Fee Rate. Such facility
fee shall accrue from and including the Closing Date to and including the
Termination Date. Facility fees shall be payable quarterly in arrears on the
first Facility Fee Payment Date following each Facility Fee Determination Date
and on the Termination Date; provided that should the Commitments be terminated
at any time prior to the Termination Date for any reason, the entire accrued and
unpaid facility fee shall be paid on the date of such termination. The
"Applicable Facility
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Fee Rate" shall be determined quarterly based upon the ratio of Consolidated
Funded Debt to Consolidated Total Capital (calculated as of the last day of each
Fiscal Quarter) as follows:
Ratio of Consolidated Funded Applicable
Debt to Consolidated Total Capital Facility Fee Rate
Greater than or equal to 50% .20%
Greater than or equal to 40%
but less than 50% .175%
Greater than or equal to 30%
but less than 40% .15%
Less than 30% .125%
The Applicable Facility Fee Rate shall be determined effective as of the date
(herein, the "Facility Fee Determination Date") which is 60 days after the last
day of the Fiscal Quarter as of the end of which the foregoing ratio is being
determined, based on the quarterly financial statements for such Fiscal Quarter,
and the Applicable Facility Fee Rate so determined shall remain effective from
such Facility Fee Determination Date until the date which is 60 days after the
last day of the Fiscal Quarter in which such Facility Fee Determination Date
falls (which latter date shall be a new Facility Fee Determination Date);
provided that (i) for the period from and including the Closing Date to but
excluding the Facility Fee Determination Date next following the Closing Date,
the Applicable Facility Fee Rate shall be .15%; (ii) in the case of any
Applicable Facility Fee Rate determined for the fourth and final Fiscal Quarter
of a Fiscal Year, the Facility Fee Determination Date shall be the date which is
105 days after the last day of such final Fiscal Quarter and such Applicable
Facility Fee Rate shall be determined based upon the annual audited financial
statements for the Fiscal Year ended on the last day of such final Fiscal
Quarter, and (iii) if on any Facility Fee Determination Date the Borrower shall
have failed to deliver to the Banks the financial statements required to be
delivered pursuant to Section 5.01(b) with respect to the Fiscal Quarter most
recently ended prior to such Facility Fee Determination Date, then for the
period beginning on such Facility Fee Determination Date and ending on the
earlier of (A) the date on which the Borrower shall deliver to the Banks the
financial statements to be delivered pursuant to Section 5.01(b) with respect to
such Fiscal Quarter or any subsequent Fiscal Quarter, and (B) the date on which
the Borrower shall deliver to the Banks annual financial statements required to
be delivered pursuant to Section 5.01(a) with respect to the Fiscal Year which
includes such Fiscal Quarter or any subsequent Fiscal Year, the Applicable
Facility Fee Rate shall be determined as if the ratio of Consolidated Funded
Debt to Consolidated Total Capital was more than 50% at all times during such
period.
(b) The Borrower shall pay to the Agent, for the account and
sole benefit of the Agent, such fees and other amounts at such times as set
forth in the Agent's Letter Agreement.
SECTION 2.08. Optional Termination or Reduction of
Commitments. The Borrower may, upon at least 3 Domestic Business Days' notice to
the Agent, terminate at any time, or proportionately reduce from time to time by
an aggregate amount of at least $1,000,000 or any larger multiple of $500,000,
the Commitments. If the Commitments are terminated in their entirety, all
accrued fees (as provided under Section 2.07) shall be payable on the effective
date of such termination.
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SECTION 2.09. Mandatory Reduction and Termination of
Commitments. The Commitments shall terminate on the Termination Date and any
Loans then outstanding (together with accrued interest thereon) shall be due and
payable on such date.
SECTION 2.10. Optional Prepayments. (a) The Borrower may, upon
at least 1 Domestic Business Day's notice to the Agent, prepay any Base Rate
Borrowing in whole at any time, or from time to time in part in amounts
aggregating at least $1,000,000 or any larger multiple of $500,000, by paying
the principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Base Rate Loans of the several Banks included in such Base Rate
Borrowing.
(b) Except as provided in Section 8.02, the Borrower may not
prepay all or any portion of the principal amount of any Fixed Rate Loan or any
Money Market Loan prior to the last day of an Interest Period applicable
thereto.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.11. Mandatory Prepayments. On each date on which the
Commitments are reduced pursuant to Section 2.08 or Section 2.09, the Borrower
shall repay or prepay such principal amount of the outstanding Loans, if any
(together with interest accrued thereon and any amounts due under Section
8.05(a)), as may be necessary so that after such payment the aggregate unpaid
principal amount of the Loans does not exceed the aggregate amount of the
Commitments as then reduced. Each such payment or prepayment shall be applied to
repay or prepay ratably the Loans of the several Banks; provided that such
prepayment shall be applied, first, to Syndicated Loans outstanding on the date
of such prepayment (in direct order of maturity) and then, to the extent
necessary, to Money Market Loans outstanding on the date of such prepayment (in
direct order of maturity).
SECTION 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans and
of facility fees hereunder, not later than 11:00 A.M. (Atlanta, Georgia time) on
the date when due, in Federal or other funds immediately available in Atlanta,
Georgia, to the Agent at its address referred to in Section 9.01, and any such
payment to the Agent in accordance with this Section 2.12 shall satisfy in full
the Borrower's obligation to make such payment hereunder and under the Notes.
The Agent will promptly distribute to each Bank its ratable share of each such
payment received by the Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the
Domestic Loans or the Money Market Loans or of fees shall be due on a day which
is not a Domestic Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. Whenever any payment of principal
of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
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(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with respect to
any Loan or fee relating thereto shall be paid without deduction for, and free
from, any tax, imposts, levies, duties, deductions, or withholdings of any
nature now or at anytime hereafter imposed by any governmental authority or by
any taxing authority thereof or therein excluding in the case of each Bank, (i)
taxes imposed on or measured by its net income, (ii) franchise taxes imposed on
it, by the jurisdiction under the laws of which such Bank is organized or any
political subdivision thereof, and (iii) taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Bank's applicable
Lending Office or any political subdivision thereof (all such nonexcluded taxes,
imposts, levies, duties, deductions or withholdings of any nature being
"Taxes"). In the event that the Borrower is required by applicable law to make
any such withholding or deduction of Taxes with respect to any Loan or fee or
other amount, promptly after receiving notice thereof, the Borrower shall pay
such deduction or withholding to the applicable taxing authority, shall promptly
furnish to any Bank in respect of which such deduction or withholding is made
all receipts and other documents evidencing such payment and shall pay to such
Bank additional amounts as may be necessary in order that the amount received by
such Bank after the required withholding or other payment shall equal the amount
such Bank would have received had no such withholding or other payment been
made. If no withholding or deduction of Taxes are payable in respect of any Loan
or fee relating thereto, upon the request of any Bank having a reasonable belief
or concern that such Bank may be subject to Taxes, the Borrower shall furnish,
at such Bank's request, a certificate from each applicable taxing authority or
an opinion of counsel acceptable to such Bank, in either case stating that such
payments are exempt from or not subject to withholding or deduction of Taxes. If
the Borrower fails to provide such original or certified copy of a receipt
evidencing payment of Taxes or certificate(s) or opinion of counsel of
exemption, the Borrower hereby agrees to compensate such Bank for, and indemnify
them with respect to, the tax consequences of the Borrower's failure to provide
evidence of tax payments or tax exemption.
In the event any Bank receives a refund of any Taxes paid by
the Borrower pursuant to this Section 2.12, it will pay to the Borrower the
amount of such refund promptly upon receipt thereof; provided, however, if at
any time thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.12 shall be applicable with respect to any Participant,
Assignee or other Transferee, and any calculations required by such provisions
(i) shall be made based upon the circumstances of such Participant, Assignee or
other Transferee, and (ii) constitute a continuing agreement and shall survive
the termination of this Agreement and the payment in full or cancellation of the
Notes.
SECTION 2.13. Computation of Interest and Fees. Interest on
Domestic Loans based on the Base Rate shall be computed on the basis of a year
of 360 days and paid for the actual number of days elapsed (including the first
day but excluding the last day). Interest on Euro-Dollar Loans and interest on
Money Market Loans shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed, calculated as to each Interest Period
from and including the first day thereof to but excluding the last day thereof.
Facility fees and any other fees payable hereunder shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
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ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to Closing. On the Closing Date, the
Borrower shall satisfy each of the following conditions:
(a) receipt by the Agent from each of the parties hereto of
either (i) a duly executed counterpart of this Agreement signed by such
party or (ii) a facsimile transmission stating that such party has duly
executed a counterpart of this Agreement and sent such counterpart to
the Agent;
(b) receipt by the Agent of a duly executed Syndicated Note
and a duly executed Money Market Note for the account of each Bank
complying with the provisions of Section 2.04;
(c) receipt by the Agent of an opinion (together with any
opinions of local counsel relied on therein) of Mays & Valentine,
counsel for the Borrower and the Guarantors, dated as of the Closing
Date, substantially in the form of Exhibit C hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Agent or any Bank may reasonably request;
(d) receipt by the Agent of an opinion of Womble, Carlyle,
Sandridge & Rice, PLLC, special counsel for the Agent, dated as of the
Closing Date, substantially in the form of Exhibit D hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Agent may reasonably request;
(e) receipt by the Agent of a certificate (the "Closing
Certificate"), dated the Closing Date, substantially in the form of
Exhibit G hereto, signed by a principal financial officer of the
Borrower and the Secretary of each Guarantor, to the effect that (i) no
Default has occurred and is continuing on the Closing Date; (ii) the
representations and warranties of the Borrower contained in Article IV
are true on and as of the Closing Date; and (iii) the representations
and warranties of the Guarantors contained in the Guaranty are true on
and as of the Closing Date;
(f) receipt by the Agent of all documents which the Agent or
any Bank may reasonably request relating to the existence of the
Borrower and each Guarantor, the corporate authority for and the
validity of this Agreement, the Notes, and the Guaranty and any other
matters relevant hereto, all in form and substance satisfactory to the
Agent, including without limitation a certificate of incumbency of the
Borrower (the "Officer's Certificate"), signed by the Secretary or an
Assistant Secretary of the Borrower, substantially in the form of
Exhibit H hereto, certifying as to the names, true signatures and
incumbency of the officer or officers of the Borrower authorized to
execute and deliver the Loan Documents to which it is a party, and
certified copies of the following items: (i) the Borrower's Certificate
of Incorporation, (ii) the Borrower's Bylaws, (iii) a certificate of
the Secretary of State of the State of incorporation of the Borrower as
a corporation organized under the laws of such state, and (iv) the
action taken by the Board of Directors of the Borrower authorizing the
Borrower's execution, delivery and performance of this Agreement, the
Notes and the other Loan Documents to which it is a party;
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(g) receipt by the Agent of the Guaranty, duly executed by
each Guarantor; and
(h) evidence satisfactory to the Agent and the Banks in their
sole discretion of the termination of the Existing Facilities.
SECTION 3.02. Conditions to All Borrowings. The obligation
of each Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) except as provided in Section 2.02(f), either (i) receipt
by the Agent of a Notice of Borrowing as required by Section 2.02 (if
such Borrowing is a Syndicated Borrowing), or (ii) compliance with the
provisions of Section 2.03 (if such Borrowing is a Money Market
Borrowing);
(b) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the
Borrower contained in Article IV of this Agreement shall be true on and
as of the date of such Borrowing;
(d) the fact that the representations and warranties of the
Guarantors contained in the Guaranty shall be true on and as of the
date of such Borrowing; and
(e) the fact that, immediately after such Borrowing (i) the
aggregate outstanding principal amount of the Syndicated Loans of each
Bank will not exceed the amount of its Commitment and (ii) the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitments of all of the Banks as of such
date.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the truth and accuracy of the
facts specified in clauses (b), (c), (d) and (e)of this Section.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary, except where a failure to be so qualified would not have a
Material Adverse Effect and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement, the Notes and the other Loan Documents (i) are within the Borrower's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any of its Subsidiaries, and (v) do not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower enforceable in accordance with its
terms, and the Notes and the other Loan Documents, when executed and delivered
in accordance with this Agreement, will constitute valid and binding obligations
of the Borrower enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. The consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of June 30, 1995, and
the related consolidated statements of income, shareholders' equity and cash
flows for the Fiscal Year then ended, reported on by Arthur Anderson LLP, copies
of which have been delivered to each of the Banks, and the unaudited
consolidated financial statements of the Borrower for the interim period ended
September 30, 1995, copies of which have been delivered to each of the Banks,
fairly present, in conformity with GAAP, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such periods stated.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending, or to the knowledge of the Borrower threatened, against or
affecting the Borrower or any of its Subsidiaries before any court or arbitrator
or any governmental body, agency or official which could have a Material Adverse
Effect or which in any manner draws into question the validity or enforceability
of, or could materially impair the ability of the Borrower to perform its
obligations under, this Agreement, the Notes or any of the other Loan Documents.
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SECTION 4.06. Compliance with ERISA. (a) The Borrower and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled
Group is or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Taxes. There have been filed on behalf of the
Borrower and its Subsidiaries all Federal, state and local income, excise,
property and other tax returns which are required to be filed by them and all
taxes due pursuant to such returns or pursuant to any assessment received by or
on behalf of the Borrower or any Subsidiary have been paid. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate. United States income tax returns of the Borrower and its
Subsidiaries have been examined and closed through the Fiscal Year ended June
30, 1991.
SECTION 4.08. Subsidiaries. Each of the Borrower's
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is duly qualified
to transact business in every jurisdiction where, by the nature of its business,
such qualification is necessary, except where a failure to be so qualified would
not have a Material Adverse Effect, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Borrower has no Subsidiaries except those
Subsidiaries listed on Schedule 4.08, which accurately sets forth each such
Subsidiary's complete name and jurisdiction of incorporation.
SECTION 4.09. Not an Investment Company. Neither the
Borrower nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 4.10 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the
Borrower and its Consolidated Subsidiaries has title to its properties
sufficient for the conduct of its business, and none of such property is subject
to any Lien except as permitted in Section 5.08.
SECTION 4.12. No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound which could have or cause a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
SECTION 4.13. Full Disclosure. All information heretofore
furnished by the Borrower to the Agent or any Bank for purposes of or in
connection with this Agreement or any transaction
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contemplated hereby is, and all such information hereafter furnished by the
Borrower to the Agent or any Bank will be, true, accurate and complete in every
material respect or based on reasonable estimates on the date as of which such
information is stated or certified. The Borrower has disclosed to the Banks in
writing any and all facts which could have or cause a Material Adverse Effect.
