SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 No.)
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
------------
Securities registered pursuant to Section 12(g) of the Act:
Cadmus Communications Corporation Common Stock, $.50 par value, and
Preferred Stock Purchase Rights
(Title of Class)
------------
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ( )
As of July 31, 1996, 7,907,556 shares of Registrant's common stock
were outstanding, and the aggregate market value of the Registrant's common
stock held by non-affiliates was approximately $93,525,760 based on the last
sale price on July 31, 1996.
Documents Incorporated by Reference:
None.
<PAGE>
INDEX
PART I
Page
Item 1. Business................................................3
Item 2. Properties..............................................7
Item 3. Legal Proceedings.......................................7
Item 4. Submission of Matters to a Vote of Security Holders.....7
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters.........................9
Item 6. Selected Financial Data................................10
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations......11
Item 8. Financial Statements and Supplementary Data............15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................32
PART III
Item 10. Directors and Executive Officers of the Registrant.....34
Item 11. Executive Compensation.................................39
Item 12. Security Ownership of Certain Beneficial Owners
and Management.....................................45
Item 13. Certain Relationships and Related Transactions.........47
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K................................48
<PAGE>
PART I
ITEM 1. BUSINESS
Introduction
Cadmus Communications Corporation, a Virginia corporation,
("Cadmus" or "Company"), is a graphic communications company offering
specialized products and services in three broad areas: printing,
marketing, and publishing. Cadmus was formed in 1984 through the merger
of The William Byrd Press, Incorporated ("Byrd"), a leading regional
publications printer in Virginia, and Washburn Graphics, Inc.
("Washburn"), a graphic arts firm based in North Carolina. Since the
merger, Cadmus has grown through enhancement of existing products,
internal development of new products, and acquisitions. The Company's
principal executive offices are located at 6620 West Broad Street, Suite
240, Richmond, Virginia 23230, and its telephone number is (804)
287-5680. The Company's Internet address is http://www.cadmus.com.
Unless the context otherwise requires, references herein to Cadmus or
the Company shall refer to Cadmus Communications Corporation and its
consolidated subsidiaries.
The most significant acquisitions to date include: in 1986, a
company providing promotional printing and production of
point-of-purchase advertising materials located in Atlanta, Georgia
(American Graphics, Inc.); in 1987, a company offering retail and other
direct mail catalog production services located in Atlanta, Georgia
(Three Score, Inc.), and a printing company, located in Baltimore,
Maryland (Garamond/Pridemark Press); in 1992, a custom publisher of
newsletters and magazines located in Boston, Massachusetts (Marblehead
Communications, Inc.) and a publisher of specialty magazines located in
Richmond, Virginia (Tuff Stuff Publications, Inc.); in 1993, the assets
of a division engaged in the business of printing scientific, technical,
and medical journals, located in Baltimore and Easton, Maryland (the
Waverly Press Division of Waverly, Inc.); and in 1995, a direct
marketing agency located in Los Angeles, California, and Denver,
Colorado (Ronald James Direct, Inc.). In fiscal 1996, the Company
acquired all the outstanding stock of Lancaster Press, Inc. and
Subsidiary, a Pennsylvania-based producer of scientific, technical, and
medical journals; substantially all the assets and certain liabilities
of The Software Factory, Inc., an Atlanta-based provider of software
packaging and media duplication services; the assets of Na-Tex, Inc.,
the publisher of Collector's World of Racing (subsequently named Tuff
Stuff's RPM); certain assets of The Mowry Company, a direct marketing
agency located in Long Beach, California; the assets of PeachWeb Corp.,
a developer of Internet web sites; and the assets of the Atlanta
division of Encryption Technology Corporation, a provider of software
packaging, media duplication, and documentation services.
Cadmus has developed new products and services that are extensions of its
traditional product lines. Examples include Cadmus' specialty packaging and
point-of-purchase product lines. Cadmus is also developing interactive products
and services for tradeshows, kiosks, electronic catalogs, and Internet and other
electronic media. In its journal product line, Cadmus has expanded the
electronic products and services it offers to scientific, technical, and medical
journal publishers, developing a growing portfolio of skills and capabilities to
provide electronic publishing solutions, ranging from fully searchable databases
to Internet home pages created and maintained by Cadmus.
Business Groups and Product Lines
Product offerings as of June 30, 1996 consisted of three business
groups: printing, marketing, and publishing.
Printing
Fiscal Year 1996 Revenues
Product Line (in thousands)
------------ -------------------------
Journal Services $ 108,232
Magazines 51,661
Promotional Printing 41,125
Financial Communications 30,485
Specialty Packaging 9,383
--------
Total Printing Revenues $240,886
========
Cadmus printing operations provide customers a full range of services
which include state-of-the-art digital imaging, electronic prepress, sheetfed
and web offset printing, digital press multi-color printing, custom binding,
fulfillment, and distribution. Printing generated approximately 72% of the
Company's net sales in fiscal 1996.
Journal Services. Cadmus is an industry leader in the production of
medical, technical, and scientific journals. Cadmus offers a full range of
journal production services, including typesetting, editing, content management,
printing, packaging and fulfillment services to many of the most prestigious
scientific, technical, and medical journal publishers. The Company operates one
of the largest journal typesetting operations in the United States. Its six
production facilities are linked through a sophisticated electronic network and
high speed telephony. In response to increasing interest in Internet products,
the Company offers customers a full range of electronic publishing products,
ranging from Internet home pages to fully searchable databases created and
maintained by Cadmus.
Magazines. Cadmus offers print production services to publishers of
professional, trade, corporate, and consumer magazines. Such services include
electronic publishing, litho preparation, printing, finishing, and distribution.
The Company also offers customers consulting services in magazine production
planning, conversion to desktop publishing, and postal and distribution
services.
Promotional Printing. Cadmus produces catalogs, directories, programs,
corporate identity and promotional brochures, specialty books and product
literature for corporations, agencies, and educational institutions. Cadmus
offers full service graphic communications solutions to meet each customer's
unique needs including creative design, complete prepress, multi-color sheetfed
and web printing, binding, fulfillment, and distribution services.
Financial Communications. Cadmus provides financial and shareholder
communication services to corporate customers. Services provided include design,
typesetting, printing, finishing, electronic filing and fulfillment for debt and
equity offerings, proxy statements, annual reports, and quarterly reports. Many
of the Company's larger customers are electronically linked with Cadmus
facilities, giving Cadmus the ability to send documents directly to its
customers for review. Cadmus has also developed proprietary software, EDNA(TM),
to assist in the conversion of MacIntosh-based files and other graphical and
tabular material into EDGAR format for filing with the Securities and Exchange
Commission.
Specialty Packaging. Cadmus produces folding cartons, computer hardware
and software cartons, promotional packaging, portfolio folders, 3-D mailers, and
disk sleeves for computer software publishers and technology and consumer
products companies. Cadmus offers film preparation, structural engineering,
design and development of innovative packaging and printing, and finishing
services using state-of-the-art Heidelberg presses and Bobst die-cutting
equipment.
Marketing
Fiscal Year 1996 Revenues
Product Line (in thousands)
------------ -------------------------
Point-of-Purchase $31,628
Direct Marketing 20,528
Catalogs 11,164
Software Replication 8,227
Interactive 2,652
-------
Total Marketing Revenues $74,199
=======
Cadmus provides its clients with creative, database management,
production, mailing, and fulfillment services for direct marketing,
point-of-purchase, retail catalogs, and interactive multimedia programs and
systems. Marketing generated approximately 22% of the Company's net sales in
fiscal 1996.
Point-of-Purchase. Cadmus offers full service point-of-purchase support
including design, production, database management, fulfillment, and printing.
Additional services include merchandising, consulting, and point-of-purchase
program management. Through its fulfillment services, Cadmus maintains finished
goods inventories of point-of-purchase products and delivers these products for
Cadmus customers on an as needed basis. The Company's fulfillment capabilities
rely on a sophisticated inventory management system, customer database, and
telephonic and electronic links between Cadmus facilities and those of its
customers.
Direct Marketing. Cadmus develops and implements direct marketing
programs. Whether through direct mail, print, or other media, Cadmus
combines creative excellence with the response modeling and analytic
tools of database management. In addition, Cadmus also develops
customized software to help clients meet their own specific marketing
challenges and goals.
Catalogs. Cadmus creates and produces high quality catalogs both to
promote sales in retail locations and to offer consumers direct-order
convenience. Using a state-of-the-art photography studio, Cadmus creates work
for a collection of the largest, best-known retail brands in the U.S.
Software Replication. Cadmus offers turnkey software replication and
distribution services for software companies.
Interactive. Cadmus creates and provides interactive and multimedia
products including kiosks, CD-ROM, and Internet applications, to Fortune 1000
customers in the hospitality, travel, banking, and telecommunications
industries. Cadmus has formed an interactive multimedia marketing and software
solution development team with significant technical expertise.
Publishing
Fiscal Year 1996 Revenues
Product Line (in thousands)
------------ --------------------------
Custom Publishing $12,008
Consumer Publishing 9,562
-------
Total Publishing Revenues $21,570
=======
Publishing is comprised of two divisions, Consumer Publishing and Custom
Publishing. Publishing generated approximately 6% of the Company's net sales in
fiscal 1996.
Custom Publishing. Cadmus provides custom publishing services to customers
with narrowly defined target audiences in the health care, travel, financial,
technology, and non-profit areas. Publishing services include design, editorial,
advertising sales, production, and distribution of newsletters and magazines.
Services also include research and marketing to assist the customer in
efficiently reaching its target audience. Current titles include Profiles, a
Continental Airlines in-flight magazine, Living Healthy, a magazine for Blue
Cross and Blue Shield of Massachusetts, and Union Plus, a monthly magazine
published for Union Privilege, a consumer benefits organization of the AFL-CIO.
Consumer Publishing. Cadmus publishes its own special-interest magazines
that target consumers who have passionate interests in a hobby or sport.
Currently Cadmus owns four periodic publications and several annual guides. The
periodic publications are: Tuff Stuff Magazine; Tuff Stuff's Collect!; Kenner
Guide; and Tuff Stuff's RPM. Tuff Stuff Magazine, the largest Cadmus consumer
publishing title, is a 225,000 run-length monthly magazine directed at trading
card collectors. Tuff Stuff's Collect! is a monthly magazine directed at
non-sport trading card collectors and hobbyists. Kenner Guide is a quarterly
guide to Kenner sports figurines. Tuff Stuff's RPM is a monthly magazine
directed at collectors of NASCAR racing-related memorabilia. These magazines are
published, edited, managed, and printed by Cadmus.
The above product line descriptions refer to the group structure of
printing, marketing, and publishing that existed during fiscal 1996. Effective
July 1, 1996, the Company reorganized its operational and reporting structure
into the graphic communications, periodicals, marketing, and publishing groups.
Under the new group structure, the graphic communications group includes
financial communications, specialty packaging, promotional printing, marketing
services, and technology services; the periodicals group includes journal
services and magazines; the marketing group includes Cadmus Direct, Cadmus
Catalogs, Cadmus Interactive, Custom Publishing, and Point-of-Purchase; and the
publishing group includes consumer publishing. Revenues for fiscal 1996 under
the new group structure would have been as follows:
Fiscal Year 1996 Revenues
New Group Structure (in thousands)
------------------- -------------------------
Graphic Communications $89,247
Periodicals 159,893
Marketing 77,953
Publishing 9,562
--------
Total Revenues $336,655
========
Other Factors Affecting the Business of Cadmus
Seasonal Fluctuations
Seasonal fluctuations occur in the overall demand for printing. Printing
of both periodicals for the educational and scholarly market and promotional
materials tends to decline in the summer months. However, consumer publications
tend to peak before Christmas and before Easter. Printing of interim financial
statements clusters around the end of the first month in each calendar quarter
and printing of annual reports tends to fall into the first and second calendar
quarters. All of these factors combine to give Cadmus a seasonal pattern with
the months October through June typically stronger than the months July through
September.
Raw Materials
The principal raw material used in Cadmus' business is paper. Significant
stock inventories are not maintained except at Cadmus Financial in Richmond and
Cadmus Journal Services, where a supply of roll paper stock is required to
operate the web presses. The other companies generally purchase paper on a
direct order basis for specific jobs. Cadmus purchases its paper requirements
under agreements that guarantee tonnage and provide short range price protection
for three to six month intervals. The price of paper charged to customers is
subject to escalation so that, except in rare instances, Cadmus does not have
exposure to changes in the cost of paper.
The Company uses a variety of other raw materials including ink, film,
offset plates, chemicals and solvents, glue, wire, and subcontracted components.
In general, the Company has not experienced any significant difficulty in
obtaining raw materials.
Competition
Cadmus is subject to competition from a large number of companies, some of
which have greater resources and capacity. In recent years, there has been an
excess of capacity in the printing industry which has increased competition.
Rapid technological change has brought new competitors to the marketplace.
The markets served by Cadmus face competition based on a combination of
factors including quality, service levels, and price.
Employees
As of July 31, 1996, Cadmus employed approximately 3,200 persons,
approximately 7% of which are currently covered by collective bargaining
agreements. Cadmus believes its relationship with its employees is excellent.
Regulation
The printing business uses or generates substantial quantities of inks,
solvents, and other waste products that require disposal. Cadmus usually returns
salvageable waste ink to its suppliers and contracts for the removal of other
waste products.
Cadmus believes it is in substantial compliance with all applicable air
quality, waste disposal, and other environmental-related rules and regulations,
as well as with other general employee health and safety laws and regulations.
<PAGE>
ITEM 2. PROPERTIES
The Company considers all of its properties, together with the related machinery
and equipment contained therein, to be well-maintained, in good operating
condition, and adequate for its present needs. The Company will expand as
necessary for the continued development of its operations. The production
operations of the Company are conducted at the following facilities:
Cadmus Product
Location Lines Served Building
-------- -------------- --------
Richmond, Journal Owned;
Virginia Services, 274,000
Magazines, sq. ft.
Promotional
Printing,
Consumer
Publishing, and
Custom
Publishing
Easton, Maryland Journal Services Owned;
202,400
sq. ft.
Atlanta, Georgia Point-of-Purchase Owned;
179,000
sq. ft.
Charlotte, North Financial Owned;
Carolina Communications, 118,000
Specialty sq. ft.
Packaging,
Promotional
Printing, and
Direct Marketing
Richmond, Promotional Owned;
Virginia Printing, 89,100
Financial sq. ft.
Communications,
Journal
Services, and
Direct Marketing
Baltimore, Journal Owned;
Maryland Services 51,700
sq. ft.
Baltimore, Promotional Owned;
Maryland Printing and 43,000
Financial sq. ft.
Communications
Lancaster, Journal Services Owned;
Pennsylvania 176,000
sq. ft.
Akron, Journal Services Owned;
Pennsylvania 46,000
sq. ft.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal actions that are ordinary and
incidental to its business. While the outcome of legal actions cannot be
predicted with certainty, management believes the outcome of these proceedings
will not have a materially adverse effect on its consolidated financial position
or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Cadmus are elected by the Board of Directors
("Board") of the Company to serve one-year terms. The following table contains
information about the executive officers of Cadmus:
Other Business
Position and Length of Experience During Past
Name (Age) Service Five Years
- ---------- ---------------------- ----------------------
C. Stephenson Chairman of the Board, President and Chief
Gillispie, Jr. (54) President, and Chief Operating Officer,
Executive Officer, Cadmus Cadmus 1990-1992;
1992- present. President and Chief
Executive Officer, Byrd
1989-1992.
Michael Dinkins (42) Group President, Cadmus Vice President and
Graphic Communications Chief Financial
Group 1996-present. Officer, Cadmus
1993-1996; Manager
Finance for Marketing, GE
Appliance 1993; Manager
Finance for Sales, GE
Appliance 1992; Manager
of Commercial Real
Estate, GE Capital
1989-1992.
John H. Phillips (52) Vice President, Support Vice President and
and Development, Cadmus Regional Manufacturing
1996-present. Officer, Cadmus
1994-1996; Vice President
- Operations and Chief
Operating Officer, Cadmus
1992-1994; Executive Vice
President and Chief
Operating Officer, Byrd
1990-1992.
Bruce V. Thomas (39) Vice President and Chief Vice President, Law and
Financial Officer, Cadmus Development, Cadmus
1996-present. 1992-1996; Partner,
Mays & Valentine
1989-1992.
David E. Bosher (43) Vice President and Vice President,
Treasurer, Cadmus Treasurer, and Chief
1993-present. Financial Officer,
Cadmus 1990-1993.
Gregory Moyer (48) Vice President, Human Corporate Vice
Resources and Quality, President of Human
Cadmus 1994-present. Resources,
Dyncorp 1993-1994; Vice
President of Human
Resources and Quality,
P.R.C., Inc. 1989-1993.
Edward B. Fernstrom Vice President, Vice President, Chief
(47) Information Information Officer,
Technology, Cadmus Dyncorp 1990-1995.
1995-present.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Cadmus common stock is traded in the over-the-counter market and has been
quoted in the National Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq") under the symbol "CDMS" since July 2, 1984 and in
the Nasdaq National Market since April 16, 1985. Information with respect to
market prices is presented in Item 8 of this report.
As of August 30, 1996, the approximate number of beneficial holders of
Cadmus common stock was 4,700, which includes stockholders recorded on security
position listings.
On August 14, 1996, Cadmus declared a regular quarterly cash dividend of
$.05 per share, payable on September 6, 1996, to shareholders of record as of
August 23, 1996. Additional information with respect to dividends declared is
presented in Item 8 of this report.
Cadmus anticipates that it will continue its policy of paying regular
quarterly dividends. The amount of any future dividends will depend on general
business conditions encountered by Cadmus, as well as the financial condition,
earnings and capital requirements of Cadmus, and such other factors as the Board
of Directors may deem relevant. For additional information regarding
restrictions on payment of dividends, see the Notes to Consolidated Financial
Statements (Note 6) presented in Item 8 of this report.
ITEM 6. SELECTED FINANCIAL DATA
Cadmus Communications Corporation and Subsidiaries
SELECTED FINANCIAL DATA(1)
The following data should be read in conjunction with the consolidated financial
statements of the Company and management's discussion and analysis that appear
elsewhere in this report.
