SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
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 September 30, 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 240
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 October 31, 1996.
Class Outstanding at October 31, 1996
----- -------------------------------
Common Stock, $.50 Par Value 7,907,556
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -- 3
September 30, 1996 and June 30, 1996
Consolidated Statements of Income -- 4
Three Month Periods Ended
September 30, 1996 and 1995
Consolidated Statements of Cash Flows -- 5
Three Months Ended September 30, 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
</TABLE>
<PAGE>
PART I. Financial Information
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
----------------- --------------
(Unaudited)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,040 $ 1,141
Accounts receivable, net 70,186 76,889
Inventories 26,373 23,486
Deferred income taxes 2,105 2,150
Prepaid expenses and other 4,895 6,062
----------------- --------------
Total current assets 105,599 109,728
Property, plant, and equipment (net of accumulated depreciation
of $89,605 at September 30, 1996 and $87,474 at June 30, 1996) 114,635 116,365
Other assets 4,406 3,824
Goodwill, net 50,431 52,846
----------------- --------------
Total Assets $ 275,071 $ 282,763
================= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 290 $ 3,323
Current maturities of long-term debt 569 136
Accounts payable 23,273 26,361
Accrued expenses 22,074 20,351
----------------- --------------
Total current liabilities 46,206 50,171
Long-term debt 104,671 106,665
Other long-term liabilities 6,586 9,555
Deferred income taxes 8,741 8,804
Shareholders' equity:
Common stock ($.50 par value; authorized shares-16,000,000 shares; issued and
outstanding shares-7,908,000 at September 30, 1996 and June 30, 1996) 3,954 3,954
Capital in excess of par value 52,971 52,971
Retained earnings 51,942 50,643
----------------- --------------
Total shareholders' equity 108,867 107,568
----------------- --------------
Total Liabilities and Shareholders' Equity $ 275,071 $ 282,763
================= ==============
</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
September 30,
------------------------------
1996 1995
---------- ---------
<S> <C>
Net sales $ 93,922 $ 74,673
---------- ---------
Operating expenses:
Cost of sales 72,707 56,803
Selling and administrative 16,101 13,918
Restructuring gain (250) -
---------- ---------
88,558 70,721
Operating income 5,364 3,952
Interest and other expenses:
Interest 2,076 1,422
Other, net 511 57
---------- ---------
2,587 1,479
---------- ---------
Income before income taxes 2,777 2,473
Income taxes 1,083 957
---------- ---------
Net income $ 1,694 $ 1,516
========== =========
Net income per share $ .21 $ .24
========== =========
Weighted average common shares
outstanding 8,024 6,326
========== =========
Cash dividends per common share $ .05 $ .05
========== =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------------------
1996 1995
------------ -----------
<S> <C>
Operating Activities
Net income $ 1,694 $ 1,516
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Restructuring gain (250) -
Depreciation and amortization 4,621 3,140
Other, net 781 502
------------ -----------
6,846 5,158
------------ -----------
Changes in assets and liabilities, excluding debt and effects of acquisitions
and dispositions:
Accounts receivable, net 4,541 (6,259)
Inventories (3,006) (5,858)
Accounts payable and accrued expenses (1,829) 667
Payment to fund pension plan (2,837) -
Other, net 374 (277)
------------ -----------
(2,757) (11,727)
------------ -----------
Net cash provided by (used in) operating activities 4,089 (6,569)
------------ -----------
Investing Activities
Proceeds from sale of consumer publishing division 6,500 -
Purchases of property, plant, and equipment (4,557) (4,562)
Proceeds from sales of property, plant, and equipment 1,206 11
Other, net (947) (416)
------------ -----------
Net cash provided by (used in) investing activities 2,202 (4,967)
------------ -----------
Financing Activities
Proceeds from short-term borrowings - 16,725
Repayment of short-term borrowings (3,033) (5,000)
Repayment of long-term borrowings (1,964) (108)
Dividends paid (395) (302)
Proceeds from exercise of stock options - 124
------------ -----------
Net cash provided by (used in) financing activities (5,392) 11,439
------------ -----------
Increase (decrease) in cash and cash equivalents 899 (97)
Cash and cash equivalents at beginning of period 1,141 226
------------ -----------
Cash and cash equivalents at end of period $ 2,040 $ 129
============ ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting, and with applicable quarterly reporting regulations of the
Securities and Exchange Commission. They do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements and, accordingly, should be read in conjunction with the
consolidated financial statements and related footnotes included in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of interim financial
information have been included.
2. Net income per common share is computed based upon the weighted average
number of shares outstanding during the periods 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. The increase in weighted average shares outstanding reflects shares
issued in connection with the Company's equity offering completed in the second
quarter of fiscal 1996.
3. Inventories are valued at the lower of cost or market. Inventory costs have
been determined by the first-in, first-out method for 71% of inventories at
September 30, 1996 and 70% at June 30, 1996. Costs for the remaining inventories
have been determined by the last-in, first-out (LIFO) method. Because the
inventory determination under the LIFO method can only be made at year-end based
on the current inventory levels and costs, interim LIFO determination, including
that at September 30, 1996, must necessarily be based on management's estimates
of expected year-end inventory levels and costs. Since future estimates of
inventory levels and costs are subject to many forces beyond the control of
management, interim financial results are subject to final year-end LIFO
inventory amounts. Components of net inventories at September 30, 1996 and June
30, 1996 were as follows (in thousands):
September 30, June 30,
1996 1996
------------- --------
Raw materials and supplies $ 7,758 $ 8,055
Work in process:
Materials 7,520 5,659
Other manufacturing costs 10,271 8,823
Finished goods 2,723 2,848
LIFO reserve (1,899) (1,899)
-------- ------
Inventories $26,373 $23,486
======= =======
4. Results of operations for the quarter ended September 30, 1996 include
recognition of a $0.3 million gain resulting from a restructuring of the
Company's publishing operations. The restructuring gain included income of $0.7
million related to the September 30, 1996 sale of its consumer publishing
division, for total consideration of $6.5 million, which was offset by charges
of $0.4 million related to the restructuring and repositioning of Cadmus custom
publishing into the Company's Marketing Group.
5. In October 1996, the Company entered into an agreement for a revolving
credit/term loan facility of $160 million with six major banks, replacing the
former $115 million revolving credit/term loan facility. The $160 million
agreement is composed of a $120 million revolving credit facility, which has a
five-year term expiring in October 2001 and a $40 million seven-year term loan
expiring in October 2003. The interest rate options and commitment fees are the
same as under the former $115 million facility. Also in October 1996, the
Company entered into an interest rate swap agreement with a notional amount of
$40 million. This swap, which expires in September 2001, effectively converts
$40 million of variable-rate debt to fixed-rate debt. Under the terms of this
agreement, the Company makes payments at a fixed rate of 6.7% and receives
payments based on 30-day LIBOR.
Also in October 1996, using the additional capacity available under the new $160
million facility referred to above, the Company repaid $40 million of 6.74%
senior unsecured notes which were borrowed in fiscal 1994 to fund the Company's
fiscal 1994 acquisition of Waverly Press. There was no prepayment penalty
associated with this debt retirement.
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Effective July 1, 1996, the Company reorganized its operational and reporting
group structure into the Periodicals, Graphic Communications, Marketing, and
Publishing Groups. In doing so, the Company also realigned the various product
lines which comprise each group. Under this new structure the Periodicals Group
includes the journal services and magazine product lines; the Graphic
Communications Group includes the financial communications, specialty packaging,
promotional printing, marketing services, and technology services product lines;
the Marketing Group includes the direct marketing, catalogs, custom publishing,
and multimedia product lines; and the Publishing Group included the consumer
publishing product line. Effective with the sale of the Company's consumer
publishing division in September 1996, the publishing group ceased to exist.
Therefore, all discussion and analysis in future filings will include references
to only the Periodicals, Graphic Communications, and Marketing Groups.
Sales for the first quarter of fiscal 1997 were $93.9 million, up 26% from sales
of $74.7 million recorded in the first quarter of fiscal 1996. Excluding the
effect of fiscal 1996 acquisitions, sales decreased 1%; however, after adjusting
for the impact of declining paper prices, sales increased 1%. First quarter
fiscal 1997 net income was $1.7 million, or $.21 per share, compared to $1.5
million, or $.24 per share, for the same quarter of fiscal 1996. Excluding a
$0.3 million gain in the first quarter of fiscal 1997, resulting from a
restructuring of the Company's publishing operations, net income was $1.5
million, or $.19 per share. There were 8,024,000 weighted average common shares
outstanding for the first quarter of fiscal 1997, compared to 6,326,000 shares
for the same period of last year. The increase in shares outstanding reflects
shares issued in connection with the Company's equity offering completed in the
second quarter of fiscal 1996.