SECTION 4.14. Environmental Matters. (a) Neither the Borrower
nor any Subsidiary is subject to any Environmental Liability which is reasonably
likely to have a Material Adverse Effect and, except as disclosed on Schedule
4.14, neither the Borrower nor any Subsidiary has been designated as a
potentially responsible party under CERCLA or under any state statute similar to
CERCLA. None of the Properties has been identified on any current or proposed
(i) National Priorities List under 40 C.F.R. ss. 300, (ii) CERCLIS list or (iii)
any list arising from a state statute similar to CERCLA.
(b) No Hazardous Materials have been or are being used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled at, or shipped or transported to or
from the Properties or are otherwise present at, on, in or under the Properties,
or, to the best of the knowledge of the Borrower, at or from any adjacent site
or facility, except for Hazardous Materials, such as inks, other chemicals used
in printing operations, cleaning solvents, pesticides and other materials used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, and managed or otherwise handled in the ordinary course of business
in compliance with all applicable Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries and Affiliates,
has procured all Environmental Authorizations necessary for the conduct of its
business, and is in compliance with all Environmental Requirements in connection
with the operation of the Properties and the Borrower's, and each of its
Subsidiary's and Affiliate's, respective businesses, except where a failure to
procure an Environmental Authorization or a failure to comply with an
Environmental Requirement would not, singly or in the aggregate, have a Material
Adverse Effect.
SECTION 4.15. Compliance with Laws. The Borrower and each
Subsidiary is in compliance with all applicable laws, including, without
limitation, all Environmental Laws, except where any failure to comply with any
such laws would not, alone or in the aggregate, have a Material Adverse Effect.
SECTION 4.16. Capital Stock. All Capital Stock, debentures,
bonds, notes and all other securities of the Borrower and its Subsidiaries
presently issued and outstanding are validly and properly issued in accordance
with all applicable laws, including, but not limited to, the "Blue Sky" laws of
all applicable states and the federal securities laws. The issued shares of
Capital Stock of the Borrower's Wholly Owned Subsidiaries are owned by the
Borrower free and clear of any Lien or adverse claim. At least a majority of the
issued shares of capital stock of each of the Borrower's other Subsidiaries
(other than Wholly Owned Subsidiaries) is owned by the Borrower free and clear
of any Lien or adverse claim.
SECTION 4.17. Margin Stock. Neither the Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulation X.
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SECTION 4.18. Insolvency. After giving effect to the execution
and delivery of the Loan Documents and the making of the Loans under this
Agreement, the Borrower will not be "insolvent," within the meaning of such term
as used in O.C.G.A. ss. 18-2-22 or as defined in ss. 101 of Title 11 of the
United States Code or Section 2 of the Uniform Fraudulent Transfer Act, or any
other applicable state law pertaining to fraudulent transfers, as each may be
amended from time to time, or be unable to pay its debts generally as such debts
become due, or have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated.
SECTION 4.19. Existing Facilities. The Borrower and the
Guarantors have fully paid and performed any and all indebtedness, liabilities
and obligations under the Existing Facilities and the Existing Facilities have
been terminated.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each
of the Banks:
(a) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a consolidated and consolidating balance
sheet of the Borrower and its Consolidated Subsidiaries as of the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, shareholders' equity and cash flows for such
Fiscal Year, setting forth in each case in comparative form the figures
for the previous fiscal year, all certified by Arthur Anderson LLP or
other independent public accountants of nationally recognized standing,
with such certification to be free of exceptions and qualifications not
acceptable to the Required Banks;
(b) as soon as available and in any event within 45 days after
the end of each of the first 3 Fiscal Quarters of each Fiscal Year, a
consolidated and consolidating balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Quarter and the
related consolidated and consolidating statement of income and
statement of cash flows for such Fiscal Quarter and for the portion of
the Fiscal Year ended at the end of such Fiscal Quarter, setting forth
in each case in comparative form the figures for the corresponding
Fiscal Quarter and the corresponding portion of the previous Fiscal
Year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, GAAP and consistency by the chief financial
officer, the chief accounting officer or the treasurer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate,
substantially in the form of Exhibit I (a "Compliance Certificate"), of
the chief financial officer, the chief accounting officer or the
treasurer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 5.03 through 5.08,
inclusive, and 5.11 on the date of such financial statements and (ii)
stating whether any Default exists on the date
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of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes
to take with respect thereto;
(d) simultaneously with the delivery of each set of annual
financial statements referred to in clause (a) above, a statement of
the firm of independent public accountants which reported on such
statements to the effect that nothing has come to their attention to
cause them to believe that any Default existed on the date of such
financial statements;
(e) within 5 Domestic Business Days after the Borrower becomes
aware of the occurrence of any Default, a certificate of the chief
financial officer, the chief accounting officer or the treasurer of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports which the Borrower shall have filed with
the Securities and Exchange Commission;
(h) if and when the Borrower or any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or required
to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, a copy of such notice; or
(iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate or appoint a trustee to administer any Plan, a copy
of such notice;
(i) promptly after the Borrower knows of the commencement
thereof, notice of any litigation, dispute or proceeding involving a
claim against the Borrower and/or any Subsidiary for $5,000,000 or more
in excess of amounts covered in full by applicable insurance; and
(j) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries
as the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower will (i) keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
and activities; and (ii) permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense prior to the occurrence of an
Event of Default and at the Borrower's expense after the occurrence of an Event
of Default to visit and inspect any of their respective properties, to examine
and make abstracts from any of their respective books and records and to discuss
their respective affairs,
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finances and accounts with their respective officers, employees and independent
public accountants. The Borrower agrees to cooperate and assist in such visits
and inspections, in each case at such reasonable times and as often as may
reasonably be desired.
SECTION 5.03. Ratio of Consolidated Funded Debt to
Consolidated Total Capital. The ratio of Consolidated Funded Debt to
Consolidated Total Capital will not at any time during the period commencing on
the Closing Date and continuing until the Termination Date, exceed 0.55 to 1.00.
SECTION 5.04. Minimum Consolidated Net Worth. Consolidated Net
Worth will at no time be less than $93,000,000 plus the sum of: (i) 100% of the
cumulative Net Proceeds of Capital Stock received during any period after the
Closing Date, calculated quarterly, and (ii) 50% of the cumulative Reported Net
Income of the Borrower and its Consolidated Subsidiaries during any period after
June 30, 1995 (taken as one accounting period), calculated quarterly but
excluding from such calculations of Reported Net Income for purposes of this
clause (ii) any quarter in which the Consolidated Net Income of the Borrower and
its Consolidated Subsidiaries is negative.
SECTION 5.05. Fixed Charges Coverage. At the end of each
Fiscal Quarter, commencing with the Fiscal Quarter ending September 30, 1995,
the ratio of Cash Available for Fixed Charges for the Fiscal Quarter then ended
and the immediately preceding three Fiscal Quarters to Consolidated Fixed
Charges for the Fiscal Quarter then ended and the immediately preceding three
Fiscal Quarters, shall not be less than 3.25 to 1.00.
SECTION 5.06. Loans or Advances. Neither the Borrower nor any
of its Subsidiaries shall make loans or advances to any Person except: (i) loans
or advances to employees made in the ordinary course of business and
consistently with practices existing on September 30, 1995 in an aggregate
outstanding principal amount that does not exceed at any time one percent (1%)
of Consolidated Total Assets; (ii) deposits required by government agencies or
public utilities; and (iii) loans or advances to Subsidiaries; provided that
after giving effect to the making of any loans, advances or deposits permitted
by clause (i), (ii) or (iii) of this Section, no Default shall have occurred and
be continuing.
SECTION 5.07. Investments. Neither the Borrower nor any of its
Subsidiaries shall make Investments in any Person except as permitted by Section
5.06 and except Investments in (i) direct obligations of the United States
Government maturing within one year, (ii) certificates of deposit issued by a
commercial bank whose long term certificates of deposit are rated at least A or
the equivalent thereof by Standard & Poor's Corporation or A2 or the equivalent
thereof by Moody's Investors Service, Inc., (iii) commercial paper rated A-1 or
the equivalent thereof by Standard & Poor's Corporation or P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in either case maturing within 6
months after the date of acquisition; (iv) tender bonds the payment of the
principal of and interest on which is fully supported by a letter of credit
issued by a United States bank whose long-term certificates of deposit are rated
at least AA or the equivalent thereof by Standard & Poor's Corporation and AA or
the equivalent thereof by Moody's Investors Service, Inc.; (v) Permitted
Acquisitions; and/or (vi) Investments not permitted under Sections 5.07(i)
through (v) if immediately after giving effect to such Investments not permitted
under Sections 5.07(i) through (v), the aggregate amount of all such Investments
made pursuant to this Section 5.07 (vi) does not exceed $5,000,000.
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SECTION 5.08. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal
amount not exceeding $2,000,000;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Consolidated Subsidiary and not created
in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
or constructing such asset, provided that such Lien attaches to such
asset concurrently with or within 18 months after the acquisition or
completion of construction thereof;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the
Borrower or a Consolidated Subsidiary and not created in contemplation
of such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the
Borrower or to a Wholly-Owned Subsidiary;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing clauses of this Section, provided that (i) such Debt
is not secured by any additional assets, and (ii) the amount of such
Debt secured by any such Lien is not increased;
(h) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do not in
the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(i) Liens securing taxes, assessments or other similar
governmental charges or levies which are not yet due and payable;
(j) Liens arising out of any litigation or legal proceeding
which are being contested in good faith by appropriate proceedings
diligently pursued;
(k) Liens of the type described in Section 9.04 hereof (as
long as no such Lien in favor of any Person other than one of the Banks
extends to deposits in or held by such Bank);
(l) any Lien on Margin Stock; and
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(m) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt (other than indebtedness represented by the
Notes) in an aggregate principal amount at any time outstanding not to
exceed 10% of Consolidated Total Assets.
SECTION 5.09. Maintenance of Existence. The Borrower shall,
and shall cause each Significant Subsidiary to, except as permitted by Section
5.11, maintain its corporate existence and carry on its business in
substantially the same manner and in substantially the same fields as such
business is now carried on and maintained.
SECTION 5.10. Dissolution. Neither the Borrower nor any of its
Significant Subsidiaries shall suffer or permit dissolution or liquidation
either in whole or in part or redeem or retire any shares of its own stock or
that of any Subsidiary, except through corporate reorganization to the extent
permitted by Section 5.11.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. The
Borrower will not, nor will it permit any Significant Subsidiary to, consolidate
or merge with or into, or sell, lease or otherwise transfer all or any
substantial part of its assets to, any other Person, or discontinue or eliminate
any business line or segment, provided that (a) the Borrower or a Subsidiary may
merge with another Person if (i) such Person was organized under the laws of the
United States of America or one of its states, (ii) the Borrower or the
Subsidiary, as the case may be, is the corporation surviving such merger and
(iii) immediately after giving effect to such merger, no Default shall have
occurred and be continuing, (b) Subsidiaries of the Borrower may merge with the
Borrower or one another, and (c) the foregoing limitation on the sale, lease or
other transfer of assets and on the discontinuation or elimination of a business
line or segment shall not prohibit, during any Fiscal Quarter, a transfer of
assets or the discontinuance or elimination of a business line or segment (in a
single transaction or in a series of related transactions) unless the aggregate
assets to be so transferred or utilized in a business line or segment to be so
discontinued, when combined with all other assets transferred, and all other
assets utilized in all other business lines or segments discontinued, during
such Fiscal Quarter and the immediately preceding seven Fiscal Quarters,
constituted more than 10% of Consolidated Total Assets at the end of such Fiscal
Quarter.
SECTION 5.12. Use of Proceeds. No portion of the proceeds of
the Loans will be used by the Borrower or any Subsidiary (i) in connection with,
either directly or indirectly, any tender offer for, or other acquisition of,
stock of any corporation with a view towards obtaining control of such other
corporation (other than in connection with an acquisition that constitutes a
Permitted Acquisition), (ii) directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any Margin Stock,
or (iii) for any purpose in violation of any applicable law or regulation.
SECTION 5.13. Compliance with Laws; Payment of Taxes. The
Borrower will, and will cause each of its Subsidiaries and each member of the
Controlled Group to, comply in all material respects with applicable laws
(including but not limited to ERISA), regulations and similar requirements of
governmental authorities (including but not limited to PBGC), except where the
necessity of such compliance is being contested in good faith through
appropriate proceedings diligently pursued. The Borrower will, and will cause
each of its Subsidiaries to, pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which, if unpaid, might become a lien against the property of the Borrower or
any Subsidiary, except liabilities being contested in good faith
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by appropriate proceedings diligently pursued and against which, if requested by
the Agent, the Borrower shall have set up reserves in accordance with GAAP.
SECTION 5.14. Insurance. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain (either in the name of the Borrower
or in such Subsidiary's own name), with financially sound and reputable
insurance companies, insurance on all its Property in at least such amounts and
against at least such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or similar business.
SECTION 5.15. Change in Fiscal Year. The Borrower will not
change its Fiscal Year without the consent of the Required Banks.
SECTION 5.16. Maintenance of Property. The Borrower shall, and
shall cause each Subsidiary to, maintain all of its properties and assets in
good condition, repair and working order, ordinary wear and tear excepted.
SECTION 5.17. Environmental Notices. The Borrower shall
furnish to the Banks and the Agent prompt written notice of all Environmental
Liabilities, pending, threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and Environmental
Releases at, on, in, under or in any way affecting the Properties or any
adjacent property, and all facts, events, or conditions that could lead to any
of the foregoing.
SECTION 5.18. Environmental Matters. The Borrower and its
Subsidiaries will not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at, or
otherwise handle or ship or transport to or from the Properties any Hazardous
Materials except for Hazardous Materials such as inks, other chemicals used in
printing operations, cleaning solvents, pesticides and other similar materials
used, produced, manufactured, processed, treated, recycled, generated, stored,
disposed, managed or otherwise handled in the ordinary course of business in
compliance with all applicable Environmental Requirements.
SECTION 5.19. Environmental Release. The Borrower agrees that
upon the occurrence of an Environmental Release at or on any of the Properties
it will act immediately to investigate the extent of, and to take appropriate
remedial action to eliminate, such Environmental Release, whether or not ordered
or otherwise directed to do so by any Environmental Authority.
SECTION 5.20. Transactions with Affiliates. Neither the
Borrower nor any of its Subsidiaries shall enter into, or be a party to, any
transaction with any Affiliate of the Borrower or such Subsidiary (which
Affiliate is not the Borrower or a Subsidiary), except as permitted by law and
in the ordinary course of business, and pursuant to terms which are no less
favorable to Borrower or such Subsidiary than would be obtained in a comparable
arm's length transaction with a Person which is not an Affiliate.