<TABLE>
<CAPTION>
(Dollars and shares in thousands,
except per share data) Years Ended June 30,
1996 1995 1994 1993 1992
<S> <C>
OPERATIONS
Net sales $336,655 $279,641 $247,730 $198,126 $188,006
Cost of sales 259,086 209,415 184,088 146,031 142,425
Gross profit 77,569 70,226 63,642 52,095 45,581
Selling and administrative expenses 61,204 52,172 48,824 40,753 35,176
Operating income(2) 16,365 18,054 12,918 11,342 10,405
Income before income taxes, extraordinary
item, and cumulative effect of changes in
accounting principles(2) 10,408 12,682 7,933 7,480 6,448
Income before extraordinary item and cumulative effect
of changes in
accounting principles(2) 6,504 7,479 4,807 4,533 3,901
Net income(2)(3) 5,709 7,479 5,208 4,533 3,901
PER SHARE DATA
Income before extraordinary item and cumulative effect
of changes in
accounting principles(2) $ .87 $ 1.21 $ .79 $ .76 $ .65
Net income(2)(3) .76 1.21 .86 .76 .65
Cash dividends .20 .20 .20 .20 .20
Shareholders' equity 13.60 10.26 9.18 8.52 7.96
FINANCIAL POSITION
Current assets $109,728 $ 76,319 $ 61,937 $ 48,766 $ 44,261
Current liabilities 50,171 43,906 38,581 32,227 25,523
Working capital 59,557 32,413 23,356 16,539 18,738
Property, plant, and equipment 203,839 161,359 147,890 129,097 122,540
Accumulated depreciation 87,474 76,789 70,818 63,114 57,668
Goodwill, net 52,846 8,281 7,617 7,717 9,082
Total assets 282,763 171,570 160,129 134,189 123,054
Short-term borrowings 3,323 3,775 -- 4,000 1,000
Long-term debt, including current maturities 106,801 56,342 58,440 46,483 44,916
Shareholders' equity 107,568 61,882 54,929 50,693 47,571
Total capital 217,692 121,999 113,369 101,176 93,487
SELECTED RATIOS
Gross profit margin 23.0% 25.1% 25.7% 26.3% 24.2%
Operating income margin(2) 4.9% 6.5% 5.2% 5.7% 5.5%
Effective tax rate 37.5% 41.0% 39.4% 39.4% 39.5%
Sales to average total capital 2.0 2.4 2.3 2.0 2.0
Current ratio 2.2 1.7 1.6 1.5 1.7
Debt as a percent of total capital 50.6% 49.3% 51.5% 49.9% 49.1%
Operating income return on average
total capital(2) 9.6% 15.3% 12.0% 11.7% 11.3%
Net income return on average
shareholders' equity(2)(3) 6.7% 12.8% 9.9% 9.2% 8.4%
OTHER DATA
Weighted average common shares outstanding 7,495 6,195 6,085 5,972 5,986
Shares outstanding at fiscal year end 7,908 6,030 5,984 5,948 5,975
Stock market price data:
High $ 29 7/8 $ 24 3/4 $ 19 1/2 $ 11 $ 10
Low 13 1/4 14 1/2 8 1/2 6 1/4 5 3/4
Close 15 3/8 23 5/8 17 3/4 8 3/4 9 1/4
Number of employees 3,234 2,380 2,400 1,780 1,895
</TABLE>
(1) Certain reclassifications were made to prior years' amounts to conform with
current year presentation.
(2) After restructuring charge in fiscal 1994 of $1.9 million pretax, $1.1
million after tax.
(3) After extraordinary loss on early extinguishment of debt in fiscal 1996 of
$0.8 million (net of tax) and income from cumulative effect of changes in
accounting principles in fiscal 1994 of $0.4 million (net of tax).
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cadmus Communications Corporation and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
This discussion and analysis will focus on the group structure of printing,
marketing, and publishing. Effective July 1, 1996, the Company reorganized its
operational and reporting group structure into the graphic communications,
periodicals, marketing, and publishing groups. All discussion and analysis in
the future will be done around the Company's new group structure.
The following table presents the major components from the Consolidated
Statements of Income as a percent of net sales:
[CAPTION]
<TABLE>
Years Ended June 30,
1996 1995 1994
<S> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 77.0 74.9 74.3
Gross profit 23.0 25.1 25.7
Selling and administrative expenses 18.2 18.6 19.7
Restructuring charge -- -- 0.8
Operating income 4.8 6.5 5.2
Interest expense 1.5 1.9 1.9
Other expenses, net 0.2 0.0 0.1
Income before income taxes, extraordinary item, and cumulative
effect of changes in accounting principles 3.1% 4.6% 3.2%
</TABLE>
Comparison of Fiscal 1996 with Fiscal 1995
Net sales in fiscal 1996 were $336.7 million, an increase of 20.4% over fiscal
1995 sales of $279.6 million, with growth in each of the Company's three
business groups: printing -- 13.5%, marketing -- 31.0%, and publishing --
11.4%. Adjusted for acquisitions, net sales rose 12.1%.
The 13.5% growth in printing sales was driven primarily by a 59.4% increase
in financial communications, a 17.7% increase in specialty packaging, a 16.7%
increase in magazines, and an 8.5% increase in journal services sales.
Financial communications revenues increased as a result of continued growth in
the mutual fund business, along with the addition of several full-service
contracts for financial communications customers. The increase in specialty
packaging sales was due to both the expansion of services for existing
customers, as well as the addition of new customers. Sales growth in the
magazines product line was also a result of the addition of several new
customers. The increase in journal services revenues was primarily attributable
to the acquisition of Lancaster Press, Inc. and Subsidiary ("Lancaster") in May
1996. Adjusted for this acquisition, journal services sales increased slightly,
up 1.2% from fiscal 1995. The promotional printing product line showed a slight
increase in sales.
The 31.0% increase in marketing revenues for fiscal 1996 was attributable to
both internal growth and to the acquisition of substantially all the assets of
Cadmus Technology Solutions (formerly "The Software Factory, Inc.") and two
direct marketing agencies. Point-of-purchase sales rose 6.8% for fiscal 1996 due
to increased activity with quick-service restaurant customers as well as the
addition of new customers. These increases were offset somewhat by decreased
demand from beverage customers, decreased volume resulting from the merger of
customer accounts, and the cessation of operations of two marketing services
programs, Kids Link and Sports Marketing. Direct marketing revenues increased
41.3% due to the acquisition of Ronald James Direct, Inc., in the fourth quarter
of fiscal 1995 and the acquisition of certain assets of The Mowry Company in the
first quarter of fiscal 1996. Adjusted for these acquisitions, direct marketing
revenues declined 9.9% in fiscal 1996. This decrease was due to the loss of
certain customers combined with the slow-down in new customer account
development. Cadmus Interactive sales increased 88.7%, or $1.2 million, during
fiscal 1996. Catalogs also posted an increase in revenues of 15.7%, or $1.5
million, for fiscal 1996.
Publishing sales growth of 11.4% resulted from increases in the custom
publishing product line offset with slight declines in consumer publishing.
Custom publishing revenues increased 33.7% in fiscal 1996 as a result of the
addition of new titles and new customer accounts. Sales in the consumer
publishing product line declined by 3.3% due to the continued softness in the
hobby and trading card collectibles markets.
Gross profit in fiscal 1996 was 23.0% of sales compared with 25.1% of
sales in fiscal 1995. The decline in gross profit margin is attributable
to manufacturing inefficiencies and excess production capacity, along
with a change in
<PAGE>
product sales mix. Manufacturing inefficiencies resulted from external factors,
including severe winter weather experienced at all facilities and a fire in the
Charlotte facility in March 1996, as well as overall poor production performance
at certain manufacturing facilities. These inefficiencies were partially offset
by savings from procurement activities, a reduction in depreciation expense due
to the assignment of salvage values to certain equipment, and from reductions in
the workforce related to the fiscal 1995 restructuring of the Company's
composition and prepress operations. The change in product sales mix was a
result of a shift from high-margin creative projects to lower value projects
with higher material costs in the direct marketing and
point-of-purchase product lines.
The Company's selling and administrative expenses as a percent of sales
improved from 18.6% in fiscal 1995 to 18.2% in fiscal 1996. However, total
selling and administrative expenses for fiscal 1996 increased by $9.0 million.
This increase resulted primarily from expenses associated with reorganizing and
unifying Cadmus, establishing and operating a New York office for the financial
communications product line, expanding the capacity and capabilities of the
Company's fulfillment operations, and hiring executives and staff to support the
Company's full-service offerings. Acquired companies accounted for the remainder
of this increase. The decline in the selling and administrative expense ratio is
due to these increased costs offset by a combination of increased sales volume
along with management efforts within each product line to limit overhead costs
through discretionary spending control measures.
Other expenses increased $0.8 million in fiscal 1996 as compared to fiscal
1995. The increase is due primarily to goodwill amortization associated with
fiscal 1996 acquisitions.
The effective income tax rate of 37.5% in fiscal 1996 decreased from 41.0% in
fiscal 1995 due primarily to tax liabilities arising from the sale of the
Company's 50% joint venture interest in Central Florida Press, L.C. in the third
quarter of fiscal 1995. The fiscal 1995 effective tax rate, excluding this
transaction, was 38.7%.
Comparison of Fiscal 1995 with Fiscal 1994
Net sales in fiscal 1995 were $279.6 million, representing an increase of 12.9%
over fiscal 1994 sales of $247.7 million. Sales growth occurred in each of the
Company's three business groups: printing -- 14.8%, marketing -- 12.6%, and
publishing -- 5.7%.
The 14.8% growth in printing sales was driven by a 25.3% increase in journal
services sales, a 53.0% increase in specialty packaging sales, and a 13.2%
increase in sales of promotional printing. In addition, higher paper prices
accounted for 2.3% of the increase in fiscal 1995 printing sales. Excluding the
full-year impact of the Waverly Press acquisition, journal services sales
increased 9.2% due primarily to an increase in the number of titles. The
increase in specialty packaging sales was principally the result of growth from
existing customers.
The 12.6% increase in sales for the marketing group resulted from a 22.1%
growth in point-of-purchase revenues combined with a 5.4% increase in direct
marketing sales. In addition, the formation of Cadmus Interactive in the first
quarter of fiscal 1995 accounted for 22.0% of the overall increase in marketing
revenues. These increases were partially offset by a decline in marketing
services revenues due to the loss of a customer in fiscal 1994. This customer
entered into a new contract with the Company in late fiscal 1995. Effective June
30, 1995, the Company ceased operating two marketing services programs, Kids
Link and Sports Marketing, which together contributed $1.9 million to fiscal
1995 sales.
Publishing sales growth of 5.7% resulted from new titles and expanded product
circulation, an increased market share, and a 25.3% cover price increase for
Tuff Stuff magazine. New product circulation involved the introduction in March
1994 of Mid-Atlantic Soccer, a regional magazine focused on promoting youth
soccer. In addition, circulation of Tuff Stuff's Collect!, a magazine serving
the non-sports collectibles market, was expanded through an increase in the
frequency of distribution from bi-monthly to monthly. Market share expansion was
achieved through extensive telemarketing efforts within consumer publishing
despite a decline in sports card collecting due in part to the baseball strike.
Gross profit in fiscal 1995 was 25.1% of sales compared with 25.7% in fiscal
1994. The gross profit decline in fiscal 1995 was a result of increased paper
prices and a change in sales mix due to the full year impact of the acquisition
of Waverly Press, which had a relatively lower gross margin. Excluding Waverly
Press, the gross margin was 27.0% and 26.8% for fiscal 1995 and 1994,
respectively. The decline in gross profit was partially offset by approximately
$1.3 million in savings generated in fiscal 1995 from the restructuring and
transfer of the Company's Springfield, Virginia, composition and prepress
activities to Richmond, Virginia, and Baltimore, Maryland.
The Company's selling and administrative expenses as a percent of sales were
18.6% and 19.7% in fiscal 1995 and 1994, respectively. The decrease in the
selling and administrative expense ratio in fiscal 1995 was primarily
<PAGE>
attributable to the full year impact of the acquisition of Waverly Press, which
had a lower selling and administrative expense ratio of 8.8%. In addition,
savings of approximately $0.3 million generated from the restructuring and
consolidation of composition and prepress facilities in Richmond, Springfield,
and Baltimore contributed to the decline in the selling and administrative
expense ratio in fiscal 1995.
The effective income tax rate of 41.0% in fiscal 1995 increased from 39.4% in
fiscal 1994 due to a one-time liability of $0.3 million arising from the sale of
the Company's fifty percent joint venture interest in CFP. Exclusive of the sale
transaction, the effective rate would have been 38.7%, a decrease attributable
to both higher levels of pretax income and a decrease in the overall state
effective tax rate.
Extraordinary Item
In December 1995, the Company retired $11.2 million principal of 9.76%
Senior Notes originally due June 2000 and recorded a $1.3 million ($0.8
million after tax) extraordinary loss relating to the early retirement
of this debt. The funds used for the debt retirement were provided from
the proceeds of the issuance of 1.725 million shares of the Company's
common stock.
Restructuring Charge
In the fourth quarter of fiscal 1994, the Company announced a plan to
restructure its journal services and specialty magazine printing divisions,
resulting in a one-time pretax charge of $1.9 million. This charge resulted from
reductions in the workforce related to the closing of the Company's
Springfield, Virginia, composition and prepress facility and the transfer of
these activities to the Richmond, Virginia, and Baltimore, Maryland,
facilities. These actions were substantially complete by June 30, 1995. During
fiscal 1995, the Company recognized pretax cost savings of $1.6 million,
primarily due to payroll-related savings.
The total original restructuring reserve of $1.9 million included costs
relating to employee separations, equipment write-downs, and other direct costs
relating to the restructuring. As of June 30, 1996, all restructuring costs had
been incurred and charged to the restructuring reserve.
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 for investments in property, plant, and equipment,
working capital, and acquisitions.
Net cash provided by operating activities in fiscal 1996 increased to $13.8
million from $5.4 million in fiscal 1995. The increase in funds available was
due primarily to reduced cash requirements to fund the Company's working
capital investment. As the rate of growth in inventory and accounts receivable
levels moderated in fiscal 1996, the amount of funds required to finance these
investments declined. Together, funds used to finance the Company's investment
in inventories and accounts receivable declined from $16.9 million in fiscal
1995 to $9.7 million in fiscal 1996. The Company continued to experience a
slowdown in its sales collection cycle, though the rate of the slowdown was
slightly improved from fiscal 1995. The slowdown in collections continues to
occur with selected product lines' Fortune 500 customers and does not reflect a
deterioration of the quality of the Company's overall receivables portfolio.
Net cash used in investing activities totaled $98.3 million in fiscal 1996,
as compared to $9.9 million in fiscal 1995, and included primarily the use of
$98.7 million to fund fiscal 1996 acquisitions and capital expenditures.
Capital investment in property, plant, and equipment totaled $25.3 million up
from fiscal 1995 expenditures of $21.0 million. Significant projects in fiscal
1996 included new presses for both Richmond and Baltimore manufacturing
facilities, a saddle stitcher and digital scanning equipment for one of the
Richmond manufacturing facilities, various prepress equipment for certain
facilities, an automated imposing platemaker for the magazine product line in
Richmond, a platesetter for the Easton manufacturing facility, and a die cutter
and gluer for the Charlotte manufacturing facility. The Company anticipates
that capital spending in fiscal 1997 will approximate $18.0 million.
Net cash provided by financing activities increased from $0.9 million in
fiscal 1995 to $85.4 million in fiscal 1996. This increase is attributable to
$38.4 million in net proceeds received from the issuance of 1.725 million shares
of the Company's common stock, and to $62.7 million of proceeds from long-term
borrowings used primarily to finance the acquisition of Lancaster. These
proceeds were partially offset by the use of these funds to repay $11.2 million
of 9.76% Senior Notes and the $1.3 million ($0.8 million after tax) prepayment
penalty, and to repay short-term borrowings which were used to finance seasonal
working capital needs.
Total debt at June 30, 1996 was $110.1 million, representing an increase of
$50.0 million from the $60.1 million at June 30, 1995. The increase in debt
relates to amounts borrowed to fund both
<PAGE>
acquisitions and operations, offset by the retirement of the 9.76% Senior Notes.
The higher debt levels resulted in a slight increase in the Company's
debt-to-capital ratio from 49.3% at June 30, 1995 to 50.6% at June 30, 1996. At
June 30, 1996, borrowings under the Company's $115.0 million credit facility
totaled $60.0 million, leaving an unused balance of $55.0 million. Borrowings
under this agreement had a weighted average interest rate of approximately
5.97%.
In January 1996, the Company entered into an agreement for a revolving credit
facility of $85.0 million with four major banks, replacing the former $25.0
million revolving credit facilities. In June 1996, the $85.0 million agreement
was replaced with a $115.0 million committed revolving credit/term loan facility
with the same four major banks. The $115.0 million agreement is composed of an
$85.0 million revolving credit facility which has a five-year term, expiring in
June 2001, and a $30.0 million seven-year term loan expiring in May 2003. The
Company has the following interest rate options: (i) LIBOR; (ii) prime rate or
(iii) money market rate. The $85.0 million revolving credit facility requires
commitment fees of 1/8 to 1/4 of 1% per annum on the total facility. At June 30,
1996, borrowings under each of the term and the revolving credit facility
totaled $30.0 million.
During fiscal 1996, the Company entered into two interest rate swap agreements
with notional amounts of $22.5 million and $7.5 million. Together these swaps,
which expire in May 2003, effectively convert $30.0 million of variable-rate
debt to fixed-rate debt. Under the terms of these agreements, the Company makes
payments at a fixed rate of 6.54% and receives payments based on 30-day LIBOR.
The net interest paid or received is included in interest expense. At June 30,
1996, the fair value of these contracts was $0.3 million.
During fiscal 1995, the Company entered into two interest rate swap agreements
with two banks to convert debt with an initial aggregate notional amount of $8.7
million from floating-rate to fixed-rate debt. The notional amount of these
swaps, which have terms of four years, was $17.9 million at June 30, 1996. Under
the terms of these agreements, the Company makes payments at a fixed interest
rate of 8.061% and will receive payments based on six-month LIBOR in arrears.
The net interest paid or received is included in interest expense. These swaps
are hedged against the $35.0 million of 6.74% Senior Notes which were originally
converted to floating-rate debt in fiscal 1994. At June 30, 1996, the fair value
of these contracts was negative $0.6 million.
In fiscal 1994, the Company entered into a fixed-to-floating interest rate
swap agreement with a bank with a notional amount of $35.0 million to convert
that amount of the 6.74% Senior Notes due in 2003, to floating-rate debt. This
swap has an initial term of three years which is renewable at the bank's option
for an additional two years. Under the terms of this agreement, the Company
makes payments at variable rates which are based on six-month LIBOR and receives
payments at a fixed interest rate of 5.265%. The net interest paid or received
is included in interest expense. At June 30, 1996, the variable rate was 5.8125%
and the fair value of this contract was negative $1.1 million.