The following table presents the major components from the Consolidated
Statements of Income as a percent of net sales for the three months ended
September 30, 1996 and 1995:
Three Months Ended
September 30,
1996 1995
------ -----
Net sales 100.0% 100.0%
Cost of sales 77.4 76.1
------ ------
Gross profit 22.6 23.9
Selling and administrative expenses 17.1 18.6
Restructuring gain (0.2) -
------- --------
Operating income 5.7 5.3
Interest expense 2.2 1.9
Other expenses, net 0.5 0.1
------- -------
Income before income taxes 3.0 3.3
Income taxes 1.2 1.3
------- -------
Net income 1.8% 2.0%
======= =======
<PAGE>
RESULTS OF OPERATIONS (continued)
Sales
Through the quarter ended September 30, 1996, the Company grouped sales into
four business groups: Periodicals, Graphic Communications, Marketing, and
Publishing. The table below displays net sales for each of these groups
expressed as a percent of net sales:
Three Months Ended
September 30,
1996 1995
------ -----
Periodicals 52.8% 47.3%
Graphic Communications 35.2 36.7
Marketing 9.6 12.8
Publishing 2.4 3.2
------ ------
100.0% 100.0%
===== =====
Sales increased significantly in both the Periodicals and Graphic Communications
Groups, but declined slightly in the Marketing and Publishing groups. The 40%
increase in the Periodicals Group sales was due to a 70% increase in journal
services revenues offset somewhat by a 16% decline in magazine revenues. The
increase in journal services sales was due primarily to the inclusion of
Lancaster Press, Inc. ("Lancaster") which was acquired during the fourth quarter
of fiscal 1996. Excluding Lancaster, journal services sales increased 1% but
increased 6% after the adjustment for the impact of declining paper prices. The
decline in sales in the magazine product line is the result of the Company
continuing to examine the working relationships with slower paying, disruptive,
or otherwise non-strategic customers.
The 20% increase in the Graphic Communications Group sales was due to increases
across all product lines except the marketing services product line. Along with
the addition of software replication revenues, due to the acquisitions of The
Software Factory, Inc. and the Atlanta division of Encryption Technology
Corporation, the promotional printing, specialty packaging, and financial
communications product lines experienced significant revenue growth offset only
slightly by a 6% decline in marketing services sales. The increase in both the
promotional printing (a 9% increase) and specialty packaging (a 49% increase)
product lines resulted from growth in existing customer accounts, whereas the
12% increase in financial communications revenues was driven by increased mutual
fund business and growth in full service sales to financial institutions.
Marketing services revenues declined as the Company was adversely impacted by
the loss of a major account and by delays in the timing of customer promotional
programs.
Marketing Group sales declined 6%. Adjusted for the fiscal 1996 acquisition of
The Mowry Company, sales declined 16%. Double-digit growth in the custom
publishing and multimedia product lines was more than offset by declines in both
catalog and direct marketing sales. Catalog revenues were down 22% due primarily
to a deferral of revenues into the second quarter of fiscal 1997 as new
customers have different cycles than some former customers. Direct marketing
sales declined 19% due to both the shift of customer jobs to the second quarter
of fiscal 1997 and to the slower than anticipated replacement of client accounts
lost during fiscal 1996. Although custom publishing and multimedia revenues were
greater than fiscal 1996 first quarter by 11% and 100%, respectively, they were
behind anticipated sales levels. The Company is in the process of rebuilding the
custom publishing management team, evaluating client relationships, and
realigning the business into the Marketing Group. The Company does not expect
significant improvement from custom publishing in the near future.
<PAGE>
RESULTS OF OPERATIONS (continued)
Operating Expenses
Cost of sales increased to 77.4% of sales for the first quarter of fiscal 1997
compared to 76.1% of sales in the prior year first quarter. This increase was
driven primarily by a change in sales mix with the Marketing and Publishing
Groups accounting for only 12.0% of net sales in fiscal 1997 compared to 16.0%
for the first quarter of fiscal 1996 combined with a decline in higher-margin
marketing services revenues. In addition, the Marketing Group experienced a
deterioration in the gross profit margin as the multimedia product line strives
to establish the appropriate cost structure and production management systems to
support the dramatic revenue growth and as the Company rebuilds the custom
publishing management team. Also, inefficiencies and excess capacity continued
to exist at certain manufacturing facilities. As these factors drove the cost of
sales ratio up, the integration of the Lancaster acquisition positively impacted
cost of sales. Excluding the Lancaster acquisition, the first quarter fiscal
1997 cost of sales ratio was 78.6% of sales.
Selling and administrative expenses decreased from 18.6% of sales for the first
quarter of fiscal 1996 to 17.1% of sales for the first quarter of fiscal 1997.
This improvement was driven by the inclusion of the fiscal 1996 acquisition of
Lancaster. Excluding the Lancaster acquisition, the selling and administrative
expense ratio was 18.7%, unchanged from fiscal 1996.
In the first quarter of fiscal 1997 the Company recorded a $0.3 million pretax
gain to restructure the Publishing Group operations as it was determined that
the consumer publishing business was no longer consistent with the Company's
strategy to become an integrated, solutions-based communications and marketing
company. Therefore, the consumer publishing division was sold and the Company
recorded a $0.7 million gain from this sale. The proceeds from the sale of this
division were used to pay down debt. In addition, as part of this restructuring,
the Company recorded a $0.4 million charge related to the strategic
repositioning of the custom publishing product line into the Marketing Group.
The charge included costs of $0.2 million for termination benefits for five
associates and $0.2 million for costs related to repositioning the client base
to align with the Marketing Group strategies.
Interest and Other Expenses and Income Taxes
Interest expense increased $0.7 million, or 46%, for the first quarter of fiscal
1997 over the same period of fiscal 1996, the result of debt incurred to
purchase Lancaster in May 1996, offset by slightly lower short-term interest
rates.
Other expense increased to $0.5 million in the first quarter of fiscal 1997 from
$0.1 million in the prior year first quarter due to additional goodwill
amortization related to fiscal 1996 acquisitions.
The effective income tax rate increased from 38.7% in the first quarter of
fiscal 1996 to 39.0% in the first quarter of fiscal 1997 due primarily to an
overall increase in the state effective tax rate and an increase in the amount
of non-deductible goodwill amortization.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Management believes that the Company has the financial resources and access to
capital necessary to fund internal growth and acquisitions. The Company's major
demands on capital are investments in property, plant, and equipment, working
capital, and acquisitions.
Net cash provided by operating activities totaled $4.1 million for the first
quarter of fiscal 1997, representing a $10.7 million increase from $6.6 million
used by operating activities in the prior year first quarter. The increase was
attributable to reduced cash requirements to fund the Company's working capital
investment, particularly accounts receivable and inventories, combined with a
$1.5 million increase in depreciation and amortization, partially offset by a
$2.8 million required cash contribution to the Company's pension plan and the
$2.5 million increased use of funds applied to reduce current liabilities. The
$10.8 million turnaround in funds provided by accounts receivable, excluding the
effect of the sale of the consumer publishing division, resulted from extensive
efforts to improve collections across the Company combined with the shift in the
timing of which months sales occurred in during the quarter.
Net cash provided by investing activities totaled $2.2 million for the first
quarter of fiscal 1997, as compared to $5.0 used in the prior year first
quarter, and included proceeds of $6.5 million from the sale of the Company's
consumer publishing division in September 1996 and $1.2 million in proceeds from
the sale of certain property, plant, and equipment. These sources more than
offset $5.1 million used to fund first quarter fiscal 1997 capital expenditures
and acquisitions. The $5.1 million included fixed asset additions primarily for
a six-unit sheet-fed CD press in Charlotte and costs associated with new
business system installations.
Net cash used in financing activities was $5.4 million in the fiscal 1997 first
quarter compared with $11.4 million provided by financing activities in the
prior year first quarter. The $16.8 million change was the result of a decrease
in debt in the current fiscal quarter as funds from the proceeds of the sale of
the Company's consumer publishing division were used to pay off debt. This
reduction in debt compares to a net increase in debt of $11.6 million in the
prior year as the Company used lines of credit to fund an increase in working
capital requirements.
Total debt at September 30, 1996 was $105.5 million, down from $110.1 million at
June 30, 1996. The decline in debt was due to the use of proceeds from the sale
of the Company's consumer publishing division primarily to pay down debt. These
lower debt levels resulted in a slight decrease in the Company's debt-to-capital
ratio from 50.6% at June 30, 1996 to 49.2% at September 30, 1996.
In October 1996, the Company entered into an agreement for a revolving
credit/term loan facility of $160 million with six major banks, replacing the
former $115 million revolving credit/term loan facility. The $160 million
agreement is composed of $120 million revolving credit facility which has a
five-year term expiring in October 2001 and a $40 million seven-year term loan
expiring in October 2003. The interest rate options and commitment fees are the
same as under the former $115 million facility. Also in October 1996, the
Company entered into an interest rate swap agreement with a notional amount of
$40 million. This swap, which expires in September 2001, effectively converts
$40 million of variable-rate debt to fixed-rate debt. Under the terms of this
agreement, the Company makes payments at a fixed rate of 6.7% and receives
payments based on 30-day LIBOR.