SECTION 5.21 Significant Subsidiaries. The Borrower shall (i)
provide the Agent prompt written notice of the creation, formation or
acquisition of any Significant Subsidiary which has not previously executed the
Guaranty (and of the fact that a Subsidiary which was not previously a
Significant Subsidiary and which has not previously executed the Guaranty has
become a Significant Subsidiary), and
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(ii) as soon as practicable and in any event within thirty (30) days after the
creation, formation or acquisition of such Significant Subsidiary cause such
Significant Subsidiary to execute the Guaranty in favor of the Agent and the
Banks and deliver to the Agent all resolutions, opinions of legal counsel and
other documents that the Agent or any Bank may reasonably request relating to
the existence of such Significant Subsidiary, the corporate authority for and
validity of the Guaranty and any other matters relevant thereto; provided, that,
once a Significant Subsidiary executes the Guaranty, if at any time thereafter
the Subsidiary is not a Significant Subsidiary, such Subsidiary shall,
nevertheless, continue to be obligated under the Guaranty and shall not be
released from the Guaranty.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Loan or shall fail to pay any interest on any Loan within five
Domestic Business Days after such interest shall become due, or shall
fail to pay any fee or other amount payable hereunder within five
Domestic Business Days after such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.02(ii), or 5.03, 5.04, 5.05, or 5.09 to 5.12,
inclusive, or Section 5.21(ii); or
(c) the Borrower shall fail to observe or perform any covenant
or agreement contained or incorporated by reference in this Agreement
(other than those covered by clause (a) or (b) above) for thirty days
after the earlier of (i) the first day on which the Borrower has
knowledge of such failure or (ii) written notice thereof has been given
to the Borrower by the Agent at the request of any Bank; or
(d) any representation, warranty, certification or statement
made or deemed made by the Borrower in Article IV of this Agreement or
in any certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of Debt outstanding (other than the Notes) in an
aggregate principal amount in excess of $5,000,000 when due or within
any applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of the Borrower or any
Subsidiary in an aggregate principal amount in excess of $5,000,000 or
the mandatory prepayment or purchase of such Debt by the Borrower (or
its designee) or such Subsidiary (or its designee) prior to the
scheduled maturity thereof, or enables (or, with the giving of notice
or lapse of time or both, would enable) the holders of such Debt or any
Person acting on such holders' behalf to accelerate the maturity
thereof or require the
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mandatory prepayment or purchase thereof prior to the scheduled
maturity thereof, without regard to whether such holders or other
Person shall have exercised or waived their right to do so; or
(g) the Borrower or any Significant Subsidiary shall commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally, or shall admit in writing its inability, to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Borrower or any Significant
Subsidiary under the federal bankruptcy laws as now or hereafter in
effect; or
(i) the Borrower or any member of the Controlled Group shall
fail to pay when due any material amount which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans in a "distressed
termination" under Section 4041(c) of ERISA shall be filed under Title
IV of ERISA by the Borrower, any member of the Controlled Group, any
plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any such Plan or Plans or
a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding
shall not have been dismissed within 30 days thereafter; or a condition
shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any such Plan or Plans must be terminated; or
the Borrower or any other member of the Controlled Group shall enter
into, contribute or be obligated to contribute to, terminate or incur
any withdrawal liability with respect to, a Multiemployer Plan; or
(j) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $500,000 shall be rendered against
the Borrower or any Subsidiary and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower or
any Significant Subsidiary under Section 6323 of the Code or a lien of
the PBGC shall be filed against the Borrower or any Significant
Subsidiary under Section 4068 of ERISA and in either case such lien
shall remain undischarged for a period of 25 days after the date of
filing; or
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(l) (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of the
voting stock of the Borrower; or (ii) as of any date a majority of the
Board of Directors of the Borrower consists of individuals who were not
either (A) directors of the Borrower as of the corresponding date of
the previous year, (B) selected or nominated to become directors by the
Board of Directors of the Borrower of which a majority consisted of
individuals described in clause (A), or (C) selected or nominated to
become directors by the Board of Directors of the Borrower of which a
majority consisted of individuals described in clause (A) and
individuals described in clause (B); or
(m) the Guaranty shall cease to be in full force and effect or
the occurrence of an Event of Default (as defined in the Guaranty)
under the Guaranty;
then, and in every such event, the Agent shall (i) if requested by the Required
Banks, by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, and (ii) if requested by the Required Banks, by notice to
the Borrower declare the Notes (together with accrued interest thereon) and all
other amounts payable hereunder and under the other Loan Documents to be, and
the Notes (together with all accrued interest thereon) and all other amounts
payable hereunder and under the other Loan Documents shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided that if
any Event of Default specified in clause (g) or (h) above occurs with respect to
the Borrower, without any notice to the Borrower or any other act by the Agent
or the Banks, the Commitments shall thereupon automatically terminate and the
Notes (together with accrued interest thereon) and all other amounts payable
hereunder and under the other Loan Documents shall automatically become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower. Notwithstanding the
foregoing, the Agent shall have available to it all other remedies at law or
equity, and shall exercise any one or all of them at the request of the Required
Banks.
SECTION 6.02. Notice of Default. The Agent shall give notice
to the Borrower of any Default under Section 6.01(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the Banks thereof.
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ARTICLE VII
THE AGENT
SECTION 7.01. Appointment, Powers and Immunities. Each Bank
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto. The Agent: (a)
shall have no duties or responsibilities except as expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee for any Bank; (b) shall not be
responsible to the Banks for any recitals, statements, representations or
warranties contained in this Agreement or any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by any
Bank under, this Agreement or any other Loan Document, or for the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any other document referred to or provided for herein
or therein or for any failure by the Borrower to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Loan Document
except to the extent requested by the Required Banks, and then only on terms and
conditions satisfactory to the Agent, and (d) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document or any other document or instrument referred to or provided for herein
or therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care. The
provisions of this Article VII are solely for the benefit of the Agent and the
Banks, and the Borrower shall not have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and duties under
this Agreement and under the other Loan Documents, the Agent shall act solely as
agent of the Banks and does not assume and shall not be deemed to have assumed
any obligation (other than such obligations that are specifically described
herein) towards or relationship of agency or trust with or for the Borrower. The
duties of the Agent shall be ministerial and administrative in nature, and the
Agent shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Bank.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled
to rely upon any certification, notice or other communication (including any
thereof by telephone, telefax, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
SECTION 7.03. Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than the
non-payment of principal of or interest on the Loans) unless the Agent has
received notice from a Bank or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice of the occurrence of a Default or an Event of
Default, the Agent shall give prompt notice
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thereof to the Banks. The Agent shall give each Bank prompt notice of each
non-payment of principal of or interest on the Loans, whether or not it has
received any notice of the occurrence of such non-payment. The Agent shall
(subject to Section 9.05) take such action with respect to such Default or Event
of Default as shall be directed by the Required Banks, provided that, unless and
until the Agent shall have received such directions, the 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 in the
best interests of the Banks.
SECTION 7.04. Rights of Agent and its Affiliates as a Bank.
With respect to any Loan made by Wachovia or an Affiliate of Wachovia, such
Affiliate and Wachovia in their capacity as a Bank hereunder shall have the same
rights and powers hereunder as any other Bank and may exercise the same as
though it were not an Affiliate of Wachovia (or in Wachovia's case, acting as
the Agent), and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include such Affiliate of Wachovia or Wachovia in its individual
capacity. Such Affiliate and Wachovia may (without having to account therefor to
any Bank) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Borrower (and any of its
Affiliates) as if they were not an Affiliate of the Agent or the Agent,
respectively; and such Affiliate and Wachovia may accept fees and other
consideration from the Borrower (in addition to any agency fees and arrangement
fees heretofore agreed to between the Borrower and Wachovia) for services in
connection with this Agreement or any other Loan Document or otherwise without
having to account for the same to the Banks.
SECTION 7.05. Indemnification. Each Bank severally agrees to
indemnify the Agent, to the extent the Agent shall not have been reimbursed by
the Borrower, ratably in accordance with its Commitment, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and is continuing,
the normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; provided, however, that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. If any indemnity furnished to the
Agent for any purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
SECTION 7.06. CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE
RESPONSIBLE OR LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY
FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
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SECTION 7.07. Payee of Note Treated as Owner. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Agent and the provisions of Section 9.07(c) have
been satisfied. Any requests, authority or consent of any Person who at the time
of making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of that Note or of any Note or Notes issued in exchange therefor or
replacement thereof.
SECTION 7.08. Non-Reliance on Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Borrower and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself (or any Bank) informed
as to the performance or observance by the Borrower of this Agreement or any of
the other Loan Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Borrower or any
other Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other Person (or any of
their Affiliates) which may come into the possession of the Agent.
SECTION 7.09. Failure to Act. Except for action expressly
required of the Agent hereunder or under the other Loan Documents, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction by
the Banks of their indemnification obligations under Section 7.05 against any
and all liability and expense which may be incurred by the Agent by reason of
taking, continuing to take, or failing to take any such action.
SECTION 7.10. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Banks and the Borrower and
the Agent may be removed at any time with or without cause by the Required
Banks. Upon any such resignation or removal, the Required Banks shall have the
right to appoint a successor Agent. If no successor Agent that has been duly
appointed by the Required Banks shall have accepted such appointment within 30
days after the retiring Agent's notice of resignation or the Required Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent. Any successor Agent shall be a bank which has
a combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder.
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SECTION 7.11. Execution of Intercreditor Agreement. The Banks
hereby authorize the Agent to execute an Intercreditor Agreement relating to
each of the Guarantors, each substantially in the form attached hereto as
Exhibit M.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period:
(a) the Agent determines that deposits in Dollars (in the
applicable amounts) are not being offered in the relevant market for
such Interest Period, or
(b) the Required Banks advise the Agent that the London
Interbank Offered Rate, as determined by the Agent will not adequately
and fairly reflect the cost to such Banks of funding the relevant type
of Fixed Rate Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
the Fixed Rate Loans specified in such notice shall be suspended. Unless the
Borrower notifies the Agent at least 2 Domestic Business Days before the date of
any Borrowing of the Fixed Rate Loans for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, such Borrowing
shall instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any change in any
existing or future law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof (any
such authority, bank or agency being referred to as an "Authority" and any such
event being referred to as a "Change of Law"), or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any Authority shall make it unlawful or impossible for any Bank (or
its Lending Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to
the other Banks and the Borrower, whereupon until such Bank notifies the
Borrower and the Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Bank shall designate a different Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall determine that it may
not lawfully continue to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount of each
Euro-Dollar Loan of such Bank, together with accrued interest thereon.
Concurrently with prepaying each such Euro-Dollar Loan, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such Bank (on which
interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and such Bank shall make such a Base Rate
Loan.
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SECTION 8.03. Increased Cost and Reduced Return. (a) If
after the date hereof, a Change of Law or compliance by any Bank (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any Authority:
(i) shall subject any Bank (or its Lending Office) to any tax,
duty or other charge with respect to its Fixed Rate Loans, its Notes or
its obligation to make Fixed Rate Loans, or shall change the basis of
taxation of payments to any Bank (or its Lending Office) of the
principal of or interest on its Fixed Rate Loans or any other amounts
due under this Agreement in respect of its Fixed Rate Loans or its
obligation to make Fixed Rate Loans (except for changes in the rate of
tax on the overall net income of such Bank or its Lending Office
imposed by the jurisdiction in which such Bank's principal executive
office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending Office) or on
the London interbank market any other condition affecting its Fixed
Rate Loans, its Notes or its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that after the date
hereof the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any existing or future law, rule or regulation, or
any change in the interpretation or administration thereof, or compliance by any
Bank (or its Lending Office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Authority, has or would
have the effect of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence
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of manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section 8.03 shall be applicable
with respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee.
SECTION 8.04. Base Rate Loans Substituted for Fixed Rate
Loans. If (i) the obligation of any Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03, and the Borrower shall, by at least 5
EuroDollar Business Days' prior notice to such Bank through the Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans (in all
cases interest and principal on such Loans shall be payable
contemporaneously with the related Fixed Rate Loans of the other
Banks), and
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Base Rate Loans instead.
In the event that the Borrower shall elect that the provisions of this Section
shall apply to any Bank, the Borrower shall remain liable for, and shall pay to
such Bank as provided herein, all amounts due such Bank under Section 8.03 in
respect of the period preceding the date of conversion of such Bank's Loans
resulting from the Borrower's election.
SECTION 8.05. Compensation. Upon the request of any Bank,
delivered to the Borrower and the Agent, the Borrower shall pay to such Bank
such amount or amounts as shall compensate such Bank for any loss, cost or
expense incurred by such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.10, Section 2.11
or otherwise) of a Fixed Rate Loan or a Money Market Loan on a date other than
the last day of an Interest Period for such Fixed Rate Loan or Money Market
Loan, as the case may be;
(b) any failure by the Borrower to prepay a Fixed Rate Loan or a Money
Market Loan on the date for such prepayment specified in the relevant notice of
prepayment hereunder;
(c) any failure by the Borrower to borrow a Fixed Rate Loan on the date
for the Fixed Rate Borrowing of which such Fixed Rate Loan is a part specified
in the applicable Notice of Borrowing delivered pursuant to Section 2.02; or
(d) any failure by the Borrower to borrow a Money Market Loan (with
respect to which the Borrower has accepted a Money Market Quote) on the date for
the Money Market Borrowing of which such Money Market Loan is a part specified
in the applicable Money Market Quote Request delivered pursuant to Section 2.03;
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such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Fixed Rate Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Fixed Rate Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Fixed Rate Loan provided for herein over
(y) the amount of interest (as reasonably determined by such Bank) such Bank
would have paid on deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading banks in the London
interbank market.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party at its address
or telecopy number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for the purpose by notice
to each other party. Each such notice, request or other communication shall be
effective(i) if given by telecopier, when such telecopy is transmitted to the
telecopy number specified in this Section and the telecopy machine used by the
sender provides a written confirmation that such telecopy has been so
transmitted or receipt of such telecopy transmission is otherwise confirmed,
(ii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid, and (iii) if
given by any other means, when delivered at the address specified in this
Section; provided that notices to the Agent under Article II or Article VIII
shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any Note
or other Loan Document 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.
SECTION 9.03. Expenses; Documentary Taxes; Indemnification.
(a) The Borrower shall pay(i) all out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Banks and the
Agent, in connection with the preparation of this Agreement and the other Loan
Documents, any waiver or consent hereunder or thereunder or any amendment hereof
or thereof or any Default or alleged Default hereunder or thereunder and (ii) if
a Default occurs, all out-of-pocket expenses incurred by the Agent or any Bank,
including reasonable fees and disbursements of counsel, in connection with such
Default and collection and other enforcement proceedings resulting therefrom,
including out-of-pocket expenses incurred in enforcing this Agreement and the
other Loan Documents.
(b) The Borrower shall indemnify the Agent and each Bank
against any transfer taxes, documentary taxes, assessments or charges made by
any Authority by reason of the execution and delivery of this Agreement or the
other Loan Documents.