In November 1995, the Company completed the issuance of an additional 1.725
million shares of common stock through a public offering, resulting in net
proceeds (after deducting issuance costs) of $38.4 million. The Company used the
net proceeds to (i) repay the $11.2 million of 9.76% Senior Notes due in June
2000, plus a $1.3 million prepayment penalty, (ii) fund the cash portion of the
acquisition costs of the assets of The Software Factory, Inc. and two smaller
acquisitions, and (iii) repay short-term borrowings used to fund seasonal
working capital needs.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Cadmus Communications Corporation and Subsidiaries
SELECTED QUARTERLY DATA (unaudited)
<TABLE>
<CAPTION>
(In thousands, except per share data)
<S> <C>
1996 QUARTERS ENDED Sept. 30 Dec. 31 March 31 June 30
Net sales $74,673 $85,835 $84,362 $91,785
Gross profit 17,870 20,745 17,786 21,168
Operating income 3,952 5,757 2,281 4,375
Income before extraordinary item 1,516 2,736 754 1,498
Net income 1,516 1,941 754 1,498
Earnings per share:
Income before extraordinary item $ .24 $ .38 $ .09 $ .19
Net income .24 .26 .09 .19
Cash dividends per share .05 .05 .05 .05
Stock market price data:
High $27 1/4 $29 7/8 $29 1/2 $18 7/8
Low 22 1/4 24 16 7/8 13 1/4
Close 25 27 17 1/8 15 3/8
</TABLE>
<TABLE>
<CAPTION>
1995 QUARTERS ENDED Sept. 30 Dec. 31 March 31 June 30
<S> <C>
Net sales $60,383 $67,237 $74,846 $77,175
Gross profit 13,752 16,793 19,438 20,243
Operating income 2,755 4,238 5,482 5,579
Net income 974 1,784 2,068 2,653
Net income per share $ .16 $ .29 $ .33 $ .43
Cash dividends per share .05 .05 .05 .05
Stock market price data:
High $18 3/4 $18 3/4 $19 1/4 $24 3/4
Low 15 14 7/8 14 1/2 17
Close 18 1/2 15 3/4 18 3/4 23 5/8
</TABLE>
<PAGE>
Cadmus Communications Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
[CAPTION]
<TABLE>
(In thousands, except per share data) Years Ended June 30,
1996 1995 1994
<S> <C>
Net sales $336,655 $279,641 $247,730
Operating expenses:
Cost of sales 259,086 209,415 184,088
Selling and administrative 61,204 52,172 48,824
Restructuring charge -- -- 1,900
320,290 261,587 234,812
Operating income 16,365 18,054 12,918
Interest and other expenses:
Interest 5,144 5,351 4,813
Other, net 813 21 172
5,957 5,372 4,985
Income before income taxes, extraordinary
item, and cumulative effect of changes
in accounting principles 10,408 12,682 7,933
Income taxes 3,904 5,203 3,126
Income before extraordinary item and
cumulative effect of changes in
accounting principles 6,504 7,479 4,807
Extraordinary loss on early extinguishment
of debt (net of income tax benefit of $487) (795) -- --
Cumulative effect of changes in
accounting for:
Postretirement benefits (net of
income tax benefit of $355) -- -- (532)
Income taxes -- -- 933
Net income $ 5,709 $ 7,479 $ 5,208
Earnings per share:
Income before extraordinary item and
cumulative effect of changes
in accounting principles $ .87 $ 1.21 $ .79
Extraordinary loss on early extinguishment
of debt (.11) -- --
Cumulative effect of changes in
accounting for postretirement
benefits and income taxes -- -- .07
Net income $ .76 $ 1.21 $ .86
Weighted average common shares outstanding 7,495 6,195 6,085
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
Cadmus Communications Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
[CAPTION]
<TABLE>
(In thousands, except share data) At June 30,
ASSETS 1996 1995
<S> <C>
Current assets:
Cash and cash equivalents $ 1,141 $ 226
Accounts receivable, less allowance for doubtful
accounts ($2,310 in 1996 and $1,153 in 1995) 76,889 57,204
Inventories 23,486 16,308
Deferred income taxes 2,150 1,092
Prepaid expenses and other 6,062 1,489
Total current assets 109,728 76,319
Property, plant, and equipment, net 116,365 84,570
Goodwill, net 52,846 8,281
Other assets 3,824 2,400
TOTAL ASSETS $282,763 $171,570
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 3,323 $ 3,775
Current maturities of long-term debt 136 2,381
Accounts payable 26,361 18,818
Accrued expenses 20,351 18,932
Total current liabilities 50,171 43,906
Long-term debt 106,665 53,961
Other long-term liabilities 9,555 7,180
Deferred income taxes 8,804 4,641
Commitments and contingencies
Shareholders' equity:
Common stock ($.50 par value; authorized shares
-16,000,000; issued and outstanding shares
-7,908,000 in 1996 and 6,030,000 in 1995) 3,954 3,015
Capital in excess of par value 52,971 12,448
Retained earnings 50,643 46,419
Total shareholders' equity 107,568 61,882
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $282,763 $171,570
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
Cadmus Communications Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands) Years Ended June 30,
1996 1995 1994
<S> <C>
OPERATING ACTIVITIES
Net income $ 5,709 $ 7,479 $ 5,208
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary loss on early extinguishment of debt 795 -- --
Cumulative effect of changes in accounting for:
Postretirement benefits -- -- 532
Income taxes -- -- (933)
Depreciation and amortization 14,563 12,132 11,474
Restructuring charge -- -- 1,900
Deferred income taxes 1,784 2,080 284
Other, net 1,942 1,010 657
24,793 22,701 19,122
Changes in working capital sources (requirements),
excluding debt and effects of acquisitions:
Accounts receivable, net (7,064) (11,999) (2,515)
Inventories (2,596) (4,897) 2,780
Accounts payable and accrued expenses 1,680 624 6,959
Other, net (2,993) (1,069) (353)
(10,973) (17,341) 6,871
Net cash provided by operating activities 13,820 5,360 25,993
INVESTING ACTIVITIES
Purchases of property, plant, and equipment (25,289) (20,959) (11,742)
Proceeds from sales of property and equipment 651 3,610 502
Sale of unconsolidated joint venture -- 6,800 --
Proceeds from life insurance loans 306 2,940 159
Payments for businesses acquired (73,372) (1,519) (19,740)
Other, net (609) (740) (181)
Net cash used in investing activities (98,313) (9,868) (31,002)
FINANCING ACTIVITIES
Proceeds from stock offering, net 38,376 -- --
Retirement of long-term debt (11,200) -- --
Penalty on early extinguishment of debt (1,282) -- --
Proceeds from short-term borrowings 33,048 79,825 43,709
Repayment of short-term borrowings (33,500) (76,050) (47,709)
Proceeds from long-term borrowings 62,724 111 40,069
Repayment of long-term borrowings (1,302) (2,250) (28,112)
Dividends paid (1,485) (1,201) (1,192)
Proceeds from exercise of stock options 631 449 220
Other, net (602) (5) (327)
Net cash provided by financing activities 85,408 879 6,658
Increase (decrease) in cash and cash equivalents 915 (3,629) 1,649
Cash and cash equivalents at beginning of year 226 3,855 2,206
Cash and cash equivalents at end of year $ 1,141 $ 226 $ 3,855
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
Cadmus Communications Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation. The consolidated financial statements include the
accounts and operations of Cadmus Communications Corporation and Subsidiaries
(the "Company"), a Virginia corporation. All significant intercompany accounts
and transactions have been eliminated in consolidation.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Nature of Operations. The Company is a graphic communications company operating
primarily on the East Coast, offering specialized products and services to
domestic markets in three broad areas: printing, marketing, and publishing.
Revenue Recognition. Substantially all printing, marketing, and publishing
products are produced to customer specifications. The Company recognizes revenue
when service projects are completed or products are shipped.
Cash and Cash Equivalents. Cash and cash equivalents include all cash balances
and highly liquid investments with an original maturity of three months or less.
Inventories. Inventories are valued at the lower of cost or market. Inventory
costs have been determined by the first-in, first-out (FIFO) method for 69.8%
(at June 30, 1996) and 50.8% (at June 30, 1995) of inventories. Costs for the
remaining inventories have been determined by the last-in, first-out (LIFO)
method.
Property, Plant, and Equipment. Property, plant, and equipment are stated at
cost net of accumulated depreciation. Major renewals and betterments are
capitalized, whereas ordinary maintenance and repair costs are expensed as
incurred. Gains or losses on disposition of assets are reflected in earnings,
and the related asset costs and accumulated depreciation are removed from the
respective accounts. Depreciation is calculated by the straight-line method
based on useful lives of 30 years for buildings and three to ten years for
machinery, equipment, and fixtures.
Goodwill. Goodwill includes the costs in excess of purchase price over net
assets of businesses acquired and is being amortized by the straight-line method
over periods of 15 to 40 years. The carrying value of goodwill is periodically
reviewed, and if there is evidence that these values are impaired, the Company's
carrying value of goodwill would be reduced to its estimated fair value.
Accumulated amortization was $5.0 million and $3.8 million at June 30, 1996 and
1995, respectively.
Income Taxes. Effective July 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." SFAS No.
109 requires the liability method of accounting for deferred income taxes,
whereby enacted statutory tax rates are applied to the differences between the
financial reporting and tax bases of assets and liabilities (see Note 7).
Earnings Per Share. Earnings per share is computed on the basis of weighted
average common shares outstanding and common equivalent shares in the form of
stock options.
Reclassifications. Certain previously reported amounts have been reclassified to
conform to current year presentation.
2. ACQUISITIONS
Lancaster Press, Inc. and Subsidiary
In May 1996, the Company acquired all of the outstanding stock of Lancaster
Press, Inc. and Subsidiary ("Lancaster"), a Pennsylvania-based producer of
scientific, technical, and medical journals, for total consideration, including
assumed debt and transaction costs, of approximately $58.7 million. Goodwill of
$31.3 million is being amortized by the straight-line method over 40 years. The
acquisition was funded by borrowings under the Company's revolving credit/term
loan facility with its banks (see Note 6).
<PAGE>
The Software Factory, Inc.
In November 1995, the Company acquired substantially all the assets and assumed
certain liabilities of The Software Factory, Inc. (the "Software Factory"), an
Atlanta-based provider of software packaging and media duplication services. The
$14.1 million purchase price consisted of 79,681 shares of the Company's common
stock, at an aggregate value of $2.0 million, and $12.1 million in cash
payments, including direct acquisition costs. Goodwill of $12.5 million is being
amortized by the straight-line method over 20 years.
Other Fiscal 1996 Acquisitions
In the first quarter of fiscal 1996, the Company acquired the assets of Na-Tex,
Inc. ("Na-Tex"), the publisher of Collector's World of Racing (subsequently
named Tuff Stuff's RPM), and acquired certain assets of The Mowry Company
("Mowry"), a direct marketing agency located in Long Beach, California. In
addition, in the second quarter of fiscal 1996 the Company acquired the assets
of PeachWeb Corp. ("PeachWeb"), a developer of Internet web sites and acquired
the assets of the Atlanta division of Encryption Technology Corporation
("ETC"), a provider of software packaging, media duplication, and documentation
services. Total cash paid for these four acquisitions was $3.4 million.
Goodwill of $1.5 million is being amortized by the straight-line method over
lives ranging from 15 to 20 years. The Na-Tex, Mowry, PeachWeb, and ETC
acquisitions were not material, either individually or in the aggregate, to the
Company's consolidated financial statements taken as a whole. The funds used to
acquire the Software Factory, ETC, and PeachWeb were provided from the proceeds
of the issuance of 1.725 million shares of the Company's common stock (see Note
10).
All fiscal 1996 acquisitions were accounted for under the purchase method, and
accordingly, the costs of the acquisitions were allocated to the assets acquired
and liabilities assumed based on their respective fair values. The results of
operations of each of the acquired companies have been included in the Company's
consolidated results of operations since each respective date of acquisition.
The unaudited consolidated results of operations on a pro forma basis, as
though the Software Factory and Lancaster had been acquired as of the beginning
of fiscal 1996 and 1995, are as follows:
<TABLE>
<CAPTION>
(In thousands, except per share data) 1996 1995
<S> <C>
Revenues $391,804 $343,302
Income before extraordinary item 8,372 10,398
Net income 7,577 9,018
Earnings per share:
Income before extraordinary item $ 1.12 $ 1.66
Net income 1.01 1.44
</TABLE>
Acquisition of Waverly Press
In November 1993, the Company acquired the net assets of the Waverly Press
printing division ("Waverly Press") from Waverly, Inc. for approximately $20.0
million, which was funded through the placement of senior notes with two
insurance companies (see Note 6). Waverly Press, a leading printer of
scientific, technical, and medical journals, was renamed Cadmus Journal
Services, Inc. ("Cadmus Journal Services"), following the acquisition. The
acquisition was accounted for under the purchase method, and accordingly, the
costs of the acquisition were allocated to the assets acquired and liabilities
assumed based upon their respective fair values. The operating results of
Waverly Press have been included in the consolidated results of operations since
the date of acquisition.
<PAGE>
3. INVENTORIES
Inventories at June 30, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C>
Raw materials and supplies $ 7,345 $ 6,044
Work in process:
Materials 5,356 3,270
Other manufacturing costs 7,937 5,315
Finished goods 2,848 1,679
Inventories $23,486 $16,308
</TABLE>
If the FIFO inventory valuation method had been used exclusively, inventories
would have been $1.9 million and $1.8 million higher at June 30, 1996 and 1995,
respectively.
4. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment at June 30, 1996 and 1995 consist of the
following:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C>
Land $ 4,072 $ 2,866
Buildings and improvements 49,305 39,844
Machinery, equipment, and fixtures 150,462 118,649
Total property, plant, and equipment 203,839 161,359
Less: Accumulated depreciation 87,474 76,789
Property, plant, and equipment, net $116,365 $ 84,570
</TABLE>
Commitments outstanding for capital expenditures at June 30, 1996 totaled $3.4
million.
The Company leases office, production and storage space, and equipment under
various noncancelable operating leases. A number of leases contain renewal
options and some contain purchase options. Certain leases require the Company to
pay utilities, taxes, and other operating expenses.
Future minimum rental payments required under operating leases that have initial
or remaining noncancelable lease terms in excess of one year as of June 30, 1996
are as follows: 1997 - $5.2 million; 1998 - $5.1 million; 1999 - $4.9 million;
2000 - $3.2 million; 2001 - $2.4 million; and thereafter - $7.1 million.
Total rental expense charged to operations was $5.7 million, $4.1 million, and
$3.0 million in fiscal 1996, 1995, and 1994, respectively. Substantially all
such rental expense represented the minimum rental payments under operating
leases.
In September 1994, the Company sold the land, building, and building
improvements of Three Score, Inc., in Tucker, Georgia, for $2.9 million (which
approximated net book value) under sale and leaseback agreements. The lease is
classified as an operating lease in accordance with SFAS No. 13, "Accounting for
Leases." The Company has lease renewal options after the initial 15 year lease
term at projected future fair market values under the lease. Average annual
rental payments on the lease are $0.3 million.
5. OTHER BALANCE SHEET INFORMATION
Accrued expenses at June 30, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C>
Compensation $10,181 $10,905
Deferred revenue 6,598 5,174
Other 3,572 2,853
Accrued expenses $20,351 $18,932
</TABLE>
<PAGE>
Other long-term liabilities consist principally of amounts recorded under
deferred compensation arrangements with certain executive officers and other
employees and amounts recorded under the pension and other postretirement
benefit plans (see Notes 8 and 9).
6. DEBT
Long-term debt at June 30, 1996 and 1995 consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C>
Long-term debt:
Revolving credit/term loan facility $ 60,000 $ --
Senior unsecured notes, 6.74%, due 2003 40,000 40,000
Senior unsecured notes, 9.76%, retired December 1995 -- 11,200
Tax-exempt variable rate industrial development bonds, weighted
average interest rates of 3.8% to 5.1%, due serially through
2011 3,315 4,482
Mortgage payable, 10%, due 2002 2,718 --
Various other notes 768 660
Total long-term debt 106,801 56,342
Less: Current maturities of long-term debt 136 2,381
Long-term debt $106,665 $53,961
</TABLE>
In January 1996, the Company entered into an agreement for a revolving credit
facility of $85.0 million with four major banks, replacing the former $25.0
million revolving credit facilities. In June 1996, the $85.0 million agreement
was replaced with a $115.0 million committed revolving credit/term loan facility
with the same banks. The $115.0 million agreement is composed of an $85.0
million revolving credit facility which has a five-year term, expiring in June
2001, and a $30.0 million seven-year term loan expiring in May 2003. The Company
has the following interest rate options: (i) LIBOR; (ii) prime rate or (iii)
money market rate. The $85.0 million revolving credit facility requires
commitment fees of 1/8 to 1/4 of 1% per annum on the total facility. At June 30,
1996, borrowings under each of the term loan and the revolving credit facility
totaled $30.0 million.
During fiscal 1994, the Company entered into agreements for revolving credit
facilities aggregating $25.0 million with its four major banks, replacing the
former lines of credit. These unsecured, committed lines of credit had a
three-year term that would have expired in February 1997, at which time any
loans outstanding under the facilities would have converted to term loans with a
two-year maturity. The Company had the following interest rate options: (i)
adjusted CD rate or (ii) adjusted LIBOR. These agreements also required
commitment fees of 1/4 to 1/2 of 1% per annum on any unused portion of the lines
of credit. At June 30, 1995, borrowings under these revolving credit facilities,
which are included in short-term borrowings on the Consolidated Balance Sheets,
totaled $3.8 million, leaving an unused balance of $21.2 million. In January
1996, these revolving credit facilities were replaced with the $85.0 million
revolving credit facility.
Short-term borrowings as of June 30, 1996 consist of $3.3 million under the
Company's short-term uncommitted line of credit. The interest rate under this
line of credit was 6.625% at June 30, 1996. No debt was outstanding under this
agreement as of June 30, 1995.
In December 1995, the Company retired $11.2 million principal of 9.76% Senior
Notes originally due June 2000 and recorded a $1.3 million ($0.8 million after
tax) extraordinary loss relating to the early retirement of this debt. The funds
used for the debt retirement were provided from the proceeds of the issuance of
1.725 million shares of the Company's common stock (see Note 10).