Also in October 1996, using the additional capacity available under the new $160
million facility referred to above, the Company repaid $40 million of 6.74%
senior unsecured notes which were borrowed in fiscal 1994 to fund the Company's
fiscal 1994 acquisition of Waverly Press. There was no prepayment penalty
associated with this debt retirement.
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
Exhibit Description
Exhibit 4 $160,000,000 Revolving Credit/Term
Loan Facility Agreement dated
October 15, 1996
Exhibit 11 Statement Regarding Computation of
Net Income per Share
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K:
On August 2, 1996, the Company filed a Form 8-K, which included the press
release regarding fiscal 1996 fourth quarter and year-end financial results, as
well as a copy of the prepared remarks made on a conference call to analysts on
same date.
On August 5, 1996, the Company filed a Form 8-K/A which contained financial
statements and pro forma information omitted (in reliance upon Item 7(a)(4) and
7(b)(2) of Form 8-K) from the Form 8-K, dated June 5, 1996, that reported the
acquisition of Lancaster Press, Inc., a Pennsylvania-based producer of
scientific, technical, and medical journals.
<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: November 14, 1996 /s/ C. Stephenson Gillispie
___________________________________
C. Stephenson Gillispie, Jr.
Chairman, President, and Chief
Executive Officer
Date: November 14, 1996 /s/ Bruce V. Thomas
____________________________________
Bruce V. Thomas
Vice President and Chief
Financial Officer
EXHIBIT 4
$160,000,000
CREDIT AGREEMENT
dated as of
October 15, 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
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of October 15, 1996 among CADMUS
COMMUNICATIONS CORPORATION, the BANKS listed on the signature pages hereof,
FIRST UNION NATIONAL BANK OF VIRGINIA, as Co-Agent and a Bank, NATIONSBANK,
N.A., as Co-Agent and a Bank, 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 September 9, 1996, between the Borrower and the Agent
relating to the structure of the Term Loans and Revolving Credit 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).
1
<PAGE>
"Applicable Margin" has the meaning set forth in Section
2.06(a).
"Assignee" has the meaning set forth in Section 9.07(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.07(c) in the form attached hereto as
Exhibit K.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as
having a Term Loan Commitment and Revolving Credit 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 Borrowing" means: (i) a Term Loan Borrowing if the
advances under such borrowing bear or are to bear interest calculated by
reference to the Base Rate; and (ii) a Revolving Credit Borrowing if the
advances under such borrowing bear or are to bear interest calculated by
reference to the Base Rate.
"Base Rate Loan" means: (i) the Term Loans during periods in
which the Term Loans bear or are to bear interest calculated by reference to the
Base Rate; and (ii) Revolving Credit Loans which bear or are to bear interest
calculated by reference to 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.
"Borrower Officer's Certificate" has the meaning set forth in
Section 3.01(f).
"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.
"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.
2
<PAGE>
"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).
"Closing Date" means October 15, 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.
"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
expensed 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
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determining Consolidated Funded Debt, clauses (vii), (viii) and (ix) of the
definition of Debt contained in this Agreement shall be disregarded.
"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 Revolving Credit
Loan or Term Loan, on any day, the then highest interest rate (including the
Applicable Margin) which may be applicable to any EuroDollar Loan or Base Rate
Loan hereunder (irrespective of whether any such type of loans are actually
outstanding hereunder).
"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.
"EBILT" for any period means the sum of: (i) Consolidated Net
Income, (ii) taxes on income, and (iii) Consolidated Fixed Charges, all
determined with respect to the Borrower and its Consolidated Subsidiaries on a
consolidated basis for such period and in accordance with GAAP.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
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"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.
"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.
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"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 Borrowing" means: (i) a Term Loan Borrowing if
the advances under such borrowing bear or are to bear interest at a rate based
upon the London Interbank Offered Rate; and (ii) a Revolving Credit Borrowing if
the advances under such borrowing bear or are to bear interest at a rate based
upon the London Interbank Offered Rate.
"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: (i) the Term Loans during periods in
which the Term Loans bear interest at a rate based upon the London Interbank
Offered Rate; and (ii) Revolving Credit Loans which bear or are 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 Facility" means that certain Credit Agreement dated
as of June 12, 1996 by and between the Borrower, the Agent, NationsBank, N.A.,
as Co-Agent and a bank, First Union National Bank of Virginia, as Co-Agent and a
bank, Wachovia Bank of North Carolina, N. A., as a bank and Crestar Bank, as a
bank.
"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.
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"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Charge Coverage Ratio" means the ratio, measured as of
the last day of each Fiscal Quarter, of EBILT 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.
"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.
"Guarantor Officer's Certificate" has the meaning set forth in Section
3.01(g).
"Guarantors" means, collectively, the following: American Graphics,
Inc., a Georgia corporation, Cadmus Direct Marketing, Inc., a North Carolina
corporation, Cadmus Journal Services, Inc., a Virginia corporation, Lancaster
Press, Inc., a Delaware corporation, The William Byrd Press, Incorporated, 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 M 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
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<PAGE>
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.
"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 Euro-Dollar 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) (i) any Interest Period applicable to the Term Loans which
begins before the Term Loan Maturity Date and would otherwise end after
the Term Loan Maturity Date shall end on the Term Loan Maturity Date;
and (ii) any Interest Period applicable to a Syndicated Revolving
Credit Loan which begins before the Revolving Credit Maturity Date and
would otherwise end after the Revolving Credit Maturity Date shall end
on the Revolving Credit Maturity 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:
(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) (i) any Interest Period applicable to the Term Loans which
begins before the Term Loan Maturity Date and would otherwise end after
the Term Loan Maturity Date shall end on the Term Loan Maturity Date;
and (ii) any Interest Period applicable to a Syndicated Revolving
Credit Loan which begins before the Revolving Credit Maturity Date and
would otherwise end after the Revolving Credit Maturity Date shall end
on the Revolving Credit Maturity Date.
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<PAGE>
(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
Revolving Credit Maturity Date and would otherwise end after the
Revolving Credit Maturity 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 Documents" means this Agreement, the Notes, the
Guaranty, any other document evidencing, relating to or securing the Term Loans
or the Revolving Credit Loans, and any other document or instrument delivered
from time to time in connection with this Agreement, the Notes, the Guaranty or
the Term Loans or the Revolving Credit 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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<PAGE>
"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 Borrowing" means a Revolving Credit Borrowing if
the advances under such borrowing bear or are to bear interest at a Money Market
Rate.
"Money Market Loan" means a Revolving Credit 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 C 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 aggregate amount of any and all Debt converted into
Capital Stock), from a Person other than the Borrower or a Consolidated
Subsidiary, after deducting
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<PAGE>
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 Term Loan Note, a Syndicated Revolving Credit
Note or a Money Market Note and "Notes" means the Term Loan Notes, the
Syndicated Revolving Credit 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.
"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; (C) such acquisition is made on a negotiated basis with the
approval of the Board of Directors of the Person to be acquired; and (D) such
acquisition is permitted under Section 5.22.
"Person" means an individual, a corporation, a limited
liability company, 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.
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<PAGE>
"Private Placement Debt" means any and all indebtedness,
liabilities and obligations of the Borrower under the 6.74% Guaranteed Senior
Notes due 2003 made by the Borrower issued in an aggregate original principal
amount of $40,000,000 pursuant to the several Note Purchase Agreements dated as
of December 15, 1993, by and between the Borrower, Metropolitan Life Insurance
Company, The Variable Annuity Life Insurance Company and Texas Life Insurance
Company.
"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 Term Loan Maturity
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: (1) Banks having at least
66 2/3% of the aggregate amount of the sum of: (i) Revolving Credit Commitments;
and (ii) Term Loan Commitments; or, (2) if the Revolving Credit Commitments and
Term Loan Commitments are no longer in effect, Banks holding at least 66 2/3% of
the aggregate outstanding principal amount of the Notes.
"Revolving Credit Loan" means a Syndicated Revolving Credit
Loan or a Money Market Loan and "Revolving Credit Loans" means Syndicated
Revolving Credit Loans or Money Market Loans, or any or all of them, as the
context shall require.
"Revolving Credit Borrowing" shall mean a borrowing under the
Revolving Credit Commitment consisting of: (i) Revolving Credit Loans made to
the Borrower at the same time by, in the case of a Syndicated Revolving Credit
Borrowing, the Banks; or (ii) Revolving Credit Loans made to the Borrower at the
same time by, in the case of a Money Market Borrowing, one or more of the Banks,
in each case pursuant to Article II. A Revolving Credit Borrowing is a
"Syndicated Revolving Credit Borrowing" if such Revolving Credit Loans are
Syndicated Revolving Credit Loans or a "Money Market Borrowing" if such
Revolving Credit Loans are Money Market Loans. A Syndicated Revolving Credit
Borrowing is a "Euro-Dollar Borrowing" if such Revolving Credit Loans
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<PAGE>
are made as Euro-Dollar Loans and a "Base Rate Borrowing" if such Revolving
Credit Loans are made as Base Rate Loans.