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(c) The Borrower shall indemnify the Agent, the Banks and each
Affiliate thereof and their respective directors, officers, employees and agents
from, and hold each of them harmless against, any and all losses, liabilities,
claims or damages to which any of them may become subject, insofar as such
losses, liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrower of the proceeds of any extension of credit by any
Bank hereunder or breach by the Borrower of this Agreement or any other Loan
Document or from investigation, litigation (including, without limitation, any
actions taken by the Agent or any of the Banks to enforce this Agreement or any
of the other Loan Documents) or other proceeding (including, without limitation,
any threatened investigation or proceeding) relating to the foregoing, and the
Borrower shall reimburse the Agent and each Bank, and each Affiliate thereof and
their respective directors, officers, employees and agents, upon demand for any
expenses (including, without limitation, reasonable legal fees) incurred in
connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
SECTION 9.04. Setoffs; Sharing of Set-Offs. (a) The Borrower
hereby grants to each Bank, as security for the full and punctual payment and
performance of the obligations of the Borrower under this Agreement, a
continuing lien on and security interest in all deposits and other sums credited
by or due from such Bank to the Borrower or subject to withdrawal by the
Borrower; and regardless of the adequacy of any collateral or other means of
obtaining repayment of such obligations, each Bank may at any time upon or after
the occurrence of any Event of Default, and without notice to the Borrower, set
off the whole or any portion or portions of any or all such deposits and other
sums against such obligations, whether or not any other Person or Persons could
also withdraw money therefrom.
(b) Each Bank agrees that if it shall, by exercising any right
of set-off or counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest owing with respect to the Syndicated
Notes held by it which is greater than the proportion received by any other Bank
in respect of the aggregate amount of all principal and interest owing with
respect to the Syndicated Notes held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Syndicated Notes held by the other Banks owing to such other Banks, and/or such
other adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Syndicated Notes held by the Banks
owing to such other Banks shall be shared by the Banks pro rata; provided
that(i) nothing in this Section shall impair the right of any Bank to exercise
any right of set-off or counterclaim it may have and to apply the amount subject
to such exercise to the payment of indebtedness (including, without limitation,
Money Market Loans) of the Borrower other than its indebtedness under the
Syndicated Notes, and (ii) if all or any portion of such payment received by the
purchasing Bank is thereafter recovered from such purchasing Bank, such purchase
from each other Bank shall be rescinded and such other Bank shall repay to the
purchasing Bank the purchase price of such participation to the extent of such
recovery together with an amount equal to such other Bank's ratable share
(according to the proportion of (x) the amount of such other Bank's required
repayment to (y) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Syndicated Note, whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of set-off or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
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SECTION 9.05. Amendments and Waivers. (a) Any provision of
this Agreement, the Notes or any other Loan Documents may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of the Agent are
affected thereby, by the Agent); provided that no such amendment or waiver
shall, unless signed by all the Banks,(i) change the Commitment of any Bank or
subject any Bank to any additional obligation, (ii) change the principal of or
rate of interest on any Loan or any fees hereunder, (iii) change the date fixed
for any payment of principal of or interest on any Loan or any fees hereunder,
(iv) change the amount of principal, interest or fees due on any date fixed for
the payment thereof, (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the percentage of Banks,
which shall be required for the Banks or any of them to take any action under
this Section or any other provision of this Agreement, (vi) change the manner of
application of any payments made under this Agreement or the Notes, (vii)
release or substitute all or any substantial part of the collateral (if any)
held as security for the Loans, or (viii) release any guaranty given to support
payment of the Loans.
(b) The Borrower will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions of
this Agreement unless each Bank shall be informed thereof by the Borrower and
shall be afforded an opportunity of considering the same and shall be supplied
by the Borrower with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver
or consent effected pursuant to the provisions of this Agreement shall be
delivered by the Borrower to each Bank forthwith following the date on which the
same shall have been executed and delivered by the requisite percentage of
Banks. The Borrower will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to all such Banks.
SECTION 9.06. Margin Stock Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it in good faith is
not, directly or indirectly (by negative pledge or otherwise), relying upon any
Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 9.07. Successors and Assigns. (a) 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 the Borrower
may not assign or otherwise transfer any of its rights under this Agreement.
(b) Any Bank may at any time sell to one or more Persons (each
a "Participant") participating interests in any Loan owing to such Bank, any
Note held by such Bank, any Commitment hereunder or any other interest of such
Bank hereunder. In the event of any such sale by a Bank of a participating
interest to a Participant, such Bank's obligations under this Agreement shall
remain unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrower and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking any
action hereunder except that such Bank may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the
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payment of principal of or interest on the related Loan or Loans, (ii) the
change of the amount of any principal, interest or fees due on any date fixed
for the payment thereof with respect to the related Loan or Loans, (iii) the
change of the principal of the related Loan or Loans, (iv) any change in the
rate at which either interest is payable thereon or (if the Participant is
entitled to any part thereof) facility fee is payable hereunder from the rate at
which the Participant is entitled to receive interest or facility fee (as the
case may be) in respect of such participation, (v) the release or substitution
of all or any substantial part of the collateral (if any) held as security for
the Loans, or (vi) the release of any guaranty given to support payment of the
Loans. Each Bank selling a participating interest in any Loan, Note, Commitment
or other interest under this Agreement shall, within 10 Domestic Business Days
of such sale, provide the Borrower and the Agent with written notification
stating that such sale has occurred and identifying the Participant and the
interest purchased by such Participant. The Borrower agrees that each
Participant shall be entitled to the benefits of Article VIII with respect to
its participation in Loans outstanding from time to time.
(c) Any Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance in the form attached hereto as Exhibit
J, executed by such Assignee, such transferor Bank and the Agent (and, in the
case of an Assignee that is not then a Bank or an Affiliate of a Bank, by the
Borrower); provided that (i) no interest may be sold by a Bank pursuant to this
paragraph (c) unless the Assignee shall agree to assume ratably equivalent
portions of the transferor Bank's Commitment, (ii) the amount of the Commitment
of the assigning Bank subject to such assignment (determined as of the effective
date of the assignment) shall be equal to $5,000,000 (or any larger multiple of
$1,000,000), (iii) no interest may be sold by a Bank pursuant to this paragraph
(c) to any Assignee that is not then a Bank or an Affiliate of a Bank without
the consent of the Borrower, which consent shall not be unreasonably withheld,
provided that the Borrower's consent shall not be necessary with respect to any
assignment made during the existence of an Event of Default, and (iv) a Bank may
not have more than two (2)Assignees that are not then Banks at any one time.
Upon (A) execution of the Assignment and Acceptance by such transferor Bank,
such Assignee, the Agent and (if applicable) the Borrower, (B) delivery of an
executed copy of the Assignment and Acceptance to the Borrower and the Agent,
(C) payment by such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee, and (D)
payment by the assigning Bank of a processing and recordation fee of $2,500 to
the Agent, such Assignee shall for all purposes be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank under this
Agreement (including, without limitation, the rights of a Bank under Section
2.03) to the same extent as if it were an original party hereto with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by the Borrower, the Banks or the Agent shall
be required. Upon the consummation of any transfer to an Assignee pursuant to
this paragraph (c), the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to each of
such Assignee and such transferor Bank.
(d) Subject to the provisions of Section 9.08, the Borrower
authorizes each Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial and other information in such Bank's possession concerning the
Borrower which has been delivered to such Bank by the Borrower pursuant to this
Agreement or which has been delivered to such Bank by the Borrower in connection
with such Bank's credit evaluation prior to entering into this Agreement.
47
<PAGE>
(e) No Transferee shall be entitled to receive any greater
payment under Section 8.03 than the transferor Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is made
with the Borrower's prior written consent or by reason of the provisions of
Section 8.02 or 8.03 requiring such Bank to designate a different Lending Office
under certain circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
(f) Anything in this Section 9.07 to the contrary
notwithstanding, any Bank may assign and pledge all or any portion of the Loans
and/or obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or pledging
Bank in accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the assigning
and/or pledging Bank from its obligations hereunder.
SECTION 9.08. Confidentiality. Each Bank agrees to exercise
its best efforts to keep any information delivered or made available by the
Borrower to it which is clearly indicated to be confidential information,
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided, however, that nothing herein shall prevent
any Bank from disclosing such information (i) to any other Bank, (ii) upon the
order of any court or administrative agency, (iii) upon the request or demand of
any regulatory agency or authority having jurisdiction over such Bank, (iv)
which has been publicly disclosed, (v) to the extent reasonably required in
connection with any litigation to which the Agent, any Bank or their respective
Affiliates may be a party, (vi) to the extent reasonably required in connection
with the exercise of any remedy hereunder, (vii) to such Bank's legal counsel
and independent auditors and (viii) to any actual or proposed Participant,
Assignee or other Transferee of all or part of its rights hereunder which has
agreed in writing to be bound by the provisions of this Section 9.08.
SECTION 9.09. Representation by Banks. Each Bank hereby
represents that it is a commercial lender or financial institution which makes
loans in the ordinary course of its business and that it will make its Loans
hereunder for its own account in the ordinary course of such business; provided,
however, that, subject to Section 9.07, the disposition of the Note or Notes
held by that Bank shall at all times be within its exclusive control.
SECTION 9.10. Obligations Several. The obligations of each
Bank hereunder are several, and no Bank shall be responsible for the obligations
or commitment of any other Bank hereunder. Nothing contained in this Agreement
and no action taken by the Banks pursuant hereto shall be deemed to constitute
the Banks to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement or any other Loan Document and
it shall not be necessary for any other Bank to be joined as an additional party
in any proceeding for such purpose.
48
<PAGE>
SECTION 9.11. Survival of Certain Obligations. Sections
8.03(a), 8.03(b), 8.05 and 9.03, and the obligations of the Borrower thereunder,
shall survive, and shall continue to be enforceable notwithstanding, the
termination of this Agreement and the Commitments and the payment in full of the
principal of and interest on all Loans.
SECTION 9.12. Georgia Law. This Agreement and each Note
shall be construed in accordance with and governed by the law of the State of
Georgia.
SECTION 9.13. Severability. In case any one or more of the
provisions contained in this Agreement, the Notes or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 9.14. Interest. In no event shall the amount of
interest due or payable hereunder or under the Notes exceed the maximum rate of
interest allowed by applicable law, and in the event any such payment is
inadvertently made to any Bank by the Borrower or inadvertently received by any
Bank, then such excess sum shall be credited as a payment of principal, unless
the Borrower shall notify such Bank in writing that it elects to have such
excess sum returned forthwith. It is the express intent hereof that the Borrower
not pay and the Banks not receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may legally be paid by the Borrower
under applicable law.
SECTION 9.15. Interpretation. No provision of this Agreement
or any of the other Loan Documents shall be construed against or interpreted to
the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have
structured or dictated such provision.
SECTION 9.16. Consent to Jurisdiction. The Borrower (a)
submits to personal jurisdiction in the State of Georgia, the courts thereof and
the United States District Courts sitting therein, for the enforcement of this
Agreement, the Notes and the other Loan Documents, (b) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or venue
within the State of Georgia for the purpose of litigation to enforce this
Agreement, the Notes or the other Loan Documents, and (c) agrees that service of
process may be made upon it in the manner prescribed in Section 9.01 for the
giving of notice to the Borrower. Nothing herein contained, however, shall
prevent the Agent from bringing any action or exercising any rights against any
security and against the Borrower personally, and against any assets of the
Borrower, within any other state or jurisdiction.
49
<PAGE>
SECTION 9.17. Counterparts. 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.
[Remainder of this page intentionally left blank]
50
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective authorized
officers as of the day and year first above written.
CADMUS COMMUNICATIONS CORPORATION
By: ___________________________ (SEAL)
Title: Vice President and Treasurer
Suite 500
6620 West Broad Street
Richmond, Virginia 23230
Attention: Mr. David E. Bosher
Telecopy number:(804) 287-5683
Telephone number: (804) 287-5680
[Remainder of this page intentionally left blank]
51
<PAGE>
WACHOVIA BANK OF GEORGIA, N.A., as Agent
By: /s/ Signature Illegible (SEAL)
Title: Vice President
Lending Office
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Beth Dreiling
Telecopy number: (404) 332-4005
Telephone number: (404) 332-4008
[Remainder of this page intentionally left blank]
52
<PAGE>
COMMITMENTS:
$27,000,000 WACHOVIA BANK OF NORTH CAROLINA, N.A.,
as a Bank
By: /s/ Signature Illegible (SEAL)
Title: Vice President
Lending Office:
Wachovia Bank of North Carolina, N.A.
301 North Main Street
P. O. Box 3099
Winston-Salem, N.C. 27150
Attention: Haywood Edmundson, V
Telecopy number: (910) 732-6935
Telephone number: (910) 732-7614
[Remainder of this page intentionally left blank]
53
<PAGE>
$24,500,000 FIRST UNION NATIONAL BANK OF VIRGINIA,
as Co-Agent and as a Bank
By: /s/ Signature Illegible (SEAL)
Title: Vice President
Lending Office
First Union National Bank of Virginia
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Lowndes Burke
Telecopy number: (804) 788-9673
Telephone number: (804) 788-9732
[Remainder of this page intentionally left blank]
54
<PAGE>
$24,500,000 NATIONSBANK, N.A.,
as Co-Agent and as a Bank
By: /s/ Signature Illegible (SEAL)
Title: Senior Vice President
Lending Office
NationsBank, N.A.
4th Floor Pavilion
1111 East Main Street
Richmond, Virginia 23219
Attention: Robert Y. Bennett
Telecopy number: (804) 788-3669
Telephone number: (804) 788-3631
[Remainder of this page intentionally left blank]
55
<PAGE>
$9,000,000 CRESTAR BANK,
as a Bank
By: /s/ Signature Illegible (SEAL)
Title: Senior Vice President
Lending Office
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
Attention: Brad Booker
Telecopy number: (804) 782-5413
Telephone number: (804) 782-7781
- ------------
TOTAL COMMITMENTS:
$85,000,000
56
<PAGE>
SCHEDULE 4.08
Existing Subsidiaries
Name of Subsidiary Jurisdiction of Incorporation
American Graphics, Inc. Georgia
Cadmus Direct Marketing, Inc. North Carolina
Cadmus Interactive, Inc. Georgia
Cadmus Investment Corporation Delaware
Cadmus Journal Services, Inc. Virginia
Cadmus Marketing, Inc. Virginia
Cadmus Marketing Group, Inc. Virginia
Cadmus Printing Group, Inc. Virginia
Cadmus Publishing Group, Inc. Virginia
Cadmus Software Services, Inc. Virginia
Expert Graphics, Inc. Virginia
Garamond/Pridemark Press, Inc. Maryland
Marblehead Communications, Inc. Delaware
The William Byrd Press, Incorporated Virginia
Three Score, Inc. Georgia
Tuff Stuff Publications, Inc. Virginia
VSUB Holding Company Virginia
Washburn Graphics, Inc. North Carolina
Washburn of New York, Inc. New York
1
<PAGE>
SCHEDULE 4.14
CADMUS COMMUNICATIONS COMPANY
PROPOSED DISCLOSURE ON SUPERFUND LIABILITIES
Subsidiaries of Cadmus have been identified as potentially responsible
parties at three sites undergoing response under the federal "Superfund" law
and/or analogous state law. At each such site, the Cadmus subsidiary is but
one of over 100 PRPs alleged to have sent hazardous substances for disposal.