In December 1993, the Company completed the placement of $40.0 million in senior
unsecured notes with two insurance companies. The notes have a fixed interest
rate of 6.74%, with an average life of 8.1 years and are due in 2003. The
proceeds of this placement were used to fund the acquisition of Waverly Press
and to refinance approximately $20.0 million of revolving bank credit and term
loans.
<PAGE>
The Company periodically enters into interest rate swap agreements to moderate
its exposure to interest rate changes and to lower the overall cost of
borrowing. During fiscal 1996, the Company entered into two interest rate swap
agreements with notional amounts of $22.5 million and $7.5 million. Together
these swaps, which expire in May 2003, effectively convert $30.0 million of
variable-rate debt to fixed-rate debt. Under the terms of these agreements, the
Company makes payments at a fixed rate of 6.54% and receives payments based on
30-day LIBOR. The net interest paid or received is included in interest expense.
At June 30, 1996, the fair value of these contracts was $0.3 million.
During fiscal 1995, the Company entered into two interest rate swap
agreements with two banks to convert debt with an initial aggregate
notional amount of $8.7 million from floating-rate to fixed-rate debt.
The notional amount of these swaps, which have terms of four years, was
$17.9 million at June 30, 1996. Under the terms of these agreements, the
Company makes payments at a fixed interest rate of 8.061% and will
receive payments based on six-month LIBOR in arrears. The net interest
paid or received is included in interest expense. These swaps are hedged
against the $35.0 million of 6.74% Senior Notes which were originally
converted to floating-rate debt in fiscal 1994 as discussed below. At
June 30, 1996 and 1995, the fair value of these contracts was negative
$0.6 million and negative $0.9 million, respectively.
In fiscal 1994, the Company entered into a fixed-to-floating interest
rate swap agreement with a bank with a notional amount of $35.0 million
to convert that amount of the 6.74% Senior Notes due in 2003 to
floating-rate debt. This swap has an initial term of three years, which
is renewable at the bank's option for an additional two years. Under the
terms of this agreement, the Company makes payments at variable rates
which are based on six-month LIBOR and receives payments at a fixed
interest rate of 5.265%. The net interest paid or received is included
in interest expense. At June 30, 1996, the variable rate was 5.8125%.
The fair value of this contract was negative $1.1 million and negative
$1.2 million at June 30, 1996 and 1995, respectively.
During fiscal 1990, the Company entered into two interest rate swap agreements
with an initial notional amount of $10.0 million, which expired in December
1995. The swap agreements originally converted certain variable-rate term loans
into fixed-rate obligations with a fixed rate of 9.01%. Under the terms of these
agreements, the Company made payments at a fixed interest rate of 8.34% and
received payments at variable rates which were based on LIBOR. The net interest
paid or received was included in interest expense. In fiscal 1994, the Company
repaid the balance of these term loans and utilized these swap agreements as a
hedge against the $35.0 million floating-rate swap mentioned above. At June 30,
1995, the fair value of this contract was negative $0.1 million.
The notional amounts and applicable rates of the Company's interest rate swap
agreements are as follows:
<TABLE>
<CAPTION>
Paid Fixed, Paid Floating,
Received Floating Received Fixed
(In thousands) 1996 1995 1994 1996 1995 1994
<S> <C>
Notional amount:
Beginning balance $17,375 $ 9,125 $10,000 $35,000 $35,000 $ --
New contracts 37,900 10,000 -- -- -- 35,000
Expired contracts (7,375) (1,750) (875) -- -- --
Ending balance $47,900 $17,375 $ 9,125 $35,000 $35,000 $35,000
</TABLE>
<TABLE>
<CAPTION>
Weighted Average
Interest Rates
Type of swap: Paid Received
<S> <C>
Paid fixed, received floating 7.728 % 5.754%
Paid floating, received fixed 6.038 % 5.265%
</TABLE>
Hedging activities increased interest expense by $0.7 million in fiscal 1996 and
1995, and by $0.5 million in fiscal 1994.
<PAGE>
The notional amount of the swap contracts does not represent exposure to credit
loss. In the event of default by the counterparties, the risk, if any, in these
transactions is the cost of replacing the swap agreement at current market
rates. The Company continually monitors its positions and the credit ratings of
its counterparties and limits the amount of agreements it enters into with any
one party. Management does not anticipate nonperformance by the counterparties;
however, if incurred, any such loss would be immaterial.
The fair value of long-term debt as of June 30, 1996 and 1995 was $105.8 million
and $53.9 million, respectively, based on the market value of debt with similar
maturities and covenants.
The Company's debt agreements contain covenants regarding fixed charge coverage
and net worth and contain other restrictions, including limitations of
additional borrowings, the acquisition, disposition and securitization of
assets, and payments of dividends to shareholders. Under the terms of the
various debt instruments, retained earnings of approximately $48.7 million at
June 30, 1996 is available for cash dividends and stock acquisitions.
Maturities of long-term debt for the five years ending June 30, 2001 are as
follows: 1997 - $0.1 million; 1998 - $1.6 million; 1999 - $9.0 million; 2000 -
$10.5 million; and 2001 - $42.1 million. The book value of all encumbered
properties as of June 30, 1996 totaled $4.5 million.
The Company incurred interest expense of $5.4 million, $5.5 million, and $4.8
million for fiscal 1996, 1995, and 1994, respectively, of which $0.3 million for
1996, and $0.1 million for 1995 were capitalized. Interest paid, net of amounts
capitalized, totaled $5.0 million, $5.3 million, and $4.8 million for fiscal
1996, 1995, and 1994, respectively.
7. INCOME TAXES
Effective July 1993, the Company adopted SFAS No. 109, "Accounting for Income
Taxes." SFAS No. 109 requires the liability method of accounting for deferred
income taxes, whereby enacted statutory tax rates are applied to the differences
between the financial reporting and tax bases of assets and liabilities. The
cumulative effect of the change in accounting principle was a reduction in the
deferred income tax liability and a corresponding increase in net income of $0.9
million in fiscal 1994.
Income tax expense, for the years ended June 30, 1996, 1995, and 1994,
consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C>
Current:
Federal $2,139 $3,052 $2,313
State 418 297 360
Total current 2,557 3,349 2,673
Deferred:
Federal 1,176 1,743 133
State 171 111 320
Total deferred 1,347 1,854 453
Income taxes $3,904 $5,203 $3,126
</TABLE>
<PAGE>
The amounts of income tax expense differ from the amounts obtained by
application of the statutory U.S. rates to income before income taxes,
extraordinary item, and cumulative effect of changes in accounting principles
for the reasons shown in the following table:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
<S> <C>
Computed at statutory U.S. rate $3,539 $4,312 $2,697
State income taxes, net of Federal tax benefit 388 269 449
Goodwill amortization 251 221 242
Charitable contribution -- -- (127)
Research tax credit (217) -- --
Sale of joint venture -- 295 --
Other (57) 106 (135)
Income taxes $3,904 $5,203 $3,126
</TABLE>
Cash paid for income taxes totaled $2.4 million, $3.3 million, and $3.0 million
for fiscal 1996, 1995, and 1994, respectively.
The net current and noncurrent components of deferred income taxes included in
the Consolidated Balance Sheets at June 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C>
Net current assets $2,150 $1,092
Net noncurrent liabilities 8,804 4,641
Net liability $6,654 $3,549
</TABLE>
The Company has state net operating loss carryforwards aggregating approximately
$29.8 million, which expire during fiscal years 2004 to 2011. A valuation
allowance of $0.4 million has been established for state net operating loss
benefits that are not expected to be realized.
The tax effects of the significant temporary differences which comprise the
deferred tax assets and liabilities in the Consolidated Balance Sheets at June
30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
<S> <C>
Assets:
Allowance for doubtful accounts $ 784 $ 368
Inventories 274 135
Employee benefits 3,363 3,056
State net operating loss carryforwards 891 501
Debt discount 236 --
Other -- 77
Gross deferred tax assets 5,548 4,137
Liabilities:
Property, plant, and equipment 11,603 7,230
Other 187 182
Gross deferred tax liabilities 11,790 7,412
Less: Valuation allowance 412 274
Net liability $6,654 $3,549
</TABLE>
8. RETIREMENT PLANS
Retirement benefits are provided to substantially all employees principally
through a noncontributory, defined benefit pension plan ("Core Plan") and a
thrift savings plan. The Core Plan benefits are based on the plan provisions
relating to employees' compensation and years of service. Assets under the plans
consist of marketable securities, including common stock of the Company of $1.5
million as of
<PAGE>
August 1996, and are held in trust funds managed by independent investment
advisors. These plans are qualified plans under the Internal Revenue Code. The
policy of the Company is to fund the Core Plan at amounts not less than the
minimum requirements of the Employee Retirement Income Security Act of 1974. A
supplementary nonqualified, nonfunded pension plan ("Supplemental Plan") for
certain key executives is also maintained and is provided for by charges to
earnings sufficient to meet the projected benefit obligation. The pension cost
for this plan is based on substantially the same actuarial assumptions as those
used for the Core Plan.
The components of net pension costs for fiscal 1996, 1995, and 1994 follow:
<TABLE>
<CAPTION>
Core Plan Supplemental Plan
(In thousands) 1996 1995 1994 1996 1995 1994
<S> <C>
Present value of benefits earned $ 1,940 $ 1,685 $ 1,056 $ 70 $ 78 $ 80
Interest cost on plan liabilities 1,979 1,647 1,419 326 299 237
Return on plan assets:
Actual (4,522) (2,257) (14) -- -- --
Deferred 2,382 371 (1,921) -- -- --
Amortization of transition (asset) obligation (180) (180) (215) 76 68 37
Net pension costs $ 1,599 $ 1,266 $ 325 $472 $445 $354
</TABLE>
The actuarial assumptions used in determining net pension cost and the related
benefit obligations for the Core Plan were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<CAPTION>
<S> <C>
Discount rate for liabilities 8.25% 8.50% 8.50%
Discount rate for expenses 8.25% 8.50% 8.50%
Rate of increase in compensation 4.50% 4.50% 4.50%
Long-term rate of return on plan assets 9.00% 9.00% 9.00%
</TABLE>
A summary of the funded status of the pension plans at June 30, 1996 and 1995
follows:
<TABLE>
<CAPTION>
Supplemental
Core Plan Plan
(In thousands) 1996 1995 1996 1995
<S> <C>
Plan assets at market value $27,771 $24,192 $ * $ *
Plan liabilities:
Present value of benefit obligation:
Vested 22,882 18,896 2,816 2,886
Nonvested 1,558 637 541 411
Accumulated benefit obligation 24,440 19,533 3,357 3,297
Adjustment for future salary increases 4,244 4,154 634 637
Projected benefit obligation 28,684 23,687 3,991 3,934
(Excess) deficiency of plan assets over plan liabilities 913 (505) 3,991 3,934
Unrecognized transition asset (obligation) 2,269 2,449 (798) (838)
Adjustment required to reflect minimum liability -- -- 17 219
Unrecognized gains (losses) 282 (79) 69 (65)
Accrued pension costs $ 3,464 $ 1,865 $3,279 $3,250
</TABLE>
*The Supplemental Plan is technically a nonfunded plan; however, the Company has
acquired life insurance contracts, in the approximate amount of $14.6 million
and $14.5 million at June 30, 1996 and 1995, respectively, intended to be
adequate to fund future benefits. The cash surrender value of these contracts,
net of policy loans, was $1.2 million and $1.1 million at June 30, 1996 and
1995, respectively, and is included in other assets in the Consolidated Balance
Sheets.
<PAGE>
The Company made the required cash contributions to the Core Plan of $2.8
million and $1.4 million for fiscal 1996 and 1995, respectively. Due to the
overfunded status, no contributions were made for fiscal 1994.
The thrift savings plan enables employees to save a portion of their earnings on
a tax-deferred basis and also provides for matching contributions from the
Company for a portion of the employees' savings. Additionally, the plan provides
for individual subsidiary companies to make profit-sharing contributions. The
Company's expense under this plan was $1.8 million, $1.5 million, and $1.1
million for fiscal 1996, 1995, and 1994, respectively.
9. OTHER POSTRETIREMENT BENEFITS
All employees of the Company are eligible for retiree medical coverage if they
retire on or after attaining age 55 with ten or more years of service. Benefits
differ depending upon the date of retirement. For those employees who retired
prior to April 1, 1988, and are under age 65, coverage is available at a cost to
the retiree equal to the cost to the Company for an active employee less the
fixed company subsidy. Once employees in this group have reached age 65,
coverage is available at a cost to the retiree equal to the cost to the Company
for a post-65 retiree less the fixed company subsidy.
For those employees who retired on or after April 1, 1988, but before January 1,
1994, coverage is available until the earlier of the retiree's death or
attainment of age 65. The retiree contributes the full active rate. Upon
reaching age 65, coverage under the Company's plan ceases and the retiree
becomes covered by Medicare.
For those employees who retire on or after January 1, 1994, coverage is
available until the earlier of the death of the retiree or attainment of age 65.
The retiree contributes the full retiree rate, which is equal to the cost to the
Company for a pre-65 retired employee. Upon reaching age 65, coverage under the
Company's plan ceases, and the retiree becomes covered by Medicare.
Effective July 1993, the Company adopted SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions." SFAS No. 106 requires
recognition of the cost of postretirement benefits during the employees' service
periods. Previously, such expenses were accounted for on a cash basis. The
Company elected to immediately recognize the liability for prior years' service
as the cumulative effect of a change in accounting principle. Accordingly, in
the first quarter of 1994, the Company recorded an accumulated postretirement
benefit obligation ("APBO") and a corresponding charge to net income of $0.9
million and a noncurrent deferred income tax benefit of $0.4 million, resulting
in an after-tax charge of $0.5 million. This is an unfunded plan.
The APBO existing at July 1, 1996 was $0.2 million. The discount rate used in
determining the APBO was 8.25%. An 11% rate of increase in the per capita cost
of covered health care benefits was assumed for fiscal 1996, with the rates
gradually decreasing to 5.5% in the year 2003 and remaining level thereafter. A
one percentage-point increase in the assumed health care cost trend rates would
not change the APBO.
<PAGE>
10. SHAREHOLDERS' EQUITY
Shareholders' equity consists of the following:
<TABLE>
<CAPTION>
(Dollars in thousands, except Common Stock Capital in Excess Retained
per share data) Shares Amount of Par Value Earnings
<S> <C>
Balance at June 30, 1993 5,948,000 $2,974 $11,594 $36,125
Net income -- -- -- 5,208
Cash dividends - $.20 per share -- -- -- (1,192 )
Net shares issued upon exercise of
stock options 36,000 18 202 --
Balance at June 30, 1994 5,984,000 2,992 11,796 40,141
Net income -- -- -- 7,479
Cash dividends - $.20 per share -- -- -- (1,201 )
Net shares issued upon exercise of
stock options 46,000 23 652 --
Balance at June 30, 1995 6,030,000 3,015 12,448 46,419
Net income -- -- -- 5,709
Cash dividends - $.20 per share -- -- -- (1,485 )
Issuances of stock 1,805,000 902 39,459 --
Net shares issued upon exercise of
stock options 73,000 37 1,064 --
Balance at June 30, 1996 7,908,000 $3,954 $52,971 $50,643
</TABLE>
In November 1995, the Company completed the issuance of an additional 1.725
million shares of the Company's common stock through a public offering,
resulting in net proceeds (after deducting issuance costs) of $38.4 million. The
Company used the net proceeds to (i) repay the $11.2 million of 9.76% Senior
Notes due in June 2000, plus a $1.3 million ($0.8 million after tax) prepayment
penalty, (ii) fund the cash portion of the acquisition costs of the assets of
the Software Factory, ETC, and PeachWeb, and (iii) repay short-term borrowings
used to fund seasonal working capital needs.
In February 1989, as part of a shareholder rights plan, the Board of Directors
declared a dividend distribution of one preferred share purchase right for each
outstanding share of common stock. Each right entitles the shareholder to buy
one unit (one one-thousandth of a share) of Series A Preferred Stock at a
purchase price of $45 per share (the "Purchase Price"), subject to adjustment.
The rights will become exercisable initially if a person or group acquires or
announces a tender offer for 20% or more of the Company's common stock
("Acquiring Person"), at which time each right will be exercisable to purchase
one unit of Series A Preferred at the Purchase Price. At any time after a person
becomes an Acquiring Person, the Company may issue a share of common stock in
exchange for each right other than those held by the Acquiring Person. If an
Acquiring Person acquires 30% or more of the Company's common stock or an
Acquiring Person merges into or combines with the Company, each right will
entitle the holder, other than the Acquiring Person, upon payment of the
Purchase Price, to acquire Series A Preferred or, at the option of the Company,
common stock, having a market value equal to twice the Purchase Price. If the
Company is acquired in a merger or other business combination in which it does
not survive or if 50% of its earnings power is sold, each right will entitle the
holder, other than the Acquiring Person, to purchase securities of the surviving
company having a market value equal to twice the Purchase Price. Unless redeemed
earlier, the rights expire on February 13, 1999. The rights may be redeemed by
the Board of Directors at any time prior to the tenth day after a person becomes
an Acquiring Person, subject to the Board of Directors' ability to extend or
reinstate the redemption period under certain circumstances. The rights may have
certain anti-takeover effects. An Acquiring Person will experience substantial
dilution under certain circumstances. However, the rights should not interfere
with any merger or other business combination approved by the Board of Directors
because the rights are generally redeemable at the discretion of the Board.
<PAGE>
The Board of Directors has authorized the purchase of up to 200,000 shares of
the Company's stock from time to time on the open market. The shares, if and
when purchased, may be used for the funding of employee benefit plans. As of
June 30, 1996, 133,000 shares had been repurchased under this authorization.
In addition to its common stock, the Company's authorized capital includes
1,000,000 shares of preferred stock ($1.00 par value), issuable in series, of
which 100,000 shares are designated as Series A Preferred.
11. STOCK OPTIONS
Under the Company's stock option plans, selected employees and non-employee
directors may be granted options to purchase its common stock at prices equal
to the fair market value of the stock at the date the options are granted.
There are no charges to earnings resulting from the plans. In October 1995,
SFAS No. 123, "Accounting for Stock-Based Compensation," was issued and is
effective for fiscal 1997. The impact of the statement is expected to be
immaterial. The Company has elected to apply the accounting provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and will comply with the disclosure requirements of SFAS No. 123 in
fiscal 1997.