"Revolving Credit Commitment" means with respect to each Bank,
(i) the amount designated as the Revolving Credit Commitment 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 Revolving Credit 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.
"Revolving Credit Maturity Date" shall mean October 15, 2001.
"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 EBILT for either of
the two most recently ended Fiscal Years. A Subsidiary shall be a "Significant
Subsidiary" if such Subsidiary is included in the group of Subsidiaries,
determined in accordance with the terms of the following sentence, accounting
for either: (1) the Consolidated Total Assets measured under part (A) of the
preceding sentence, but not the EBILT measured under part (B) of the preceding
sentence; or (2) the EBILT measured under part (B) of the preceding sentence,
but not the Consolidated Total Assets measured under part (A) of the preceding
sentence; or (3) the EBILT measured under part (B) of the preceding sentence and
the Consolidated Total Assets measured under part (A) of the preceding sentence.
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) Lancaster Press, Inc.; (iv) The
William Byrd Press, Incorporated; (v) Washburn Graphics, Inc.; and (vi) Cadmus
Direct Marketing, 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.
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"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 Revolving Credit Loan" means a Base Rate Loan or a
Euro-Dollar Loan made under the Revolving Credit Commitment and Syndicated
Revolving Credit Loans means Base Rate Loans or Euro-Dollar Loans made under the
Revolving Credit Commitment, or any or all of them, as the context shall
require.
"Syndicated Revolving Credit 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 Revolving Credit Loans,
together with all amendments, consolidations, modifications, renewals and
supplements thereto and "Syndicated Revolving Credit Note" means any one of such
Syndicated Revolving Credit Notes.
"Taxes" has the meaning set forth in Section 2.12(c).
"Term Loans" means the loans made by the Banks under the Term
Loan Commitments and "Term Loan" means any one of such Term Loans. Except as may
be required pursuant to Section 2.06(g), at no time shall there be more than one
(1) Interest Period applicable to the Term Loans 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).
"Term Loan Borrowing" shall mean a borrowing under the Term
Loan Commitments consisting of Term Loans made to the Borrower at the same time
by the Banks pursuant to Article II. A Term Loan Borrowing is a "Euro-Dollar
Borrowing" if such Term Loans are made as Euro-Dollar Loans and a "Base Rate
Borrowing" if such Term Loans are made as Base Rate Loans.
"Term Loan Commitment" means, with respect to each Bank, (i)
the amount designated as the Term Loan Commitment 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 Term Loan Commitment after giving effect
to such Assignment and Acceptance, in each case as such amount may be reduced
from time to time pursuant to Section 2.09.
"Term Loan Commitment Reduction Date" means each January 15,
April 15, July 15 and October 15, commencing on January 15, 1998, and continuing
until the Term Loan Maturity Date.
"Term Loan Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit B hereto, evidencing the obligation of the
Borrower to repay the Term Loans, together with
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all amendments, consolidations, modifications, renewals and supplements thereto
and "Term Note" means any one of such Term Notes.
"Term Loan Maturity Date" means October 15, 2003.
"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.
"Total Unused Revolving Credit Commitments" means at any date,
an amount equal to: (i) the aggregate amount of the Revolving Credit Commitments
of all of the Banks at such time, less (ii) the aggregate outstanding principal
amount of the Revolving Credit Loans of all of the Banks at such time.
"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).
"Unused Revolving Credit Commitment" means at any date, with
respect to any Bank, an amount equal to its Revolving Credit Commitment less the
aggregate outstanding principal amount of its Revolving Credit 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
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<PAGE>
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.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend.
(a) Syndicated Revolving Credit Loans. Each Bank severally
agrees, on the terms and conditions set forth herein, to make Syndicated
Revolving Credit Loans to the Borrower from time to time before the Revolving
Credit Maturity Date; provided that, immediately after each such Syndicated
Revolving Credit Loan is made, the aggregate outstanding principal amount of
Syndicated Revolving Credit Loans by such Bank shall not exceed the amount of
its Revolving Credit Commitment, provided further that the aggregate principal
amount of all Syndicated Revolving Credit 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 Revolving Credit Commitments of all of
the Banks at such time. Each Syndicated Revolving Credit Borrowing that is a
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 Syndicated
Revolving Credit Borrowing that is a 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 Revolving Credit Borrowing may be
in the aggregate amount of the Unused Revolving Credit Commitments) and shall be
made from the several Banks ratably in proportion to their respective Revolving
Credit Commitments. Within the foregoing limits, the Borrower may borrow under
this Section 2.01(a), repay or, to the extent permitted by Section 2.10,
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<PAGE>
prepay Syndicated Revolving Credit Loans and reborrow under this Section 2.01(a)
at any time before the Revolving Credit Maturity Date.
(b) The Term Loans. (i) Each Bank severally agrees, on the
terms and conditions set forth herein, to make Term Loans to the Borrower from
time to time before the Term Loan Maturity Date; provided that, except as may be
required pursuant to Section 2.06(g), at no time shall any Bank have more than
one Term Loan outstanding and immediately after each such Term Loan is made, the
aggregate outstanding principal amount of Term Loans by such Bank shall not
exceed such Bank's Term Loan Commitment; and provided further that the aggregate
principal amount of all Term Loans at any one time outstanding shall not exceed
the aggregate amount of the Term Loan Commitments of all of the Banks at such
time. Each Term Loan Borrowing under this Section shall be made from the several
Banks ratably in proportion to their respective Term Loan Commitments. Within
the foregoing limits, the Borrower may borrow under this Section 2.01 (b), repay
or to the extent permitted by Section 2.10, prepay Term Loans and reborrow under
this Section 2.01 (b) at any time before the Term Loan Maturity Date; provided,
however, (y) the proceeds of any Term Loan Borrowing, other than the initial
Term Loan Borrowing, shall be used exclusively for the purpose of repaying Term
Loans maturing on the date of such Term Loan Borrowing and for no other purpose;
and (z) the ability to reborrow may be limited by the provisions of Section 2.09
hereof.
(ii) On the Closing Date: (y) the initial Term Loan Borrowing
shall be made by the Banks to the Borrower; and (z) in connection with
the initial Term Loan Borrowing, each Bank shall make a Term Loan to
the Borrower in an amount equal to such Bank's Term Loan Commitment.
The Term Loans comprising the initial Term Loan Borrowing shall be
Euro-Dollar Loans bearing interest at a rate per annum equal to the sum
of the Applicable Margin plus the Adjusted London Interbank Offered
Rate for an Interest Period of one month. The Term Loans shall at all
times be either Euro-Dollar Loans or Base Rate Loans; provided that if
the Borrower is otherwise entitled under this Agreement to repay any
Term Loans maturing at the end of an Interest Period applicable thereto
with the proceeds of a new Term Loan Borrowing and the Borrower fails
to repay such Term Loans using its own moneys and fails to give a
Notice of Borrowing in connection with a new corresponding Term Loan
Borrowing, a new Term Loan Borrowing shall be deemed to be made on the
date such Term Loans mature in an amount equal to the principal amount
of the Term Loans so maturing, and except as may be required pursuant
to Section 2.06(g) the Term Loans comprising such new Term Loan
Borrowing shall be Euro-Dollar Loans with an Interest Period of one
month.
SECTION 2.02. Method of Borrowing Syndicated Revolving Credit
Loans and Term Loans. (a) The Borrower shall give the Agent notice in the form
attached hereto as Exhibit L (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:
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<PAGE>
(i) whether such borrowing constitutes a Syndicated Revolving
Credit Borrowing or Term Loan Borrowing and the date of such borrowing,
which shall be a Domestic Business Day in the case of a Base Rate
Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing;
(ii) the aggregate amount of the Syndicated Revolving
Credit Borrowing or Term Loan Borrowing, as the case may be; and
(iii) whether the Term Loans comprising a Term Loan Borrowing
or the Revolving Credit Loans comprising a Syndicated Revolving Credit
Borrowing are to be Base Rate Loans or Euro-Dollar Loans, and 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 Revolving Credit Borrowing or Term Loan Borrowing, as
the case may be, 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 Revolving Credit Borrowing or Term Loan Borrowing, as
the case may be, referenced in the Notice of Borrowing, each Bank shall (except
as provided in subsection (d) of this Section) make available its ratable share
of such Syndicated Revolving Credit Borrowing or Term Loan Borrowing, as the
case may be, 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
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 the applicable
Syndicated Revolving Credit Borrowing or Term Loan Borrowing stating that such
Bank will not make the applicable Syndicated Revolving Credit Loan or Term Loan
in connection with such Syndicated Revolving Credit Borrowing or Term Loan
Borrowing, as the case may be, the Agent shall be entitled to assume that such
Bank will make the Revolving Credit Loan or Term Loan in connection with such
Syndicated Revolving Credit Borrowing or Term Loan 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 Revolving Credit Borrowing or Term
Loan Borrowing, as the case may be, 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 Revolving
Credit Borrowing or Term Loan Borrowing, as the case may be, 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 with the Agent), together with interest
thereon for each day during the period from the date of such Syndicated
Revolving Credit Borrowing
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<PAGE>
or Term Loan Borrowing, as the case may be, 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 Revolving Credit Loan or Term Loan, as
the case may be, included in such borrowing for purposes of this Agreement.