Among the other PRPs at each site are numerous solvent entities, including
Fortune 500 companies and other persons to whom government agencies can
look to fund site activities.
The three sites and the alleged contribution of waste from Cadmus
subsidiaries are:
AQUA-TECH SITE, GREER SC
Contribution from Waverly Press: undocumented
SEABOARD CHEMICAL CORP. SITE, JAMESTOWN NC
Contribution from Waverly Press: 275 gallons
SPECTRON, INC. SITE, ELKTON MD
Contribution from Waverly Press: 495 gallons
Contribution from William E. Byrd Press: 1210 gallons
In comparison with the total volume of substances sent to these sites,
Cadmus' contribution is de minimis at each. At the Spectron site, Cadmus
companies are alleged to have sent 1,705 gallons of waste for disposal, while
the maximum waste contribution for a de minimis party is 50,000 gallons. At the
Seaboard Chemical site, a proposed de micromis settlement would permit parties
to settle as de micromis parties if their contribution was below 5,000 gallons
(non-chlorinated wastes) or 2,000 gallons (chlorinated wastes). Cadmus'
contribution to the site of 275 gallons of waste is well below both levels.
Therefore, Cadmus' liability for response costs, if any, at these sites is not
reasonably anticipated to be material, either individually or in the aggregate.
As to the Aqua-Tech site, Cadmus has no evidence that it ever sent
hazardous substances to the site. In a letter dated November 7, 1991, to Bob
Willey of Waverly Press, Inc., a cleanup contractor, Clean Harbors, stated that
Waverly Press had been a client of Aqua-Tech. Nevertheless, no information
on actual contribution to the site from Waverly Press has been provided to the
company. Cadmus therefore has not participated in any response activities at
the site and has no reason to believe that it will be asked or required to
contribute financially to cleanup of the site. Moreover, even if information
that the Waverly Press facility (now a Cadmus Journal Services facility) sent
waste to the site is provided, based on annual waste generation at the facility,
it is likely to be a de minimis contributor to the site.
At the Seaboard site, Cadmus has participated in Phase I of response
activities as a member of the "Seaboard Group" of PRPs working in cooperation
with the North Carolina Department of Environment, Health and Natural Resources.
To date, Cadmus has incurred a cost of $108.62 for this work. Cadmus expects to
settle any further liability for cleanup of the site as a de minimis or a
de micromis settlor. The amount of any such settlement is not anticipated
to be material.
At the Spectron site, Cadmus has expressed its interest, on behalf of
both William E. Byrd Press and Cadmus Journal Services (formerly Waverly Press),
in participating in a de minimis buyout with the U.S. government with respect
to liability for response costs. The amount of any such settlement is not
anticipated to be material.
In summary, Cadmus believes that any costs that it incurs with respect
to these sites will not have a material adverse effect on the company.
2
<PAGE>
EXHIBIT A
SYNDICATED NOTE
$____________ Atlanta, Georgia
January _____, 1996
For value received, CADMUS COMMUNICATIONS CORPORATION, a
Virginia corporation (the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Lending Office, the principal sum of
________________ ______________________________ and No/100 Dollars
($____________), or such lesser amount as shall equal the unpaid principal
amount of each Syndicated Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below, on the dates and in the amounts provided in
the Credit Agreement. The Borrower promises to pay interest on the unpaid
principal amount of this Syndicated Note on the dates and at the rate or rates
provided for in the Credit Agreement. Interest on any overdue principal of and,
to the extent permitted by law, overdue interest on the principal amount hereof
shall bear interest at the Default Rate, as provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Wachovia Bank of Georgia, N.A., 191 Peachtree Street, N.E.,
Atlanta, Georgia 30303, or such other address as may be specified from time to
time pursuant to the Credit Agreement.
All Syndicated Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto and
all repayments of the principal thereof shall be recorded by the Bank and, prior
to any transfer hereof, endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make, or any error of the Bank in making, any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This Note is one of the Syndicated Notes referred to in the
Credit Agreement dated as of January _____, 1996 among the Borrower, the banks
listed on the signature pages thereof and their successors and assigns, Wachovia
Bank of Georgia, N.A., as Agent, First Union National Bank of Virginia, as
Co-Agent, and NationsBank, N.A., as Co-Agent (as the same may be amended or
modified from time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment and the repayment hereof and
the acceleration of the maturity hereof.
The Borrower hereby waives presentment, demand, protest,
notice of demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly provided for
in the Credit Agreement.
The Borrower agrees, in the event that this Note or any
portion hereof is collected by law or through an attorney at law, to pay all
reasonable costs of collection, including, without limitation, reasonable
attorneys' fees.
1
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Syndicated
Note to be duly executed under seal, by its duly authorized officer as of the
day and year first above written.
CADMUS COMMUNICATIONS CORPORATION
By: ______________________________ (SEAL)
Title: Vice President and Treasurer
2
<PAGE>
Syndicated Note (cont'd)
SYNDICATED LOANS AND PAYMENTS OF PRINCIPAL
- -----------------------------------------------------------------------------
Type Amount Amount of
of Interest of Principal Maturity Notation
Date Loan* Rate Loan Repaid Date Made By
---- ----- ------- ------ --------- -------- -------
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* i.e., a Base Rate, or Euro-Dollar Loan.
3
<PAGE>
EXHIBIT B
MONEY MARKET NOTE
$85,000,000 Atlanta, Georgia
January _____, 1996
For value received, CADMUS COMMUNICATIONS CORPORATION, a Virginia
corporation (the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Lending Office, the principal sum of Eighty
Five Million and No/100 Dollars ($85,000,000), or such lesser amount as shall
equal the unpaid principal amount of each Money Market Loan made by the Bank to
the Borrower pursuant to the Credit Agreement referred to below, on the dates
and in the amounts provided in the Credit Agreement. The Borrower promises to
pay interest on the unpaid principal amount of this Money Market Note on the
dates and at the rate or rates provided for in the Credit Agreement. Interest on
any overdue principal of and, to the extent permitted by law, overdue interest
on the principal amount hereof shall bear interest at the Default Rate, as
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Wachovia Bank of Georgia, N.A., 191
Peachtree Street, N.E., Atlanta, Georgia 30303, or such other address as may be
specified from time to time pursuant to the Credit Agreement.
All Money Market Loans made by the Bank, the respective maturities
thereof, the interest rates from time to time applicable thereto and all
repayments of the principal thereof shall be recorded by the Bank and, prior to
any transfer hereof, endorsed by the Bank on the schedule attached hereto, or on
a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make, or any error of the Bank in making, any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This Note is one of the Money Market Notes referred to in the
Credit Agreement dated as of January _____, 1996 among the Borrower, the banks
listed on the signature pages thereof and their successors and assigns, Wachovia
Bank of Georgia, N.A., as Agent, First Union National Bank of Virginia, as
Co-Agent, and NationsBank, N.A., as Co-Agent (as the same may be amended or
modified from time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment and the repayment hereof and
the acceleration of the maturity hereof.
The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law relative
hereto, except to the extent as otherwise may be expressly provided for in the
Credit Agreement.
The Borrower agrees, in the event that this Note or any portion
hereof is collected by law or through an attorney at law, to pay all reasonable
costs of collection, including, without limitation, reasonable attorneys' fees.
1
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Money Market Note
to be duly executed under seal, by its duly authorized officer as of the day and
year first above written.
CADMUS COMMUNICATIONS CORPORATION
By: ______________________________ (SEAL)
Title: Vice President and Treasurer
2
<PAGE>
Money Market Note (cont'd)
MONEY MARKET LOANS AND PAYMENTS OF PRINCIPAL
- ---------------------------------------------------------------------------
Amount Amount of
Interest of Principal Maturity Notation
Date Rate Loan Repaid Date Made By
--------------------------------------------------------------------------
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3
<PAGE>
EXHIBIT D
[WOMBLE, CARLYLE, SANDRIDGE & RICE, PLLC, SPECIAL COUNSEL LETTERHEAD]
January 5, 1996
To the Banks and the Agent
Referred to Below
c/o Wachovia Bank of Georgia, N.A.,
as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Dear Sirs:
We have participated in the preparation of the Credit Agreement
(the "Credit Agreement") dated as of January 5, 1996 among CADMUS
COMMUNICATIONS CORPORATION, a Virginia corporation (the "Borrower"), the banks
listed on the signature pages thereof (the "Banks"), Wachovia Bank of Georgia,
N.A., as Agent (the "Agent"), First Union National Bank of Virginia, as Co-Agent
and as a Bank, and NationsBank, N.A., as Co-Agent and as a Bank, and have acted
as special counsel for the Agent for the purpose of rendering this opinion
pursuant to Section 3.01(d) of the Credit Agreement. Terms defined in the Credit
Agreement are used herein as therein defined.
This opinion letter is limited by, and is in accordance with, the
January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the State Bar of Georgia
which Interpretive Standards are incorporated herein by this reference.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, and assuming the due
authorization, execution and delivery of the Credit Agreement and each of the
Notes by or on behalf of the Borrower and the Guaranty by or on behalf of the
Guarantors, we are of the opinion that the Credit Agreement constitutes a valid
and binding agreement of the Borrower, the Guaranty constitutes a valid and
binding agreement of the Guarantors and each Note constitutes valid and binding
obligations of the Borrower, in each case enforceable in accordance with its
terms except as: (i) the enforceability thereof may be affected by bankruptcy,
insolvency, reorganization, fraudulent conveyance, voidable preference,
moratorium or similar
1
<PAGE>
laws applicable to creditors' rights or the collection of debtors' obligations
generally; (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability; and
(iii) the enforceability of certain of the remedial, waiver and other provisions
of the Credit Agreement, the Guaranty and the Notes may be further limited by
the laws of the State of Georgia; provided, however, such additional laws do
not, in our opinion, substantially interfere with the practical realization of
the benefits expressed in the Credit Agreement, the Guaranty and the Notes,
except for the economic consequences of any procedural delay which may result
from such laws.
In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction except the State of Georgia. We
express no opinion as to the effect of the compliance or noncompliance of the
Agent or any of the Banks with any state or federal laws or regulations
applicable to the Agent or any of the Banks by reason of the legal or regulatory
status or the nature of the business of the Agent or any of the Banks.
This opinion is delivered to you in connection with the
transaction referenced above and may only be relied upon by you and any
Assignee, Participant or other Transferee under the Credit Agreement without our
prior written consent.
Very truly yours,
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
By:
Christopher E. Leon, Manager
2
<PAGE>
EXHIBIT E
MONEY MARKET QUOTE REQUEST
[Date]
To: Wachovia Bank of Georgia, N.A.,
as Agent
From: Cadmus Communications Corporation
Re: Money Market Quote Request
Pursuant to Section 2.03 of the Credit Agreement (the "Credit
Agreement") dated as of January ___, 1996, among Cadmus Communications
Corporation, the banks listed on the signature pages thereof, Wachovia Bank of
Georgia, N.A., as Agent, First Union National Bank of Virginia, as Co-Agent and
as a Bank, and NationsBank, N.A., as Co-Agent and as a Bank, we hereby give
notice that we request Money Market Quotes for the following proposed Money
Market Borrowing(s)
Date of Borrowing:
Principal Amount** Interest Period***
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Cadmus Communications Corporation
By:________________________________
Title:
- --------
** Amount must be $2,500,000 or a larger multiple of $500,000.
*** A period of 7 to 180 days.
1
<PAGE>
EXHIBIT F
MONEY MARKET QUOTE
Wachovia Bank of Georgia, N.A.,
as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention:
Re: Money Market Quote to Cadmus Communications Corporation (the
"Borrower")
This Money Market Quote is given in accordance with Section
2.03(c)(ii) of the Credit Agreement (the "Credit Agreement") dated as of January
_____, 1996, among Cadmus Communications Corporation, the banks listed on the
signature pages thereof (the "Banks"), Wachovia Bank of Georgia, N.A., as Agent,
First Union National Bank of Virginia, as Co-Agent and as a Bank, and
NationsBank, N.A., as Co-Agent and as a Bank. Terms defined in the Credit
Agreement are used herein as defined therein.
In response to the Borrower's invitation dated ____________ __,
19__, we hereby make the following Money Market Quote on the following terms:
1. Quoting Bank:
2. Person to contact at Quoting Bank:
3. Date of Borrowing: 1*
4. We hereby offer to make Money Market Loan(s) in the following
minimum and maximum principal amounts, for the following Interest Periods and at
the following rates:
<TABLE>
<CAPTION>
Minimum Maximum
Principal Principal Interest
Amount 2 Amount 2 Period 3 Interest Rate
--------- --------- -------- -------------
<S> <C> <C> <C>
</TABLE>
- --------------------------
* All numbered footnotes appear on the last page of this Exhibit.
1
<PAGE>
We understand and agree that the offer(s) set forth above, subject
to the satisfaction of the applicable conditions set forth in the Credit
Agreement, irrevocably obligate(s) us to make the Money Market Loan(s) for which
any offer(s) [is] [are] accepted, in whole or in part (subject to the third
sentence of Section 2.03(e) of the Credit Agreement).
Very truly yours,
[Name of Bank]
Dated: By:_______________________________
Authorized Officer
- -------------------------
- --------------------------
1 As specified in the related Money Market Quote Request.
2 The principal amount bid for each Interest Period may not exceed
the principal amount requested. Bids must be made for at least $2,500,000 or a
larger multiple of $500,000.
3 A period of 7 to 180 days.
2
<PAGE>
EXHIBIT G
CLOSING CERTIFICATE
OF
CADMUS COMMUNICATIONS CORPORATION
AND
CERTAIN OF ITS SUBSIDIARIES
Reference is made to the Credit Agreement (the "Credit Agreement")
dated as of January __, 1996, among Cadmus Communications Corporation (the
"Borrower"), Wachovia Bank of Georgia, N.A., as Agent, certain other Banks
listed on the signature pages thereof, First Union National Bank of Virginia, as
Co-Agent and as a Bank, and NationsBank, N.A., as Co-Agent and as a Bank.
Capitalized terms used herein have the meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 3.01(e) of the Credit Agreement, David E.