The following is a summary of changes in options outstanding:
<TABLE>
<CAPTION>
Number of Option Price Option Price
(Dollars in thousands, except per share price) Shares Per Share Total
<S> <C>
Outstanding and exercisable at June 30, 1993 470,000 $ 4.60 to $28.00 $ 4,589
Exercised (43,000) $ 4.60 to $ 9.75 (301)
Granted 117,000 $ 9.45 to $14.13 1,144
Lapsed or canceled (91,000) $ 9.50 to $12.38 (1,067)
Outstanding and exercisable at June 30, 1994 453,000 $ 6.38 to $28.00 4,365
Exercised (50,000) $ 9.00 to $10.63 (486)
Granted 204,000 $16.75 to $19.19 3,846
Outstanding and exercisable at June 30, 1995 607,000 $ 6.38 to $28.00 7,725
Exercised (71,000) $ 6.38 to $ 9.75 (632)
Granted 169,000 $16.75 to $25.06 3,114
Lapsed or canceled (32,000) $16.75 to $25.06 (705)
Outstanding and exercisable at June 30, 1996 673,000 $ 8.25 to $28.00 $ 9,502
</TABLE>
At June 30, 1996, 1,077,000 shares of authorized but unissued common stock were
reserved for issuance upon exercise of options granted or grantable under the
plans. Options are exercisable under the plans for periods of five to ten years
from the date of grant.
12. SALE OF UNCONSOLIDATED JOINT VENTURE
In February 1995, the Company sold its 50% joint venture interest in Central
Florida Press, L.C. ("CFP") to The Lanman Companies, Inc., the other owner of
CFP, for $6.8 million in cash. The sale resulted in an after-tax charge of $0.4
million, or $.06 per share, arising primarily from certain tax liabilities
related to the transaction.
<PAGE>
13. RESTRUCTURING CHARGE
In the fourth quarter of fiscal 1994, the Company recorded a restructuring
charge of $1.9 million. This charge resulted from reductions in its workforce
related to the decision to close its Springfield, Virginia, composition and
prepress facility and to transfer these activities to Richmond, Virginia, and
Baltimore, Maryland, facilities. The Company recorded a charge of $1.6 million
related to employee termination benefits with the remaining $0.3 million charge
related to equipment write-offs and miscellaneous other direct costs associated
with the discontinuation of the operations and other exit costs. During fiscal
1995, the Company substantially completed its restructuring plan. Actual amounts
charged against the reserve for fiscal 1995 were $1.8 million, with the
remaining $0.1 million charged against the reserve in fiscal 1996.
14. CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of trade receivables. Concentrations of credit
risk with respect to trade receivables are limited due to the large number of
customers comprising the Company's customer base, and their dispersion across
different businesses and geographic regions. As of June 30, 1996 and 1995, the
Company had no significant concentrations of credit risk.
15. SUPPLEMENTAL CASH FLOW INFORMATION
The effect of certain noncash activities has been excluded from the Consolidated
Statements of Cash Flows. The Company assumed $2.7 million of obligations in
conjunction with acquisitions for the fiscal year ended June 30, 1996. There
were no noncash investing or financing activities in fiscal 1995 and 1994.
16. CONTINGENCIES
The Company is party to various legal actions which are ordinary and incidental
to its business. While the outcome of legal actions cannot be predicted with
certainty, management believes the outcome of any of these proceedings, or all
of them combined, will not have a materially adverse effect on its consolidated
financial position or results of operations.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
Cadmus Communications Corporation:
We have audited the accompanying consolidated balance sheets of
Cadmus Communications Corporation and Subsidiaries ("Cadmus") as of June
30, 1996 and 1995, and the consolidated related statements of income and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cadmus as of June 30, 1996 and
1995, and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
As discussed in Notes 7 and 9 to the consolidated financial statements,
effective as of July 1, 1993, the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No. 109
and its method of accounting for postretirement benefits other than pensions to
conform with Statement of Financial Accounting Standards No. 106.
Our audits were made for the purpose of forming an opinion on the 1996 and
1995 basic financial statements taken as a whole. The schedules listed in the
index of financial statements are presented for purposes of complying with the
Securities and Exchange Commissions rules and are not part of the basic
financial statements. These 1996 and 1995 schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Richmond, Virginia
August 1, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Cadmus Communications Corporation:
We have audited the consolidated statements of income and cash flows of
Cadmus Communications Corporation and Subsidiaries for the year ended June 30,
1994. We have also audited the 1994 financial statement schedule listed in the
Index to Financial Statements and Schedules of this Form 10-K. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
Cadmus Communications Corporation and Subsidiaries for the year ended June 30,
1994 in conformity with generally accepted accounting principles. In addition,
in our opinion, the 1994 financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
As discussed in Notes 7 and 9 to the consolidated financial statements,
effective as of the beginning of 1994, the Company changed its method of
accounting for income taxes to conform with Statement of Financial Standards No.
109 and its method of accounting for postretirement benefits other than pensions
to conform with Statement of Financial Accounting Standards No. 106.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
August 2, 1994
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Previously reported in the Company's Form 8-K and 8-K/A filed with the
Securities and Exchange Commission on August 23, 1994 and September 20, 1994,
respectively.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Board of Directors is divided into three classes (I, II and III), with
one class being elected every year for a term of three years. Jeanne M. Liedtka
and Wallace Stettinius currently serve as Class I directors of the Company and
will be nominated to serve as Class I directors for terms of three years
expiring at the 1999 annual meeting. The Company's Articles of Incorporation
require that the classes of directors be maintained as nearly equal in number as
possible. Accordingly, John D. Munford, II, who was elected by the shareholders
of the Company to serve until the 1997 annual meeting of shareholders as a Class
II director, will be nominated to serve as a Class I director. In accordance
with the Company's Articles of Incorporation, in the event Mr. Munford is not
elected as a Class I director, he will continue to serve as a Class II director.
Certain information concerning the nominees for election at the
1996 Annual Meeting of Shareholders to be held November 13, 1996
("Annual Meeting") Annual Meeting as Class I directors is set forth
below, as well as certain information about the Class II and Class III
directors, who will continue in office after the Annual Meeting until
the 1997 and 1998 annual meeting of shareholders, respectively.
NOMINEES FOR ELECTION AS
CLASS I DIRECTORS
(TO SERVE UNTIL 1999 ANNUAL MEETING)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
DIRECTOR PAST FIVE YEARS AND DIRECTORSHIPS
NAME AND (AGE) SINCE(1) IN OTHER PUBLIC COMPANIES
<S> <C> <C>
Jeanne M. Liedtka (41) 1995 Associate Professor at the Darden Graduate School
of Business Administration, University of
Virginia. Formerly, Associate Professor at
Rutgers University and Simmons College.
John D. Munford, II (68) 1965 Retired. Formerly, Vice Chairman, Executive Vice
President, Union Camp Corporation, Franklin,
Virginia. Director, Pulaski Furniture
Corporation, Universal Corporation, and Caraustar
Industries, Inc.
Wallace Stettinius (63) 1967 Senior Executive Fellow at the School of Business,
Virginia Commonwealth University, Richmond,
Virginia. Formerly, Chairman of the Board,
President and Chief Executive Officer, Cadmus.
Director, American Filtrona Corporation and
Chesapeake Corporation.
</TABLE>
CLASS II DIRECTORS
(SERVING UNTIL 1997 ANNUAL MEETING)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
DIRECTOR PAST FIVE YEARS AND DIRECTORSHIPS
NAME AND (AGE) SINCE(1) IN OTHER PUBLIC COMPANIES
<S> <C> <C>
Frank Daniels, III (40) 1994 Chairman and Chief Executive Officer of KOZ, Inc.,
a Raleigh-based provider of Web-based data.
Formerly, Publisher, Nando.net and Vice
President, Editor and Director of Operations of
The News and Observer Publishing Company.
C. Stephenson 1991 Chairman of the Board, President and Chief
Gillispie, Jr. (54) Executive Officer, Cadmus. Formerly, Chief
Operating Officer, Cadmus, and President and
Chief Executive Officer, The William Byrd Press,
Incorporated.
Bruce A. Walker (62) 1977 President, Valco Graphics, Inc., a Seattle
publication and tabloid printing firm. Formerly,
Marketing Representative, Pacific Northwest,
Anderson Lithograph Company, Los Angeles,
California.
</TABLE>
CLASS III DIRECTORS
(TO SERVE UNTIL 1998 ANNUAL MEETING)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
DIRECTOR PAST FIVE YEARS AND DIRECTORSHIPS
NAME AND (AGE) SINCE(1) IN OTHER PUBLIC COMPANIES
<S> <C> <C>
Price H. Gwynn, III (73) 1984 Chairman, Presbyterian Publishing Corporation,
Louisville, Kentucky. Formerly Vice President,
Lance, Inc., Charlotte, North Carolina.
John C. Purnell, 1979 Executive Director, Friends Association for
Jr. (55) Children, Richmond, Virginia, a non-profit child
welfare organization.
Russell M. Robinson, 1984 Attorney-at-law, President, Director and
II (64) shareholder of Robinson, Bradshaw & Hinson, P.A.,
Charlotte, North Carolina. Director, Caraustar
Industries, Inc. and Duke Power Company.
John W. Rosenblum (52) 1988 Dean, The Jepson School of Leadership Studies,
University of Richmond, Richmond, Virginia.
Formerly, Tayloe Murphy Professor and Dean, the
Darden Graduate School of Business Adminis-
tration, University of Virginia. Director,
Chesapeake Corporation, Comdial Corporation, Cone
Mills Corporation, and T. Price Associates.
</TABLE>
(1) All service by Cadmus directors prior to June 30, 1984, refers to
service as directors of Cadmus' subsidiaries, Byrd or Washburn.
Executive Officers
For more information regarding the executive officers of Cadmus, see
"Executive Officers of the Registrant" at the end of Part I of this report.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Based on a review of the reports of changes in beneficial ownership of
Common Stock and written representations furnished to Cadmus, Cadmus believes
that its officers and directors filed on a timely basis the reports required to
be filed under Section 16(a) of the Securities Exchange Act of 1934 during the
fiscal year ended June 30, 1996, except that (i) two Forms 4 reporting 18
purchases were filed late by Mr. Daniels and (ii) one Form 4 reporting one
purchase was filed late by Mr. Walker.
Family Relationships
Mr. Dalton is the brother-in-law of Mr. Robinson.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended June 30, 1996, 1995,
and 1994, all compensation paid or accrued by Cadmus and its subsidiaries to the
Company's Chief Executive Officer and its four other most highly compensated
executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
OTHER SECURITIES ALL OTHER
ANNUAL UNDERLYING COMPEN-
NAME (AGE) AND COMPEN- OPTIONS/ SATION
PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($)(2) SATION($) SARS (#S) ($)
<S> <C> <C> <C> <C> <C> <C>
C. Stephenson Gillispie, Jr. (54) FY96 $ 310,000 $ 0 $ 46,575(3) 20,000 $29,185(9)
Chairman, President and FY95 297,500 160,000 -- 42,200 4,500
Chief Executive Officer FY94 290,200 150,000 -- 25,000 4,497
Michael Dinkins (42)
Group President, Cadmus FY96 190,000 0 -- 10,000 12,769(10)
Graphic Communications Group FY95 182,000 90,000 -- 20,800 --
FY94 179,200 75,000 115,922(4) 10,000 --
Gregory Moyer (47) FY96 180,000 0 108,459(5) 8,000 8,709(11)
Vice President, Human FY95 175,000 70,000 154,176(6) 30,800 --
Resources and Quality FY94 -- -- -- -- --
John H. Phillips (52) FY96 172,000 0 25,777(7) 8,000 10,105(12)
Vice President, Support FY95 165,000 83,000 -- 10,800 4,500
and Development FY94 163,840 83,000 -- 13,500 4,497
Bruce V. Thomas (39) FY96 165,000 0 21,344(8) 8,000 7,952(13)
Vice President and FY95 156,000 82,000 -- 10,800 4,500
Chief Financial Officer FY94 154,200 80,000 -- 12,000 1,875
</TABLE>
(1) Reflects salary before pretax contributions under the Cadmus Thrift Savings
Plans.
(2) Reflects short-term incentive awards accrued for each of the three fiscal
years ended June 30, 1996 under the Cadmus Executive Incentive Plan.
(3) Of the total amount reported as "Other Annual Compensation" for Mr.
Gillispie in fiscal year 1996, $34,875 was paid, pursuant to a change in
the Cadmus vacation policy, for previously accrued vacation not taken in
prior fiscal years and $11,700 was paid as an automobile allowance.
(4) Of the total amount reported as "Other Annual Compensation" for Mr. Dinkins
in fiscal year 1994, $50,000 was paid as a reimbursement for the value of
stock options forfeited by Mr. Dinkins when he left his previous employer
to join Cadmus during fiscal year 1994 with the balance of the amount so
reported attributable in the aggregate to other relocation expenses,
including tax payments on moving expenses, settlement and closing costs,
temporary living and travel expenses and moving expenses, each of which
individually amounts to less than 25% of the total amount reported.
(5) Of the total amount reported as "Other Annual Compensation" for Mr. Moyer
in fiscal year 1996, $93,046 was for reimbursement of costs and expenses
related to the sale of his former home.
(6) Of the total amount reported as "Other Annual Compensation" for Mr. Moyer
in fiscal year 1995, $43,311 was paid for closing costs related to the
purchase of his new home, $65,486 for mortgage and bridge loan payments,
$40,000 for discretionary expenses and $5,379 was attributable to other
relocation expenses, including temporary living and travel expenses, which
other relocation expenses individually amount to less than 25% of the total
amount reported.
(7) Of the total amount reported as "Other Annual Compensation" for Mr.
Phillips in fiscal year 1996, $19,350 was paid, pursuant to a change in the
Cadmus vacation policy, for previously accrued vacation not taken in prior
fiscal years.
(8) Of the total amount reported as "Other Annual Compensation" for Mr. Thomas
in fiscal year 1996, $12,163 was paid, pursuant to a change in the Cadmus
vacation policy, for previously accrued vacation not taken in prior fiscal
years and $9,181 was paid as an automobile allowance.
(9) Reflects $26,809 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
(10) Reflects $12,182 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
(11) Reflects $7,752 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
(12) Reflects $8,600 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
(13) Reflects $7,635 contributed or matched by Cadmus or its subsidiaries for
fiscal year 1996 under the Cadmus Thrift Savings Plans and the remainder
paid by Cadmus for life insurance premiums.
STOCK OPTIONS
The following table reflects grants of stock options made during the fiscal
year ended June 30, 1996 to each of the named executive officers.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
NUMBER OF ASSUMED ANNUAL
SECURITIES PERCENTAGE OF RATES OF STOCK
UNDERLYING TOTAL OPTIONS/ EXERCISE PRICE APPRECIATION
OPTIONS SARS GRANTED OR BASE FOR OPTION
GRANTED TO EMPLOYEES PRICE EXPIRATION TERM (2)
NAME (#) (1) IN FISCAL YEAR ($/SH) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
C. Stephenson Gillispie, Jr. 20,000 12% $16.75 05/08/06 $210,715 $533,990
Michael Dinkins 10,000 6 16.75 05/08/06 105,358 266,995
Gregory Moyer 8,000 5 16.75 05/08/06 84,286 213,596
John H. Phillips 8,000 5 16.75 05/08/06 84,286 213,596
Bruce V. Thomas 8,000 5 16.75 05/08/06 84,286 213,596
</TABLE>
(1) All grants were made under the Company's 1990 Long Term Incentive Stock
Plan, and are exercisable approximately two to five years from the date of
grant, depending upon the Common Stock's "cumulative total return" relative
to the Company's peer group, as reflected in the performance graph included
in the Company's proxy statements.
(2) The dollar amounts under these columns are the result of calculations at
assumed annual rates of stock price appreciation set by the Securities and
Exchange Commission. The dollar amounts shown are not intended to forecast
possible future appreciation, if any, of the price of the Common Stock.
The following table reflects certain information regarding the exercise of
stock options during the fiscal year ended June 30, 1996, as well as information
with respect to unexercised options held at such date by each of the named
executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT "IN THE MONEY"
FISCAL OPTIONS AT FISCAL
NUMBER OF YEAR END (#) YEAR END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
C. Stephenson Gillispie, Jr. 0 $0 107,000/62,200 $668,000/0
Michael Dinkins 0 0 20,000/20,800 55,650/0
Gregory Moyer 0 0 20,000/18,800 0/0
John H. Phillips 0 0 51,500/18,800 336,562/0
Bruce V. Thomas 0 0 20,000/18,800 121,500/0
</TABLE>
CHANGE-IN-CONTROL AGREEMENTS
Cadmus has entered into agreements with Messrs. Gillispie, Dinkins, Moyer,
Phillips, Thomas, Bosher and Fernstrom and five other managers that provide for
severance payments and certain other benefits if their employment terminates
after "a change in control" (as defined therein) of Cadmus. Payments and
benefits will be paid under these agreements only if, within three years
following a change in control (or such shorter period from the date of any
change in control to normal retirement), the employee (i) is terminated
involuntarily without "cause" (as defined therein) and not as a result of death,
disability or normal retirement, or (ii) terminates his employment voluntarily
for "good reason" (as defined therein). "Change in control" is defined generally
to include (i) an acquisition of 20% of Cadmus' voting stock, (ii) certain
changes in the composition of the Cadmus Board of Directors, (iii) shareholder
approval of certain business combinations or asset sales in which Cadmus'
historic shareholders hold less than 60% of the resulting or purchasing company
or (iv) shareholder approval of the liquidation or dissolution of Cadmus.
In the event of such termination following a change in control, the
employee will be entitled to receive a lump sum severance payment, certain other
payments and a continuation of employee welfare benefits. Severance payments
under these agreements are determined by a formula that takes into account base
salary, annual bonus and years of employment. Under this formula, Mr. Gillispie
will be entitled to the maximum severance payment, which will be an amount equal
to three times the sum of his base salary and annual bonus for the year in which
termination occurs, or for the fiscal year ended June 30, 1992, whichever is
higher. The total amount payable to Mr. Gillispie may not exceed the maximum
amount that may be paid without the imposition of a federal excise tax on Mr.
Gillispie and denial of a tax deduction to the payer.