(d) If any Bank makes: (i) a new Syndicated Revolving Credit
Loan hereunder on a day on which the Borrower is to repay all or any part of an
outstanding Syndicated Revolving Credit Loan from such Bank or (ii) a new Term
Loan hereunder on a day on which the Borrower is to repay all or any part of an
outstanding Term Loan from such Bank, such Bank shall apply the proceeds of its
new Syndicated Revolving Credit Loan or Term Loan, as the case may be, 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 Euro-Dollar 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 Revolving Credit Loans comprising such Syndicated Revolving Credit
Borrowing are to be Base Rate Loans or Euro-Dollar Loans, such Revolving Credit
Loans shall be made as Base Rate Loans. If the Borrower is otherwise entitled
under this Agreement to repay any Revolving Credit Loans maturing at the end of
an Interest Period applicable thereto with the proceeds of a new Revolving
Credit Borrowing and the Borrower fails to repay such Revolving Credit Loans
using its own moneys and fails to give a Notice of Borrowing in connection with
a new corresponding Revolving Credit Borrowing, a new Revolving Credit Borrowing
shall be deemed to be made on the date such Revolving Credit Loans mature in an
amount equal to the principal amount of the Revolving Credit Loans so maturing,
and the Revolving Credit Loans comprising such new Revolving Credit 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) applicable to the
Syndicated Revolving Credit Loans and (ii) the proceeds of any Syndicated
Revolving Credit Borrowing that is a Base Rate Borrowing shall be applied first
to repay the unpaid principal amount of all Syndicated Revolving Credit
Borrowings that are Base Rate Loans (if any) outstanding immediately before such
Syndicated Base Rate Borrowing.
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SECTION 2.03. Money Market Loans. (a) In addition to making
Syndicated Revolving Credit 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 Revolving Credit Loans, at any one time outstanding shall not
exceed the aggregate amount of the Revolving Credit 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 Fixed Charge Coverage
Ratio (determined as of the most recent Rate Determination Date) is less than
2.00 to 1.00; 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 Fixed Charge Coverage Ratio
(determined as of the most recent Rate Determination Date) is less than 2.00 to
1.00.
(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 F 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 G 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 Revolving Credit 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).
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(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 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
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<PAGE>
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 Money Market 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.
SECTION 2.04. Notes. (a) The Syndicated Revolving Credit Loans
of each Bank shall be evidenced by a single Syndicated Revolving Credit 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 Revolving Credit
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) The Term Loan of each Bank shall be evidenced by a single
Term Loan 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 Term
Loan Commitment.
(d) 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 Syndicated Revolving Credit Loan,
Money Market Loan or Term Loan, as the case may be, 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 Revolving Credit Note or Term
Loan Note, such Syndicated Revolving Credit Loan or Term Loan, as the case may
be, 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.
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SECTION 2.05. Maturity of Revolving Credit Loans and Term
Loans.
(a) Revolving Credit Loans. Each Revolving Credit Loan
included in any Revolving Credit Borrowing shall mature, and the principal
amount thereof shall be due and payable, on the first to occur of: (i) the last
day of the Interest Period applicable to such Revolving Credit Borrowing; or
(ii) the Revolving Credit Maturity Date; provided, however, that the aggregate
outstanding principal amount of all Revolving Credit Loans at any one time
outstanding shall not exceed the aggregate amount of the Revolving Credit
Commitments of all of the Banks at such time.
(b) Term Loans. Each Term Loan included in any Term Loan
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the first to occur of: (i) the last day of the Interest Period
applicable to such Term Loan Borrowing; or (ii) the Term Loan Maturity Date;
provided, however, that the aggregate outstanding principal amount of all Term
Loans at any one time outstanding shall not exceed the aggregate amount of the
Term Loan Commitments of all of the Banks at such time.
SECTION 2.06. Interest Rates. (a) "Applicable Margin"
shall be determined quarterly based upon: (1) the Fixed Charge Coverage Ratio;
and (2) the ratio of Consolidated Funded Debt to Consolidated Total Capital
(both calculated as of the last day of each Fiscal Quarter), as follows:
<TABLE>
<CAPTION>
If the Fixed Charge Coverage Ratio Syndicated
is greater than or equal to 2.00 to 1.0, Term Loans Revolving Credit
and the Ratio of Consolidated Funded Base that are Loans that are
Debt to Consolidated Total Capital is: Rate Loans Euro-Dollar Loans Euro-Dollar Loans
<S> <C>
Greater than or equal to 55% 0% .75% .50%
Greater than or equal to 45% 0% .625% .425%
but less than 55%
Greater than or equal to 35%
but less than 45% 0% .475% .30%
Greater than or equal to 25%
but less than 35% 0% .375% .225%
Less than 25% 0% .30% .175%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
If the Fixed Charge Coverage Ratio Syndicated
is less than 2.00 to 1.0 and the Term Loans Revolving Credit
Ratio of Consolidated Funded Base that are Loans that are
Debt to Consolidated Total Capital is: Rate Loans Euro-Dollar Loans Euro-Dollar Loans
- ------------------------------------- ---------- ----------------- -----------------
<S> <C>
Greater than or equal to 55% 0% .875% .575%
Greater than or equal to 45% 0% .75 .50%
but less than 55%
Greater than or equal to 35%
but less than 45% 0% .625% .425%
Greater than or equal to 25%
but less than 35% 0% .475% .30%
Less than 25% 0% .375% .225%
</TABLE>
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 ratios are 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 (y) for the period from
and including the Closing Date to but excluding the Rate Determination Date next
following the Closing Date, the Applicable Margin shall be (A) 0% for Base Rate
Loans, and (B) (y) .75% for Term Loans that are Euro-Dollar Loans; and (z) .50%
for Syndicated Revolving Credit Loans that are 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 Fixed Charge Coverage Ratio was less than 2.00 to 1.0 and the ratio of
Consolidated Funded Debt to Consolidated Total Capital was more than 55% 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 Revolving Credit Loan and Term Loan outstanding on such Rate
Determination Date.
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(b) Each Term Loan and Revolving Credit Loan that is a Base
Rate Loan shall bear interest on the outstanding principal amount thereof, for
each day from the date such Base Rate 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 Term Loan and Revolving Credit Loan that is a
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 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 display
designated as Page "3750" of the Telerate Service (or such other page as may
replace page 3750 of that service or such other service or services as may be
nominated by the British Banker's Association for the purpose of displaying
London Interbank Offered Rates for U.S. dollar deposits) determined as of 1:00
p.m. New York City time, 2 Euro-Dollar Business Days prior to the first day of
such Interest Period.
"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.
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(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 Money
Market Loan quoted by the Bank making such Money Market 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 Term Loans and Revolving Credit 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 Term Loans and Revolving Credit 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 Term Loan and on any Revolving Credit Loan shall bear interest payable on
demand, for each day until paid at a rate per annum equal to the Default Rate.
(g) Notwithstanding anything herein to the contrary, if one or
more Term Loan Commitment Reduction Dates are scheduled to occur during an
Interest Period in which the Term Loans are Euro-Dollar Loans other than on the
last day of such Interest Period, then during such Interest Period a portion of
the outstanding balance of the Term Loans which is equal to the aggregate amount
of the principal payment due on the Term Loans on such Term Loan Commitment
Reduction Dates shall be Base Rate Loans, and only the remaining portion of the
outstanding principal of the Term Loans shall constitute Euro-Dollar Loans.
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 Revolving Credit
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 Revolving Credit Maturity 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 Revolving Credit Maturity Date;
provided that should the Revolving Credit Commitments be terminated at any time
prior to the Revolving Credit Maturity Date for any reason, the entire accrued
and unpaid facility fee shall be paid on the date of such termination. The
"Applicable Facility Fee Rate" shall be determined quarterly based upon: (1) the
Fixed Charge Coverage Ratio; and (2) the ratio of Consolidated Funded Debt to
Consolidated Total Capital (both calculated as of the last day of each Fiscal
Quarter) as follows:
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<TABLE>
<CAPTION>
If the Fixed Charge Coverage Ratio
is greater than or equal to 2.00 to 1.0,
and the Ratio of Consolidated Funded Applicable
Debt to Consolidated Total Capital is Facility Fee Rate
<S> <C>
Greater than or equal to 55% .25%
Greater than or equal to 45% .20%
but less than 55%
Greater than or equal to 35%
but less than 45% .175%
Greater than or equal to 25%
but less than 35% .15%
Less than 25% .125%
If the Fixed Charge Coverage Ratio
is less than 2.00 to 1.0 and the
Ratio of Consolidated Funded Debt Applicable
to Consolidated Total Capital is: Facility Fee Rate
Greater than or equal to 55% .30%
Greater than or equal to 45% .25%
but less than 55%
Greater than or equal to 35%
but less than 45% .20%
Greater than or equal to 25%
but less than 35% .175%
Less than 25% .15%
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 ratios are 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
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Fee Determination Date next following the Closing Date, the Applicable Facility
Fee Rate shall be .25%; (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 Fixed Charge Coverage Ratio was less than 2.00 to 1.00 and
the ratio of Consolidated Funded Debt to Consolidated Total Capital was more
than 55% at all times during such period.