Bosher, the duly authorized Vice President and Treasurer of the Borrower, and
Bruce V. Thomas, the duly authorized Secretary of each of the Guarantors, hereby
certify to the Agent and the Banks that: (i) no Default has occurred and is
continuing on the date hereof; (ii) the representations and warranties of the
Borrower contained in Article IV of the Credit Agreement are true on and as of
the date hereof; and (iii) the representations and warranties of the Guarantors
contained in the Guaranty are true on and as of the date hereof.
Certified as of the ____ day of January, 1996.
CADMUS COMMUNICATIONS CORPORATION
By:___________________________________
Name: David E. Bosher
Title: Vice President and Treasurer
AMERICAN GRAPHICS, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
1
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CADMUS DIRECT MARKETING, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
CADMUS INTERACTIVE, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
CADMUS JOURNAL SERVICES, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
CADMUS MARKETING GROUP, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
CADMUS PRINTING GROUP, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
CADMUS PUBLISHING GROUP, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
CADMUS SOFTWARE SERVICES, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
2
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EXPERT GRAPHICS, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
GARAMOND/PRIDEMARK PRESS, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
MARBLEHEAD COMMUNICATIONS, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
THE WILLIAM BYRD PRESS, INCORPORATED
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
THREE SCORE, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
TUFF STUFF PUBLICATIONS, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
WASHBURN GRAPHICS, INC.
By:___________________________________
Name: Bruce V. Thomas
Title: Secretary
3
<PAGE>
EXHIBIT H
CADMUS COMMUNICATIONS CORPORATION
SECRETARY'S CERTIFICATE
The undersigned, Bruce V. Thomas, Secretary of Cadmus
Communications Corporation, a Virginia corporation (the "Borrower"), hereby
certifies that he has been duly elected, qualified and is acting in such
capacity and that, as such, he is familiar with the facts herein certified and
is duly authorized to certify the same, and hereby further certifies, in
connection with the Credit Agreement dated as of January _____, 1996 among the
Borrower, Wachovia Bank of Georgia, N.A., as Agent, certain Banks listed on the
signature pages thereof, and First Union National Bank of Virginia, as Co-Agent
and as a Bank, and NationsBank, N.A., as Co-Agent and as a Bank, that:
1. Attached hereto as Exhibit A is a complete and correct copy of
the Certificate of Incorporation of the Borrower as in full force and effect on
the date hereof as certified by the State Corporation Commission of the
Commonwealth of Virginia, the Borrower's state of incorporation.
2. Attached hereto as Exhibit B is a complete and correct copy of
the Bylaws of the Borrower as in full force and effect on the date hereof.
3. Attached hereto as Exhibit C is a complete and correct copy of
the resolutions duly adopted by the Board of Directors of the Borrower on
November 8, 1995, and the resolutions of the Executive Committee of the Board of
Directors of the Borrower effective December 15, 1995 approving, and authorizing
the execution and delivery of, the Credit Agreement, the Notes (as such term is
defined in the Credit Agreement) and the other Loan Documents (as such term is
defined in the Credit Agreement) to which the Borrower is a party. Such
resolutions have not been repealed or amended and are in full force and effect,
and no other resolutions or consents have been adopted by the Board of Directors
of the Borrower in connection therewith.
4. David E. Bosher, who as Vice President and Treasurer of the
Borrower signed the Credit Agreement, the Notes and the other Loan Documents to
which the Borrower is a party, was duly elected, qualified and acting as such at
the time he signed the Credit Agreement, the Notes and other Loan Documents to
which the Borrower is a party, and his signature appearing on the Credit
Agreement, the Notes and the other Loan Documents to which the Borrower is a
party is his genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as
of the ____ day of January, 1996.
--------------------------------
Name: Bruce V. Thomas
Title: Secretary
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EXHIBIT I
FORM OF COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of January __,
1996 (as modified and supplemented and in effect from time to time, the "Credit
Agreement") among Cadmus Communications Corporation, the Banks from time to time
parties thereto, First Union National Bank of Virginia, as Co-Agent and as a
Bank, and NationsBank, N.A., as Co-Agent and as a Bank, and Wachovia Bank of
Georgia, N.A., as Agent. Capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement.
Pursuant to Section 5.01(c) of the Credit Agreement,
_________________, the duly authorized ___________________, of Cadmus
Communications Corporation, hereby certifies to the Agent and the Banks that the
information contained in the Compliance Check List attached hereto is true,
accurate and complete as of _____________, 199___, and that no Default is in
existence on and as of the date hereof.
CADMUS COMMUNICATIONS
CORPORATION
By:__________________________
Title:
1
<PAGE>
COMPLIANCE CHECK LIST
Cadmus Communications Corporation
________________, 199__
<TABLE>
<S> <C> <C>
1. Ratio of Consolidated Funded Debt to Consolidated
Total Capital (Section 5.03)
(a) Consolidated Funded Debt $__________
(b) Consolidated Total Capital $_________
(Consolidated Net Worth, plus
Consolidated Funded Debt)
Actual Ratio of (a) to (b) ___________
Maximum Ratio .55 to 1.00
2. Consolidated Net Worth (Section 5.04)
(1) Base Amount of Consolidated Net Worth $93,000,000
(2) 50% of Reported Net Income after 6/30/95 excluding
any quarter in which Consolidated Net Income
is negative
$----------
(3) 100% of Net Proceeds of Capital Stock $__________
after Closing Date
Total __________
Actual Consolidated Net Worth $__________
</TABLE>
2
<PAGE>
COMPLIANCE CHECK LIST
Cadmus Communications Corporation
________________, 199__
3. Fixed Charge Coverage (Section 5.05)
(a) Cash Available for Fixed Charges $_________
(b) Consolidated Fixed Charges $_________
Actual Ratio of (a) to (b) _________
Maximum Ratio 3.25 to 1.00
4. Loans or Advances (Section 5.06)
(a) Actual loans or advances to employees $_________
(b) 1% of Consolidated Total Assets $_________
5. Investments (Section 5.07)
Investments pursuant to Section 5.07(vi) (i.e., not
permitted under Sections 5.07(i) through (v) ) $_________
Maximum Amount $5,000,000
3
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COMPLIANCE CHECK LIST
Cadmus Communications Corporation
________________, 199__
<TABLE>
<S> <C> <C>
6. Negative Pledge (Section 5.08)
(a) Debt secured by Liens pursuant to Section
5.08(m) (i.e., not permitted by
Sections 5.08(a) through (l) $_____________________
(b) Limitation (10% of Consolidated Net Worth) $_____________________
7. Consolidations, Mergers and Sales of Assets (Section 5.11)
(1) All assets transferred and all other assets utilized in all
other business lines or segments discontinued during current
Fiscal Quarter $_________
(2) All assets transferred and all other assets utilized in all
other business lines or segments discontinued during preceding
seven Fiscal Quarters.
$---------
(3) Total $_________
(4) Maximum - 10% of Consolidated Total Assets $_________
</TABLE>
4
<PAGE>
EXHIBIT J
ASSIGNMENT AND ACCEPTANCE
Dated ________________, ________
Reference is made to the Credit Agreement dated as of January
_____, 1996 (together with all amendments and modifications thereto, the "Credit
Agreement") among Cadmus Communications Corporation, a Virginia corporation (the
"Borrower"), the Banks (as defined in the Credit Agreement), Wachovia Bank of
Georgia, N.A., as Agent (the "Agent"), First Union National Bank of Virginia, as
Co-Agent and as a Bank, and NationsBank, N.A., as Co-Agent and as a Bank . Terms
defined in the Credit Agreement are used herein with the same meaning.
_____________________________________________________ (the
"Assignor") and _____________________________________________ (the "Assignee")
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without recourse to
the Assignor, and the Assignee hereby purchases and assumes from the Assignor, a
______% interest in and to all of the Assignor's rights and obligations under
the Credit Agreement as of the Effective Date (as defined below) (including,
without limitation, a ______% interest (which on the Effective Date hereof is
$_______________) in the Assignor's Commitment and a ______% interest (which on
the Effective Date hereof is $_______________) in the Syndicated Loans owing to
the Assignor [and a ___% interest in the Money Market Loans owing to the
Assignor] and a ______% interest in the Syndicated Note held by the Assignor
(which on the Effective Date hereof is $__________________)).
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement, any other
instrument or document furnished pursuant thereto or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, any other Loan Document or any other instrument or document furnished
pursuant thereto, other than that it is the legal and beneficial owner of the
interest being assigned by it hereunder, that such interest is free and clear of
any adverse claim and that as of the date hereof its Commitment (without giving
effect to assignments thereof which have not yet become effective) is
$_________________ and the aggregate outstanding principal amount of Syndicated
Loans [and Money Market Loans] owing to it (without giving effect to assignments
thereof which have not yet become effective) is $_________________; (ii) makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under the Credit Agreement, any other Loan
Document or any other instrument or document furnished pursuant thereto; and
(iii) attaches the Note[s] referred to in paragraph 1 above and requests that
the Agent exchange such Note[s] as follows: [a new Syndicated Note dated
_______________, ____ in the principal amount of _________________ payable to
the order of the Assignee] [new Syndicated Notes as follows: a Syndicated Note
dated _________________, ____ in the principal amount of $_______________
payable to the order of the Assignor and a Syndicated Note dated ______________,
____ in the principal amount of $______________ payable to the order of the
Assignee] [and a new Money Market Note dated _______, ____ in the principal of
$_________ payable to the order of the Assignee].
1
<PAGE>
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.04(a) thereof (or any more recent financial statements of the
Borrower delivered pursuant to Section 5.01(a) or (b) thereof) and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor or
any other Bank 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 the Credit Agreement; (iii) confirms that it is a bank
or financial institution; (iv) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (v) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank; (vi) specifies as
its Lending Office (and address for notices) the office set forth beneath its
name on the signature pages hereof, (vii) represents and warrants that the
execution, delivery and performance of this Assignment and Acceptance are within
its corporate powers and have been duly authorized by all necessary corporate
action[, and (viii) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's status for purposes
of determining exemption from United States withholding taxes with respect to
all payments to be made to the Assignee under the Credit Agreement and the Notes
or such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty].****
4. The Effective Date for this Assignment and Acceptance shall be
_______________ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for execution and
acceptance by the Agent [and to the Borrower for execution by the
Borrower]*****.
5. Upon such execution and acceptance by the Agent [and execution
by the Borrower]**, from and after the Effective Date, (i) the Assignee shall be
a party to the Credit Agreement and, to the extent rights and obligations have
been transferred to it by this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder and (ii) the Assignor shall, to the extent its
rights and obligations have been transferred to the Assignee by this Assignment
and Acceptance, relinquish its rights (other than under Section 8.03 and Section
9.03 of the Credit Agreement) and be released from its obligations under the
Credit Agreement.
6. Upon such execution and acceptance by the Agent [and execution
by the Borrower]**, from and after the Effective Date, the Agent shall make all
payments in respect of the interest assigned hereby to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments for
periods prior to such acceptance by the Agent directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Georgia.
[NAME OF ASSIGNOR]
- --------
****If the Assignee is organized under the laws of a jurisdiction outside
the United States.
*****If the Assignee is not a Bank or an Affiliate of a Bank prior to the
Effective Date.
2
<PAGE>
By:____________________________________
Title:
[NAME OF ASSIGNEE]
By:____________________________________
Title:
Lending Office:
[Address]
WACHOVIA BANK OF GEORGIA, N.A., as Agent
By:____________________________________
Title:
CADMUS COMMUNICATIONS CORPORATION
By:____________________________________
Title:
3
<PAGE>
EXHIBIT K
NOTICE OF BORROWING
______________, 1996
Wachovia Bank of Georgia, N.A., as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Re: Credit Agreement (as amended and modified from time
to time, the "Credit Agreement") dated as of January
_____, 1996 by and among Cadmus Communications
Corporation, the Banks from time to time parties
thereto, Wachovia Bank of Georgia, N.A., as Agent,
First Union National Bank of Virginia, as Co-Agent
and as a Bank, and NationsBank, N.A., as Co-Agent and
as a Bank.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein
shall have the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to Section
2.02 of the Credit Agreement.
The Borrower hereby requests a [Euro-Dollar Borrowing] [Base Rate
Borrowing] in the aggregate principal amount of $___________ to be made on
________, 19__, and for interest to accrue thereon at the rate established by
the Credit Agreement for [Euro-Dollar Loans] [Base Rate Loans]. The duration of
the Interest Period with respect thereto shall be [30 days] [1 month] [2 months]
[3 months] [6 months].
The Borrower has caused this Notice of Borrowing to be executed
and delivered by its duly authorized officer this ___ day of __________________,
_________.
CADMUS COMMUNICATIONS CORPORATION
By:___________________________ (SEAL)
Title:
<PAGE>
EXHIBIT L
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") is made as of the ______
day of January, 1996, by the undersigned (hereinafter collectively referred to
as the "Guarantors" and individually as a "Guarantor"), to and for the benefit
of WACHOVIA BANK OF GEORGIA, N.A., a national banking association (the "Agent")
in its capacity as Agent for the Banks as defined in that certain Credit
Agreement of even date herewith between Cadmus Communications Corporation (the
"Borrower"), the Agent, First Union National Bank of Virginia, as Co-Agent and
as a Bank and NationsBank, N.A., as Co-Agent and as a Bank, and the Banks (as
amended, modified or extended from time to time, the "Credit Agreement"), and
the BANKS.
WHEREAS, the Guarantors have requested the Banks to extend credit
to the Borrower under the Credit Agreement and the Banks have agreed to extend
such credit by reason of such request and in reliance upon this Guaranty; and
WHEREAS, capitalized terms used but not defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement; and
WHEREAS, the Agent and the Banks require additional assurances and
guarantees by the Guarantors as one of the conditions for making the Loans to
the Borrower; and
WHEREAS, each Guarantor is a Subsidiary of the Borrower; and
WHEREAS, each Guarantor acknowledges the receipt of substantial
direct benefits by the making of the Loans to the Borrower;
NOW THEREFORE, in consideration of the Loans extended and/or to be
extended by the Banks to the Borrower under the Credit Agreement, and for other
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor agrees as follows:
1. Guaranty. Each Guarantor hereby unconditionally, absolutely,
jointly and severally, guarantees to the Banks and the Agent and their
respective successors, endorsees and assigns that (a) the Borrower will duly and
punctually pay and perform, at the place specified therefor in the Credit
Agreement, all indebtedness, obligations and liabilities, direct or indirect,
matured or unmatured, primary or secondary, certain or contingent, of the
Borrower to the Banks and the Agent now or hereafter owing or incurred pursuant
to the Credit Agreement, the Notes and the other Loan Documents (including
without limitation reasonable attorneys' fees and other costs and expenses
incurred by the Bank in attempting to collect or enforce any of the foregoing
after an Event of Default) accrued in each case to the date of payment hereunder
(collectively, the "Obligations" and individually, an "Obligation"); and (b) the
Borrower will perform in all other respects its obligations under the Credit
Agreement, the Notes and the other Loan Documents in accordance with the
respective terms of the Credit Agreement, the Notes and the other Loan
Documents.