RETIREMENT BENEFITS
PENSION PLAN. Substantially all employees of Cadmus and its participating
subsidiaries who are 21 years of age or older and who are credited with at least
one year of service with Cadmus or a participating subsidiary are covered by the
Cadmus Pension Plan (the "Pension Plan"). The Pension Plan is a non-contributory
defined benefit pension plan under which retirement benefits are generally based
on periods of active participation. For the period July 1, 1979 through June 30,
1985, a participant earned a retirement benefit expressed as an annuity for life
equal to 2% of his or her base compensation (exclusive of non-guaranteed
commissions, bonuses, overtime pay and similar payments) for each year of
service. For periods after June 30, 1985, a participant earns a retirement
benefit generally equal to 1.6% of his or her base compensation each year
(limited to the inflation adjusted compensation cap each year starting July 1,
1989). Under a special rule, employees who were participants on June 30, 1985
generally accrued further benefits after June 30, 1985 and before January 1,
1992 at no less than the amount of accrual for the fiscal year ended June 30,
1985. This special rule ceased to apply effective for accruals after December
31, 1991. Prior to July 1, 1979, several different benefit formulas applied, and
employees who were participants before July 1, 1979 will retain their accrued
past service benefit for service before July 1, 1979 based on the benefit
formulas then in effect.
Because retirement benefits under the Pension Plan are based on career
average compensation, a table showing annual retirement benefits based upon
final average compensation and years of service is inappropriate and has been
omitted. Based on the benefit formula in effect on and after July 1, 1985, and
on the assumption that the individuals named will continue to receive, until
normal retirement age, covered compensation in the same amounts paid for the
fiscal year ended June 30, 1996, the estimated annual benefits which are not
subject to any deduction for Social Security or other offset amount payable for
the named executive officers are $65,208 for Mr. Gillispie, $60,600 for Mr.
Dinkins, $47,004 for Mr. Moyer, $64,140 for Mr. Phillips, and $69,876 for Mr.
Thomas.
CADMUS SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. Cadmus maintains the Cadmus
Supplemental Executive Retirement Plan (the "SERP") to provide supplemental
retirement benefits for certain key employees of Cadmus and its participating
subsidiaries who are credited with at least five years of service as group 1
employees and who are selected by the Board of Directors of Cadmus for
participation in the SERP. The Board may waive all or any part of the five year
service requirement. The SERP is a non-qualified unfunded plan which covers 17
active key employees of Cadmus and its participating subsidiaries. The
retirement or death benefit payable under the SERP is a 15-year term certain
annuity equal to 30% of the participant's final average (highest three years out
of last ten) base compensation (exclusive of non-guaranteed commissions,
bonuses, overtime pay or similar payments) generally commencing at the
participant's normal retirement age (which is age 65 for employees last hired
prior to age 60 or otherwise is the fifth anniversary of commencement of
participation). Benefits are not subject to any reduction for Social Security or
other offset amount.
The following table shows the estimated annual retirement benefits payable
to SERP participants in the following average final compensation and years of
service classifications assuming retirement at age 65. Average compensation
under the SERP includes only the amounts set forth under "Salary" in the Summary
Compensation Table.
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN TABLE
HIGHEST 3-YEAR YEARS OF SERVICE
AVERAGE COMPENSATION 5 10 15 20 AND OVER
100,000 $ 7,500 $15,000 $22,500 $ 30,000
125,000 9,375 18,750 28,125 37,500
150,000 11,250 22,500 33,750 45,000
175,000 13,125 26,250 39,375 52,500
200,000 15,000 30,000 45,000 60,000
225,000 16,875 33,750 50,625 67,500
250,000 18,750 37,500 56,250 75,000
300,000 22,500 45,000 67,500 90,000
350,000 26,250 52,500 78,750 105,000
400,000 30,000 60,000 80,000 120,000
Credited years of service under the SERP as of the fiscal year ended June
30, 1996 are: Mr. Gillispie -- 19; Mr. Dinkins -- 2; Mr. Moyer -- 1; Mr.
Phillips -- 21; and Mr. Thomas -- 4.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Executive Compensation and organization ("ECOC")
ECOC are Messrs. Gwynn, Munford, Robinson (Chairman), Rosenblum and
Walker. No member of the ECOC is or has been an employee of Cadmus.
Furthermore, none of Cadmus' executive officers has served on the board
of directors of any company of which an ECOC member is an employee
except for John H. Phillips, Vice President, Support and Development of
Cadmus, who serves as a director of Valco Graphics, Inc., a
privately-held Seattle publication and tabloid printing firm, of which
Bruce A. Walker, an ECOC member, is President.
The firm of Robinson, Bradshaw & Hinson, P.A. of which Russell M. Robinson,
II, a Class III director, is President, a Director and a shareholder, was
retained to perform legal services for Cadmus during fiscal year 1996. It is
anticipated that the firm will continue to provide legal services to Cadmus
zduring fiscal year 1997.
DIRECTORS' COMPENSATION
CASH COMPENSATION. Each director of Cadmus who is not also an executive
officer of Cadmus receives: (a) an annual retainer of $10,000; (b) $1,000 for
attendance at each Board meeting; (c) $750 for attendance at each committee
meeting; and (d) $300 for each conference call Board meeting in which he
participates. The Chairmen of the Audit, the Executive Compensation and
Organization, and the Benefits and Investment Committees each receive an
additional $2,000 annually. Each director also is reimbursed for usual and
ordinary expenses of meeting attendance. A director who also is an employee of
Cadmus or its subsidiaries receives no additional compensation for serving as a
director.
Cadmus has in effect a plan under which directors may elect to defer their
annual retainers and attendance fees generally until after the termination of
their service on the Board.
NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN. Under the 1992 Non-Employee
Director Stock Compensation Plan, a portion of the anticipated future increases
in the annual retainer are paid in stock options. Each Director who is not an
employee of Cadmus or its subsidiaries receives an option grant covering 1,000
shares of Common Stock on August 15 of each year during the term of the Plan,
with the fourth grant made under the Plan on August 15, 1996, at a per share
exercise price of $13.18. The options granted under the Plan are not exercisable
for six months from date of grant except in the case of death or disability.
Options that are not exercisable at the time a director's services on the Board
terminate for any reason other than death, disability or retirement in
accordance with Cadmus' policy will be forfeited.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 31, 1996, the number and
percentage of shares of Common Stock held by each of the Cadmus directors and
nominees for director, the executive officers named in the "Summary Compensation
Table," and all directors and executive officers as a group. Cadmus knows of no
person that owns more than five percent of the issued and outstanding shares of
Common Stock.
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP COMMON STOCK ISSUED
OF BENEFICIAL OWNER OF COMMON STOCK (1) AND OUTSTANDING
Robert I. Dalton, Jr. 10,738(2) *
Charlotte, North Carolina
Frank Daniels, III 12,000(3) *
Charlotte, North Carolina
Michael Dinkins 20,965(4) *
Richmond, Virginia
C. Stephenson Gillispie, Jr. 137,811(5) 1.7%
Richmond, Virginia
Price H. Gwynn, III 14,466(6) *
Charlotte, North Carolina
Jeanne M. Liedtka 1,000(7) *
Charlottesville, Virginia
Frank G. Louthan, Jr. 140,771(8) 1.8%
Richmond, Virginia
Gregory Moyer 20,750(9) *
Richmond, Virginia
John D. Munford, II 49,003 *
Virginia Beach, Virginia
John H. Phillips 81,830(10) 1.0%
Richmond, Virginia
John C. Purnell, Jr. 7,907 *
Richmond, Virginia
Russell M. Robinson, II 18,272 *
Charlotte, North Carolina
John W. Rosenblum 5,000 *
Charlottesville, Virginia
Wallace Stettinius 218,022(11) 2.7%
Richmond, Virginia
Bruce V. Thomas 21,623(12) *
Richmond, Virginia
Bruce A. Walker 4,800 *
Seattle, Washington
All Directors and Executive
Officers as a Group (18
persons) 788,283(13) 9.6%
* Indicates that percent of class does not exceed one percent.
(1) Except as otherwise indicated, each nominee, director, or executive officer
has sole voting and investment power with respect to the shares shown.
Except as otherwise noted, beneficial ownership for each non-employee
director includes 3,000 shares as to which each such director holds
presently exercisable options under the Non-Employee Director Stock Option
Plan.
(2) Includes 300 shares held by Mr. Dalton's wife as to which shares Mr. Dalton
disclaims beneficial ownership. Mr. Dalton is the brother-in-law of Mr.
Robinson.
(3) Mr. Daniels holds 1,000 of his shares in the form of presently exercisable
options.
(4) Includes 20,000 shares as to which Mr. Dinkins holds presently exercisable
options and 115 shares held for his account in the Cadmus account under the
Cadmus Thrift Savings Plan and the Cadmus Non-Qualified Thrift Plan (the
"Cadmus Thrift Savings Plans").
(5) Includes 107,000 shares as to which Mr. Gillispie holds presently
exercisable options, 986 shares held in a trust of which he is the trustee
and 594 shares held for his account in the Cadmus account under the Cadmus
Thrift Savings Plans.
(6) Mr. Gwynn holds 2,000 of his shares in the form of presently exercisable
options.
(7) Ms. Liedtka holds all of her shares in the form of presently exercisable
options.
(8) Includes 14,298 shares held by Mr. Louthan's wife, as to which shares Mr.
Louthan disclaims beneficial ownership.
(9) Includes 20,000 shares as to which Mr. Moyer holds presently exercisable
options and 250 shares held for his account in the Cadmus account under the
Cadmus Thrift Savings Plans.
(10) Includes 51,500 shares as to which Mr. Phillips holds presently exercisable
options and 498 shares held for his account in the Cadmus account under the
Cadmus Thrift Savings Plans.
(11) Includes: 181,106 shares held in an agency account by NationsBank of
Virginia, N.A., as to all of which shares Mr. Stettinius is the beneficial
owner; 2,222 shares, also held in an agency account by NationsBank of
Virginia, N.A., for Mr. Stettinius' wife, as to which shares Mr. Stettinius
disclaims beneficial ownership; 34,000 shares as to which Mr. Stettinius
holds presently exercisable options; and 694 shares held for his account in
the Cadmus account under the Cadmus Thrift Savings Plans.
(12) Includes 20,000 shares as to which Mr. Thomas holds presently exercisable
options and 196 shares held for his account in the Cadmus account under the
Cadmus Thrift Savings Plans.
(13) In addition to the executive officers named in the Summary Compensation
Table, the beneficial ownership shown for executive officers of Cadmus
reflects shares beneficially owned by David E. Bosher, Vice President and
Treasurer and Edward B. Fernstrom, Vice President, Information Technology.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation in
Compensation Decisions" presented in Item 11 of this report for information
relating to Mr. Robinson's relationship to the Company.
From time to time, Cadmus may purchase products from, or utilize services
of, other corporations of which a Cadmus director is a director, officer or
employee. Such transactions occur in the ordinary course of business and are not
deemed material.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedules
The financial statements presented in Item 8 of this report and the
financial statement schedules filed as part of this report are listed in the
Index to Financial Statements and Schedules on page 50 hereof.
(b) Reports on Form 8-K
On June 5, 1996, the Company filed a Form 8-K to report the May 21, 1996,
acquisition of Lancaster Press, Inc., a Pennsylvania-based producer of
scientific, technical, and medical journals.
(c) Exhibits
The Exhibits listed in the accompanying "Index of Exhibits" on pages 54
through 55 hereof are filed as a part of this report.
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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, as of the 30th day of
September, 1996.
CADMUS COMMUNICATIONS CORPORATION
/s/ C. Stephenson Gillispie, Jr.
-------------------------------------
C. Stephenson Gillispie, Jr.
Chairman of the Board, President, and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of the 30th day of September,
1996.
Signature Title
--------- -----
/s/ C. Stephenson Gillispie, Jr. Chairman of the Board, President, and
- ------------------------------------- Chief Executive Officer
C. Stephenson Gillispie, Jr. (Principal Executive Officer)
/s/ Bruce V. Thomas Vice President and
- ------------------------------------- Chief Financial Officer
Bruce V. Thomas (Principal Financial and Accounting
Officer)
*/s/ Robert I. Dalton, Jr Director
- -------------------------------------
Robert I. Dalton, Jr.
Director
- -------------------------------------
Frank Daniels, III
*/s/ Price H. Gwynn, III Director
- -------------------------------------
Price H. Gwynn, III
*/s/ Jeanne M. Liedtka Director
- -------------------------------------
Jeanne M. Liedtka
*/s/ Frank G. Louthan, Jr. Director
- -------------------------------------
Frank G. Louthan, Jr.
*/s/ John D. Munford, II Director
- -------------------------------------
John D. Munford, II
*/s/ John C. Purnell, Jr. Director
- -------------------------------------
John C. Purnell, Jr.
*/s/ Russell M. Robinson, II Director
- -------------------------------------
Russell M. Robinson, II
*/s/ John W. Rosenblum Director
- -------------------------------------
John W. Rosenblum
*/s/ Wallace Stettinius Director
- -------------------------------------
Wallace Stettinius
*/s/ Bruce A. Walker Director
- -------------------------------------
Bruce A. Walker
*By /s/ C. Stephenson Gillispie, Jr.
- -------------------------------------
C. Stephenson Gillispie, Jr.
Attorney-in-fact
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The Consolidated Balance Sheets of Cadmus Communications Corporation and
Subsidiaries as of June 30, 1996 and 1995, and the related Consolidated
Statements of Income and Cash Flows for each of the three years in the period
ended June 30, 1996, including the notes thereto, are presented in Item 8 of
this report. The following additional financial data should be read in
conjunction with these consolidated financial statements.
Page
Reports of Independent Accountants 31-32
Financial Statement Schedules: *
II - Valuation and Qualifying Accounts 53
* All other schedules have been omitted since the required information is
not present in amounts sufficient to require submission of the schedules,
or because the information required is included in the consolidated
financial statements, including the notes thereto.
<PAGE>
SCHEDULE II
CADMUS COMMUNICATIONS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
<TABLE>
<CAPTION>
Additions
---------------
Reserves and Allowances Charged to Costs Charged
Deducted from Asset Balance at and to Other Balance
Accounts: Allowance Beginning Other Accounts- Deductions- at End of
for Doubtful Accounts of Period Expenses Describe Describe (A) Period
- ------------------------ ---------- -------- --------- ------------ ---------
<S> <C>
Years Ended:
June 30, 1994 $1,912 $ 535 $ 225(B) $1,158 $1,514
June 30, 1995 1,514 860 55(C) 1,276 1,153
June 30, 1996 1,153 963 1,005(D) 811 2,310
</TABLE>
- -----------
(A) Uncollectible accounts charged off, net of recoveries.
(B) Adjustments resulting from acquisition of Waverly Press in fiscal 1994.
(C) Allowance for doubtful accounts of fiscal 1995 acquisitions which included
Cadmus Interactive and Ronald James Direct.
(D) Allowance for doubtful accounts of fiscal 1996 acquisitions which included
Lancaster Press, Inc., and Subsidiary, The Software Factory, Inc., Na-Tex,
Inc., The Mowry Company, Peachweb Corp., and Encryption Technology
Corporation.
<PAGE>
INDEX OF EXHIBITS
3.1 Restated Articles of Incorporation of Cadmus Communications Corporation,
as amended -- incorporated herein by reference from Exhibit 3.1 of the
Form 10-K for the fiscal year ended June 30, 1993.
3.2 Bylaws of Cadmus Communications Corporation, as amended -- incorporated
herein by reference from Exhibit 3.2 of the Form 10-Q for the fiscal
quarter ended March 31, 1995.
4.1 Cadmus agrees to furnish to the Commission upon request any instrument
with respect to long-term debt as to which the total amount of securities
authorized thereunder does not exceed 10% of Cadmus total consolidated
assets.
4.2 $115,000,000 Revolving Credit/Term Loan Facility Agreement dated as of
June 12, 1996, filed herewith.
4.3 Note Purchase Agreement dated as of December 15, 1993 providing for the
issuance of Cadmus' $40,000,000 6.74% Guaranteed Senior Notes due 2003
-incorporated by reference from Exhibit 4.3 of the Form 10-K for the
fiscal year ended June 30, 1994.
10.1 Cadmus Executive Incentive Plan dated July 30, 1985 -- incorporated
herein by reference from Exhibit 10.1 of the Form 10-K for the fiscal
year ended June 30, 1985 (Commission File No. 0-12954).
10.2 Cadmus Supplemental Executive Retirement Plan, as restated effective July
1, 1992 -- incorporated herein by reference from Exhibit 10.2 of Form SE
dated September 25, 1992.
10.3 Cadmus 1984 Stock Option Plan -- incorporated herein by reference from
Exhibit 10.3 of the Form 10-K for the fiscal year ended June 30, 1985
(Commission File No. 0-12954).
10.4 Cadmus 1992 Non-Employee Director Stock Compensation Plan -- incorporated
herein by reference from Exhibit 10.5 of the Form SE dated September 25,
1992.
10.5 Cadmus 1990 Long Term Stock Incentive Plan, as amended effective August
10, 1994 -- incorporated by reference from Exhibit 10.6 of the Form 10-K
for the fiscal year ended June 30, 1994.
10.6 Cadmus Deferred Compensation Plan, effective July 1, 1995 -- incorporated
by reference from Exhibit 10.7 of the Form 10-K for the fiscal year ended
June 30, 1995.
10.7 Cadmus Non-Qualified Thrift Plan, effective July 1, 1995, incorporated by
reference from Exhibit 10.8 of the Form 10-K for the fiscal year ended
June 30, 1995.
10.8 Employee Retention Agreement dated as of September 1, 1991, between
Cadmus Communications Corporation and C. Stephenson Gillispie,
Jr. -- incorporated by reference from Exhibit 10.9 of the
Form SE dated September 23, 1991 (Commission File No. 0-12954).
10.9 Employee Retention Agreement dated as of September 1, 1991, between
Cadmus Communications Corporation and David E. Bosher -- incorporated
herein by reference from Exhibit 10.10 of the Form SE dated September 23,
1991 (Commission File No. 0-12954).
10.10 Employee Retention Agreement dated as of May 1, 1992, between Cadmus
Communications Corporation and Bruce V. Thomas -- incorporated herein by
reference from Exhibit 10.11 of the Form SE dated September 25, 1992.
10.11 Employee Retention Agreement dated as of September 1, 1991, between
Cadmus Communications Corporation and John H. Phillips -- incorporated
herein by reference from Exhibit 10.12 of the Form 10-K for the fiscal
year ended June 30, 1993.
10.12 Employee Retention Agreement dated as of September 21, 1993, between
Cadmus Communications Corporation and Michael Dinkins -- incorporated by
reference from Exhibit 10.12 of the Form 10-K for the fiscal year ended
June 30, 1994.
10.13 Employee Retention Agreement dated as of August 1, 1994, between Cadmus
Communications Corporation and Gregory Moyer -- incorporated by reference
from Exhibit to 10.14 of the Form 10-K for the fiscal year ended June 30,
1995.