(b) The Borrower shall also pay to the Agent on the Closing
Date for the ratable account of each Bank an up-front fee, equal to the product
of: (i) the aggregate amount of such Bank's Term Loan Commitment and Revolving
Credit Commitment, multiplied by (ii) 0.075%.
(c) 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 Revolving
Credit 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 Revolving Credit Commitments; provided, however, no such
termination or reduction shall be in an amount greater than the Total Unused
Revolving Credit Commitments on the date of such termination or reduction. If
the Revolving Credit Commitments are terminated in their entirety, all accrued
fees (as provided under Section 2.07(a)) shall be payable on the effective date
of such termination.
SECTION 2.09. Mandatory Reduction and Termination of
Commitments.
(a) Revolving Credit Commitments. The Revolving Credit
Commitments shall terminate on the Revolving Credit Maturity Date and any
Revolving Credit Loan then outstanding (together with accrued interest thereon)
shall be due and payable on such date.
(b) Term Loan Commitments. (1) The Term Loan Commitments shall terminate
on the Term Loan Maturity Date and any Term Loans then outstanding (together with accrued interest
thereon) shall be due and payable on such date.
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<PAGE>
(2) The aggregate amount of the Term Loan Commitments shall be
reduced as follows: (i) in sixteen (16) consecutive quarterly installments in
the amount of $1,500,000 each, commencing on the first Term Loan Commitment
Reduction Date and continuing on each Term Loan Commitment Reduction Date
thereafter until and including the Term Loan Commitment Reduction Date on
October 15, 2001; and (ii) in eight (8) consecutive quarterly installments in
the amount of $2,000,000 each, commencing on the Term Loan Commitment Reduction
Date occurring on January 15, 2002 and continuing on each Term Loan Commitment
Reduction Date thereafter until and including the Term Loan Commitment Reduction
Date on the Term Loan Maturity Date.
(3) If the Borrower shall repay or prepay any Term Loans other
than with the proceeds of a new Term Loan Borrowing under the Term Loan
Commitments then there shall be a mandatory reduction of the Term Loan
Commitments to an amount equal to the aggregate principal amount of all Term
Loans then outstanding (after giving effect to such repayment or prepayment).
(4) Each reduction of the Term Loan Commitments shall be
applied to reduce the Term Loan Commitments of the several Banks ratably. Any
optional reduction of the Term Loan Commitments shall reduce the amount of any
subsequent mandatory reductions pursuant to this Section 2.09 (b) in their
inverse chronological order of maturity. No mandatory reduction of the Term Loan
Commitments pursuant to any paragraph of this Section 2.09 (b) shall reduce the
amount of any subsequent mandatory reduction of the Term Loan Commitments
pursuant to such paragraph or any other paragraph of this Section 2.09 (b).
SECTION 2.10. Optional Prepayments of Revolving Credit Loans
and Term Loans. (a) The Borrower may, upon at least 1 Domestic Business Day's
notice to the Agent, prepay any Revolving Credit Loan or Term Loan that is a
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 Revolving Credit Loans or Term Loans, as the case may be, of
the several Banks included in such Base Rate Borrowing; provided that such
prepayment shall be applied, first, to Syndicated Revolving Credit Loans
outstanding on the date of such prepayment (in direct order of maturity), and
then, to the extent necessary, to the Term Loans outstanding on the date of such
prepayment.
(b) Except as provided in Section 8.02, the Borrower may not
prepay all or any portion of the principal amount of any Euro-Dollar 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. (a) On each date on
which the Revolving Credit Commitments are reduced or terminated pursuant to
Section 2.08 or Section 2.09, the Borrower shall repay or prepay such principal
amount of the outstanding Revolving Credit Loans, if any
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<PAGE>
(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 Revolving Credit Loans does not exceed the aggregate
amount of the Revolving Credit Commitments as then reduced. Each such payment or
prepayment shall be applied to repay or prepay ratably the Revolving Credit
Loans of the several Banks; provided that such prepayment shall be applied,
first, to Syndicated Revolving Credit 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).
(b) On each date on which the Term Loan Commitments are
reduced pursuant to Section 2.09, the Borrower shall repay or prepay such
principal amount of the outstanding Term 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 Term
Loans does not exceed the aggregate amount of the Term Loan Commitments as then
reduced. Each such payment or prepayment shall be applied to repay or prepay
ratably the Term Loans of the several Banks.
SECTION 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Term
Loans and Revolving Credit 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
Base Rate 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.
(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 Term Loan or Revolving Credit 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
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<PAGE>
applicable Lending Office or any political subdivision thereof (all such
non-excluded 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 Term
Loan or Revolving Credit 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 Term Loan or Revolving
Credit 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
Base Rate Loans 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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<PAGE>
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
Revolving Credit Note, a Term Loan 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 D 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 E 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 H 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, the corporate authority for and the validity of this
Agreement, the Notes, 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 "Borrower
Officer's Certificate"), signed by the Secretary or an Assistant
Secretary of the Borrower, substantially in the form of Exhibit I
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,
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<PAGE>
(iii) a certificate of the Secretary of State of the State of
incorporation of the Borrower as to the existence 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;
(g) receipt by the Agent of all documents which the Agent or
any Bank may reasonably request relating to the existence of the
Guarantors, the corporate authority for and the validity of the
Guaranty and the other Loan Documents, and any other matters relevant
hereto, all in form and substance satisfactory to the Agent, including
without limitation a certificate of incumbency of each Guarantor (the
"Guarantor Officer's Certificate"), signed by the Secretary or an
Assistant Secretary of each Guarantor, substantially in the form of
Exhibit N hereto, certifying as to the names, true signatures and
incumbency of the officer or officers of the respective Guarantors
authorized to execute and deliver the Loan Documents, and certified
copies of the following items: (i) the Guarantor's Articles of
Incorporation, (ii) the Guarantor's Bylaws, (iii) a certificate of the
Secretary of State of the State of the Guarantor's incorporation as to
the existence of the Guarantor as a corporation, and (iv) the action
taken by the Board of Directors of the Guarantor authorizing the
Guarantor's execution, delivery and performance of the Guaranty and the
other Loan Documents to which such Guarantor is a party;
(h) receipt by the Agent of the Guaranty, duly executed by
each Guarantor;
(i) receipt by the Agent and the Banks of the calculations,
financial information and other supporting data, in form satisfactory
to the Agent and Banks, in their sole discretion, identifying the
Subsidiaries comprising the Significant Subsidiary Group; and
(j) receipt by the Agent of evidence satisfactory to the Agent
and the Banks that the proceeds of the initial Term Loan Borrowing
shall be used by the Borrower to repay the Private Placement Debt in
full.
SECTION 3.02. Conditions to All Borrowings. The obligation of
each Bank to make a Revolving Credit Loan or Term Loan on the occasion of each
Revolving Credit Borrowing or Term Loan Borrowing, as the case may be, is
subject to the satisfaction of the following conditions:
(a) except as provided in Sections 2.01(b)(ii) or 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 Term Loan Borrowing or a
Syndicated Revolving Credit 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 Revolving
Credit Borrowing or Term Loan Borrowing, as the case may be, no Default
shall have occurred and be continuing;
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<PAGE>
(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 Revolving Credit Borrowing or Term Loan
Borrowing, as the case may be;
(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 Revolving Credit Borrowing or Term Loan Borrowing, as the
case may be; and
(e) the fact that, immediately after such Revolving Credit
Borrowing or Term Loan Borrowing, as the case may be, (i) the aggregate
outstanding principal amount of the Revolving Credit Loans of each Bank
will not exceed the amount of its Revolving Credit Commitment and (ii)
the aggregate outstanding principal amount of the Term Loans will not
exceed the aggregate amount of the Term Loan Commitments of all of the
Banks as of such date.
Each Revolving Credit Borrowing and Term Loan Borrowing hereunder shall be
deemed to be a representation and warranty by the Borrower on the date of such
Revolving Credit Borrowing or Term Loan Borrowing, as the case may be, as to the
truth and accuracy of the facts specified in clauses (b), (c), (d) and (e) of
this Section.
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,
except in favor of the Agent and the Banks as provided in the Loan Documents.
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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, 1996 and
the related consolidated statements of income, shareholders' equity and cash
flows for the Fiscal Year then ended, reported on by Arthur Andersen LLP, 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.
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 unsatisfied
liability to the PBGC or a Plan under Title IV of ERISA.
(b) Other than Lancaster Press, Inc.'s obligation to
contribute to the "CWA/ITU Negotiated Pension Plan" for its employees who are
Communications Workers of America, ITU #70 union members, neither the Borrower
nor any member of the Controlled Group is or ever has been obligated to
contribute to any Multiemployer Plan. Neither the Borrower nor any member of the
Controlled Group has incurred any withdrawal liability with respect to any
Multiemployer Plan under Title IV of ERISA, and no such liability is expected to
be incurred.