2. Guaranty Absolute. This Guaranty is an absolute,
unconditional, continuing and, except as provided below in Section 20 hereof,
unlimited guaranty of the full and punctual payment and performance by the
Borrower of the Obligations and not of their collectibility only and is in no
way
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<PAGE>
conditioned upon any requirement that the Agent or any of the Banks first
attempt to collect any of the Obligations from the Borrower, any other
Guarantor, or any other person, or resort to any security for the Obligations or
this Guaranty or to other means of obtaining payment of any of the Obligations
which the Agent or any Banks now has or may acquire after the date hereof, or
upon any other contingency whatsoever, and the Agent and the Banks may proceed
hereunder against any Guarantor in the first instance to collect the Obligations
when due, without first proceeding against the Borrower or any other person and
without first resorting to any security or other means of obtaining payment. The
obligations of each Guarantor hereunder are irrevocable, absolute and
unconditional, irrespective of genuineness, validity, regularity or
enforceability of the Obligations or any security given therefor or in
connection therewith or any other circumstance (except payment to, or express,
written waiver, release or consent by, the Agent and the Banks) which might
otherwise constitute a legal or equitable discharge of a surety or guarantor.
This Guaranty shall be in addition to any other guaranty or other security for
the Obligations, and it shall not be prejudiced or rendered unenforceable by the
invalidity of any such other guaranty or security. The liability of each
Guarantor hereunder shall in no way be affected or impaired by any acceptance by
the Agent and the Banks of any direct or indirect security for, or other
guaranties of, the Obligations or any other indebtedness, liability or
obligations of the Borrower, any Guarantor or other person to the Agent or any
of the Banks or by any failure, delay, neglect or omission of the Agent or any
of the Banks to realize upon or protect any Obligations or any such other
indebtedness, liability or obligation or any notes or other instruments
evidencing the same or any direct or indirect security therefor, or by any
approval, consent, waiver or other action taken or omitted to be taken by the
Agent or any of the Banks. Upon any default by the Borrower in the payment and
performance of the Obligations (and after the expiration of any applicable grace
period provided in the Credit Agreement), the liabilities and obligations of the
Guarantors hereunder shall, at the option of the Required Banks, become
forthwith due and payable to the Agent and the Banks without demand or notice of
any nature, all of which are expressly waived by each Guarantor; provided that
if any Event of Default specified in clause (g) or (h) of Section 6.01 of the
Credit Agreement occurs, without any notice to any Guarantor or any other act by
the Agent or the Banks, the liabilities and obligations of the Guarantors
hereunder shall automatically become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Guarantors. Payments by the Guarantors, or any of them,
hereunder may be required by the Agent and the Banks on any number of occasions.
3. No Impairment. Each Guarantor agrees that its obligations
hereunder shall not be impaired, modified, changed, released or limited in any
manner whatsoever by any impairment, modification, change, release or limitation
of liability of the Borrower or its estate by reason of the commencement of any
case, proceeding or other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of the Borrower or its
property under any law relating to bankruptcy, insolvency, reorganization,
relief of debtors or seeking appointment of a receiver, trustee, custodian or
similar official for the Borrower or for all or part of its property.
4. Guarantors' Further Agreement to Pay. Each Guarantor further
agrees to pay to the Agent and the Banks forthwith upon demand, in funds
immediately available to the Agent and the Banks, all costs and expenses
(including court costs and reasonable attorneys' fees) incurred or expended by
the Agent and the Banks in connection with the enforcement of this Guaranty.
5. Termination of Guaranty. It is the intention hereof that the
Guarantors shall remain liable under this Guaranty until all of the Obligations
have been fully paid and performed notwithstanding any act, omission or thing
(except payment to, or express, written waiver, release or consent by, the Agent
and the Banks) which might otherwise operate as a legal or equitable discharge
of the Guarantors.
-2-
<PAGE>
Notwithstanding anything contained herein to the contrary, each Guarantor agrees
that to the extent all or any part of any payment of any of the Obligations
previously received by the Agent and the Banks pursuant to the Credit Agreement
or otherwise is subsequently invalidated, voided, declared to be fraudulent or
preferential, set aside, recovered, rescinded or is required to be retained by
or repaid to a trustee, receiver, or any other person under any bankruptcy code,
common law, or equitable cause, or otherwise required to be returned by the
Agent and the Banks for any reason, whether by court order, administrative order
or settlement, this Guaranty and the obligation or part thereof intended to be
satisfied shall be revived and reinstated and continued in full force and effect
as to each Guarantor's obligations hereunder, and each Guarantor agrees that it
shall immediately pay to the Agent and the Banks the amount of such payment,
notwithstanding any termination of this Guaranty or any cancellation of the
Credit Agreement or the Notes.
6. Security; Setoff. Each Guarantor hereby grants to the Agent and
the Banks, as security for the full and punctual payment and performance of such
Guarantor's obligations hereunder, a continuing lien on and security interest in
all deposits and other sums credited by or due from the Agent or any of the
Banks to the Guarantor or subject to withdrawal by the Guarantor. Regardless of
the adequacy of any collateral or other means of obtaining repayment of the
Obligations, each Bank and the Agent may at any time upon or after the
occurrence of any Event of Default, and without notice to any Guarantor, set off
the whole or any portion or portions of any or all such deposits and other sums
credited by or due from Agent or any of the Banks to a Guarantor or subject to
withdrawal by a Guarantor against amounts payable under this Guaranty, whether
or not any other person or persons could also withdraw money therefrom. Each
Guarantor agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note, whether or not
acquired pursuant to the terms of the Credit Agreement, may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
Guarantor in the amount of such participation.
7. Bank's Freedom to Deal with Borrower and Other Parties. The
Agent and the Banks shall be at liberty, without giving notice to or obtaining
the assent of the Guarantors, or any of them, and without relieving any
Guarantor of any liability hereunder, to deal with the Borrower and with each
other party who is now, or after the date hereof becomes, liable in any manner
for any of the Obligations (including, without limitation, any co-guarantor), in
such manner as the Agent and the Banks in their sole discretion deems fit and to
this end each Guarantor hereby gives to the Agent and the Banks full authority
in its sole discretion to do any or all of the following things: (a) extend
credit, make loans and afford other financial accommodations to the Borrower or
to any such other party at such times, in such amounts and on such terms as the
Banks may approve, (b) vary the terms and grant extensions or renewals of any
present or future indebtedness or obligation of the Borrower or of any such
other party to the Agent and the Banks, (c) grant extensions of time, waivers
and other indulgences in respect thereof, (d) vary, exchange, release or
discharge, wholly or partially, or delay in or abstain from perfecting and
enforcing any security or guaranty or other means of obtaining payment of any of
the Obligations or any liability under this Guaranty, which security or guaranty
the Agent and the Banks now have or acquire after the date hereof, (e) accept
partial payments from the Borrower or such other party, (f) release or
discharge, wholly or partially, any endorser or guarantor, and (g) compromise or
make any settlement or other arrangement with the Borrower or any such other
party.
-3-
<PAGE>
8. Representations and Warranties of Guarantors. To induce the
Banks to extend credit to the Borrower, each Guarantor represents and warrants
to the Agent and the Bank that:
(a) Corporate Existence and Power. Each Guarantor is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary, except where a failure to be so qualified would not have a Material
Adverse Effect, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
(b) Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by each Guarantor of this Guaranty and
the other Loan Documents to which it is a party (i) are within the Guarantors'
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of each Guarantor or of any agreement,
judgment, injunction, order, decree or other instrument binding upon each
Guarantor or any of their respective Subsidiaries, and (v) do not result in the
creation or imposition of any Lien on any asset of each Guarantor or any of
their respective Subsidiaries, except as provided herein.
(c) Binding Effect. This Guaranty constitutes a valid and binding
agreement of each Guarantor enforceable in accordance with its terms, and the
other Loan Documents to which it is a party, when executed and delivered in
accordance with this Guaranty, will constitute valid and binding obligations of
each Guarantor enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
(d) Financial Information. The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of June 30, 1995 and the related
consolidated statements of income, shareholders' equity and cash flows for the
Fiscal Year then ended, reported on by Arthur Anderson LLP, copies of which have
been delivered to each of the Banks, and the unaudited consolidated financial
statements of the Borrower for the interim period ended September 30, 1995,
copies of which have been delivered to each of the Banks, fairly present, in
conformity with GAAP, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such dates and their consolidated results of
operations and cash flows for such periods stated.
(e) Litigation. There is no action, suit or proceeding pending, or
to the knowledge of any Guarantor threatened, against or affecting any Guarantor
or any of their respective Subsidiaries before any court or arbitrator or any
governmental body, agency or official which could have a Material Adverse Effect
or which in any manner draws into question the validity or enforceability of, or
could materially impair the ability of any Guarantor to perform its obligations
under, this Guaranty or any of the other Loan Documents to which it is a party.
(f) Compliance with ERISA. (i) Each Guarantor and each member of
the Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC or a Plan under Title
IV of ERISA.
-4-
<PAGE>
(ii) Neither any Guarantor nor any member of the
Controlled Group is or ever has been obligated to contribute to any
Multiemployer Plan.
(g) Taxes. There have been filed on behalf of each Guarantor and
their respective Subsidiaries all Federal, state and local income, excise,
property and other tax returns which are required to be filed by them and all
taxes due pursuant to such returns or pursuant to any assessment received by or
on behalf of each Guarantor or any of their Subsidiaries have been paid. The
charges, accruals and reserves on the books of each Guarantor and of their
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of each Guarantor, adequate. United States income tax returns of each
Guarantor and their respective Subsidiaries have been examined and closed
through the Fiscal Year ended June 30, 1991.
(h) Subsidiaries. Each of the Guarantors' respective Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, is duly qualified to transact
business in every jurisdiction where, by the nature of its business, such
qualification is necessary, except where a failure to be so qualified would not
have a Material Adverse Effect, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Guarantors have no Subsidiaries except
those Subsidiaries listed on Schedule 4.08, which accurately sets forth each
such Subsidiary's complete name and jurisdiction of incorporation.
(i) Not an Investment Company. Neither any Guarantor nor
any of their respective Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(j) Public Utility Holding Company Act. Neither any Guarantor nor
any of their respective Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
(k) Ownership of Property; Liens. Each of the Guarantors and their
respective Subsidiaries has title to their respective properties sufficient for
the conduct of their respective businesses, and none of such properties are
subject to any Lien except as permitted in Section 5.08 of the Credit Agreement.
(l) No Default. Neither any Guarantor nor any of their
respective Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound which could have or cause a Material Adverse Effect. No
Default or Event
of Default has occurred and is continuing.
(m) Full Disclosure. All information heretofore furnished by the
Guarantors to the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Guarantors to the Agent or any Bank will be, true,
accurate and complete in every material respect or based on reasonable estimates
on the date as of which such information is stated or certified. The Guarantors
have disclosed to the Banks in writing any and all facts which could have or
cause a Material Adverse Effect.
(n) Environmental Matters. (1) Neither any Guarantor nor
any of their respective Subsidiaries are subject to any Environmental Liability
which is reasonably likely to have a Material Adverse Effect and, except as
disclosed on Schedule 4.14, neither any Guarantor nor any of their Subsidiaries
have been
-5-
<PAGE>
designated as a potentially responsible party under CERCLA or under any state
statute similar to CERCLA. None of the Properties has been identified on any
current or proposed (i) National Priorities List under 40 C.F.R. ss. 300, (ii)
CERCLIS list or (iii) any list arising from a state statute similar to CERCLA.
(2) No Hazardous Materials have been or are being used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to or from the
Properties or are otherwise present at, on, in or under the Properties, or, to
the best of the knowledge of Guarantors, at or from any adjacent site or
facility, except for Hazardous Materials, such as inks, other chemicals used in
printing operations, cleaning solvents, pesticides and other materials used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, and managed or otherwise handled in the ordinary course of business
in compliance with all applicable Environmental Requirements.
(3) Each Guarantor, and each of their respective Subsidiaries and
Affiliates, has procured all Environmental Authorizations necessary for the
conduct of its business, and is in compliance with all Environmental
Requirements in connection with the operation of the Properties and the
Guarantors', and each of their respective Subsidiaries' and Affiliates',
respective businesses, except where a failure to procure an Environmental
Authorization and/or a failure to comply with an Environmental Requirement would
not, singly or in the aggregate, have a Material Adverse Effect.
(o) Compliance with Laws. Each Guarantor and each of their
Subsidiaries is in compliance with all applicable laws, including, without
limitation, all Environmental Laws, except where any failure to comply with any
such laws would not, alone or in the aggregate, have a Material Adverse Effect.
(p) Capital Stock. All Capital Stock, debentures, bonds, notes and
all other securities of the Guarantors and their respective Subsidiaries
presently issued and outstanding are validly and properly issued in accordance
with all applicable laws, including, but not limited to, the "Blue Sky" laws of
all applicable states and the federal securities laws. The issued shares of
Capital Stock of the Guarantors' Wholly Owned Subsidiaries are owned by the
respective Guarantors free and clear of any Lien or adverse claim. At least a
majority of the issued shares of capital stock of each of the Guarantors' other
Subsidiaries (other than Wholly Owned Subsidiaries) is owned by the respective
Guarantors free and clear of any Lien or adverse claim.
(q) Margin Stock. Neither any Guarantor nor any of their
respective Subsidiaries is engaged principally, or as one of its important
activities, in the business of purchasing or carrying any Margin Stock, and no
part of the proceeds of any Loan will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock, or be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation X.
(r) Insolvency. After giving effect to the execution and delivery
of the Loan Documents and the making of the Loans under this Agreement, no
Guarantor will be "insolvent," within the meaning of such term as used in
O.C.G.A. ss. 18-2-22 or as defined in ss. 101 of Title 11 of the United States
Code or Section 2 of the Uniform Fraudulent Transfer Act, or any other
applicable state law pertaining to fraudulent transfers, as each may be amended
from time to time, or be unable to pay its debts generally as such debts become
due, or have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated.
-6-
<PAGE>
(s) Existing Facilities. The Borrower and the
Guarantors have fully paid and performed any and all indebtedness, liabilities
and obligations under the Existing Facilities and the Existing Facilities have
been terminated.
9. Covenants. Each Guarantor covenants and agrees that, from the
date hereof and until payment in full of the Obligations, such Guarantor shall,
unless the Agent otherwise consents in writing, comply with all of the covenants
contained in the Credit Agreement (as it may be amended from time to time) as
applicable to such Guarantors and shall deliver to the Agent and each Bank:
(i) within five Business Days after such Guarantor becomes aware
of the occurrence of any Default or Event of Default, a certificate of
a principal financial officer or a principal accounting officer of such
Guarantor setting forth the details thereof and the action which the
Guarantor is taking or proposes to take with respect thereto; and
(ii)from time to time, such additional information regarding the
financial position or business of such Guarantor as the Bank may
reasonably request.