10.14 Employee Retention Agreement dated as of April 12, 1995, between Cadmus
Communications Corporation and Edward B. Fernstrom -- incorporated by
reference from Exhibit to 10.15 of the Form 10-K for the fiscal year ended
June 30, 1995.
10.15 Stock Purchase Agreement dated as of May 21, 1996, among Lancaster Press,
Inc. and Cadmus Communications Corporation -- incorporated by reference to
Exhibit 2 of the Form 8-K dated May 21, 1996.
11. Statement Regarding Computation of Net Income Per Share, filed herewith.
21. Subsidiaries of the Registrant, filed herewith.
23.1 Consent of Arthur Andersen LLP, filed herewith.
23.2 Consent of Coopers & Lybrand L.L.P., filed herewith.
24. Powers of Attorney, filed herewith.
27. Financial Data Schedule, filed herewith.
Note: Exhibits 10.1-10.14 are management contracts or compensatory plans and
arrangements
$115,000,000
CREDIT AGREEMENT
dated as of
June 12, 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 June 12, 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 April 11, 1996, as amended by a Letter Agreement of even
date herewith, 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's 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.
"Cash Available for Fixed Charges" for any period means the
sum of (i) Consolidated Net Income, (ii) taxes on income, (iii) Consolidated
Fixed Charges, (iv) Depreciation and Amortization, and (v) other non-cash
expenses for such period, all determined with respect to the Borrower and its
Consolidated Subsidiaries on a consolidated basis for such period and in
accordance with GAAP.
"CERCLA" means the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C.ss.9601 et seq. and
its implementing regulations and amendments.
2
<PAGE>
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in
Section 8.02.
"Closing Certificate" has the meaning set forth in
Section 3.01(e).
"Closing Date" means June 12, 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,
whether expensed or capitalized, in respect of Debt of the Borrower or any of
its Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" means, for any period, the Net
Income of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of the Borrower or any Subsidiary in the unremitted earnings of any
Person that is not a Subsidiary.
"Consolidated Net Worth" means, at any time, Stockholders'
Equity.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Borrower in its consolidated financial statements
as of such date.
"Consolidated Total Assets" means, at any time, the total
assets of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in
accordance with GAAP.
3
<PAGE>
"Consolidated Total Capital" means, at any time, the sum of
(i) Consolidated Net Worth, and (ii) Consolidated Funded Debt, provided, that
for purposes of this definition only, in determining Consolidated Funded Debt,
clauses (vii), (viii) and (ix) of the definition of Debt contained in this
Agreement shall be disregarded.
"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 Base Rate for such day.
"Depreciation and Amortization" means for any period the sum
of all depreciation and amortization expenses of the Borrower and its
Consolidated Subsidiaries for such period, as determined in accordance with
GAAP.
"Dollars" or "$" means dollars in lawful currency of
the United States of America.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in Georgia are
authorized or required by law to close.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
4
<PAGE>
"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.
"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.
5
<PAGE>
"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 January 5, 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.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
6
<PAGE>
"Fixed Charge Coverage Ratio" means the ratio of Cash
Available for Fixed Charges for the Fiscal Quarter then ended and the
immediately preceding three Fiscal Quarters to Consolidated Fixed Charges for
the Fiscal Quarter then ended and the immediately preceding three Fiscal
Quarters.
"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 Interactive, Inc., a Georgia corporation, Cadmus Journal
Services, Inc., a Virginia corporation, Cadmus Marketing Group, Inc., a Virginia
corporation, Cadmus Printing Group, Inc., a Virginia corporation, Cadmus
Publishing Group, Inc., a Virginia corporation, Cadmus Software Services, Inc.,
a Virginia corporation, Expert Graphics, Inc., a Virginia corporation,
Garamond/Pridemark Press, Inc., a Maryland corporation, Lancaster Press, Inc., a
Delaware corporation, Tapsco Inc., a Pennsylvania corporation, Marblehead
Communications, Inc., a Delaware corporation, The William Byrd Press,
Incorporated, a Virginia corporation, Three Score, Inc., a Georgia corporation,
Tuff Stuff Publications, Inc., a Virginia corporation and Washburn Graphics,
Inc., a North Carolina corporation and each Significant Subsidiary that executes
the Guaranty pursuant to Section 5.21.
"Guaranty" means the Guaranty Agreement executed by each of
the Guarantors substantially in the form of Exhibit 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
7
<PAGE>
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Intercreditor Agreements" means the Intercreditor Agreements
by and among the applicable Guarantors, the Agent , as agent for the Banks, and
the 1993 Senior Noteholders (as defined therein), substantially in the form of
Exhibit O hereto, either as originally executed or as they may be from time to
time supplemented, modified, amended, renewed or extended.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such borrowing and ending on the
numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period (subject to clause (c) below) which
would otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding 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
8
<PAGE>
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.
(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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"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), after deducting
therefrom all reasonable and customary costs and expenses incurred by
the Borrower or such Consolidated Subsidiary directly in connection
with the issuance of such Capital Stock.
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"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; and (C) such acquisition is made on a negotiated basis with
the approval of the Board of Directors of the Person to be acquired.
"Person" means an individual, a corporation, a partnership
(including without limitation, a joint venture), an unincorporated association,
a trust or any other entity or organization, including, but not limited to, a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by a member
of the Controlled Group for employees of any member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding 5 plan years made contributions.
"Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia. Wachovia
lends at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrower or any Subsidiary, wherever located.
"Quotation Date" has the meaning set forth in Section 2.03(b).
"Rate Determination Date" has the meaning set forth in
Section 2.06(a).
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"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 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 June 12, 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 Cash Available for
Fixed Charges for either of the two most recently ended Fiscal Years. The
determination of the Significant Subsidiary or the Significant Subsidiaries
comprising the Significant Subsidiary Group as of any date shall be made on the
basis of a group consisting of the smallest number of Subsidiaries necessary to
comprise the Significant Subsidiary Group as of such date. On the Closing Date,
the Significant Subsidiary Group is comprised of: (i) American Graphics, Inc;
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(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.
"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.
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"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
August 22, November 22, February 22, and May 22, commencing on
August 22, 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 all amendments, consolidations,
modifications, renewals and supplements thereto and "Term Note" means any one of
such Term Notes.
"Term Loan Maturity Date" means May 22, 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.
"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
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concurred in by the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks, unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other Loan
Documents: (i) the Borrower shall have objected to determining such compliance
on such basis at the time of delivery of such financial statements, or (ii) the
Required Banks shall so object in writing within 30 days after the delivery of
such financial statements, in either of which events such calculations shall be
made on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made (which,
if objection is made in respect of the first financial statements delivered
under Section 5.01 hereof, shall mean the financial statements referred to in
Section 4.04).
SECTION 1.03. Use of Defined Terms. All terms defined in this
Agreement shall have the same meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall
otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 1.05. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits", "Schedules",
and "Sections" are references to articles, exhibits, schedules and
sections hereof.
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
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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, 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; provided that notwithstanding
Section 2.06(c), the Interest Period applicable to the Term Loans
comprising the initial Term Loan Borrowing shall end on June 22, 1996.
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.
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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:
(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 or Term Loan Borrowing, as the case may be, until
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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
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Borrowings that are Base Rate Loans (if any) outstanding immediately before such
Syndicated Base Rate Borrowing.
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 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.
(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 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
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<PAGE>
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).
(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
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<PAGE>
amount of the Money Market Borrowing for which offers have been received and (B)
the maximum principal amount and Money Market Rates so offered by each Bank
(identifying the Bank that made each Money Market Quote).
(e) Not later than 11:00 A.M. (Atlanta, Georgia time) on the
Quotation Date (or such other time and date as the Borrower and the Agent, with
the consent of the Required Banks, may agree), the Borrower shall notify the
Agent of its acceptance or nonacceptance of the offers so notified to it
pursuant to Section 2.03(d) and the Agent shall promptly notify each Bank that
has submitted a Money Market Quote. In the case of acceptance, such notice shall
specify the aggregate principal amount of offers for each Interest Period that
are accepted. The Borrower may accept any Money Market Quote in whole or in part
(provided that any Money Market Quote accepted in part from any Bank shall not
be less than the amount set forth in the Money Market Quote of such Bank as the
minimum principal amount of the Money Market Loan such Bank was willing to make
for the applicable Interest Period); provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set forth
in the related Money Market Quote Request;
(ii) the aggregate principal amount of each Money Market
Borrowing shall be at least $2,500,000 (and in larger multiples of
$500,000) but shall not cause the limits specified in Section 2.03(a)
to be violated;
(iii) acceptance of offers may only be made in ascending
order of Money Market Rates; and
(iv) the Borrower may not accept any offer where the Agent has
advised the Borrower that such offer fails to comply with Section
2.03(c)(ii) or otherwise fails to comply with the requirements of this
Agreement (including, without limitation, Section 2.03(a)).
If offers are made by two or more Banks with the same Money Market Rates for a
greater aggregate principal amount than the amount in respect of which offers
are accepted for the related Interest Period, the principal amount of Money
Market Loans in respect of which such offers are accepted shall be allocated by
the Borrower among such Banks as nearly as possible (in multiples of $100,000)
in proportion to the aggregate principal amount of such offers. Determinations
by the Borrower of the amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
(f) Any Bank whose offer to make any Money Market Loan has
been accepted shall, not later than 12:00 P.M. (Atlanta, Georgia time) on the
Quotation Date, make the amount of such 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.
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<PAGE>
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.
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.
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<PAGE>
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 3.75 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 50% 0% .60% .40%
Greater than or equal to 40%
but less than 50% 0% .475% .30%
Greater than or equal to 30%
but less than 40% 0% .375% .225%
Less than 30% 0% .30% .175%
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
If the Fixed Charge Coverage Ratio Syndicated
is less than 3.75 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 50% 0% .75% .525%
Greater than or equal to 40%
but less than 50% 0% .60% .40%
Greater than or equal to 30%
but less than 40% 0% .475% .30%
Less than 30% 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) .475% for Term Loans that are Euro-Dollar Loans; and (z) .30%
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 3.75 to 1.0 and the ratio of
Consolidated Funded Debt to Consolidated Total Capital was more than 50% at all
times during such period. Any change in the Applicable Margin on any Rate
Determination Date shall result in a corresponding change, effective on and as
of such Rate Determination Date, in the interest rate applicable to each
Syndicated Revolving Credit Loan and Term Loan outstanding on such Rate
Determination Date.
(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
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<PAGE>
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.
(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.
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<PAGE>
(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:
26
<PAGE>
If the Fixed Charge Coverage Ratio
is greater than or equal to 3.75 to 1.0,
and the Ratio of Consolidated Funded Applicable
Debt to Consolidated Total Capital is Facility Fee Rate
Greater than or equal to 50% .20%
Greater than or equal to 40%
but less than 50% .175%
Greater than or equal to 30%
but less than 40% .15%
Less than 30% .125%
27
<PAGE>
If the Fixed Charge Coverage Ratio
is less than 3.75 to 1.0 and the Ratio
of Consolidated Funded Debt to Applicable
Consolidated Total Capital is: Facility Fee Rate
Greater than or equal to 50% .225%
Greater than or equal to 40%
but less than 50% .20%
Greater than or equal to 30%
but less than 40% .175%
Less than 30% .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 Fee Determination Date next following the Closing Date,
the Applicable Facility Fee Rate shall be .175%; (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 3.75 to 1.00 and the ratio of Consolidated Funded Debt to Consolidated
Total Capital was more than 50% 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 amount of such Bank's Term Loan Commitment, multiplied by (ii)
0.10%.
(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.
28
<PAGE>
A#0005705.05
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. 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.
(2) The aggregate amount of the Term Loan
Commitments shall be reduced in twenty (20) consecutive quarterly
installments in the amount of $1,500,000 each on each Term Loan
Commitment Reduction 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. No
optional reduction of the Term Loan Commitments shall reduce the amount of any
subsequent mandatory reduction pursuant to this Section 2.09 (b) and 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), then,
to the extent necessary, to the Money Market 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.
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<PAGE>
(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 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 (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
30
<PAGE>
without deduction for, and free from, any tax, imposts, levies, duties,
deductions, or withholdings of any nature now or at anytime hereafter imposed by
any governmental authority or by any taxing authority thereof or therein
excluding in the case of each Bank, (i) taxes imposed on or measured by its net
income, (ii) franchise taxes imposed on it, by the jurisdiction under the laws
of which such Bank is organized or any political subdivision thereof, and (iii)
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Bank's applicable Lending Office or any political
subdivision thereof (all such 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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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, (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;
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(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, provided that
with respect to any Guarantor other than Lancaster Press, Inc. or any
of its Subsidiaries, in the event the Agent does not receive on the
Closing Date, the items referenced in (i) and (iii) above, certified by
the Secretary of State of the State of such Guarantor's incorporation,
the Borrower shall deliver to the Agent copies of such documents,
certified by such Secretary of State on or before June 30, 1996.
(h) receipt by the Agent of the Guaranty, duly
executed by each Guarantor;
(i) receipt by the Agent of the Intercreditor
Agreements, duly executed by the respective parties thereto;
(j) receipt by the Agent and the Banks of evidence
satisfactory to the Agent and the Banks in their sole discretion, that
the Borrower has acquired one hundred percent (100%) of the capital
stock of Lancaster Press, Inc., substantially upon the terms and
conditions initially disclosed by the Borrower to the Agent and the
Banks; and
(k) 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.
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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(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.
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
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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. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of June 30,
1995, and the related consolidated statements of income, shareholders' equity
and cash flows for the Fiscal Year then ended, reported on by Arthur Andersen
LLP, copies of which have been delivered to each of the Banks, and the unaudited
consolidated financial statements of the Borrower for the interim period ended
March 31, 1996, 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.
(b) The consolidated balance sheet of Lancaster Press, Inc.
and the consolidated subsidiaries of Lancaster Press, Inc. as of March 31, 1995
and the related consolidated statements of income, shareholders' equity and cash
flows for the fiscal year of Lancaster Press, Inc. and the consolidated
subsidiaries of Lancaster Press, Inc. then ended, reported on by Arthur
Andersen, LLP, copies of which have been delivered to the Agent and the Banks,
and the unaudited consolidated financial statements of Lancaster Press, Inc. for
the fiscal year ending March 31, 1996, copies of which have been delivered to
the Agent and the Banks, fairly present in all material respects, in conformity
with GAAP, the consolidated financial position of Lancaster Press, Inc. and the
consolidated subsidiaries of Lancaster Press, Inc. 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,
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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 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: (i) as set forth on Schedule 4.08; and
(ii) 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, 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. The
Borrower has no Subsidiaries except those Subsidiaries listed on Schedule 4.08,
which accurately sets forth each such Subsidiary's complete name and
jurisdiction of incorporation.
SECTION 4.09. Not an Investment Company. Neither the
Borrower nor any of its Subsidiaries is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.10 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the
Borrower and its Consolidated Subsidiaries has title to its properties
sufficient for the conduct of its business, and none of such property is subject
to any Lien except as permitted in Section 5.08.
SECTION 4.12. No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound which could have or cause a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
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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 Borrower's Wholly Owned Subsidiaries are owned by the
Borrower free and clear of any Lien or adverse claim. At least a majority of the
issued shares of capital stock of each of the Borrower's other Subsidiaries
(other than Wholly Owned Subsidiaries) is owned by the Borrower free and clear
of any Lien or adverse claim.
SECTION 4.17. Margin Stock. Neither the Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Term Loan or Revolving Credit Loan will be used to purchase or
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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;
(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
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the chief financial officer, the chief accounting officer or the
treasurer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 5.03 through 5.08,
inclusive, and 5.11 on the date of such financial statements and (ii)
stating whether any Default exists on the date of such certificate and,
if any Default then exists, setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set of annual
financial statements referred to in clause (a) above, a statement of
the firm of independent public accountants which reported on such
statements to the effect that nothing has come to their attention to
cause them to believe that any Default existed on the date of such
financial statements;
(e) within 5 Domestic Business Days after the Borrower becomes
aware of the occurrence of any Default, a certificate of the chief
financial officer, the chief accounting officer or the treasurer of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports which the Borrower shall have filed with
the Securities and Exchange Commission;
(h) if and when the Borrower or any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or required
to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, a copy of such notice; or
(iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate or appoint a trustee to administer any Plan, a copy
of such notice;
(i) promptly after the Borrower knows of the commencement
thereof, notice of any litigation, dispute or proceeding involving a
claim against the Borrower and/or any Subsidiary for $5,000,000 or more
in excess of amounts covered in full by applicable insurance; and
(j) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries
as the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower will (i) keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
and activities; and (ii) permit, and will cause each Subsidiary to permit,
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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, commencing with the Fiscal Quarter ending June 30, 1996, the
Fixed Charge Coverage Ratio shall not be less than 3.25 to 1.00.
SECTION 5.06. Loans or Advances. Neither the Borrower nor any
of its Subsidiaries shall make loans or advances to any Person except: (i) loans
or advances to employees made in the ordinary course of business and
consistently with practices existing on September 30, 1995 in an aggregate
outstanding principal amount that does not exceed at any time one percent (1%)
of Consolidated Total Assets; (ii) deposits required by government agencies or
public utilities; and (iii) loans or advances to Subsidiaries; provided that
after giving effect to the making of any loans, advances or deposits permitted
by clause (i), (ii) or (iii) of this Section, no Default shall have occurred and
be continuing.
SECTION 5.07. Investments. Neither the Borrower nor any of its
Subsidiaries shall make Investments in any Person except as permitted by Section
5.06 and except Investments in (i) direct obligations of the United States
Government maturing within one year, (ii) certificates of deposit issued by a
commercial bank whose long term certificates of deposit are rated at least A or
the equivalent thereof by Standard & Poor's Corporation or A2 or the equivalent
thereof by Moody's Investors Service, Inc., (iii) commercial paper rated A-1 or
the equivalent thereof by Standard & Poor's Corporation or P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in either case maturing within 6
months after the date of acquisition; (iv) tender bonds the payment of the
principal of and interest on which is fully supported by a letter of credit
issued by a United States bank whose long-term certificates of deposit are rated
at least AA or the equivalent thereof by Standard & Poor's Corporation and AA or
the equivalent thereof by Moody's Investors Service, Inc.; (v) Permitted
Acquisitions; and/or (vi) Investments not permitted under Sections 5.07(i)
through (v) if immediately after giving effect to such Investments not permitted
under Sections 5.07(i) through (v), the aggregate amount of all such Investments
made pursuant to this Section 5.07 (vi) does not exceed $5,000,000.