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; provided, however,
that an Event of Default shall not be deemed to have occurred under Section
6.01(d) as a result of Lancaster Press, Inc. (or any subsidiary of Lancaster
Press, Inc.) having failed to file any tax return prior to the Closing Date or
pay any tax prior to the Closing Date if: (1) the failure to pay such tax or
file such tax return does not result in a material liability; and (2) such tax
is paid (together with any and all interest and penalties) promptly after the
earlier of the Borrower having knowledge of such failure or the Agent providing
notice of such failure to the Borrower, and/or such tax return is filed promptly
after the
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earlier of the Borrower having knowledge of such failure or the Agent providing
notice of such failure to the Borrower. 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 (excluding
Lancaster Press, Inc. and its subsidiaries) have been examined and closed
through the Fiscal Year ended June 30, 1991. United States income tax returns of
Lancaster Press, Inc. and its subsidiaries have been examined and closed through
the Fiscal Year ended March 31, 1993.
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 in good standing
or 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, provided however, that an
Event of Default shall not be deemed to have occurred under 6.01(d) as a result
of Lancaster Press, Inc. (or any subsidiary of Lancaster Press, Inc.) not
possessing a governmental license, authorization, consent or approval on or
before May 31, 1997 if: (1) such governmental license, authorization, consent or
approval is not material to the business of Lancaster Press, Inc. (or any
subsidiary of Lancaster Press, Inc.); and (2) such governmental license,
authorization, consent or approval is promptly obtained after the earlier of the
Borrower having knowledge of such failure or the Agent providing notice of such
failure to the Borrower. As of the Closing Date, the Borrower has no
Subsidiaries except those Subsidiaries listed on Schedule 4.08. Each Compliance
Certificate delivered by the Borrower pursuant to Section 5.01(c) sets forth the
complete name and jurisdiction of the incorporation of each Subsidiary of the
Borrower created, formed or acquired during the time period covered by the
financial statements applicable to such Compliance Certificate. Schedule 4.08
and such Compliance Certificates accurately set 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
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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 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) Except as disclosed on Schedule 4.14, 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
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Borrower's Wholly Owned Subsidiaries are owned by the Borrower, directly or
indirectly, 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, directly or
indirectly, 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 Term Loan or Revolving Credit 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.
SECTION 4.18. Insolvency. After giving effect to the execution
and delivery of the Loan Documents and the making of the Term Loans and
Revolving Credit 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 Facility. Upon disbursement of the
initial borrowing under this Agreement, the Borrower and the Guarantors shall
have fully paid and performed any and all indebtedness, liabilities and
obligations under the Existing Facility and the Existing Facility shall be
terminated.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Revolving Credit Commitment or Term Loan 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;
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(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 J (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; (ii)
identifying the complete name and jurisdiction of incorporation of each
Subsidary of the Borrower created, formed or acquired during the time
period covered by such financial statements; (iii) identifying the
Subsidiaries comprising the Significant Subsidiary Group and setting
forth the calculations, financial information and other data supporting
such determination; and (iv) stating whether any Default exists on the
date 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
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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, 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 Term Loan Maturity Date, exceed 0.60
to 1.00.
SECTION 5.04. Minimum Consolidated Net Worth. Consolidated Net
Worth will at no time be less than $95,000,000 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
March 31, 1996 (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 the Fixed Charge Coverage Ratio shall not be less than: (i) 1.50
to 1.00 for the period commencing with the Fiscal Quarter ending June 30, 1996,
and continuing through the Fiscal Quarter ending June 30, 1997 (inclusive); and
(ii) 1.75 to 1.00 for the period commencing with the Fiscal Quarter ending
September 30, 1997, and continuing for each Fiscal Quarter thereafter.
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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 June 30, 1996, 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.
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 $5,000,000;
(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;
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(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
(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 (including, without limitation, any of its
Subsidiaries) 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
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to such merger, no Default shall have occurred and be continuing, (b)
Subsidiaries of the Borrower may merge with the Borrower or one another,
provided the conditions set forth in Section 5.11(a)(i) and (iii) are satisfied,
and in the case of a merger with the Borrower, the Borrower is the corporation
surviving such merger, and (c) the foregoing limitation on the sale, lease or
other transfer of assets (including, without limitation, the sale or transfer of
a Subsidiary) and on the discontinuation or elimination of a business line or
segment shall not prohibit, during any Fiscal Quarter, a sale or transfer of
assets (including, without limitation, the sale or transfer of a Subsidiary) 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 sold or transferred or utilized in a business line or segment to be so
discontinued, when combined with all other assets sold or 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. (a) No portion of the proceeds
of the Term Loans and Revolving Credit 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.
(b) The proceeds of the Term Loans and Revolving
Credit Loans made on the date of the initial borrowing hereunder shall be used
exclusively by the Borrower to refinance existing indebtedness of the Borrower
under: (i) the Existing Facility; and (ii) repayment in full of the Private
Placement Debt.
SECTION 5.13. Compliance with Laws; Payment of Taxes. (a) 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 by appropriate
proceedings diligently pursued and against which, if requested by the Agent, the
Borrower shall have set up reserves in accordance with GAAP.
(b) The Borrower shall not permit the aggregate complete or partial
withdrawal liability under Title IV of ERISA with respect to Multiemployer Plans
incurred by the Borrower and members of the Controlled Group to exceed
$1,000,000 at any time. For purposes of this Section 5.13(b), the amount of
withdrawal liability of the Borrower and members of the Controlled Group at any
date shall be the aggregate present value of the amount claimed to have been
incurred less any portion thereof which the Borrower and members of the
Controlled Group have paid or as to which the Borrower reasonably
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believes, after appropriate consideration of possible adjustments arising under
Sections 4219 and 4221 of ERISA, it and members of the Controlled Group will
have no liability, provided that the Borrower shall obtain prompt written advice
from independent actuarial consultants supporting such determination. The
Borrower agrees (i) once in each year, beginning with 1996, to request and
obtain a current statement of the withdrawal liability of the Borrower and
members of the Controlled Group from each Multiemployer Plan, if any, and (ii)
to transmit a copy of such statement to the Agent and the Banks within fifteen
(15) days after the Borrower receives the same.
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: (1) 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; and (2)
the trichloroethylene that is being remediated at the property commonly known as
3575 Hempland Road, Lancaster, Pennsylvania, as described on Schedule 4.14.
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
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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 (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: (A) except as provided in (B),
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; and (B) if a Guarantor ceases to be a Subsidiary of
the Borrower as a result of the Borrower's transfer or sale of one hundred
percent (100%) of the capital stock of such Subsidiary in accordance with and
subject to the terms of Section 5.11, the Agent and Banks agree to release such
Subsidiary from the Guaranty.
SECTION 5.22 Acquisitions. The Borrower will not, nor will it
permit any Subsidiary to purchase, lease or otherwise acquire (in a single
transaction or in a series of transactions), directly or indirectly: (i) all or
any substantial part of the assets or stock of any other Person; (ii) a business
line or segment of any other Person; or (iii) control of any other Person, if
the total amount expended, assumed or incurred by the Borrower and Subsidiaries
of the Borrower in connection with any such purchase, lease or acquisition
exceeds $25,000,000.
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 Revolving Credit Loan or any Term Loan or shall fail to pay any
interest on any Revolving Credit Loan or any Term 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
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(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 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
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(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 distress 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
(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
(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 Revolving Credit Commitments and
Term Loan 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, any Guarantor or any
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other act by the Agent or the Banks, the Revolving Credit Commitments and the
Term Loan 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.
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.
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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 Term Loans or the Revolving
Credit 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 thereof to the Banks. The Agent shall give each Bank prompt notice of
each non-payment of principal of or interest on the Term Loans and the Revolving
Credit 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 Term Loan or Revolving Credit 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 the aggregate amount of its Revolving
Credit Commitment and Term Loan 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
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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.
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. Each Bank
acknowledges that each Bank designated as a "Co-Agent" on the signature pages of
this Agreement shall have no right, duty or responsibility, and shall incur no
liability, under this Agreement in its capacity as a Co-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
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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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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 Euro-Dollar 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 Euro-Dollar 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 Euro-dollar Borrowing 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 Euro-Dollar Loans, its Notes
or its obligation to make Euro-Dollar 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 Euro-Dollar Loans or any other amounts
due under this Agreement in respect of its Euro-Dollar Loans or its
obligation to make Euro-Dollar 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
Euro-Dollar Loans, its Notes or its obligation to make Euro-Dollar
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 Euro-Dollar 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
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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 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 Euro-Dollar
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
Euro-Dollar 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 Term Loans and Revolving Credit 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
Term Loans or Revolving Credit Loans, as the case may be, shall be
payable contemporaneously with the related Euro-Dollar 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
Euro-Dollar 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 Term Loans
and Revolving Credit 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 Euro-Dollar Loan or a Money Market Loan on a date other than
the last day of an Interest Period for such Euro-Dollar Loan or Money Market
Loan, as the case may be;
(b) any failure by the Borrower to prepay a Euro-Dollar Loan or a
Money Market Loan on the date for such prepayment specified in the relevant
notice of prepayment hereunder;
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(c) any failure by the Borrower to borrow a Euro-Dollar Loan on the
date for the Euro-Dollar Borrowing of which such Euro-Dollar 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;
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 Euro-Dollar Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Euro-Dollar 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
56
<PAGE>
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.