10. Events of Default. Each of the following shall constitute an
"Event of Default" hereunder:
(a) Failure of any Guarantor to pay on demand by the Agent or any
Bank any principal of, premium, if any, or interest on the Obligations after the
same shall become due, whether by acceleration or otherwise.
(b) Failure of any Guarantor to observe or perform any of its
covenants, conditions or agreements under this Guaranty (other than set forth in
paragraph (a) above) for a period of thirty (30) days after notice specifying
such failure and requesting that it be remedied is given by the Agent to such
Guarantor.
(c) Any representation, warranty, certification or statement made
by any Guarantor in any certificate, financial statement or other document
delivered pursuant to this Guaranty shall prove to have been incorrect in any
material respect when made.
(d) The Borrower shall at any time fail to own 51% or more of the
issued and outstanding shares of voting stock of the Guarantors.
(e) The occurrence of an Event of Default (as defined in the
Credit Agreement) under the Credit Agreement.
Whenever any Default or Event of Default shall have occurred, the
Agent (if requested by the Required Banks) may declare the entire unpaid
principal of, premium, if any, and interest on the Obligations to be immediately
due and payable without presentation, demand, protest and notice of any kind,
all of which are hereby expressly waived; provided that if any Event of Default
specified in clause (g) or (h) of Section 6.01 of the Credit Agreement occurs,
without any notice to any Guarantor or any other act by the Agent or the Banks,
the liabilities and obligations of the Guarantors hereunder shall automatically
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Guarantors. As used
herein, the term "Default" means any condition or event which constitutes an
Event of Default or which with the giving of notices or lapse of time or both
would, unless cured or waived, become an Event of Default.
No failure or delay by the Agent to exercise any right, power or
privilege hereunder shall operate as a waiver of any such right, power or
privilege nor shall any single or partial exercise of any right,
-7-
<PAGE>
power or privilege preclude any other or further exercise thereof. The rights
and remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
11. Waivers by Guarantors. Each Guarantor hereby waives: (a)
acceptance or notice of acceptance of this Guaranty by the Agent and the Banks;
(b) notice of any action taken or omitted by the Agent and the Banks in reliance
hereon; (c) any duty on the part of the Agent or any of the Banks to disclose to
the Guarantors, or any of them, any facts it may now or hereafter know regarding
the Borrower or any other Guarantor; (d) notice of presentment and demand for
payment or performance of any of the Obligations; (e) protest and notice of
dishonor or of default to the Guarantors, or any of them, or to any other party
with respect to the payment or performance of the Obligations hereby guaranteed;
(f) any and all other notices whatsoever from the Agent or any of the Banks to
which the Guarantors, or any of them, might otherwise be entitled; and (g) any
requirement that the Agent or any of the Banks be diligent or prompt in making
demands hereunder, giving notice of any default by the Borrower or asserting any
other right of the Agent or any of the Banks hereunder. Each Guarantor also
irrevocably waives, to the fullest extent permitted by law, and agrees not to
assert or take advantage of any and all defenses which at any time may be
available in respect of such Guarantor's obligations to the Agent and the Banks
hereunder by virtue of: (i) the statute of limitations in any action hereunder
or for the collection or the performance of any of the Obligations; (ii) the
incapacity, lack of authority, death or disability of any Guarantor or any other
person or entity, or the failure of the Agent or any of the Banks to file or
enforce a claim against the estate (either in administration, bankruptcy, or any
other proceeding) of the Borrower, any Guarantor or any other person or entity;
(iii) the failure of the Agent or any of the Banks to give notice of any action
or non-action on the part of any other person whomsoever, in connection with any
of the Obligations; (iv) an election of remedies by the Agent or any the Banks
which destroys or otherwise impairs any subrogation rights of the Guarantors, or
any of them, the right of a Guarantor to proceed against the Borrower for
reimbursement, or the right of a Guarantor to seek contribution from any
co-guarantor, or all or any combination of such rights; (v) the failure of the
Agent or any of the Banks to commence an action against the Borrower, any
Guarantor, or any other person; (vi) any homestead exemption, valuation, stay,
moratorium law or other similar law now or hereafter in effect; (vii) any
defense based on lack of due diligence by the Agent or any of the Banks in
collection, protection or realization upon any collateral securing the
Obligations; (viii) any and all rights the Guarantors, or any of them, may now
or hereafter have arising under O.C.G.A.ss.10-7-24 ; (ix) the amendment of,
supplement to or waiver of any provision of the Credit Agreement, the Note or
any other instruments, (x) the failure of any Guarantor to receive any benefit
from or as a result of its execution, delivery and performance of this Guaranty;
and (xi) any other legal or equitable defenses whatsoever to which the
Guarantors, or any of them, might otherwise be entitled.
12. No Contest with Agent or any of the Banks. So long as any
Obligation remains unpaid or undischarged, no Guarantor will, by paying any sum
recoverable hereunder (whether or not demanded by the Agent or any of the Banks)
or by any means or on any other ground, claim any right of subrogation with
respect to any of the Obligations guaranteed hereby or to any collateral now or
hereafter granted to secure the Obligations or claim any setoff or counterclaim
against the Borrower in respect of any liability of the Guarantors, or any of
them, to the Borrower or of the Borrower to the Guarantors, or any of them, or,
in proceedings under any federal or state bankruptcy code or insolvency
proceedings of any nature, proceed in competition with the Agent or any of the
Banks in respect of payment hereunder or be entitled to have the benefit of any
counterclaim or proof of claim or dividend or payment by or on behalf of the
Borrower or the benefit of any other security for any Obligation which, now or
hereafter, the Agent or any Bank may hold or in which it may have any share.
-8-
<PAGE>
13. Remedies Cumulative. Each right, privilege, power and remedy
of the Agent and the Banks under this Guaranty, the Credit Agreement, the Note
or other agreement or instrument signed by the Borrower or any Guarantors, or
under any other instrument of any other party securing or guaranteeing any of
the Obligations or under applicable laws shall be cumulative and concurrent and
the exercise of any one or more of them shall not preclude the simultaneous or
later exercise by the Agent and the Banks of any or all such other rights,
privileges, powers and remedies.
14. Demands and Notices. All notices, requests and other
communications to the parties hereunder shall be in writing and shall be given
(i) to a Guarantor in care of the Borrower at the address for the Borrower set
forth in the Credit Agreement, (ii) to the Agent at its address set forth in the
Credit Agreement; and (iii) to the respective Banks at their respective
addresses set forth in the Credit Agreement. All notices shall be given in the
manner specified in the Credit Agreement
15. Amendments, Waiver, Etc. No provision of this Guaranty can be
changed, waived or discharged or terminated except by an instrument in writing
signed by the Agent and each Guarantor and consented to by the Banks as required
by the Credit Agreement. No course of dealing or delay or omission on the part
of either party in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto.
16. Counterparts. This Guaranty may be executed in any number of
counterparts. Each of the counterparts will be considered an original, and all
counterparts constitute but one and the same instrument.
17. Pari Passu Obligations. Each Guarantor warrants and represents
that payment obligations and liabilities of such Guarantor under this Guaranty
shall at all times rank pari passu with all other unsecured and unsubordinated
payment obligations and liabilities (including contingent obligations and
liabilities) of such Guarantor (other than those which are mandatorily preferred
by laws or regulations of general application). Each Guarantor shall assure that
the representation set forth herein is true and correct at all times.
18. Indemnity. Each Guarantor agrees to indemnify the Agent and
the Banks against, and hold the Agent and the Banks harmless from, any loss,
cost, charge, expense (including reasonable attorneys' fees), claims, demands,
suits, damages, penalties, taxes, fines, levies and assessments which may be
asserted or imposed against, or suffered or incurred by, the Agent or any of the
Banks as a direct or indirect result of any representation or warranty of the
Borrower in the Credit Agreement or of the Guarantors herein being untrue or
inaccurate in any respect or as a direct or indirect result of the failure by
the Borrower or any Guarantor to observe, perform or comply with any of its
respective covenants, undertakings or obligations set forth in the Credit
Agreement or this Guaranty.
19. Financial Information. The liability of each Guarantor under
this Guaranty shall be reflected in the consolidated financial statements (or
the notes thereto) of the Borrower and its Subsidiaries in accordance with GAAP.
20. Maximum Liability. Notwithstanding anything in this Guaranty
to the contrary, the maximum liability of each Guarantor under this Guaranty
shall in no event exceed such Guarantor's Maximum Obligated Amount. "Maximum
Obligated Amount" of any Guarantor shall mean the maximum amount which could be
paid out by such Guarantor without rendering this Guaranty, in whole or in part,
void or voidable under applicable law, including, without limitation, (i) the
Bankruptcy Code of 1978, as amended, and (ii) any applicable state or federal
law relative to fraudulent conveyances.
-9-
<PAGE>
21. Miscellaneous Provisions. This Guaranty is intended to take
effect as a sealed instrument to be governed by and construed in accordance with
the laws of the State of Georgia (but not including the choice of law rules
thereof). This Guaranty shall bind the successors and assigns of each Guarantor
and shall inure to the benefit of the Bank, its successors and assigns. All
words herein shall be deemed to refer to the singular, plural, masculine,
feminine or neuter as the identity of the person or entity may require. The
descriptive headings of the several paragraphs of this Guaranty are inserted for
convenience only and do not constitute a part of this Guaranty.
[Remainder of this page intentionally left blank]
-10-
<PAGE>
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as
of the day and year first above written.
GUARANTORS:
AMERICAN GRAPHICS, INC.,
a Georgia corporation
ATTEST:
__________________________ By:_______________________________
Its:_______________________ Title:
[CORPORATE SEAL]
CADMUS DIRECT MARKETING, INC.,
a North Carolina corporation
ATTEST:
__________________________ By:______________________________
Its:_______________________ Title:
[CORPORATE SEAL]
CADMUS INTERACTIVE, INC.,
a Georgia corporation
ATTEST:
_________________________ By:_____________________________
Its:______________________ Title:
[CORPORATE SEAL]
-11-
<PAGE>
CADMUS JOURNAL SERVICES, INC.,
a Virginia corporation
ATTEST:
__________________________ By:__________________________________
Its:______________________ Title:
[CORPORATE SEAL]
CADMUS MARKETING GROUP, INC.,
a Virginia corporation
ATTEST:
__________________________ By:__________________________________
Its:_______________________ Title:
[CORPORATE SEAL]
CADMUS PRINTING GROUP, INC.,
a Virginia corporation
ATTEST:
__________________________ By:__________________________________
Its:_______________________ Title:
[CORPORATE SEAL]
CADMUS PUBLISHING GROUP, INC.,
a Virginia corporation
ATTEST:
__________________________ By:__________________________________
Its:_______________________ Title:
[CORPORATE SEAL]
-12-
<PAGE>
CADMUS SOFTWARE SERVICES, INC.
a Virginia corporation
ATTEST:
__________________________ By:__________________________________
Its:_______________________ Title:
[CORPORATE SEAL]
EXPERT GRAPHICS, INC.,
a Virginia corporation
ATTEST:
__________________________ By:__________________________________
Its:______________________ Title:
[CORPORATE SEAL]
GARAMOND/PRIDEMARK PRESS, INC.,
a Maryland corporation
ATTEST:
__________________________ By:__________________________________
Its:______________________ Title:
[CORPORATE SEAL]
MARBLEHEAD COMMUNICATIONS, INC.,
a Delaware corporation
ATTEST:
__________________________ By:__________________________________
Its:______________________ Title:
[CORPORATE SEAL]
THE WILLIAM BYRD PRESS,
INCORPORATED,
a Virginia corporation
ATTEST:
__________________________ By:__________________________________
Its:______________________ Title:
[CORPORATE SEAL]
-13-
<PAGE>
THREE SCORE, INC.,
a Georgia corporation
ATTEST:
__________________________ By:__________________________________
Its:______________________ Title:
[CORPORATE SEAL]
TUFF STUFF PUBLICATIONS, INC.,
a Virginia corporation
ATTEST:
__________________________ By:__________________________________
Its:______________________ Title:
[CORPORATE SEAL]
WASHBURN GRAPHICS, INC.,
a North Carolina corporation
ATTEST:
__________________________ By:__________________________________
Its:______________________ Title:
[CORPORATE SEAL]
-14-
Exhibit 11
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------- -------------------------------
1996 1995 1996 1995
------------ ------------- -------------- ------------
Net income per share was computed as follows:
<S> <C> <C> <C> <C>
Primary:
1) Net income $ 754,056 $ 2,067,669 $ 4,211,313 $ 4,825,324
============ ============= ============== ============
2) Weighted average common shares outstanding 7,890,399 6,016,405 7,030,237 6,004,833
3) Incremental shares under stock options computed
under the treasury stock method using the
average market price of issuer's common stock
during the periods 279,029 178,108 268,475 184,557
------------ ------------- -------------- ------------
4) Weighted average common and common equivalent
shares outstanding 8,169,428 6,194,513 7,298,712 6,189,390
============ ============ ============= =============
5) Net income per share (item 1 divided by item 4) $ .09 $ .33 $ .58 $ .78
============ ============= ============== ============
Fully diluted:
1) Net income $ 754,056 $ 2,067,669 $ 4,211,313 $ 4,825,324
============ ============= ============== ============
2) Weighted average common shares outstanding 7,890,399 6,016,405 7,030,237 6,004,833
3) Incremental shares under stock options computed
under the treasury stock method using the
market price of issuer's common at the end
of the periods if higher than the average
market price 279,029 208,618 268,475 207,798
------------ ------------- -------------- ------------
4) Weighted average common and common equivalent
shares outstanding 8,169,428 6,225,023 7,298,712 6,212,631
============ ============= ============== ============
5) Net income per share (item 1 divided by item 4) $ .09 $ .33 $ .58 $ .78
============ ============= ============== ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,460
<SECURITIES> 0
<RECEIVABLES> 70,546
<ALLOWANCES> 1,440
<INVENTORY> 20,426
<CURRENT-ASSETS> 97,048
<PP&E> 178,655
<DEPRECIATION> 84,222
<TOTAL-ASSETS> 216,662
<CURRENT-LIABILITIES> 53,429
<BONDS> 43,765
0
0
<COMMON> 3,953
<OTHER-SE> 102,379
<TOTAL-LIABILITY-AND-EQUITY> 216,662
<SALES> 84,361
<TOTAL-REVENUES> 84,361
<CGS> 66,576
<TOTAL-COSTS> 66,576
<OTHER-EXPENSES> 106
<LOSS-PROVISION> 157
<INTEREST-EXPENSE> 955
<INCOME-PRETAX> 1,219
<INCOME-TAX> 465
<INCOME-CONTINUING> 754
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 754
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