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SECTION 5.08. Negative Pledge. Neither the Borrower
nor any Consolidated Subsidiary will create, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal
amount not exceeding $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;
(f) Liens securing Debt owing by any Subsidiary to
the Borrower or to a Wholly-Owned Subsidiary;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing clauses of this Section, provided that (i) such Debt
is not secured by any additional assets, and (ii) the amount of such
Debt secured by any such Lien is not increased;
(h) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do not in
the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(i) Liens securing taxes, assessments or other similar
governmental charges or levies which are not yet due and
payable;
(j) Liens arising out of any litigation or legal proceeding
which are being contested in good faith by appropriate proceedings
diligently pursued;
(k) Liens of the type described in Section 9.04
hereof (as long as no such Lien in favor of any Person other
than one of the Banks extends to deposits in or held by such
Bank);
(l) any Lien on Margin Stock; and
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(m) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt (other than indebtedness represented by the
Notes) in an aggregate principal amount at any time outstanding not to
exceed 10% of Consolidated Total Assets.
SECTION 5.09. Maintenance of Existence. The Borrower shall,
and shall cause each Significant Subsidiary to, except as permitted by Section
5.11, maintain its corporate existence and carry on its business in
substantially the same manner and in substantially the same fields as such
business is now carried on and maintained.
SECTION 5.10. Dissolution. Neither the Borrower nor any of its
Significant Subsidiaries shall suffer or permit dissolution or liquidation
either in whole or in part or redeem or retire any shares of its own stock or
that of any Subsidiary, except through corporate reorganization to the extent
permitted by Section 5.11.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. The
Borrower will not, nor will it permit any Significant Subsidiary to, consolidate
or merge with or into, or sell, lease or otherwise transfer all or any
substantial part of its assets to, any other Person, or discontinue or eliminate
any business line or segment, provided that (a) the Borrower or a Subsidiary may
merge with another Person if (i) such Person was organized under the laws of the
United States of America or one of its states, (ii) the Borrower or the
Subsidiary, as the case may be, is the corporation surviving such merger and
(iii) immediately after giving effect to such merger, no Default shall have
occurred and be continuing, (b) Subsidiaries of the Borrower may merge with the
Borrower or one another, 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 and on the
discontinuation or elimination of a business line or segment shall not prohibit,
during any Fiscal Quarter, a transfer of assets or the discontinuance or
elimination of a business line or segment (in a single transaction or in a
series of related transactions) unless the aggregate assets to be so transferred
or utilized in a business line or segment to be so discontinued, when combined
with all other assets transferred, and all other assets utilized in all other
business lines or segments discontinued, during such Fiscal Quarter and the
immediately preceding seven Fiscal Quarters, constituted more than 10% of
Consolidated Total Assets at the end of such Fiscal Quarter.
SECTION 5.12. Use of Proceeds. (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) certain loan(s) made by Wachovia Bank of North
Carolina, N.A. to the Borrower advanced in connection with the
Borrower's acquisition of Lancaster Press, Inc.
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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 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
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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 disclosed 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 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.
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
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Domestic Business Days after such interest shall become due, or shall
fail to pay any fee or other amount payable hereunder within five
Domestic Business Days after such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.02(ii), or 5.03,
5.04, 5.05, or 5.09 to 5.12, inclusive, or Section 5.21(ii);
or
(c) the Borrower shall fail to observe or perform any covenant
or agreement contained or incorporated by reference in this Agreement
(other than those covered by clause (a) or (b) above) for thirty days
after the earlier of (i) the first day on which the Borrower has
knowledge of such failure or (ii) written notice thereof has been given
to the Borrower by the Agent at the request of any Bank; or
(d) any representation, warranty, certification or statement
made or deemed made by the Borrower in Article IV of this Agreement or
in any certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of Debt outstanding (other than the Notes) in an
aggregate principal amount in excess of $5,000,000 when due or within
any applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of the Borrower or any
Subsidiary in an aggregate principal amount in excess of $5,000,000 or
the mandatory prepayment or purchase of such Debt by the Borrower (or
its designee) or such Subsidiary (or its designee) prior to the
scheduled maturity thereof, or enables (or, with the giving of notice
or lapse of time or both, would enable) the holders of such Debt or any
Person acting on such holders' behalf to accelerate the maturity
thereof or require the 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
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for relief shall be entered against the Borrower or any Significant
Subsidiary under the federal bankruptcy laws as now or hereafter in
effect; or
(i) the Borrower or any member of the Controlled Group shall
fail to pay when due any material amount which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans in a 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 other act by the Agent or the
Banks, the Revolving Credit Commitments and the Term Loan Commitments shall
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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.
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
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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 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
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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 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
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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.
SECTION 7.11. Execution of Intercreditor Agreement. The Banks
hereby authorize the Agent to execute an Intercreditor Agreement relating to
each of the Guarantors, each substantially in the form attached hereto as
Exhibit O.
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.
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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.
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
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consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence 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;
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(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;
(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
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Agent, in connection with the preparation of this Agreement and the other Loan
Documents, any waiver or consent hereunder or thereunder or any amendment hereof
or thereof or any Default or alleged Default hereunder or thereunder and (ii) if
a Default occurs, all out-of-pocket expenses incurred by the Agent or any Bank,
including reasonable fees and disbursements of counsel, in connection with such
Default and collection and other enforcement proceedings resulting therefrom,
including out-of-pocket expenses incurred in enforcing this Agreement and the
other Loan Documents.
(b) The Borrower shall indemnify the Agent and each Bank
against any transfer taxes, documentary taxes, assessments or charges made by
any Authority by reason of the execution and delivery of this Agreement or the
other Loan Documents.
(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 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,
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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 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
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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 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
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case of an Assignee that is not then a Bank or an Affiliate of a Bank, by the
Borrower); provided that (i) no interest may be sold by a Bank pursuant to this
paragraph (c) unless the Assignee shall agree to assume ratably equivalent
portions of the transferor Bank's 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, and (iv) a Bank may not have more than two (2)Assignees that are not
then Banks at any one time. Upon (A) execution of the Assignment and Acceptance
by such transferor Bank, such Assignee, the Agent and (if applicable) the
Borrower, (B) delivery of an executed copy of the Assignment and Acceptance to
the Borrower and the Agent, (C) payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such transferor Bank and
such Assignee, and (D) payment by the assigning Bank of a processing and
recordation fee of $2,500 to the Agent, such Assignee shall for all purposes be
a Bank party to this Agreement and shall have all the rights and obligations of
a Bank under this Agreement (including, without limitation, the rights of a Bank
under Section 2.03) to the same extent as if it were an original party hereto
with a 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
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.
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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 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
58
<PAGE>
inadvertently made to any Bank by the Borrower or inadvertently received by any
Bank, then such excess sum shall be credited as a payment of principal, unless
the Borrower shall notify such Bank in writing that it elects to have such
excess sum returned forthwith. It is the express intent hereof that the Borrower
not pay and the Banks not receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may legally be paid by the Borrower
under applicable law.
SECTION 9.15. Interpretation. No provision of this Agreement
or any of the other Loan Documents shall be construed against or interpreted to
the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have
structured or dictated such provision.
SECTION 9.16. Consent to Jurisdiction. The Borrower (a)
submits to personal jurisdiction in the State of Georgia, the courts thereof and
the United States District Courts sitting therein, for the enforcement of this
Agreement, the Notes and the other Loan Documents, (b) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or venue
within the State of Georgia for the purpose of litigation to enforce this
Agreement, the Notes or the other Loan Documents, and (c) agrees that service of
process may be made upon it in the manner prescribed in Section 9.01 for the
giving of notice to the Borrower. Nothing herein contained, however, shall
prevent the Agent from bringing any action or exercising any rights against any
security and against the Borrower personally, and against any assets of the
Borrower, within any other state or jurisdiction.
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.
[ Remainder of this page intentionally left blank]
59
<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
[Remainder of this page intentionally left blank]
60
<PAGE>
COMMITMENTS:
Revolving Credit Commitment:
$26,630,869.00 WACHOVIA BANK OF NORTH CAROLINA, N.A.,
as a Bank
Term Loan Commitment:
$9,399,131.00
By:______________________________(SEAL)
Title:_____________________________
Lending Office:
Wachovia Bank of North Carolina, N.A.
301 North Main Street
P. O. Box 3099
Winston-Salem, N.C. 27150
Attention: Haywood Edmundson, V
Telecopy number: (910) 732-6935
Telephone number: (910) 732-7614
[Remainder of this page intentionally left blank]
61
<PAGE>
Revolving Credit Commitment:
$24,006,957.00 FIRST UNION NATIONAL BANK OF VIRGINIA,
as Co-Agent and as a Bank
Term Loan Commitment: By:___________________________ (SEAL)
$8,473,043.00 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
[Remainder of this page intentionally left blank]
<PAGE>
Revolving Credit Commitment: NATIONSBANK, N.A.,
$24,006,957.00 as Co-Agent and as a Bank
Term Loan Commitment: By:___________________________ (SEAL)
$8,473,043.00 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
[Remainder of this page intentionally left blank]
62
<PAGE>
Revolving Credit Commitment: CRESTAR BANK,
$10,355,217.00 as a Bank
Term Loan Commitment: By:___________________________ (SEAL)
$3,654,783.00 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
- --------------
TOTAL COMMITMENTS:
Revolving Credit Commitment:
$85,000,000.00
Term Loan Commitment:
$30,000,000.00
64
<PAGE>
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended June 30,
Net income per share was computed as follows: 1996 1995 1994
---- ---- ----
<S> <C>
Primary:
1) Income before extraordinary item and
cumulative effect of changes in accounting principles $6,504 $7,479 $4,807
2) Extraordinary loss on early extinguishment of
debt (net of income tax benefit of $487) (795)
3) Cumulative effect of changes in accounting for:
Postretirement benefits (net of income tax
benefit of $355) (532)
Income taxes 933
4) Net income $5,709 $7,479 $5,208
===== ===== =====
5) Weighted average common shares outstanding 7,248 6,010 5,965
6) Incremental shares under stock options
computed under the treasury stock method
using the average market price of issuer's
common stock during the periods 247 185 120
--- ------ ---
7) Weighted average common and common equivalent
shares outstanding 7,495 6,195 6,085
===== ====== ======
8) Income per share before extraordinary item and
cumulative effect of changes in accounting principles (item 1
divided by item 7) $ .87 $ 1.21 $ 0.79
9) Extraordinary loss on early extinguishment of debt (.11)
10) Cumulative effect of changes in accounting for
postretirement benefits and income taxes 0.07
11) Net income per share (item 4 divided by item 7) $ .76 $ 1.21 $ 0.86
===== ====== ======
Fully diluted:
1) Income before extraordinary item and
cumulative effect of changes in accounting principles $6,504 $7,479 $4,807
2) Extraordinary loss on early extinguishment of
debt (net of income tax benefit of $487) (795)
3) Cumulative effect of changes in accounting for:
Postretirement benefits (net of income tax
benefit of $355) (532)
Income taxes 933
----- ----- -----
4) Net income $5,709 $7,479 $5,208
===== ===== =====
5) Weighted average common shares outstanding 7,248 6,010 5,965
6) 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 247 253 207
--- ------ ------
7) Weighted average common and common equivalent
shares outstanding 7,495 6,263 6,172
===== ====== ======
8) Income per share before extraordinary item and
cumulative effect of changes in accounting principles (item 1
divided by item 7) $.87 $ 1.19 $ 0.78
9) Extraordinary loss on early extinguishment of debt (11)
10) Cumulative effect of changes in accounting for
postretirement benefits and income taxes 0.06
-------- --------- ----
11) Net income per share (item 4 divided by item 7) $ .76 $ 1.19 $ 0.84
===== ====== ======
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
American Graphics, Inc., incorporated under the laws of Georgia;
Cadmus Direct Marketing, Inc., incorporated under the laws of North Carolina;
Cadmus Financial Distribution, Inc., incorporated under the laws of Virginia;
Cadmus Interactive, Inc., incorporated under the laws of Georgia;
Cadmus Investment Corporation, incorporated under the laws of Delaware;
Cadmus Journal Services, Inc., incorporated under the laws of Virginia;
Cadmus Marketing Group, Inc., incorporated under the laws of Virginia;
Cadmus Marketing, Inc., incorporated under the laws of Virginia;
Cadmus Printing Group, Inc. incorporated under the laws of Virginia;
Cadmus Publishing Group, Inc., incorporated under the laws of Virginia;
Cadmus Publishing Holding Corporation, incorporated under the laws of Delaware;
Cadmus Software Services, Inc., incorporated under the laws of Virginia;
E-DOC., incorporated under the laws of Pennsylvania;
Electronic Document Services, Inc., incorporated under the laws of Pennsylvania;
Expert Graphics, Inc., incorporated under the laws of Virginia;
Garamond/Pridemark Press, Inc., incorporated under the laws of Maryland;
Lancaster Information Group, Inc., incorporated under the laws of Delaware;
Lancaster Information Group, Inc., incorporated under the laws of Pennsylvania;
Lancaster Press, Inc., incorporated under the laws of Pennsylvania;
Marblehead Communications, Inc., incorporated under the laws of Delaware;
Tapsco, Inc., incorporated under the laws of Pennsylvania;
Three Score, Inc., incorporated under the laws of Georgia;
Tuff Stuff Publications, Inc., incorporated under the laws of Virginia;
Vaughan Printers, Incorporated, incorporated under the laws of Florida;
VSUB Holding Company, incorporated under the laws of Virginia;
Washburn Graphics, Inc., incorporated under the laws of North Carolina;
Washburn of New York, Inc., incorporated under the laws of New York; and
The William Byrd Press, Incorporated, incorporated under the laws of Virginia.
EXHIBIT 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into the
Company's previously filed registration statements File Nos. 033-56653,
33-10214, 33-87690 and 2-90742. It should be noted that we have not
audited any financial statements of Cadmus Communications Corporation
subsequent to June 30, 1996 or performed any audit procedures
subsequent to the date of our report.
Arthur Andersen LLP
Richmond, Virginia,
September 30, 1996
EXHIBIT 23.2
Consent of Coopers & Lybrand L.L.P.
We consent to the incorporation by reference in the registration
statements of Cadmus Communications Corporation on Form S-8 (File Nos.
033-56653, 33-10214, 33-87690, and 2-90742), of our report dated August
2, 1994 on our audit of the consolidated statements of income and cash
flows and the financial statement schedule of Cadmus Communications
Corporation and Subsidiaries for the year ended June 30, 1994, which
report is included in this Annual Report on Form 10-K.
COOPERS AND LYBRAND L.L.P.
Richmond, Virginia
September 27, 1996
POWER OF ATTORNEY
I, /s/ Price H. Gwynn, III, do hereby constitute and appoint C.
Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 5th day of August, 1996.
/s/ Price H. Gwynn, III
<PAGE>
POWER OF ATTORNEY
I, /s/ Robert I. Dalton, Jr., do hereby constitute and appoint C.
Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 12th day of August, 1996.
/s/ Robert I. Dalton, Jr.
<PAGE>
POWER OF ATTORNEY
I, /s/ Jeanne M. Liedtka, do hereby constitute and appoint
C. Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 24th day of August, 1996.
/s/ Jeanne M. Liedtka
<PAGE>
POWER OF ATTORNEY
I, /s/ Frank G. Louthan, Jr., do hereby constitute and appoint
C. Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 5th day of August, 1996.
/s/ Frank G. Louthan, Jr.
<PAGE>
POWER OF ATTORNEY
I, /s/ John D. Munford, II, do hereby constitute and appoint
C. Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 6th day of August, 1996.
/s/ John D. Munford, II
<PAGE>
POWER OF ATTORNEY
I, /s/ John C. Purrell, Jr., do hereby constitute and appoint C.
Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 7th day of August, 1996.
/s/ John C. Purrell, Jr.
<PAGE>
POWER OF ATTORNEY
I, /s/ Russell M. Robinson, II do hereby constitute and appoint C.
Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 14th day of August, 1996.
/s/ Russell M. Robinson, II
<PAGE>
POWER OF ATTORNEY
I, /s/ John W. Rosenblum, do hereby constitute and appoint C.
Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 13th day of August, 1996.
/s/ John W. Rosenblum
<PAGE>
POWER OF ATTORNEY
I, /s/ Wallace Stettinius, do hereby constitute and appoint C.
Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 3th day of August, 1996.
/s/ Wallace Stettinius
<PAGE>
POWER OF ATTORNEY
I, /s/ Bruce A. Walker, do hereby constitute and appoint C.
Stephenson Gillispie, Jr., David E. Bosher and Bruce V. Thomas, my true and
lawful attorneys-in-fact, any of whom acting singly is hereby authorized for me
and in my name and on my behalf as a director and/or officer of Cadmus
Communications Corporation ("Cadmus"), to act and to execute any and all
instruments as such attorneys or attorney deem necessary or advisable to enable
Cadmus to comply with the Securities and Exchange Act of 1934, and any rules,
regulations, policies or requirements of the Securities and Exchange Commission
(the "Commission") in respect thereof, in connection with the preparation and
filing with the Commission of Cadmus' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, and any and all amendments to such Report, together
with such other supplements, statements, instruments and documents as such
attorneys or attorney deem necessary or appropriate.
I do hereby ratify and confirm all my said attorneys or attorney shall
do or cause to be done by the virtue hereof.
WITNESS the execution hereof this 5th day of August, 1996.
/s/ Bruce A. Walker
<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.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,141
<SECURITIES> 0
<RECEIVABLES> 79,199
<ALLOWANCES> 2,310
<INVENTORY> 23,486
<CURRENT-ASSETS> 109,728
<PP&E> 203,839
<DEPRECIATION> 87,474
<TOTAL-ASSETS> 282,763
<CURRENT-LIABILITIES> 50,171
<BONDS> 106,665
0
0
<COMMON> 3,954
<OTHER-SE> 103,614
<TOTAL-LIABILITY-AND-EQUITY> 282,763
<SALES> 336,655
<TOTAL-REVENUES> 336,655
<CGS> 259,086
<TOTAL-COSTS> 259,086
<OTHER-EXPENSES> 813
<LOSS-PROVISION> 963
<INTEREST-EXPENSE> 5,144
<INCOME-PRETAX> 10,408
<INCOME-TAX> 3,904
<INCOME-CONTINUING> 6,504
<DISCONTINUED> 0
<EXTRAORDINARY> (795)
<CHANGES> 0
<NET-INCOME> 5,709
<EPS-PRIMARY> .76
<EPS-DILUTED> .76
</TABLE>