(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 any 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. Set-Offs; 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
Revolving Credit Notes and Term Loan 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 Revolving Credit
Note and Term Loan Notes held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Syndicated Revolving Credit Notes and Term Loan 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
57
<PAGE>
all such payments of principal and interest with respect to the Syndicated
Revolving Credit Notes and Term Loan 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 Revolving Credit
Notes and Term Loan 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 Revolving Credit Note and
Term Loan 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.
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 of the Banks, (i) change the Revolving Credit
Commitment or Term Loan Commitment of any Bank or subject any Bank to any
additional obligation, (ii) change the principal of or rate of interest on any
Term Loan or Revolving Credit Loan or change the amount of any fees hereunder or
the amount of the Obligations (as defined in the Guaranty) payable by any
Guarantor under the Guaranty, (iii) change the date fixed for any payment of
principal of or interest on any Term Loan or Revolving Credit Loan or any fees
hereunder or any of the Obligations (as defined in the Guaranty) under the
Guaranty, (iv) change the amount of principal, interest or fees due on any date
fixed for the payment thereof under this Agreement, the Notes or any other Loan
Document, (v) change the percentage of the Revolving Credit Commitment or Term
Loan Commitment 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,
the Guaranty or the Notes, (vii) release or substitute all or any substantial
part of the collateral (if any) held as security for the Term Loans or the
Revolving Credit Loans, (viii) waive any of the conditions precedent contained
in Section 3.01 or Section 3.02, or (ix) release, discharge or terminate any
guaranty given to support payment of the Term Loans or Revolving Credit Loans
(including, without limitation, the Guaranty).
(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
58
<PAGE>
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 Term Loan or Revolving Credit
Loan owing to such Bank, any Note held by such Bank, any Term Loan Commitment or
Revolving Credit 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 payment of principal of or interest on the related
Term Loan or Revolving Credit Loan or Term Loans or Revolving Credit 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 Term Loan or Revolving
Credit Loan or Term Loans or Revolving Credit Loans, (iii) the change of the
principal of the related Term Loan or Revolving Credit Loan or Term Loans or
Revolving Credit 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 Term Loans or Revolving Credit
Loans, or (vi) the release of any guaranty given to support payment of the Term
Loans or Revolving Credit Loans. Each Bank selling a participating interest in
any Term Loan or Revolving Credit Loan, Note, Term Loan Commitment, Revolving
Credit 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
59
<PAGE>
by such Participant. The Borrower agrees that each Participant shall be entitled
to the benefits of Article VIII with respect to its participation in Term Loans
and Revolving Credit 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
K, executed by such Assignee, such transferor Bank and the Agent (and, in the
case of (i) an Assignee that is not then a Bank or an Affiliate of a Bank; and
(ii) an assignment not made during the existence of an Event of Default, 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 Term Loan Commitment and Revolving Credit
Commitment, (ii) the aggregate amount of the Term Loan Commitment and Revolving
Credit 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; (iv) a Bank may not, at any one time, have more than two
(2)Assignees that either: (y) are not then Banks or an Affiliate of such a Bank;
or (z) that were not previously Banks; and (v) 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 Agent, which consent shall not
be unreasonably withheld, provided, that, although the Agent's consent may not
be necessary with respect to an Assignee that is then a Bank or an Affiliate of
a Bank, no such assignment shall be effective until the conditions set forth in
the following sentence are satisfied. 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 Term Loan Commitment and Revolving Credit Commitment, as the case
may be, 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, new Notes are 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
60
<PAGE>
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.
(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 Term
Loans, Revolving Credit 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 Term Loans, Revolving Credit 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 Term Loans, Revolving Credit
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 Term Loans and Revolving Credit 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, Affiliates 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 Term
Loans and Revolving Credit 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
61
<PAGE>
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.
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 Revolving Credit Commitments and Term Loan
Commitments and the payment in full of the principal of and interest on all Term
Loans and Revolving Credit 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
62
<PAGE>
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.
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.
SECTION 9.18. Termination of Existing Facility. The
Borrower hereby agrees that effective as of the Closing Date the Existing
Facility is terminated.
63
<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
WACHOVIA BANK OF GEORGIA, N.A., as Agent
By: ___________________________ (SEAL)
Title:
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
64
<PAGE>
COMMITMENTS:
Revolving Credit Commitment:
$30,000,000 WACHOVIA BANK OF NORTH CAROLINA, N.A.,
as a Bank
Term Loan Commitment:
$10,000,000
By:______________________________(SEAL)
Title:_____________________________
Lending Office:
Wachovia Bank of North Carolina, N.A.
100 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
65
<PAGE>
Revolving Credit Commitment:
$28,125,000 FIRST UNION NATIONAL BANK OF VIRGINIA,
as Co-Agent and as a Bank
Term Loan Commitment: By:___________________________ (SEAL)
$9,375,000 Title:
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
66
<PAGE>
Revolving Credit Commitment: NATIONSBANK, N.A.,
$28,125,000 as Co-Agent and as a Bank
Term Loan Commitment: By:___________________________ (SEAL)
$9,375,000 Title:
Lending Office
NationsBank, N.A.
4th Floor Pavilion
1111 East Main Street
Richmond, Virginia 23277-0001
Attention: E. Turner Coggin
Telecopy number: (804) 788-3669
Telephone number: (804) 788-3455
67
<PAGE>
Revolving Credit Commitment: CRESTAR BANK,
$17,250,000 as a Bank
Term Loan Commitment: By:___________________________ (SEAL)
$5,750,000 Title:
Lending Office
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
Attention: Brad Booker
Telecopy number: (804) 782-5413
Telephone number: (804) 782-7781
68
<PAGE>
Revolving Credit Commitment SUNTRUST BANK, ATLANTA
$8,250,000
Term Loan Commitment By: (SEAL)
$2,750,000 Title:
By: (SEAL)
Title:
Lending Office
SunTrust Bank, Atlanta
25 Park Place
Mail Code 118
Atlanta, Georgia 30303
Attention: Ruth Whitner
Telecopy number: (404) 658-4905
Telephone number: (404) 588-7915
69
<PAGE>
Revolving Credit Commitment SIGNET BANK
$8,250,000
Term Loan Commitment By: (SEAL)
$2,750,000 Title:
Lending Office
Signet Bank
Upper Mezzanine
800 East Main Street
Richmond, Virginia 23219
Attention: Bill Garrison
Telecopy number: (804) 771-7151
Telephone number: (804) 771-7259
- --------------
TOTAL COMMITMENTS:
Revolving Credit Commitment:
$120,000,000.00
Term Loan Commitment:
$40,000,000.00
70
</TABLE>
Exhibit 11
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
-------- -------
(In thousands except per share data)
<S> <C>
Net income per share was computed as follows:
Primary:
1) Net income $ 1,694 $ 1,516
===== =====
2) Weighted average common shares outstanding 7,908 6,040
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 116 286
------ ---------
4) Weighted average common and common equivalent
shares outstanding 8,024 6,326
===== =====
5) Net income per share (item 1 divided by item 4) $ .21 $ .24
========= ========
Fully diluted:
1) Net income $ 1,694 $ 1,516
===== =====
2) Weighted average common shares outstanding 7,908 6,040
3) Incremental shares under stock options computed
under the treasury stock method using the
market price of issuer's common stock at the end
of the periods if higher than the average
market price 150 292
------ ------
4) Weighted average common and common equivalent
shares outstanding 8,058 6,332
===== =====
5) Net income per share (item 1 divided by item 4) $ .21 $ .24
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CADMUS
COMMUNICATIONS CORPORATION'S CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED
STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,040
<SECURITIES> 0
<RECEIVABLES> 72,666
<ALLOWANCES> 2,480
<INVENTORY> 26,373
<CURRENT-ASSETS> 105,599
<PP&E> 204,240
<DEPRECIATION> 89,605
<TOTAL-ASSETS> 275,071
<CURRENT-LIABILITIES> 46,206
<BONDS> 104,671
<COMMON> 3,954
0
0
<OTHER-SE> 104,913
<TOTAL-LIABILITY-AND-EQUITY> 275,071
<SALES> 93,922
<TOTAL-REVENUES> 93,922
<CGS> 72,707
<TOTAL-COSTS> 72,707
<OTHER-EXPENSES> 511
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,076
<INCOME-PRETAX> 2,777
<INCOME-TAX> 1,083
<INCOME-CONTINUING> 1,694
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,694
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
